WIND RIVER SYSTEMS INC
DEFM14A, 2000-01-14
COMPUTER PROGRAMMING SERVICES
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<PAGE>
                            SCHEDULE 14A INFORMATION

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

    Filed by the Registrant /X/
    Filed by a Party other than the Registrant / /

    Check the appropriate box:
    / /  Preliminary Proxy Statement
    / /  Confidential, for Use of the Commission Only (as permitted by Rule
         14a-6(e)(2))
    /X/  Definitive Proxy Statement
    / /  Definitive Additional Materials
    / /  Soliciting Material Pursuant to Section240.14a-11(c) or
         Section240.14a-12

                                   WIND RIVER SYSTEMS, INC.
- --------------------------------------------------------------------------------
                (Name of Registrant as Specified In Its Charter)

- --------------------------------------------------------------------------------
    (Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

/ /  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:
         Common Stock, no par value
         -----------------------------------------------------------------------
     (2) Aggregate number of securities to which transaction applies:
         -----------------------------------------------------------------------
     (3) Per unit price or other underlying value of transaction computed
         pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
         filing fee is calculated and state how it was determined):
         -----------------------------------------------------------------------
     (4) Proposed maximum aggregate value of transaction:
         -----------------------------------------------------------------------
     (5) Total fee paid:
         -----------------------------------------------------------------------
/X/  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:
         $204,960
         -----------------------------------------------------------------------
     (2) Form, Schedule or Registration Statement No.:
         Form S-4; No. 333-91545
         -----------------------------------------------------------------------
     (3) Filing Party:
         Wind River Systems, Inc.
         -----------------------------------------------------------------------
     (4) Date Filed:
         November 23, 1999
         -----------------------------------------------------------------------
<PAGE>
[WIND RIVER LOGO]

                                                       [INTEGRATED SYSTEMS LOGO]

                        SPECIAL MEETINGS OF STOCKHOLDERS
                  MERGER PROPOSED--YOUR VOTE IS VERY IMPORTANT

    The boards of directors of Wind River Systems, Inc. and Integrated
Systems, Inc. have unanimously approved a merger combining Wind River and
Integrated Systems.

    If the merger is completed, holders of Integrated Systems common stock will
receive 0.92 of a share of Wind River common stock for each share of Integrated
Systems common stock they own. This is a fixed exchange ratio that will not be
adjusted for changes in the stock price of either company before the merger is
completed. The Wind River common stock is listed on the Nasdaq National Market
under the symbol "WIND."

    Stockholders of Wind River will be asked, at Wind River's special meeting of
stockholders, to approve the issuance of shares of Wind River common stock to
the shareholders of Integrated Systems in the merger, and to approve an
amendment to the Wind River 1998 Equity Incentive Plan to increase the number of
shares of Wind River common stock reserved for option grants under the 1998
Equity Incentive Plan by 2,600,000 shares. Shareholders of Integrated Systems
will be asked, at Integrated Systems' special meeting of shareholders, to
approve the principal terms of the merger.

    The dates, times and places of the special meetings are as follows:

<TABLE>
<CAPTION>
<S>                                               <C>
For Wind River stockholders:                      For Integrated Systems shareholders:
February 15, 2000                                 February 15, 2000
11:00 a.m., local time                            9:00 a.m., local time
Wind River Systems, Inc.                          Integrated Systems, Inc.
600 Wind River Way                                201 Moffett Park Drive
Alameda, California 94501                         Sunnyvale, California 94089
</TABLE>

    This joint proxy statement/prospectus provides you with information about
Wind River, Integrated Systems and the proposed merger. In addition, you may
obtain other information about Wind River and Integrated Systems from documents
filed with the Securities and Exchange Commission. We encourage you to read the
entire joint proxy statement/prospectus carefully.

<TABLE>
<CAPTION>
<S>                                                       <C>
/s/ JERRY L. FIDDLER                                      /s/ NARENDRA K. GUPTA

Jerry L. Fiddler                                          Narendra K. Gupta
Chairman of the Board                                     Chairman of the Board
Wind River Systems, Inc.                                  Integrated Systems, Inc.
</TABLE>

    FOR A DISCUSSION OF SIGNIFICANT MATTERS THAT SHOULD BE CONSIDERED BEFORE
VOTING AT THE SPECIAL MEETINGS, SEE "RISK FACTORS" BEGINNING ON PAGE 15.

    NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
REGULATORS HAVE APPROVED THE WIND RIVER COMMON STOCK TO BE ISSUED IN THE MERGER
OR DETERMINED WHETHER THE JOINT PROXY STATEMENT/PROSPECTUS IS ACCURATE OR
ADEQUATE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

    The joint proxy statement/prospectus is dated January 14, 2000, and is first
being mailed to stockholders of Wind River and shareholders of Integrated
Systems on or about January 14, 2000.

    THE JOINT PROXY STATEMENT/PROSPECTUS IS NOT AN OFFER TO SELL THESE
SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE SECURITIES IN ANY
STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
<PAGE>
                            WIND RIVER SYSTEMS, INC.
                               500 WIND RIVER WAY
                               ALAMEDA, CA 94501
                                 (510) 748-4100

                   NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
                        TO BE HELD ON FEBRUARY 15, 2000

To the stockholders of Wind River Systems, Inc.:

    A special meeting of stockholders of Wind River Systems, Inc., a Delaware
corporation, will be held on Tuesday, February 15, 2000 at 11:00 a.m., local
time, at the principal executive offices of Wind River located at 600 Wind River
Way, Alameda, California, for the following purposes:

    1.  To consider and vote upon the issuance of shares of Wind River common
       stock in the merger contemplated by the Agreement and Plan of Merger and
       Reorganization, dated as of October 21, 1999, among Wind River
       Systems, Inc., University Acquisition Corp., a Delaware corporation and a
       wholly owned subsidiary of Wind River, and Integrated Systems, Inc.;

    2.  To approve an amendment to the Wind River 1998 Equity Incentive Plan to
       increase the number of shares of Wind River common stock reserved for
       option grants under the 1998 Equity Incentive Plan by 2,600,000 shares;
       and

    3.  To transact such other business as may properly come before the special
       meeting or any adjournment or postponement thereof.

    The board of directors of Wind River has fixed the close of business on
December 23, 1999 as the record date for the determination of stockholders
entitled to notice of, and to vote at, the special meeting and any adjournment
or postponement thereof. Only holders of record of shares of Wind River common
stock at the close of business on the record date are entitled to notice of, and
to vote at, the special meeting. At the close of business on the record date,
Wind River had outstanding and entitled to vote 42,214,854 shares of common
stock.

    YOUR VOTE IS IMPORTANT. THE AFFIRMATIVE VOTE OF THE HOLDERS OF A MAJORITY OF
THE VOTES CAST IS REQUIRED FOR APPROVAL OF THE ISSUANCE OF THE WIND RIVER SHARES
IN THE MERGER, AND THE AFFIRMATIVE VOTE OF THE HOLDERS OF A MAJORITY OF THE
SHARES OF WIND RIVER COMMON STOCK PRESENT IN PERSON OR REPRESENTED BY PROXY AND
ENTITLED TO VOTE AT THE SPECIAL MEETING IS REQUIRED FOR APPROVAL OF THE
AMENDMENT TO THE 1998 EQUITY INCENTIVE PLAN. EVEN IF YOU PLAN TO ATTEND THE
SPECIAL MEETING IN PERSON, WE REQUEST THAT YOU SIGN AND RETURN THE ENCLOSED
PROXY AND THUS ENSURE THAT YOUR SHARES WILL BE REPRESENTED AT THE SPECIAL
MEETING IF YOU ARE UNABLE TO ATTEND. IF YOU SIGN, DATE AND MAIL YOUR PROXY CARD
WITHOUT INDICATING HOW YOU WISH TO VOTE, YOUR PROXY WILL BE COUNTED AS A VOTE IN
FAVOR OF THE ISSUANCE OF SHARES OF WIND RIVER COMMON STOCK IN THE MERGER AND IN
FAVOR OF THE AMENDMENT TO THE 1998 EQUITY INCENTIVE PLAN. IF YOU FAIL TO RETURN
YOUR PROXY CARD, THE EFFECT WILL BE THAT YOUR SHARES WILL NOT BE COUNTED FOR
PURPOSES OF DETERMINING WHETHER A QUORUM IS PRESENT AT THE SPECIAL MEETING. IF
YOU DO ATTEND THE SPECIAL MEETING AND WISH TO VOTE IN PERSON, YOU MAY WITHDRAW
YOUR PROXY AND VOTE IN PERSON.

                                          By Order of the Board of Directors,
                                          /s/ JERRY L. FIDDLER Jerry L. Fiddler
                                          CHAIRMAN OF THE BOARD

Alameda, California
January 14, 2000

    WIND RIVER'S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT WIND RIVER
STOCKHOLDERS VOTE "FOR" THE ISSUANCE OF SHARES OF WIND RIVER COMMON STOCK IN THE
MERGER AND "FOR" APPROVAL OF THE AMENDMENT TO THE 1998 EQUITY INCENTIVE PLAN.
<PAGE>
                            INTEGRATED SYSTEMS, INC.
                             201 MOFFETT PARK DRIVE
                          SUNNYVALE, CALIFORNIA 94089
                                 (408) 542-1500

                   NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
                        TO BE HELD ON FEBRUARY 15, 2000

To the shareholders of Integrated Systems, Inc.:

    A special meeting of shareholders of Integrated Systems, Inc., a California
corporation, will be held on Tuesday, February 15, 2000 at 9:00 a.m., local
time, at the principal executive offices of Integrated Systems located at 201
Moffett Park Drive, Sunnyvale, California, for the following purposes:

    1.  To consider and vote upon the principal terms of the merger contemplated
       by the Agreement and Plan of Merger and Reorganization, dated as of
       October 21, 1999, among Wind River Systems, Inc., University Acquisition
       Corp., a Delaware corporation and a wholly owned subsidiary of Wind
       River, and Integrated Systems; and

    2.  To transact such other business as may properly come before the special
       meeting or any adjournment or postponement thereof.

    The board of directors of Integrated Systems has fixed the close of business
on December 23, 1999 as the record date for the determination of shareholders
entitled to notice of, and to vote at, the special meeting and any adjournment
or postponement thereof. Only holders of record of shares of Integrated Systems
common stock at the close of business on the record date are entitled to notice
of, and to vote at, the special meeting. At the close of business on the record
date, Integrated Systems had outstanding and entitled to vote 24,256,570 shares
of common stock. Holders of Integrated Systems common stock are entitled to
dissenters' rights under the California General Corporation Law under certain
circumstances in connection with the merger.

    YOUR VOTE IS IMPORTANT. THE AFFIRMATIVE VOTE OF THE HOLDERS OF A MAJORITY OF
THE OUTSTANDING SHARES OF INTEGRATED SYSTEMS COMMON STOCK IS REQUIRED FOR
APPROVAL OF THE PRINCIPAL TERMS OF THE MERGER. EVEN IF YOU PLAN TO ATTEND THE
SPECIAL MEETING IN PERSON, WE REQUEST THAT YOU SIGN AND RETURN THE ENCLOSED
PROXY AND THUS ENSURE THAT YOUR SHARES WILL BE REPRESENTED AT THE SPECIAL
MEETING IF YOU ARE UNABLE TO ATTEND. IF YOU SIGN, DATE AND MAIL YOUR PROXY CARD
WITHOUT INDICATING HOW YOU WISH TO VOTE, YOUR PROXY WILL BE COUNTED AS A VOTE IN
FAVOR OF THE PRINCIPAL TERMS OF THE MERGER. IF YOU FAIL TO RETURN YOUR PROXY
CARD, THE EFFECT WILL BE A VOTE AGAINST THE PRINCIPAL TERMS OF THE MERGER. IF
YOU DO ATTEND THE SPECIAL MEETING AND WISH TO VOTE IN PERSON, YOU MAY WITHDRAW
YOUR PROXY AND VOTE IN PERSON.

                                          By Order of the Board of Directors,
                                          /s/ NARENDRA K. GUPTA

                                          Narendra K. Gupta
                                          CHAIRMAN OF THE BOARD

Sunnyvale, California
January 14, 2000

    INTEGRATED SYSTEMS' BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT
INTEGRATED SYSTEMS SHAREHOLDERS VOTE "FOR" APPROVAL OF THE PRINCIPAL TERMS OF
THE MERGER.
<PAGE>
                               TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                                PAGE
                                                                                                             -----------
<S>                                                                                                          <C>
QUESTIONS AND ANSWERS ABOUT THE MERGER.....................................................................           1
SUMMARY....................................................................................................           3
RISK FACTORS...............................................................................................          15
  Risks Relating to the Merger.............................................................................          15
  Risks Relating to Wind River.............................................................................          16
  Risks Relating to Integrated Systems.....................................................................          23
THE COMPANIES..............................................................................................          27
  Wind River...............................................................................................          27
  Merger Sub...............................................................................................          28
  Integrated Systems.......................................................................................          28
THE SPECIAL MEETING OF WIND RIVER STOCKHOLDERS.............................................................          29
  Date, Time and Place.....................................................................................          29
  Purposes of the Special Meeting..........................................................................          29
  Recommendation of Wind River's Board of Directors........................................................          29
  Record Date and Voting Power.............................................................................          29
  Voting and Revocation of Proxies.........................................................................          29
  Required Vote............................................................................................          30
  Solicitation of Proxies..................................................................................          30
  Other Matters............................................................................................          30
THE SPECIAL MEETING OF INTEGRATED SYSTEMS SHAREHOLDERS.....................................................          31
  Date, Time and Place.....................................................................................          31
  Purpose of the Special Meeting...........................................................................          31
  Recommendation of Integrated Systems' Board of Directors.................................................          31
  Record Date and Voting Power.............................................................................          31
  Voting and Revocation of Proxies.........................................................................          31
  Required Vote............................................................................................          31
  Solicitation of Proxies..................................................................................          32
  Other Matters............................................................................................          32
THE MERGER.................................................................................................          33
  General Description of the Merger........................................................................          33
  Background...............................................................................................          33
  Reasons for the Merger...................................................................................          36
  Wind River's Reasons for the Merger......................................................................          36
  Integrated Systems' Reasons for the Merger...............................................................          38
  Opinion of Wind River's Financial Advisor................................................................          40
  Opinion of Integrated Systems' Financial Advisor.........................................................          45
  Interests of Wind River's Officers and Directors in the Merger...........................................          49
  Interests of Integrated Systems' Officers and Directors in the Merger....................................          50
  Material Federal Income Tax Consequences.................................................................          51
  Anticipated Accounting Treatment.........................................................................          53
  Regulatory Approvals.....................................................................................          53
  Restrictions on Resales by Affiliates....................................................................          53
CERTAIN TERMS OF THE MERGER AGREEMENT......................................................................          54
  The Merger...............................................................................................          54
  Effective Time of the Merger.............................................................................          54
  Manner and Basis of Converting Shares....................................................................          54
  Integrated Systems Stock Options.........................................................................          55
  Integrated Systems Employee Stock Purchase Plan..........................................................          55
</TABLE>

                                       i
<PAGE>
<TABLE>
<CAPTION>
                                                                                                                PAGE
                                                                                                              ---------
<S>                                                                                                          <C>
  Representations and Warranties...........................................................................          55
  Covenants; Conduct of Business Prior to the Merger.......................................................          55
  Limitation on Considering Other Acquisition Proposals....................................................          58
  Conditions to the Merger.................................................................................          59
  Termination of the Merger Agreement......................................................................          61
  Expenses and Termination Fees............................................................................          62
STOCK OPTION AGREEMENT.....................................................................................          63
  Purpose of the Option....................................................................................          63
  Exercisability of the Option.............................................................................          63
  Profit Limitation........................................................................................          63
  Other....................................................................................................          63
VOTING AGREEMENTS..........................................................................................          64
  Voting Agreements Relating to Integrated Systems Shares..................................................          64
  Voting Agreements Relating to Wind River Shares..........................................................          64
MANAGEMENT AND OTHER INFORMATION...........................................................................          65
SECURITY OWNERSHIP BY CERTAIN BENEFICIAL OWNERS............................................................          66
  Beneficial Ownership of Wind River Shares................................................................          66
  Beneficial Ownership of Integrated Systems Shares........................................................          67
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS................................................          70
  Pro Forma Condensed Combined Balance Sheet...............................................................          71
  Pro Forma Condensed Combined Statements of Income........................................................          72
  Notes to Unaudited Pro Forma Condensed Combined Financial Statements.....................................          77
DISSENTERS' RIGHTS.........................................................................................          79
DESCRIPTION OF WIND RIVER CAPITAL STOCK....................................................................          80
  General..................................................................................................          80
  Wind River Common Stock..................................................................................          80
  Wind River Preferred Stock...............................................................................          80
  Rights to Purchase Wind River Preferred Stock............................................................          80
  Transfer Agent and Registrar.............................................................................          82
COMPARATIVE RIGHTS OF WIND RIVER STOCKHOLDERS AND INTEGRATED SYSTEMS SHAREHOLDERS..........................          83
APPROVAL OF THE AMENDMENT TO THE WIND RIVER 1998 EQUITY INCENTIVE PLAN.....................................          90
  General..................................................................................................          90
  Purpose..................................................................................................          90
  Administration...........................................................................................          91
  Eligibility..............................................................................................          91
  Stock Subject to the Plan................................................................................          92
  Terms of Options.........................................................................................          92
  Terms of Stock Bonuses and Purchases of Restricted Stock.................................................          93
  Stock Appreciation Rights................................................................................          94
  Adjustment Provisions....................................................................................          94
  Effect of Certain Corporate Events.......................................................................          94
  Duration, Amendment and Termination......................................................................          95
  Federal Income Tax Information...........................................................................          95
INDEPENDENT AUDITORS.......................................................................................          98
LEGAL MATTERS..............................................................................................          98
EXPERTS....................................................................................................          98
STOCKHOLDER PROPOSALS......................................................................................          98
WHERE YOU CAN FIND MORE INFORMATION........................................................................          98
</TABLE>

                                       ii
<PAGE>

<TABLE>
<S>                                                                                     <C>
  ANNEXES:
  A Agreement and Plan of Merger and Reorganization
  B Stock Option Agreement
  C Form of Voting Agreements
  D Opinion of Credit Suisse First Boston Corporation
  E Opinion of Hambrecht & Quist LLC
  F Sections 1300-1312 of the California General Corporation Law (Dissenters' Rights)
</TABLE>

                                      iii
<PAGE>
                     QUESTIONS AND ANSWERS ABOUT THE MERGER

Q: WHY ARE THE TWO COMPANIES PROPOSING TO MERGE?

A: Wind River and Integrated Systems are proposing to merge because we believe
    the resulting combination will create a stronger, more competitive company
    capable of achieving greater financial strength, operational efficiencies,
    technology development, earning power and growth potential than either
    company would have on its own.

Q: WHAT WILL INTEGRATED SYSTEMS SHAREHOLDERS RECEIVE IN THE MERGER?

A: As a result of the merger, Integrated Systems shareholders will receive 0.92
    of a share of Wind River common stock for each share of Integrated Systems
    common stock they own. For example, if you own 100 shares of Integrated
    Systems common stock, you will receive 92 shares of Wind River common stock
    in exchange for your Integrated Systems shares. The number of shares of Wind
    River common stock to be issued for each share of Integrated Systems common
    stock is fixed and will not be adjusted based upon changes in the values of
    Integrated Systems or Wind River common stock. As a result, the value of the
    Wind River shares you will receive in the merger will not be known before
    the merger, and will go up or down as the market price of Wind River common
    stock goes up or down. We encourage you to obtain current market quotations
    of Integrated Systems and Wind River common stock.

Q: WHAT DO I NEED TO DO NOW?

A: We urge you to read this joint proxy statement/prospectus carefully,
    including its annexes, and to consider how the merger affects you. Then just
    mail your signed proxy card in the enclosed return envelope as soon as
    possible so that your shares can be voted at the special meeting of Wind
    River stockholders or special meeting of Integrated Systems shareholders.

Q: WHAT HAPPENS IF I DO NOT RETURN A PROXY CARD?

A: If you are a Wind River stockholder, the failure to return your proxy card
    could be a factor in establishing a quorum for the special meeting of Wind
    River stockholders. If you are an Integrated Systems shareholder, the
    failure to return your proxy card will have the same effect as voting
    against the merger.

Q: MAY I VOTE IN PERSON?

A: Yes. You may attend the special meeting of Wind River stockholders or the
    special meeting of Integrated Systems shareholders, respectively, and vote
    your shares in person, rather than signing and returning your proxy card.

Q: MAY I CHANGE MY VOTE AFTER I HAVE MAILED MY SIGNED PROXY CARD?

A: Yes. You may change your vote at any time before your proxy card is voted at
    your special meeting. You can do this in one of three ways. First, you can
    send a written notice stating that you would like to revoke your proxy.
    Second, you can complete and submit a new proxy card. Third, you can attend
    the meeting and vote in person. Your attendance alone will not revoke your
    proxy. If you have instructed a broker to vote your shares, you must follow
    directions received from your broker to change those instructions.

Q: IF MY SHARES ARE HELD IN "STREET NAME" BY MY BROKER, WILL MY BROKER VOTE MY
    SHARES FOR ME?

A: Your broker will not be able to vote your shares without instructions from
    you. You should instruct your broker to vote your shares, following the
    procedure provided by your broker.

                                       1
<PAGE>
Q: SHOULD I SEND IN MY STOCK CERTIFICATES NOW?

A: No. If you are an Integrated Systems shareholder, after the merger is
    completed, you will receive written instructions for exchanging your shares
    of Integrated Systems common stock for shares of Wind River common stock.
    You will also receive a cash payment for any fractional share. Wind River
    stockholders will not exchange their stock certificates.

Q: AM I ENTITLED TO DISSENTERS' RIGHTS?

A: Integrated Systems shareholders will be entitled to dissenters' rights in
    certain instances. Wind River stockholders will not be entitled to
    dissenters' rights.

Q: WHO CAN HELP ANSWER MY QUESTIONS?

A: If you are a Wind River stockholder, and would like additional copies,
    without charge, of this joint proxy statement/prospectus or if you have
    questions about the merger, including the procedures for voting your shares,
    you should contact:

       WIND RIVER SYSTEMS, INC.
       Attn: Investor Relations
       500 Wind River Way
       Alameda, California 94501
       Telephone: (510) 748-4100
       E-mail: [email protected]

       OR

       D.F. KING & CO.
       Attn: James E. Long
       77 Water Street
       New York, New York 10005-4495
       Telephone: (212) 269-5550

    If you are an Integrated Systems shareholder, and would like additional
copies, without charge, of this joint proxy statement/prospectus or if you have
questions about the merger, including the procedures for voting your shares, you
should contact:

       INTEGRATED SYSTEMS, INC.
       Attn: Investor Relations
       201 Moffett Park Drive
       Sunnyvale, California 94089
       Telephone: (408) 542-1500
       E-mail: [email protected]

       OR

       CORPORATE INVESTOR COMMUNICATIONS, INC.
       Attn: Eileen Sculley
       111 Commerce Road
       Carlstadt, New Jersey 07072-2586
       Telephone: (201) 896-1900

                                       2
<PAGE>
                                    SUMMARY

    THIS SUMMARY HIGHLIGHTS SELECTED INFORMATION FROM THIS DOCUMENT. TO
UNDERSTAND THE MERGER FULLY, YOU SHOULD READ CAREFULLY THIS ENTIRE DOCUMENT AND
THE DOCUMENTS WE REFER TO. SEE "WHERE YOU CAN FIND MORE INFORMATION" ON PAGE 98.
THE MERGER AGREEMENT IS ATTACHED AS ANNEX A TO THIS JOINT PROXY STATEMENT/
PROSPECTUS. WE ENCOURAGE YOU TO READ THE MERGER AGREEMENT AS IT IS THE LEGAL
DOCUMENT THAT GOVERNS THE MERGER. WE HAVE INCLUDED PAGE REFERENCES IN
PARENTHESES TO DIRECT YOU TO A MORE DETAILED DESCRIPTION OF THE TOPICS PRESENTED
IN THIS SUMMARY.

FORWARD-LOOKING INFORMATION

    CERTAIN OF THE INFORMATION RELATING TO WIND RIVER, INTEGRATED SYSTEMS AND
THE COMBINED COMPANY CONTAINED OR INCORPORATED BY REFERENCE IN THIS JOINT PROXY
STATEMENT/PROSPECTUS IS FORWARD-LOOKING IN NATURE. ALL STATEMENTS INCLUDED OR
INCORPORATED BY REFERENCE IN THIS JOINT PROXY STATEMENT/PROSPECTUS OR MADE BY
MANAGEMENT OF WIND RIVER OR INTEGRATED SYSTEMS OTHER THAN STATEMENTS OF
HISTORICAL FACT REGARDING WIND RIVER, INTEGRATED SYSTEMS OR THE COMBINED COMPANY
ARE FORWARD-LOOKING STATEMENTS. EXAMPLES OF FORWARD-LOOKING STATEMENTS INCLUDE
STATEMENTS REGARDING WIND RIVER'S, INTEGRATED SYSTEMS' OR THE COMBINED COMPANY'S
FUTURE FINANCIAL RESULTS, OPERATING RESULTS, PRODUCT SUCCESSES, BUSINESS
STRATEGIES, PROJECTED COSTS, FUTURE PRODUCTS, COMPETITIVE POSITIONS AND PLANS
AND OBJECTIVES OF MANAGEMENT FOR FUTURE OPERATIONS. IN SOME CASES, YOU CAN
IDENTIFY FORWARD-LOOKING STATEMENTS BY TERMINOLOGY, SUCH AS "MAY," "WILL,"
"SHOULD," "WOULD," "EXPECTS," "PLANS," "ANTICIPATES," "BELIEVES," "ESTIMATES,"
"PREDICTS," "POTENTIAL," OR "CONTINUE" OR THE NEGATIVE OF THESE TERMS OR OTHER
COMPARABLE TERMINOLOGY. ANY EXPECTATIONS BASED ON THESE FORWARD-LOOKING
STATEMENTS ARE SUBJECT TO RISKS AND UNCERTAINTIES AND OTHER IMPORTANT FACTORS,
INCLUDING THOSE DISCUSSED IN THE RISK FACTORS SECTION OF THIS JOINT PROXY
STATEMENT/PROSPECTUS. THESE AND MANY OTHER FACTORS COULD AFFECT THE FUTURE
FINANCIAL AND OPERATING RESULTS OF WIND RIVER, INTEGRATED SYSTEMS OR THE
COMBINED COMPANY. THESE FACTORS COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY
FROM EXPECTATIONS BASED ON FORWARD-LOOKING STATEMENTS MADE IN THIS DOCUMENT OR
ELSEWHERE BY OR ON BEHALF OF WIND RIVER, INTEGRATED SYSTEMS OR THE COMBINED
COMPANY.

THE COMPANIES (PAGE 27)

WIND RIVER SYSTEMS, INC.
500 Wind River Way
Alameda, California 94501
(510) 748-4100

    Wind River develops, markets, supports and provides consulting services for
advanced software operating systems and development tools that allow customers
to create complex, robust, real-time software applications for embedded
computers. An embedded computer is a microprocessor that is incorporated into a
larger device and is dedicated to responding to external events by performing
specific tasks quickly, predictably and reliably. Wind River's flagship
products, Tornado-TM- II and VxWorks-Registered Trademark-, enable customers to
enhance product performance, standardize designs across projects, reduce
research and development costs and shorten product development cycles.

                                       3
<PAGE>
INTEGRATED SYSTEMS, INC.
201 Moffett Park Drive
Sunnyvale, California 94089
(408) 542-1500

    Integrated Systems provides solutions for embedded software development that
consist of real-time operating systems and software components for embedded
microprocessors; tools for designing, developing and optimizing embedded
applications; networking products for device connectivity and management; and
engineering design services for accelerated co-sourced product development.
Integrated Systems' products help users accelerate the design, development,
debugging, implementation and maintenance of embedded software. Integrated
Systems' products and services are intended to reduce the expense associated
with embedded software and system development and enable customers to develop
systems featuring greater functionality, enhanced performance, improved
reliability and ease-of-use.

MERGER CONSIDERATION; FIXED EXCHANGE RATIO (PAGE 33)

    If you are an Integrated Systems shareholder, you will receive 0.92 of a
share of Wind River common stock in exchange for each share of Integrated
Systems common stock you own. The actual number of shares you will receive in
the merger will be 0.92 multiplied by the number of shares of Integrated Systems
common stock that you own at the effective time of the merger.

    The exchange ratio is fixed and, regardless of fluctuations in the market
prices of Wind River's or Integrated Systems' common stock, will not change
between now and the date that the merger is completed.

COMPARATIVE PER SHARE MARKET PRICE INFORMATION

    Integrated Systems and Wind River common stock are both listed on the Nasdaq
National Market. On October 21, 1999, the last full trading day prior to the
public announcement of the proposed merger, Integrated Systems common stock
closed at $10.56, and Wind River common stock closed at $20.06. On January 6,
2000, Integrated Systems common stock closed at $29.00, and Wind River common
stock closed at $32.00.

TAX MATTERS (PAGE 51)

    The exchange of shares of Integrated Systems common stock for shares of Wind
River common stock in the merger is intended to be tax-free to Integrated
Systems shareholders for federal income tax purposes. Any cash received for any
fractional share, however, will result in the recognition of gain or loss as if
you sold your fractional share. Your tax basis in the shares of Wind River
common stock that you receive in the merger will equal your current tax basis in
your Integrated Systems common stock (reduced by the basis allocable to any
fractional share interest for which you receive cash).

    TAX MATTERS CAN BE COMPLICATED, AND THE TAX CONSEQUENCES OF THE MERGER TO
YOU WILL DEPEND ON THE FACTS OF YOUR OWN SITUATION. YOU SHOULD CONSULT YOUR OWN
TAX ADVISORS TO FULLY UNDERSTAND THE TAX CONSEQUENCES OF THE MERGER TO YOU.

REASONS FOR THE MERGER

    WIND RIVER (PAGE 36).  The Wind River board of directors approved the merger
based on a number of factors, including the following:

    - the strategic benefits of the ability of the combined company to commit
      greater resources to both current and emerging product development efforts
      and fund the future growth of its business;

                                       4
<PAGE>
    - Integrated Systems' significant technical, engineering, management and
      sales expertise, which is in high demand and short supply;

    - Integrated Systems' significant professional services expertise; and

    - the combined company's increased sales and distribution capacity,
      particularly in international markets.

    INTEGRATED SYSTEMS (PAGE 38).  The Integrated Systems board of directors
believes that the merger should result in a number of benefits to Integrated
Systems and its shareholders, including, among other benefits, the following:

    - providing Integrated Systems shareholders with shares of Wind River common
      stock in a tax-free exchange at a substantial premium over the market
      price for Integrated Systems common stock;

    - the ability of the combined company to offer complementary product lines,
      which presents the opportunity to increase the breadth of products
      offered;

    - the ability of the two companies to combine their technological resources
      to develop new products with increased functionality and bring them to
      market faster; and

    - the availability of greater resources for product marketing and
      distribution.

RECOMMENDATIONS TO STOCKHOLDERS

    TO WIND RIVER STOCKHOLDERS (PAGE 29).  The Wind River board of directors
believes that the merger is advisable and fair to you and in your best
interests. The Wind River board of directors unanimously recommends that you
vote "FOR" the issuance of shares of Wind River common stock in the merger. The
Wind River board of directors also unanimously recommends that you vote "FOR"
approval of the amendment to the Wind River 1998 Equity Incentive Plan.

    TO INTEGRATED SYSTEMS SHAREHOLDERS (PAGE 31).  The Integrated Systems board
of directors believes that the merger is advisable and fair to you and in your
best interests. The Integrated Systems board of directors unanimously recommends
that you vote "FOR" approval of the principal terms of the merger.

OPINIONS OF FINANCIAL ADVISORS

    OPINION OF WIND RIVER'S FINANCIAL ADVISOR (PAGE 40).  In deciding to approve
the merger, one of the factors that the Wind River board of directors considered
was the opinion of its financial advisor, Credit Suisse First Boston
Corporation, that, as of October 21, 1999, the exchange ratio pursuant to the
merger agreement was fair to Wind River from a financial point of view. The full
text of the Credit Suisse First Boston Corporation opinion describes the basis
for its opinion and is attached as Annex D to this joint proxy
statement/prospectus. WIND RIVER URGES YOU TO READ THE ENTIRE OPINION CAREFULLY.

    OPINION OF INTEGRATED SYSTEMS' FINANCIAL ADVISOR (PAGE 45).  In deciding to
approve the merger, one of the factors that the Integrated Systems board of
directors considered was the opinion of its financial advisor, Hambrecht & Quist
LLC, that, as of October 21, 1999, the consideration to be received by the
holders of Integrated Systems common stock in the merger was fair to the holders
from a financial point of view. The full text of the Hambrecht & Quist LLC
opinion describes the basis for its opinion and is attached as Annex E to this
joint proxy statement/prospectus. INTEGRATED SYSTEMS URGES YOU TO READ THE
ENTIRE OPINION CAREFULLY.

                                       5
<PAGE>
THE SPECIAL MEETINGS

THE WIND RIVER SPECIAL MEETING (PAGE 29).

    TIME, DATE AND PLACE.  A special meeting of the stockholders of Wind River
will be held on Tuesday, February 15, 2000, at the principal executive offices
of Wind River located at 600 Wind River Way, Alameda, California at 11:00 a.m.,
local time, to vote on:

    - the issuance of shares of Wind River common stock in the merger; and

    - approval of the amendment to the Wind River 1998 Equity Incentive Plan.

    RECORD DATE AND VOTING POWER FOR WIND RIVER.  You are entitled to vote at
the special meeting if you owned shares of Wind River common stock at the close
of business on December 23, 1999, the record date for the special meeting. You
will have one vote at the special meeting for each share of Wind River common
stock you owned at the close of business on the record date. There are
42,214,854 shares of Wind River common stock entitled to be voted at the special
meeting.

    WIND RIVER REQUIRED VOTE.  The affirmative vote of the holders of a majority
of the votes cast is required for approval of the issuance of the Wind River
shares in the merger, and the affirmative vote of the holders of a majority of
the shares of Wind River common stock present in person or represented by proxy
and entitled to vote at the special meeting is required for approval of the
amendment to the 1998 Equity Incentive Plan.

    SHARE OWNERSHIP OF MANAGEMENT.  The directors and executive officers of Wind
River own approximately 12% of the shares entitled to vote at the special
meeting. All of the directors and executive officers of Wind River have agreed
to vote their shares in favor of the issuance of shares of Wind River common
stock in the merger.

THE INTEGRATED SYSTEMS SPECIAL MEETING (PAGE 31).

    TIME, DATE AND PLACE.  A special meeting of the shareholders of Integrated
Systems will be held on Tuesday, February 15, 2000, at the principal executive
offices of Integrated Systems located at 201 Moffett Park Drive, Sunnyvale,
California at 9:00 a.m. local time, to approve the principal terms of the
merger.

    RECORD DATE AND VOTING POWER FOR INTEGRATED SYSTEMS.  You are entitled to
vote at the special meeting if you owned shares of Integrated Systems common
stock at the close of business on December 23, 1999, the record date for the
special meeting. You will have one vote at the special meeting for each share of
Integrated Systems common stock you owned at the close of business on the record
date. There are 24,256,570 shares of Integrated Systems common stock entitled to
be voted at the special meeting.

    INTEGRATED SYSTEMS REQUIRED VOTE.  The approval of the principal terms of
the merger requires the affirmative vote of a majority of the shares of
Integrated Systems common stock outstanding at the close of business on the
record date.

    SHARE OWNERSHIP OF MANAGEMENT.  The directors and executive officers of
Integrated Systems own approximately 27% of the shares entitled to vote at the
special meeting. All of the directors and executive officers of Integrated
Systems have agreed to vote their shares in favor of the principal terms of the
merger.

                                       6
<PAGE>
INTERESTS OF OFFICERS AND DIRECTORS IN THE MERGER (PAGE 49; PAGE 50)

    When considering the recommendations by the Wind River board of directors
and the Integrated Systems board of directors, you should be aware that a number
of Wind River's officers and directors and Integrated Systems' officers and
directors have interests in the merger that are different from other Wind River
stockholders and Integrated Systems shareholders.

CONDITIONS TO THE MERGER (PAGE 59)

    The obligations of both Wind River and Integrated Systems to complete the
merger are subject to the satisfaction of certain conditions.

TERMINATION OF THE MERGER AGREEMENT (PAGE 61)

    Wind River and Integrated Systems can terminate the merger agreement under
certain conditions.

LIMITATION ON CONSIDERING OTHER ACQUISITION PROPOSALS (PAGE 58)

    Integrated Systems has agreed not to consider a business combination or
other similar transaction with another party while the merger is pending unless
the other party has made an unsolicited proposal to the Integrated Systems board
of directors for a superior transaction.

EXPENSES AND TERMINATION FEES (PAGE 62)

    The merger agreement requires:

    - Integrated Systems to reimburse Wind River for merger expenses (including
      for up to $2.0 million in attorneys' fees, accountants' fees, financial
      advisory fees and filing fees) if the merger agreement is terminated
      because the Integrated Systems shareholders fail to approve the principal
      terms of the merger; and

    - Wind River to reimburse Integrated Systems for merger expenses (including
      for up to $2.0 million in attorneys' fees, accountants' fees, financial
      advisory fees and filing fees) if the merger agreement is terminated
      because the Wind River stockholders fail to approve the issuance of shares
      of Wind River common stock in the merger.

    The merger agreement also requires Integrated Systems to pay Wind River a
termination fee of $16.0 million if, among other things:

    - Integrated Systems or Wind River terminates the merger agreement because
      the Integrated Systems shareholders fail to approve the principal terms of
      the merger after another acquisition proposal has been disclosed,
      announced, commenced, submitted or made;

    - Wind River terminates the merger agreement because the Integrated Systems
      board of directors withdraws its recommendation of, or otherwise fails to
      support, the proposal to approve the principal terms of the merger, or
      recommends another acquisition proposal;

    - Wind River terminates the merger agreement because a tender or exchange
      offer relating to securities of Integrated Systems is commenced or another
      acquisition proposal is publicly announced, and Integrated Systems does
      not actively oppose such tender or exchange offer or acquisition proposal;

    - Wind River terminates the merger agreement because Integrated Systems
      breaches its agreement not to solicit, encourage or participate in
      discussions or negotiations with respect to acquisition proposals with
      parties other than Wind River; or

                                       7
<PAGE>
    - Wind River terminates the merger agreement because Integrated Systems
      fails to hold its special meeting within 45 days after the effective date
      of the registration statement of which this joint proxy
      statement/prospectus is a part.

    The merger agreement also requires Wind River to pay Integrated Systems a
termination fee of $16.0 million if Integrated Systems terminates the merger
agreement because the Wind River board of directors withdraws its recommendation
of the proposal to approve the issuance of shares of Wind River common stock in
the merger.

STOCK OPTION AGREEMENT (PAGE 63)

    In order for Wind River to proceed with the merger, Wind River required
Integrated Systems to grant Wind River an option to purchase newly issued shares
of Integrated Systems common stock representing up to 10% of the number of
shares of Integrated Systems common stock outstanding as of October 21, 1999.
The option is exercisable only under limited circumstances in which a
termination fee would be payable by Integrated Systems to Wind River. The
option's per share exercise price is $18.46, and the profit that Wind River can
recognize under the option is limited. Integrated Systems granted the option to
Wind River in order to increase the likelihood that the companies would complete
the merger. The option could discourage other companies from trying to combine
with Integrated Systems before Wind River and Integrated Systems complete the
merger.

ANTICIPATED ACCOUNTING TREATMENT (PAGE 53)

    The merger is expected to be accounted for as a "pooling of interests" for
financial accounting purposes which means that Wind River and Integrated Systems
will be treated as if they had always been combined for accounting and financial
reporting purposes.

DISSENTERS' RIGHTS (PAGE 79)

    Integrated Systems shareholders will be entitled to dissenters' rights in
certain instances. Wind River stockholders will not be entitled to dissenters'
rights.

                                       8
<PAGE>
                         MARKET PRICE AND DIVIDEND DATA

    Wind River common stock and Integrated Systems common stock are included in
the National Association of Securities Dealers Automated Quotations System
("Nasdaq") and designated on the Nasdaq National Market under the symbols "WIND"
and "INTS," respectively. This table sets forth, for the periods indicated, the
range of high and low per share sales prices for Wind River common stock and
Integrated Systems common stock as reported on Nasdaq.

<TABLE>
<CAPTION>
                                                                                  WIND RIVER        INTEGRATED SYSTEMS
                                                                                 COMMON STOCK          COMMON STOCK
                                                                             --------------------  --------------------
                                                                                LOW       HIGH        LOW       HIGH
                                                                             ---------  ---------  ---------  ---------
<S>                                                                          <C>        <C>        <C>        <C>
FISCAL YEAR 1997*
  First quarter............................................................  $    8.15  $   12.00  $   22.75  $   37.00
  Second quarter...........................................................      11.26      17.11      23.75      42.50
  Third quarter............................................................      14.56      20.67      15.75      42.25
  Fourth quarter...........................................................      17.56      23.89      18.75      30.00
FISCAL YEAR 1998*
  First quarter............................................................      12.08      23.00       8.50      24.75
  Second quarter...........................................................      15.50      28.67      10.63      18.38
  Third quarter............................................................      20.50      31.83      14.75      25.75
  Fourth quarter...........................................................      21.17      30.92      11.38      18.38
FISCAL YEAR 1999*
  First quarter............................................................      21.58      28.08      15.50      25.00
  Second quarter...........................................................      19.00      25.92       6.63      20.25
  Third quarter............................................................      18.67      34.42       6.00      13.25
  Fourth quarter...........................................................      20.17      33.42       9.88      18.00
FISCAL YEAR 2000*
  First quarter............................................................      11.25      25.50      11.00      16.63
  Second quarter...........................................................      13.69      22.75       8.25      14.44
  Third quarter............................................................      13.38      21.00       9.13      30.88
  Fourth quarter (through January 6, 2000).................................      20.88      45.00      26.75      40.38
</TABLE>

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

*Respective fiscal quarters. Wind River's fiscal year ends on January 31, and
Integrated Systems' fiscal year ends on February 28. All Wind River share prices
have been adjusted to give effect to three-for-two stock splits by means of
stock dividends paid on May 24, 1996, March 10, 1997 and February 4, 1999. All
Integrated Systems share prices have been adjusted to reflect a two-for-one
stock split effected on April 5, 1996.

    The following table sets forth the closing per share sales price of Wind
River common stock and Integrated Systems common stock, as reported on Nasdaq,
and the estimated equivalent per share price (as explained below) of Integrated
Systems common stock on October 21, 1999, the last full trading day before the
public announcement of the proposed merger, and on January 6, 2000:

<TABLE>
<CAPTION>
                                                                                                    ESTIMATED
                                                                               INTEGRATED          EQUIVALENT
                                                             WIND RIVER          SYSTEMS       INTEGRATED SYSTEMS
                                                            COMMON STOCK      COMMON STOCK       PER SHARE PRICE
                                                           ---------------  -----------------  -------------------
<S>                                                        <C>              <C>                <C>
October 21, 1999.........................................     $   20.06         $   10.56           $   18.46
January 6, 2000..........................................     $   32.00         $   29.00           $   29.44
</TABLE>

    The estimated equivalent per share price of a share of Integrated Systems
common stock equals the exchange ratio of 0.92 multiplied by the price of a
share of Wind River common stock. You may use this calculation to determine what
your shares of Integrated Systems common stock will be worth if the merger is
completed. If the merger had occurred on January 6, 2000, you would have
received a

                                       9
<PAGE>
fraction of a share of Wind River common stock worth $29.44 for each share of
Integrated Systems common stock you owned. The actual equivalent per share price
of a share of Integrated Systems common stock that you will receive if the
merger closes may be different from this price because the per share price of
Wind River common stock on the Nasdaq National Market fluctuates continuously.

    Neither Wind River nor Integrated Systems has ever declared or paid cash
dividends on its respective common stock. The policies of Wind River and
Integrated Systems are to retain earnings for use in their respective
businesses. Following the merger, Wind River common stock will continue to be
listed on the Nasdaq National Market, and there will be no further market for
the Integrated Systems common stock.

                                       10
<PAGE>
                                   WIND RIVER
                SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA
                     (In Thousands, Except Per Share Data)

    You should read the following table in conjunction with Wind River's
consolidated financial statements and related notes and Wind River's
"Management's Discussion and Analysis of Financial Condition and Results of
Operations," which we incorporate by reference in this joint proxy statement/
prospectus. During fiscal year 1999, Wind River acquired Zinc Software, Inc. The
acquisition was accounted for as a pooling of interests, however, as the
operations of Zinc were not material to Wind River's consolidated operations and
financial position, the financial statements of Zinc have been recorded in Wind
River's consolidated financial statements as of May 1, 1998. During the nine
months ended October 31, 1999, Wind River completed the acquisition of
RouterWare, Inc. in transactions accounted for as a pooling of interests. The
results of RouterWare have been combined with the results of Wind River since
fiscal 1997. Historical results are not necessarily indicative of the results to
be expected in the future.

<TABLE>
<CAPTION>
                                                      NINE MONTHS ENDED
                                                         OCTOBER 31,                      YEAR ENDED JANUARY 31,
                                                     --------------------  -----------------------------------------------------
                                                       1999       1998       1999       1998       1997       1996       1995
                                                     ---------  ---------  ---------  ---------  ---------  ---------  ---------
                                                         (UNAUDITED)
<S>                                                  <C>        <C>        <C>        <C>        <C>        <C>        <C>
CONSOLIDATED INCOME STATEMENT DATA:
Revenues...........................................  $ 117,681  $  92,725  $ 131,903  $  93,770  $  65,804  $  44,000  $  32,100
Operating income...................................     20,050     24,886     36,610      9,713     16,372      8,130      3,452
Net income.........................................     14,406     17,253     25,623      4,326     11,525      5,383      2,460
Net income per share:
  Basic............................................       0.35       0.43       0.64       0.11       0.33       0.17       0.08
  Diluted..........................................       0.33       0.40       0.58       0.10       0.28       0.15       0.07
Shares used in basic per share calculations........     41,496     40,075     40,267     38,915     35,443     31,470     30,482
Shares used in diluted per share calculations......     43,881     43,661     43,843     43,567     40,515     35,153     33,563

CONSOLIDATED BALANCE SHEET DATA:
Working capital....................................     62,689     48,713     58,134    152,277     58,336     27,701     24,220
Total assets.......................................    372,826    316,304    329,713    290,841    132,111     45,480     39,183
Convertible subordinated notes and long-term
  debt.............................................    140,000    140,000    140,000    140,000         --         --         73
Stockholders' equity...............................    175,436    129,750    151,892    114,892    112,199     32,813     28,345
</TABLE>

                                       11
<PAGE>
                               INTEGRATED SYSTEMS
                SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA
                     (In Thousands, Except Per Share Data)

    You should read the following table in conjunction with Integrated Systems'
consolidated financial statements and related notes and Integrated Systems'
"Management's Discussion and Analysis of Financial Condition and Results of
Operations," which we incorporate by reference in this joint proxy
statement/prospectus. During fiscal year 1996, Integrated Systems acquired Take
Five Software GmbH and Doctor Design, Inc. in transactions accounted for as
poolings of interests. The results of Take Five and Doctor Design have been
combined with the results of Integrated Systems since 1996. Prior period results
have not been restated for the results of Take Five as such financial
information was not material. During fiscal year 1997, Integrated Systems
acquired Epilogue Technology Corporation in a transaction accounted for as a
pooling of interests. The results of Epilogue have been combined with the
results of Integrated Systems since the date of acquisition. Prior period
information has not been restated for the results of Epilogue because such
financial information was not material. Also during fiscal year 1997, Integrated
Systems revised the terms of the acquisition of Diab Data, Inc., which was
acquired in fiscal year 1996 in a transaction accounted for under the equity
method of accounting. Beginning December 1, 1996, the operating results of Diab
Data have been consolidated with those of Integrated Systems.

<TABLE>
<CAPTION>
                                                  NINE MONTHS ENDED
                                                     NOVEMBER 30,                     YEAR ENDED FEBRUARY 28,
                                                 --------------------  -----------------------------------------------------
                                                   1999       1998       1999       1998       1997       1996       1995
                                                 ---------  ---------  ---------  ---------  ---------  ---------  ---------
                                                     (UNAUDITED)
<S>                                              <C>        <C>        <C>        <C>        <C>        <C>        <C>
CONSOLIDATED INCOME STATEMENT DATA:
Total revenue..................................  $ 111,272  $  98,449  $ 133,504  $ 120,469  $ 105,463  $  84,442  $  58,054
Income (loss) from operations..................     (6,052)     6,969      5,674      5,293      6,939      6,464      7,999
Net income (loss)..............................     (4,477)     9,570      9,633      6,073      7,254      5,283      6,490
Earnings (loss) per share:
  Basic........................................      (0.19)      0.41       0.42       0.26       0.32         --         --
  Diluted......................................      (0.19)      0.40       0.40       0.25       0.31       0.24       0.33
Shares used in basic per share calculations....     23,322     23,299     23,138     23,237     22,437         --         --
Shares used in diluted per share
  calculations.................................     23,322     23,984     23,840     24,078     23,508     22,088     19,964

CONSOLIDATED BALANCE SHEET DATA:
Working capital................................     21,587     22,416     22,435     23,036     38,019     31,431     17,783
Total assets...................................    158,386    134,540    143,035    128,120    112,502     85,264     66,101
Total stockholders' equity.....................    110,023     99,142    100,791     94,426     86,172     58,276     47,948
</TABLE>

                                       12
<PAGE>
              SELECTED UNAUDITED PRO FORMA COMBINED FINANCIAL DATA

    The selected unaudited pro forma combined financial information gives effect
to the proposed merger of Wind River and Integrated Systems on a pooling of
interests basis. The Wind River and Integrated Systems unaudited pro forma
combined balance sheet data assume that the merger of Wind River and Integrated
Systems took place on October 31, 1999, and combines the Wind River historical
consolidated balance sheet at October 31, 1999 with Integrated Systems'
historical consolidated balance sheet at November 30, 1999. The Wind River and
Integrated Systems unaudited pro forma combined statements of operations data
assume that the merger of Wind River and Integrated Systems took place as of the
beginning of the periods presented and combine Wind River's historical
consolidated statements of operations data for the years ended January 31, 1999,
1998, 1997, 1996 and 1995, and for the nine months ended October 31, 1999 and
1998 with Integrated Systems' historical consolidated statements of operations
data for the years ended February 28, 1999, 1998, 1997, 1996 and 1995, and for
the nine months ended November 30, 1999 and 1998. This presentation is
consistent with the periods expected to be combined after the date of the
closing of the merger.

    The selected unaudited pro forma combined financial data are presented for
illustrative purposes only and are not necessarily indicative of the combined
financial position or results of operations of future periods or the results
that actually would have been realized had the entities been a single entity
during these periods. The selected unaudited pro forma combined financial data
as of October 31, 1999 and for each of the years ended January 31, 1999, 1998,
1997, 1996 and 1995, and for the nine months ended October 31, 1999 and 1998,
are derived from the unaudited pro forma condensed combined financial statements
included elsewhere in this joint proxy statement/prospectus and should be read
in conjunction with those statements and the related notes. See "Unaudited Pro
Forma Condensed Combined Financial Statements."

<TABLE>
<CAPTION>
                                                                 NINE MONTHS ENDED
                                                                    OCTOBER 31,           YEARS ENDED JANUARY 31,
                                                                --------------------  -------------------------------
                                                                  1999       1998       1999       1998       1997
                                                                ---------  ---------  ---------  ---------  ---------
                                                                      (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S>                                                             <C>        <C>        <C>        <C>        <C>
UNAUDITED PRO FORMA COMBINED STATEMENT OF INCOME DATA:
Revenues......................................................  $ 228,823  $ 191,021  $ 265,157  $ 214,019  $ 171,127
Operating income..............................................     13,998     31,855     42,284     15,006     23,311
Net income....................................................      9,929     26,823     35,256     10,399     18,779
Net income per share:
  Basic.......................................................       0.16       0.44       0.57       0.17       0.33
  Diluted.....................................................       0.15       0.41       0.54       0.16       0.30
Shares used in basic per share calculations...................     62,952     61,510     61,554     60,293     56,085
Shares used in diluted per share calculations.................     65,337     65,726     65,776     65,719     62,142

UNAUDITED PRO FORMA COMBINED BALANCE SHEET DATA:
Working capital...............................................     84,276     71,129     80,569    175,313     96,355
Total assets..................................................    531,212    450,844    472,748    418,961    244,613
Convertible subordinated notes................................    140,000    140,000    140,000    140,000         --
Stockholders' equity..........................................    285,459    228,892    252,683    209,318    198,371
</TABLE>

                                       13
<PAGE>
                           COMPARATIVE PER SHARE DATA

    The information below reflects:

    - the historical net income and book value per share of Wind River common
      stock and the historical net income (loss) and book value per share of
      Integrated Systems common stock in comparison with the unaudited pro forma
      net income (loss) and book value per share after giving effect to the
      proposed merger of Wind River with Integrated Systems on a pooling of
      interests basis; and

    - the equivalent historical net income and book value per share attributable
      to 0.92 of a share of Wind River common stock which will be received for
      each share of Integrated Systems common stock.

    You should read the following tables in conjunction with the unaudited pro
forma condensed combined financial statements included elsewhere in this
document, the historical consolidated financial statements and related notes of
Wind River and the historical consolidated financial statements of Integrated
Systems which are incorporated by reference in this joint proxy
statement/prospectus.

    You should read the table below in conjunction with the respective audited
and unaudited consolidated financial statements and related notes of Wind River
and Integrated Systems incorporated by reference in this joint proxy
statement/prospectus and the unaudited pro forma condensed financial information
and notes related to such consolidated financial statements included elsewhere
in this joint proxy statement/prospectus.

                                   WIND RIVER

<TABLE>
<CAPTION>
                                                                                                 YEARS ENDED JANUARY 31,
                                                                        NINE MONTHS ENDED    -------------------------------
                                                                        OCTOBER 31, 1999       1999       1998       1997
                                                                      ---------------------  ---------  ---------  ---------
<S>                                                                   <C>                    <C>        <C>        <C>
HISTORICAL PER COMMON SHARE DATA:
Net income per common share--basic(2)...............................        $     .35        $     .64  $     .11  $     .33
Net income per common share--diluted(2).............................        $     .33        $     .58  $     .10  $     .28
Book value per share(1).............................................        $    4.18        $    3.67
</TABLE>

                               INTEGRATED SYSTEMS

<TABLE>
<CAPTION>
                                                                                                     YEARS ENDED
                                                                                                    FEBRUARY 28,
                                                                       NINE MONTHS ENDED   -------------------------------
                                                                       NOVEMBER 30, 1999     1999       1998       1997
                                                                      -------------------  ---------  ---------  ---------
<S>                                                                   <C>                  <C>        <C>        <C>
HISTORICAL PER COMMON SHARE DATA:
Net income (loss) per common share--basic(2)........................       $    (.19)      $     .42  $     .26  $     .32
Net income (loss) per common share--diluted(2)......................       $    (.19)      $     .40  $     .25  $     .31
Book value per share(1).............................................       $    4.54       $    4.44
</TABLE>

                       WIND RIVER AND INTEGRATED SYSTEMS

<TABLE>
<CAPTION>
                                                                                                 YEARS ENDED JANUARY 31,
                                                                        NINE MONTHS ENDED    -------------------------------
                                                                        OCTOBER 31, 1999       1999       1998       1997
                                                                      ---------------------  ---------  ---------  ---------
<S>                                                                   <C>                    <C>        <C>        <C>
COMBINED PRO FORMA PER COMMON SHARE DATA:
Net income per Wind River share--basic(2)...........................        $     .16        $     .57  $     .17  $     .33
Net income per Wind River share--diluted(2).........................        $     .15        $     .54  $     .16  $     .30
Net income per equivalent Integrated Systems share--basic(3)........        $     .15        $     .52  $     .16  $     .30
Net income per equivalent Integrated Systems share--diluted(3)......        $     .14        $     .50  $     .15  $     .28
Book value per Wind River share(1)..................................        $    4.44        $    3.97
Book value per equivalent Integrated Systems share(3)...............        $    4.09        $    3.65
</TABLE>

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

(1) The historical book value per Wind River share is computed by dividing
    stockholders' equity by the number of shares of common stock outstanding at
    October 31, 1999 and January 31, 1999. The historical book value per
    Integrated Systems share is computed by dividing stockholders' equity by the
    number of shares of common stock outstanding at November 30, 1999 and
    February 28, 1999. The pro forma combined book value per share is computed
    by dividing pro forma stockholders' equity by the pro forma number of shares
    of Wind River common stock outstanding as of October 31, 1999 assuming the
    merger had occurred as of that date.

(2) Basic net income (loss) per share is computed using the weighted average
    number of common shares outstanding during the period. Diluted net income
    (loss) per share is computed using the weighted average number of common and
    common equivalent shares outstanding during the period. Common equivalent
    shares consist of the incremental common shares issuable upon conversion of
    the convertible preferred stock and shares issuable upon the exercise of
    stock options and warrants. Common equivalent shares are excluded from the
    computations if their effect is antidilutive.

(3) The equivalent pro forma combined book value per Integrated Systems share is
    calculated by dividing the pro forma combined share amounts by the exchange
    ratio of 0.92 of a share of Wind River common stock for each share of
    Integrated Systems common stock.

                                       14
<PAGE>
                                  RISK FACTORS

    You should consider the following factors in evaluating whether to approve
the issuance of shares of Wind River common stock in the merger and the
principal terms of the merger. These factors should be considered in conjunction
with the other information included or incorporated by reference in this joint
proxy statement/prospectus.

RISKS RELATING TO THE MERGER:

IF WE DO NOT INTEGRATE OUR PRODUCTS, WE MAY LOSE CUSTOMERS AND FAIL TO ACHIEVE
OUR FINANCIAL OBJECTIVES.

    Achieving the benefits of the merger will depend in part on the integration
of Wind River's and Integrated Systems' products in a timely and efficient
manner. In order for us to provide enhanced and more valuable products to our
customers after the merger, we will need to integrate our product lines and
development organizations. This will be difficult and unpredictable because our
products are highly complex, have been developed independently and were designed
without regard to such integration. If we cannot successfully integrate our
products and continue to provide customers with products and new product
features in the future on a timely basis, we may lose customers and our business
and results of operations may be seriously harmed.

IF WE ARE NOT SUCCESSFUL IN INTEGRATING OUR ORGANIZATIONS, WE WILL NOT BE ABLE
TO OPERATE EFFICIENTLY AFTER THE MERGER.

    Achieving the benefits of the merger will also depend in part on the
successful integration of Wind River's and Integrated Systems' operations and
personnel in a timely and efficient manner. Such integration requires
coordination of different development and engineering teams. This, too, will be
difficult and unpredictable because of possible cultural conflicts and different
opinions on technical decisions and product roadmaps. If we cannot successfully
integrate our operations and personnel, we will not realize the expected
benefits of the merger.

INTEGRATING OUR COMPANIES MAY DIVERT MANAGEMENT'S ATTENTION AWAY FROM OUR
OPERATIONS.

    Successful integration of Wind River's and Integrated Systems' operations,
products and personnel may place a significant burden on our management and our
internal resources. The diversion of management attention and any difficulties
encountered in the transition and integration process could have a material
adverse effect on the combined company's business, financial condition and
operating results.

IF WE DO NOT SUCCESSFULLY INTEGRATE THE COMPANIES INTO A SINGLE BUSINESS AND
REALIZE THE EXPECTED BENEFITS OF THE MERGER, WE WILL HAVE INCURRED SIGNIFICANT
COSTS WHICH MAY HARM OUR BUSINESS.

    Wind River expects to incur costs from integrating Integrated Systems'
operations, products and personnel. These costs may be substantial and may
include costs for:

    - employee redeployment, relocation or severance;

    - conversion of information systems;

    - combining research and development teams and processes;

    - reorganization or closures of facilities; and

    - relocation or disposition of excess equipment.

    We do not know whether Wind River will be successful in these integration
efforts and cannot assure you that we will realize the expected benefits of the
merger.

                                       15
<PAGE>
FAILURE TO RETAIN KEY EMPLOYEES COULD DIMINISH THE BENEFITS OF THE MERGER.

    The successful combination of Wind River and Integrated Systems will depend
in part on the retention of key personnel. There can be no assurance that Wind
River will be able to retain Integrated Systems' key management, technical,
sales and customer support personnel, or that Wind River will realize the
anticipated benefits of the merger.

IF CUSTOMER RELATIONSHIPS ARE DISRUPTED BY THE MERGER, OUR SALES COULD DECLINE.

    Our customers may not continue their current buying patterns during the
pendency of, and following, the merger. Any significant delay or reduction in
orders for Wind River's or Integrated Systems' products could have a material
adverse effect on the combined company's business, financial condition and
results of operations. Customers may defer purchasing decisions as they evaluate
the likelihood of successful integration of Wind River's and Integrated Systems'
products and the combined company's future product strategy. Customers may also
consider purchasing products of competitors. In addition, by increasing the
breadth of Wind River's and Integrated Systems' business, the merger may make it
more difficult for the combined company to enter into relationships, including
customer relationships, with strategic partners, some of whom may view the
combined company as a more direct competitor than either Wind River or
Integrated Systems as an independent company.

BECAUSE INTEGRATED SYSTEMS SHAREHOLDERS WILL RECEIVE A FIXED NUMBER OF SHARES OF
WIND RIVER COMMON STOCK IN THE MERGER, RATHER THAN A FIXED VALUE, IF THE MARKET
PRICE OF WIND RIVER COMMON STOCK DECLINES, THE INTEGRATED SYSTEMS SHAREHOLDERS
WILL RECEIVE CONSIDERATION IN THE MERGER OF LESSER VALUE.

    Upon completion of the merger, each Integrated Systems share will be
converted into 0.92 of a share of Wind River common stock. Since the exchange
ratio is fixed, the number of shares that Integrated System shareholders will
receive in the merger will not change, even if the market price of Wind River
common stock changes. There will be no adjustment of the exchange ratio or
termination of the merger based solely on fluctuations in the price of Wind
River common stock. In recent years, and particularly in recent months, the
stock market, in general, and the securities of technology companies, in
particular, have experienced extreme price and volume fluctuations. These market
fluctuations may adversely affect the market price of Wind River common stock.
The market price of Wind River common stock upon and after completion of the
merger could be lower than the market price on the date of the merger agreement
or the current market price. Integrated Systems shareholders should obtain
recent market quotations of Wind River common stock before they vote on the
merger.

RISKS RELATING TO WIND RIVER:

OUR REVENUES AND OPERATING RESULTS MAY FLUCTUATE SIGNIFICANTLY FROM PERIOD TO
PERIOD AND CAUSE THE MARKET PRICE OF OUR COMMON STOCK TO DECLINE.

    Our revenues and operating results have fluctuated significantly in the past
and may continue to do so in the future. If our quarterly or annual operating
results do not meet the expectations of securities analysts and investors, the
market price of our common stock could decline significantly. A number of
factors, many of which are outside our control, may cause or contribute to these
fluctuations, including:

    - the amount and timing of orders we receive;

    - changes in the length of our products' sales cycles, which increase as our
      customers' purchase decisions become more strategic and are made at higher
      management levels;

    - the success of our customers' products from which we derive our royalty
      revenues;

                                       16
<PAGE>
    - the mix of our revenues from the sale of services (which have lower gross
      margins than our revenue from the sale of products) as compared to
      products;

    - our ability to control our operating expenses, which we anticipate will
      continue to increase;

    - our ability to continue to develop, introduce and ship competitive new
      products and product enhancements quickly;

    - announcements, new product introductions and price reductions by our
      competitors;

    - our ability to manage costs for fixed-price consulting engagements;

    - changes in business cycles that affect the markets in which we sell our
      products;

    - economic conditions generally and in international markets, which
      historically have provided a significant portion of our revenues; and

    - foreign currency exchange rates.

    In addition, we often recognize a significant portion of our quarterly
revenues from orders we receive and ship in the last month of the quarter and,
as a result, we may not be able to forecast our revenues until late in the
period. Further, our customers historically have purchased more of our products
in our fourth fiscal quarter than in other quarters. A decrease in orders is
likely to adversely and disproportionately affect our operating results, because
a significant portion of our expenses are fixed and are based, in part, on our
expectations of future revenues. Therefore, we have a limited ability to reduce
expenses in response to a shortfall in anticipated revenues. We believe that
period-to-period comparisons of our operating results may not be meaningful, and
should not be relied on as an indication of our future performance.

WE FACE INTENSE COMPETITION, WHICH COULD DECREASE DEMAND FOR OUR PRODUCTS OR
CAUSE US TO REDUCE THEIR PRICES.

    The embedded real-time software industry is highly competitive. We believe
that our principal competition comes from companies that develop real-time
operating systems in-house rather than purchase these systems from independent
software vendors such as Wind River. We also compete with other independent
software vendors, including:

    - Accelerated Technology, Inc.

    - Mentor Graphics, Inc.

    - Microsoft Corporation

    - Microware Systems Corporation

    - QNX Software Systems, Ltd.

    - Sun Microsystems, Inc.; and

    - Symbian Inc.

    In addition, hardware or other software vendors could seek to expand their
product offerings by designing and selling products that directly compete with
or adversely affect sales of our products. Many of our existing and potential
competitors have substantially greater financial, technical, marketing and sales
resources than we do. As a result, they may be able to respond more quickly to
new or emerging technologies and changes in customer requirements, or to devote
greater resources to the development, promotion, sale and support of their
products. Moreover, our competitors may foresee the course of market
developments more accurately than we do and could in the future develop new
technologies that compete with our products or even render our products
obsolete. Although we believe we presently have certain technological and other
advantages over our competitors, maintaining

                                       17
<PAGE>
these advantages will require a continued high level of investment in research
and development, marketing and customer service and support. In addition,
competitive pressures could cause us to reduce the prices of our products,
run-time royalties and services, which would result in reduced profit margins.

OUR FAILURE TO RESPOND QUICKLY TO RAPID TECHNOLOGICAL CHANGE WITH PRODUCT
OFFERINGS WILL ADVERSELY AFFECT OUR ABILITY TO COMPETE.

    The market for embedded real-time software is characterized by ongoing
technological developments, evolving industry standards and rapid changes in
customer requirements. Our success depends upon our ability to adapt and respond
to these changes. We must continuously update our existing products to keep them
current with customer needs, and must develop new products to take advantage of
new technologies, emerging standards, and expanding customer requirements that
could render our existing products obsolete. We have from time to time
experienced delays in the development of new products and the enhancement of
existing products, including, most recently, a delay in the development of our
new product "Tornado for Managed Switches." Such delays are commonplace in the
software industry. We must achieve design wins with key customers because once a
customer has designed a product with a particular operating system, that
customer typically is reluctant to change its supplier, due to the significant
costs associated with selecting a new supplier. If we cannot adapt or respond in
a cost effective and timely manner to new technologies and new customer
requirements, the market for our products would suffer.

BECAUSE OUR OPERATING RESULTS DEPEND UPON SALES OF A SMALL NUMBER OF PRODUCTS, A
REDUCTION IN DEMAND FOR A SINGLE PRODUCT MAY DISPROPORTIONATELY DECREASE OUR
OPERATING RESULTS.

    Revenue from sales of our Tornado and VxWorks family of products and
services has historically accounted for substantially all of our revenue, and we
expect this concentration will continue in the foreseeable future. Any reduction
in the demand for our Tornado or VxWorks family of products and services could
materially adversely affect our operating results and cause the price of our
common stock to decline.

IF WE DO NOT CONTINUE TO SUCCESSFULLY ADDRESS NEW AND RAPIDLY CHANGING MARKETS,
OUR REVENUES WILL DECLINE.

    We are continuously engaged in product development for new or rapidly
changing markets. It is difficult to predict whether demand for any of these
products will develop or increase in the future.

    In particular, we have invested significant time and effort, together with a
consortium of industry participants, in the development of I2O, a new
specification that is intended to create an open standard set of interface
specifications for high performance Input Output (I/O) systems. In parallel with
this effort, we have developed IxWorks, a real-time operating system for use in
conjunction with the I2O specification. The success of the I2O specification and
the IxWorks product line depends heavily on its adoption by a broad segment of
the industry. We have also spent, and continue to spend, substantial time and
financial resources to develop software solutions for Internet appliances and
Internet infrastructure, including Tornado for Managed Switches. These products
must be ported to an increasing number of internet protocols. If the protocols
upon which our Internet products are based ultimately fail to be widely adopted,
our products based in those protocols will fail to achieve market acceptance.

    If our products fail to achieve market acceptance or if their targeted
markets fail to develop, our revenues will decline.

                                       18
<PAGE>
A SIGNIFICANT PORTION OF OUR REVENUE IS DERIVED FROM ROYALTIES, WHICH ARE
DEPENDENT UPON THE EFFORTS OF THIRD PARTIES OUTSIDE OUR CONTROL.

    Our operating systems are embedded in customers' end-user products, and we
receive royalty fees for each copy of our operating system embedded in those
products. Our royalty revenues depend upon our ability to successfully negotiate
royalty agreements with our customers and, in turn, their successful
commercialization of the underlying products. We cannot control their product
development or predict its success. If our customers are not successful, our
royalty revenues will decline significantly.

ACQUISITIONS MAY DISRUPT OUR BUSINESS, DILUTE OUR STOCKHOLDERS AND INCREASE OUR
INDEBTEDNESS.

    As part of our business strategy, we have acquired or made investments in
several businesses, products and technologies that complement ours, and we
anticipate that we will continue to do so in the future. We may experience
difficulties integrating an acquired company's operations into ours. As a
result, we may divert management attention to the integration that would
otherwise be available for the ongoing development of our business. Acquisitions
have additional inherent risks, including:

    - difficulties assimilating acquired operations, technologies or products;

    - unanticipated costs; and

    - adverse effects on relationships with customers, suppliers and employees.

    We may not be successful in integrating the businesses, products,
technologies or personnel we acquire. Similarly, we cannot guarantee that our
investments will yield a significant return if any. To finance acquisitions, we
may issue equity securities, which may dilute our earnings per share, or incur
significant indebtedness and related interest expense.

FAILURE OF OUR CURRENT AND PLANNED SYSTEMS, PROCEDURES AND CONTROLS TO
ADEQUATELY MANAGE AND SUPPORT OUR ANTICIPATED GROWTH AND FUTURE OPERATIONS,
COULD DISRUPT OUR BUSINESS.

    We have experienced, and expect to continue to experience, significant
growth in our headcount and in the scope, complexity and geographic reach of our
operations. To support this expansion, we must continue to improve our
management controls, reporting systems and procedures. To implement those
improvements, we must purchase, develop and maintain complex and expensive
systems, such as our enterprise resource planning system and our planned sales
force automation system. Our current and planned systems, procedures and
controls may not be adequate to support our future operations. Failure of these
systems to meet our needs could disrupt our operations.

IF WE ARE UNABLE TO ATTRACT AND RETAIN QUALIFIED EMPLOYEES IN AN INCREASINGLY
COMPETITIVE ENVIRONMENT, OUR BUSINESS MAY SUFFER.

    Our future success depends, and will continue to depend, on our ability to
hire, train, motivate and and retain additional highly skilled managerial,
product development, marketing, sales, customer support and operations personnel
to support our growing business. Competition for these personnel is intense,
especially for engineers and especially in the San Francisco Bay Area where we
maintain our headquarters and principal engineering facilities. We cannot be
certain that we will be successful in recruiting and retaining such personnel.
Our failure to do so could impair our ability to compete successfully.

OUR SIGNIFICANT INTERNATIONAL BUSINESS ACTIVITIES SUBJECT US TO ECONOMIC RISKS.

    During the three and nine month period ended October 31, 1999 and the fiscal
year ended January 31, 1999, we derived approximately 36%, 36% and 32%,
respectively, of our total revenue from sales outside of North America. We
expect that international sales will continue to generate a

                                       19
<PAGE>
significant percentage of our total revenue in the foreseeable future, and we
also expect to continue to make investments to further expand our international
operations and to increase our direct sales force in Europe and Asia.

    Risks inherent in international operations include:

    - the imposition of governmental controls and regulatory requirements;

    - the costs and risks of localizing products for foreign countries;

    - unexpected changes in tariffs, import and export restrictions and other
      barriers and restrictions;

    - greater difficulty in accounts receivable collection;

    - the restrictions of repatriation of earnings;

    - the burdens of complying with a variety of foreign laws; and

    - difficulties in staffing and managing foreign subsidiaries and branch
      operations.

    Any of these events could reduce our international sales and increase our
costs of doing business internationally.

GAINS AND LOSSES RESULTING FROM FLUCTUATIONS IN FOREIGN CURRENCY EXCHANGE RATES
COULD HARM OUR INTERNATIONAL BUSINESS AND OUR OVERALL OPERATING RESULTS.

    As a business with significant international operations, we face exposure to
adverse movements in foreign currency exchange rates. Sales by our foreign
subsidiaries are denominated in the local currency, and an increase in the
relative value of the dollar against such currencies would reduce our revenues
in dollar terms or make our products more expensive and, therefore, potentially
less competitive in foreign markets. Gains and losses on the conversion to
dollars of accounts receivable, accounts payable and other monetary assets and
liabilities arising from international operations may contribute to fluctuations
in our results of operations.

OUR INTERNATIONAL BUSINESS DEPENDS ON THE EFFORTS OF THIRD PARTY DISTRIBUTORS
OUTSIDE OUR CONTROL.

    We rely on distributors for sales of our products in certain foreign
countries. Accordingly, we are dependent on their ability to promote and support
our products and, in some cases, to translate them into foreign languages. Wind
River's international distributors generally offer products of several different
companies, including in some cases products that are competitive with Wind
River's products. We cannot predict that our international distributors will
continue to market our products or provide them with adequate levels of support.
If our international distributors do not promote our products effectively, our
international revenues could decline.

WE SELL A SIGNIFICANT PORTION OF OUR PRODUCTS TO CUSTOMERS DEPENDENT UPON
GOVERNMENT FUNDING, WHICH MAY NOT CONTINUE TO BE AVAILABLE.

    We have derived a portion of our revenues historically from sales of systems
built to the VME (versabus module eurocard) standard. These systems typically
are used in high cost, low volume applications, including military,
telecommunications, space and research applications. Although we believe that
revenues from sales of products designed for embedded systems applications
(non-VME customers) will account for an increasing percentage of our revenues in
the future, we do expect revenues from the VME market to continue to be
significant for the foreseeable future. Academic institutions and defense
industry participants, which generate most of our VME revenues, are dependent on
government funding. Any unanticipated future termination of government funding
of VME customers would reduce our revenues.

                                       20
<PAGE>
WE HAVE RECENTLY BEGUN TO OFFER SOFTWARE CONSULTING SERVICES, WHICH HAVE LOWER
MARGINS THAN OUR CORE BUSINESS.

    Our new professional services business is characterized by fixed-price
commitments and high costs for personnel and consultants. If this business is
not successful, or if it grows more slowly than anticipated, our gross margin
will suffer.

THE RIGHTS WE RELY UPON TO PROTECT THE INTELLECTUAL PROPERTY UNDERLYING OUR
PRODUCTS MAY NOT BE ADEQUATE, WHICH COULD ENABLE THIRD PARTIES TO USE OUR
TECHNOLOGY AND REDUCE OUR ABILITY TO COMPETE IN THE MARKET.

    Our success is partially dependent upon the proprietary technology contained
in our products. We currently rely on a combination of patents, copyrights,
trademarks, trade secret laws, and contractual provisions to establish and
protect our intellectual property rights in our products. We cannot be certain
that the steps we take to protect our intellectual property will adequately
protect our rights, that others will not independently develop or otherwise
acquire equivalent or superior technology, or that we can maintain such
technology as trade secrets. For example, end user licenses of our software are
frequently in the form of shrink wrap or click wrap license agreements, which
are not signed by licensees, and these may be unenforceable in some cases. In
addition, policing unauthorized use of our products is difficult, and while we
are unable to determine the extent to which software piracy of our products
exists, software piracy can be expected to be a persistent problem, particularly
in foreign countries, where the laws may not protect our intellectual property
as fully as in the United States. Employees, consultants, and others who
participate in the development of our products may breach their agreements with
us regarding our intellectual property, and we may not have adequate remedies
for any such breach.

IF WE ENFORCE OUR INTELLECTUAL PROPERTY RIGHTS THROUGH LITIGATION, THE COSTS
COULD BE SIGNIFICANT.

    We may initiate claims or litigation against third parties for infringement
of our proprietary rights or to establish the validity of our proprietary
rights. Litigation to determine the validity of any claims, whether or not such
litigation is determined in our favor, could result in significant expense to us
and divert the efforts of our technical and management personnel from productive
tasks.

THIRD PARTY CLAIMS OF PATENT INFRINGEMENT COULD RESULT IN SUBSTANTIAL COSTS.

    We occasionally receive communications from third parties alleging patent
infringement, and there is always the chance that third parties may assert
infringement claims against us. Any such claims, with or without merit, could
result in costly litigation, expense of significant resources to develop
non-infringing technology, cause product shipment delays or require us to enter
into royalty or licensing agreements. We cannot be certain that the necessary
licenses will be available or that they can be obtained on commercially
reasonable terms. If we were to fail to obtain such royalty or licensing
agreements in a timely manner and on reasonable terms, our business, financial
condition and results of operations would be materially adversely affected. We
believe that our products and technology do not infringe on the intellectual
property rights of others or upon intellectual property rights that may be
granted in the future pursuant to pending applications. We also believe that we
will not be required to obtain licenses of technology owned by other parties.

DEFECTS IN OUR PRODUCTS COULD HURT OUR OPERATING RESULTS AND EXPOSE US TO
SIGNIFICANT PRODUCT LIABILITY CLAIMS.

    Because of their complexity, software products, including Wind River's, have
in the past and may in the future contain undetected or unresolved errors,
particularly when first introduced or as new versions are released. Despite
extensive testing, errors may be found in our current or future products or
enhancements after commencement of commercial shipments. If this occurs, we may
experience delay in or loss of market acceptance and sales, product returns,
diversion of development resources, injury to our reputation, and increased
service and warranty costs.

                                       21
<PAGE>
    Our products are increasingly used in applications, such as network
infrastructure, transportation, medical and mission-critical business systems,
in which the failure of the embedded system could cause property damage,
personal injury or economic loss resulting in product liability claims against
us. Although our agreements with our customers typically contain provisions
intended to limit our exposure to liability claims, these provisions may not be
effective in doing so in all circumstances or in all jurisdictions. We maintain
product liability insurance covering certain damages arising from use of our
products, however such insurance may not adequately cover claims brought against
us. Liability claims against us could require us to spend significant time and
money in litigation and, if successful, to pay significant damages.

THE YEAR 2000 PROBLEM MAY ADVERSELY AFFECT OUR BUSINESS, FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.

    The "year 2000 problem" is typically the result of limitations of certain
software written using two digits rather than four digits to define the
applicable year resulting in certain programs recognizing "00" as the year 1900
rather than the year 2000. If software does not correctly recognize date
information in connection with the year change to 2000, we could experience the
following:

    - potential warranty or other claims from our customers, which may result in
      significant expense to Wind River;

    - failure of systems we use to run our business, which could disrupt our
      business operations;

    - failure of systems used by our suppliers, which could delay or affect the
      quality of our manufacturing or products; and

    - the potential failure of our products due to year 2000 problems, which may
      require that we replace any such products and potentially incur
      significant unexpected expenses.

    Although we believe our most current releases of our products, including
third party software integrated into certain products, are year 2000 compliant,
because all customer situations cannot be anticipated, we may see an increase in
warranty and other claims as a result of the year 2000 transition. In addition,
litigation, and resulting expenses, regarding year 2000 compliance issues may
increase.

    The majority of our products are combined by our customers with other
software programs or hardware devices not provided by us. These combinations
with other products that are not year 2000 compliant or modifications of our
products by our customers may introduce year 2000 issues for our customers. Our
customers' inability to remedy their own year 2000 problems could affect their
demand for our products.

WE HAVE SUBSTANTIAL DEBT SERVICE AND PRINCIPAL REPAYMENT OBLIGATIONS, WHICH
COULD MAKE IT DIFFICULT FOR US TO OBTAIN FINANCING.

    We sold $140 million of 5% convertible subordinated notes in 1997, which
mature in 2002. This debt financing increased significantly both the ratio of
our long-term debt to our total capitalization and our interest expenses. The
degree to which we are leveraged could impair our ability to obtain financing
for working capital or acquisitions, should we need to do so. The notes are
convertible into our common stock at a price of $32.33 per share, and no notes
have been converted to date. On August 1, 2002, we will be required either to
pay off or refinance any unconverted notes. We do not know if we will be able to
refinance the notes on favorable terms or at all. If a significant amount of the
notes remains unconverted at maturity and we are unable to refinance the notes,
the repayment would deplete our cash reserves significantly.

                                       22
<PAGE>
OUR STOCK PRICE HAS BEEN AND MAY CONTINUE TO BE VOLATILE; A SIGNIFICANT DECREASE
IN OUR STOCK PRICE MAY INCREASE OUR EXPOSURE TO SECURITIES LITIGATION.

    The trading price of our common stock has been and is likely to be volatile.
It could fluctuate widely in response to a variety of factors, including:

    - actual or anticipated variations in our operating results;

    - announcements of new products or significant events or transactions by us
      or our competitors;

    - changes in our industry;

    - changes in financial estimates by securities analysts;

    - pricing pressures;

    - general market conditions;

    - events affecting other companies that investors believe to be comparable
      to us; and

    - other events or factors that may be beyond our control.

    In recent years, the stock markets in general and the shares of technology
companies in particular have experienced extreme price fluctuations. These
fluctuations often have been unrelated or disproportionate to the operating
performance of the companies affected. Any change in investors' perception of
our prospects could depress our stock price regardless of our results. Other
broad market and industry factors may decrease our stock price, as may general
political or economic conditions such as recessions or interest rate or currency
fluctuations. In the past, following declines in the market price of a company's
securities, securities class action litigation often has been instituted against
the company. Litigation of this type, even if ultimately unsuccessful, could
result in substantial costs and a diversion of management's time and focus.

RISKS RELATING TO INTEGRATED SYSTEMS:

    Integrated Systems is subject to a number of risks similar to those
described above under the following sub-headings:

    - OUR REVENUES AND OPERATING RESULTS MAY FLUCTUATE SIGNIFICANTLY FROM PERIOD
      TO PERIOD AND CAUSE THE MARKET PRICE OF OUR COMMON STOCK TO DECLINE;

    - WE FACE INTENSE COMPETITION, WHICH COULD DECREASE DEMAND FOR OUR PRODUCTS
      OR CAUSE US TO REDUCE THEIR PRICES;

    - IF WE ARE UNABLE TO ATTRACT AND RETAIN QUALIFIED EMPLOYEES IN AN
      INCREASINGLY COMPETITIVE ENVIRONMENT, OUR BUSINESS MAY SUFFER;

    - OUR INTERNATIONAL BUSINESS DEPENDS ON THE EFFORTS OF THIRD PARTY
      DISTRIBUTORS OUTSIDE OUR CONTROL;

    - THE RIGHTS WE RELY UPON TO PROTECT THE INTELLECTUAL PROPERTY UNDERLYING
      OUR PRODUCTS MAY NOT BE ADEQUATE, WHICH COULD ENABLE THIRD PARTIES TO USE
      OUR TECHNOLOGY AND REDUCE OUR ABILITY TO COMPETE IN THE MARKET;

    - THIRD PARTY CLAIMS OF PATENT INFRINGEMENT COULD RESULT IN SUBSTANTIAL
      COSTS; and

    - DEFECTS IN OUR PRODUCTS COULD HURT OUR OPERATING RESULTS AND EXPOSE US TO
      SIGNIFICANT PRODUCT LIABILITY CLAIMS.

In addition, Integrated Systems is subject to a number of additional risks,
including those described below. Some of these additional risks are also similar
to risks described above relating to Wind River.

                                       23
<PAGE>
SMALL VARIATIONS BETWEEN ANTICIPATED ORDERS AND ACTUAL ORDERS, AS WELL AS
NONRECURRING OR LARGE ORDERS, CAN CAUSE DISPROPORTIONATE VARIATIONS IN OUR
OPERATING RESULTS FROM QUARTER TO QUARTER.

    Fluctuations in our operating results contribute to the volatility of the
market price of our common stock. If our operating results for a particular
period do not meet the expectations of stock market analysts and investors, the
market price of our stock will likely fall. Factors that contribute to
variations in our operating results include:

    - our product revenue in any quarter depends on the volume and timing of
      orders received in that quarter;

    - the magnitude of quarterly fluctuations may not become evident until late
      in, or after the end of, a particular quarter because we generally
      recognize a substantial portion of our total revenue from orders received
      and shipped in the last two weeks of the quarter; and

    - a high percentage of our expenses is fixed and we may not be able to
      reduce expenses if revenues decrease.

OUR LENGTHY AND VARIABLE SALES CYCLE MAKES IT DIFFICULT FOR US TO PREDICT
WHETHER OR IF SALES WILL BE MADE.

    The procurement process of our customers typically ranges from a few weeks
to several months or longer from initial inquiry to order, making the timing of
sales and license fees difficult to predict. As licensing of our products
increasingly becomes a more strategic decision made at higher management levels,
we believe that sales cycles for our products will lengthen. We may have
significant sales and marketing expenses during the time the potential customer
is evaluating our products. If sales forecasted from a specific customer for a
particular quarter are not realized, we may experience an unplanned shortfall in
product revenue.

IF WE HAVE DIFFICULTIES INTRODUCING NEW PRODUCTS OR PRODUCT ENHANCEMENTS, OUR
BUSINESS REPUTATION AND FINANCIAL PERFORMANCE WOULD SUFFER.

    The market for embedded applications is fragmented and is characterized by
technological change, evolving industry standards and rapid changes in customer
requirements. Our existing products will be rendered less competitive or
obsolete if we fail to introduce new products or product enhancements that
anticipate the features and functionality that customers demand. The success of
our new product introductions will depend on our ability to:

    - accurately anticipate industry trends and changes in technology standards;

    - timely complete and introduce new product designs and features;

    - continue to enhance our existing product lines;

    - offer our products across a spectrum of microprocessor families used in
      the embedded systems market;

    - respond promptly to customers' requirements and preferences; and

    - manage the transition from older products to minimize disruption in
      customer ordering patterns.

INTERNATIONAL SALES OF OUR PRODUCTS ACCOUNT FOR A SIGNIFICANT PORTION OF OUR
TOTAL REVENUE, WHICH EXPOSES US TO THE BUSINESS AND ECONOMIC RISKS OF
INTERNATIONAL OPERATIONS.

    Sales from outside of North America accounted for approximately 38% of our
total revenue in fiscal year 1997, 41% of our total revenue in fiscal year 1998
and 42% of our total revenue in fiscal year 1999 and the first nine months of
fiscal year 2000. We expect that international sales will continue

                                       24
<PAGE>
to generate a significant percentage of our total revenue in the foreseeable
future. International operations are subject to a number of special risks. These
risks include:

    - foreign government regulation;

    - reduced protection of intellectual property rights in some countries where
      we do business;

    - longer receivable collection periods and greater difficulty in accounts
      receivable collection;

    - unexpected changes in, or imposition of, regulatory requirements, tariffs,
      import and export restrictions and other barriers and restrictions;

    - potentially adverse tax consequences;

    - the burdens of complying with a variety of foreign laws and staffing and
      managing foreign operations;

    - general geopolitical risks, such as political and economic instability,
      hostilities with neighboring countries and changes in diplomatic and trade
      relationships; and

    - possible recessionary environments in economies outside the United States.

    More generally, recent instability in Asian currency and stock market
economies could adversely affect the economic health of the entire region and
could have an adverse effect on our results of operations. For example, in many
countries in the Asia Pacific region, during fiscal years 1998 and 1999 there
was little or no growth in investment in product development infrastructure by
manufacturing companies.

IF OUR INTERNATIONAL DISTRIBUTORS AND REPRESENTATIVES DO NOT PROMOTE OUR
PRODUCTS EFFECTIVELY, OUR REVENUES COULD DECLINE.

    We rely on distributors and representatives for sales of our products in
some foreign countries. We depend on their ability to promote and support our
products and, in some cases, to translate them into foreign languages. Our
international distributors and representatives generally offer products of
several different companies, including in some cases products that are
competitive with our products, and these distributors and representatives are
not subject to any minimum purchase or resale requirements. Our international
distributors and representatives may not continue to purchase our products or
provide them with adequate levels of support.

IF WE LOSE THIRD-PARTY LICENSE RIGHTS, WE MAY NOT BE ABLE TO SELL SOME OF OUR
PRODUCTS.

    We license software development tool products from other companies to
distribute with some of our products. These third parties may not be able to
provide competitive products with adequate features and high quality on a timely
basis or to provide sales and marketing cooperation. In addition, our products
compete with products produced by some of our licensors. When these licenses
terminate or expire, continued license rights might not be available to us on
reasonable terms. In addition, we might not be able to obtain similar products
to substitute into our tool suites.

IF WE OR OUR SIGNIFICANT SUPPLIERS OR SERVICE PROVIDERS FAIL TO BE YEAR 2000
COMPLIANT, OUR BUSINESS MAY BE DISRUPTED AND OUR REVENUES MAY DECLINE.

    We believe that all of our most current product releases will not cease to
perform nor generate incorrect or ambiguous data or results solely due to the
change in date on or after January 1, 2000, and will calculate any information
dependent on such dates in the same manner, and with the same functionality,
data integrity and performance, as these products did on or before December 31,
1999. However, all of our customers may not implement the Year 2000 compliant
release of our products in a timely manner, which could lead to failure of
customer systems and product liability claims against us.

                                       25
<PAGE>
Even if our products are Year 2000 compliant, we may, in the future, be subject
to claims based on Year 2000 issues in the products of other companies or issues
arising from the integration of multiple products within a system. The costs of
defending and resolving Year 2000-related disputes, and any liability for Year
2000-related damages, including consequential damages, could be significant. In
addition, Year 2000 failures could have a negative effect on our competitive
position. If any of our critical suppliers do not successfully and timely
achieve Year 2000 compliance, and we are unable to replace them with new or
alternate suppliers, our business would be disrupted.

WE ARE AT RISK OF SECURITIES CLASS ACTION LITIGATION DUE TO OUR STOCK PRICE
VOLATILITY.

    The prices for our common stock have fluctuated widely in the past. During
the six months ended January 6, 2000, the closing price of a share of our common
stock ranged from a high of $38.88 to a low of $8.44. Stock price volatility has
had a substantial effect on the market prices of securities issued by us and
other high technology companies, often for reasons unrelated to the operating
performance of the specific companies. In the past, following periods of
volatility in the market price of a company's securities, securities class
action litigation has often been instituted against the company. We may in the
future be the target of similar litigation. Regardless of the outcome,
securities litigation may result in substantial costs and divert management
attention and resources.

                                       26
<PAGE>
                                 THE COMPANIES

WIND RIVER

    Wind River develops, markets and supports advanced software operating
systems and development tools that allow customers to create complex, robust,
real-time software applications for embedded computers. An embedded, or hidden,
computer is a microprocessor that is incorporated into a larger device and is
dedicated to responding to external events by performing specific tasks quickly,
predictably and reliably. Embedded systems provide an immediate, predictable
response to an unpredictable sequence of external events. As more powerful
microprocessors have become available and have decreased in price, embedded
systems are being used in a wider range of applications and digital appliances
and are facilitating the development of entirely new products. In addition,
emerging Embedded Internet-Registered Trademark- applications for interactive
entertainment, network computers, remote maintenance, and other areas may offer
significant additional opportunities for embedded systems. Some examples of
embedded computers are:

    - telecommunications products such as PBX, routers, central office switches
      and call processing systems;

    - office products such as fax machines, laser printers and photocopiers;

    - vehicle anti-lock brakes and navigation systems;

    - consumer products such as camcorders, video games and set-top boxes;

    - medical instrumentation and imaging systems;

    - industrial automation equipment such as robots; and

    - aerospace devices such as NASA's Mars probe, Pathfinder.

    Wind River's operating systems and development tools allow customers to
create complex real-time embedded software applications more quickly, more
economically and with less risk than creating such applications using internally
developed systems and tools. Wind River typically charges a one-time fee for a
development license and a run-time license fee for each copy of its operating
system embedded in the customer's product. A key component of Wind River's
strategy is to significantly increase revenue through run-time license fees. Any
increase in the percentage of revenues attributable to run-time licenses will
depend on Wind River's successful negotiation of run-time license agreements and
on the successful commercialization by its customers of the underlying products.

    Wind River markets its products and services in North America and Europe
primarily through its own direct sales organization, which consists of
salespersons and field engineers. Wind River has eighteen licensed international
distributors principally to serve customers in regions not serviced by its
direct sales force or its Japanese master distributors. Wind River's customers
include Boeing Company, Cisco Systems, Inc., Ericsson Radio Systems AB, General
Motors Corporation, Hewlett-Packard Company, Hitachi, Ltd., Hughes Aircraft
Company, Lucent Technologies Inc., Intel Corporation, Lockheed-Martin
Corporation, McDonnell Douglas Corporation, Mitsubishi Electric Corporation,
Motorola, Inc., Network Computer, Inc., Nippon Electric Corporation, Northern
Telecom Ltd., Raytheon Company, Siemens AG, Sun Microsystems, Inc., and
TRW Inc.

    Wind River was incorporated in California in February 1983 and
reincorporated in Delaware in April 1993.

                                       27
<PAGE>
MERGER SUB

    Merger Sub is a wholly owned subsidiary of Wind River incorporated on
October 5, 1999 in the State of Delaware. Merger Sub does not engage in any
operations and exists solely to facilitate the merger.

INTEGRATED SYSTEMS

    Integrated Systems provides solutions for embedded software development that
consist of real-time operating systems and software components for embedded
microprocessors; tools for designing, developing and optimizing embedded
applications; networking products for device connectivity and management; and
engineering design services for accelerated co-sourced product development.
Integrated Systems' products help users accelerate the design, development,
debugging, implementation and maintenance of embedded software. Integrated
Systems' products and services are intended to reduce the expense associated
with embedded software and system development and enable customers to develop
systems featuring greater functionality, enhanced performance, improved
reliability and ease-of-use. Integrated Systems markets and supports its
products and provides services on a worldwide basis to a variety of users in a
broad range of industries, including telecommunications, data communications,
automotive, consumer electronics, office products and point-of-sale, and
aerospace.

    Integrated Systems' engineering services group offers core competencies in
areas such as embedded software design and implementation, drivers and board
support package development, rapid system prototyping, Application Specific
Integrated Circuit design and development, sophisticated application
programming, test and certification, production engineering, cost reduction, and
customized hands-on training. These services have allowed Integrated Systems to
offer its customers complete turnkey solutions. Integrated Systems' extensive
resources and industry-specific expertise help customers in a wide range of
industries that include:

    - the telecommunications market;

    - the data communications market;

    - the automotive market;

    - the consumer electronics market;

    - the office products & point-of-sale markets; and

    - the aerospace market.

    Founded in 1980, Integrated Systems is headquartered in Sunnyvale,
California, with a worldwide sales and service presence extending throughout
Asia, Europe and the Americas.

                                       28
<PAGE>
                 THE SPECIAL MEETING OF WIND RIVER STOCKHOLDERS

DATE, TIME AND PLACE

    The special meeting of Wind River stockholders will be held on Tuesday,
February 15, 2000, at the principal executive offices of Wind River located at
600 Wind River Way, Alameda, California commencing at 11:00 a.m. local time. We
are sending this joint proxy statement/prospectus to you in connection with the
solicitation of proxies by the Wind River board of directors for use at the Wind
River special meeting and any adjournments or postponements of the special
meeting.

PURPOSES OF THE SPECIAL MEETING

    The purposes of the special meeting are:

    - to consider and vote on the proposal to approve the issuance of shares of
      Wind River common stock in the merger;

    - to approve the amendment to the Wind River 1998 Equity Incentive Plan to
      increase the number of shares of Wind River common stock reserved for
      option grants under the 1998 Equity Incentive Plan by 2,600,000 shares;
      and

    - to transact such other business as may properly come before the special
      meeting or any adjournments or postponements of the special meeting.

RECOMMENDATION OF WIND RIVER'S BOARD OF DIRECTORS

    THE WIND RIVER BOARD OF DIRECTORS HAS CONCLUDED THAT THE PROPOSAL TO APPROVE
THE ISSUANCE OF SHARES OF WIND RIVER COMMON STOCK IN THE MERGER IS ADVISABLE AND
IN THE BEST INTERESTS OF WIND RIVER AND ITS STOCKHOLDERS AND HAS UNANIMOUSLY
APPROVED AND ADOPTED THE PROPOSAL. ACCORDINGLY, THE WIND RIVER BOARD OF
DIRECTORS UNANIMOUSLY RECOMMENDS THAT ALL WIND RIVER STOCKHOLDERS VOTE "FOR" THE
ISSUANCE OF SHARES OF WIND RIVER COMMON STOCK IN THE MERGER. THE WIND RIVER
BOARD OF DIRECTORS ALSO UNANIMOUSLY RECOMMENDS THAT YOU VOTE "FOR" APPROVAL OF
THE AMENDMENT TO THE WIND RIVER 1998 EQUITY INCENTIVE PLAN.

RECORD DATE AND VOTING POWER

    Only holders of record of Wind River common stock at the close of business
on the record date, December 23, 1999, are entitled to notice of, and to vote
at, the special meeting. There were approximately 665 holders of record of Wind
River common stock at the close of business on the record date, with 42,214,854
shares of Wind River common stock issued and outstanding. Each share of Wind
River common stock entitles the holder thereof to one vote on each matter
submitted for stockholder approval. See "Security Ownership by Certain
Beneficial Owners" for information regarding persons known to the management of
Wind River to be the beneficial owners of more than 5% of the outstanding shares
of Wind River common stock.

VOTING AND REVOCATION OF PROXIES

    All properly executed proxies that are not revoked will be voted at the
special meeting and at any adjournments or postponements of the special meeting
in accordance with the instructions contained in the proxy. If a holder of Wind
River common stock executes and returns a proxy and does not specify otherwise,
the shares represented by that proxy will be voted "FOR" the issuance of shares
of Wind River common stock in the merger and "FOR" approval of the amendment to
the Wind River 1998 Equity Incentive Plan in accordance with the recommendation
of the Wind River board of directors.

    A Wind River stockholder who has executed and returned a proxy may revoke it
at any time before it is voted at the special meeting by executing and returning
a proxy bearing a later date, filing

                                       29
<PAGE>
written notice of revocation with the Secretary of Wind River stating that the
proxy is revoked or attending the special meeting and voting in person.

REQUIRED VOTE

    The presence, in person or by proxy, at the special meeting of the holders
of a majority of the shares of Wind River common stock outstanding and entitled
to vote at the special meeting is necessary to constitute a quorum at the
meeting. The affirmative vote of the holders of a majority of the votes cast is
required for approval of the issuance of the Wind River shares in the merger,
and the affirmative vote of the holders of a majority of the shares of Wind
River common stock present in person or represented by proxy and entitled to
vote at the special meeting is required for approval of the amendment to the
1998 Equity Incentive Plan. Abstentions will be counted towards the tabulation
of votes cast on the proposals presented to stockholders and will have the same
effect as negative votes, and broker non-votes will be counted towards a quorum,
but are not counted for any purpose in determining whether the proposals are
approved.

    At the record date for the special meeting, the directors and executive
officers of Wind River owned approximately 12% of the outstanding shares of Wind
River common stock entitled to vote at the meeting. Jerry L. Fiddler, Thomas St.
Dennis, Ronald A. Abelmann, William B. Elmore, David B. Pratt and Grant M.
Inman, directors of Wind River, and Richard W. Kraber, David G. Fraser, Graham
D. Shenton, Curt Schacker, Peter J. Richards, John Fogelin, Kamran Sokhanvari,
and Marla Ann Stark, executive officers of Wind River, have each entered into a
voting agreement with Integrated Systems dated October 21, 1999. They have
agreed in the voting agreements to vote all shares of Wind River common stock
owned by them as of the record date in favor of the issuance of shares of Wind
River common stock in the merger. They granted Integrated Systems an irrevocable
proxy to vote their shares of Wind River common stock in favor of the issuance
of shares of Wind River common stock in the merger. Additionally, Jazem II
Family Partners LP (of which Jerry L. Fiddler is a General Partner); Jazem III
Family Partners LP (of which Jerry L. Fiddler is a partner); Grant M. Inman and
Suanne B. Inman, Trustees FBO Inman Living Trust UAD 5/9/89; Grant M. Inman
Custodian SSB Keogh PS Custodian the West Ven Keogh; GWIK a Partnership; and
Suanne Inman Trustee FBO Bonner Trust 1988 MBI UAD 12/22/88 have entered into
voting agreements with Integrated Systems dated October 21, 1999. Approximately
4,885,522 shares of Wind River common stock, which represents approximately 12%
of the outstanding shares of Wind River common stock as of the record date, are
subject to the voting agreements. See "Voting Agreements."

SOLICITATION OF PROXIES

    In addition to solicitation by mail, the directors, officers, employees and
agents of Wind River may solicit proxies from Wind River's stockholders by
personal interview, telephone, telegram or otherwise. Wind River will bear the
costs of the solicitation of proxies from its stockholders, except that Wind
River and Integrated Systems will each pay one-half of the cost of printing this
joint proxy statement/ prospectus. Arrangements will also be made with brokerage
firms and other custodians, nominees and fiduciaries who are record holders of
Wind River common stock for the forwarding of solicitation materials to the
beneficial owners of Wind River common stock. Wind River will reimburse these
brokers, custodians, nominees and fiduciaries for the reasonable out-of-pocket
expenses they incur in connection with the forwarding of solicitation materials.
Wind River has engaged the services of D.F. King & Co., Inc. to distribute proxy
solicitation materials to brokers, banks and other nominees and to assist in the
solicitation of proxies from Wind River stockholders for a fee of approximately
$5,000 plus reasonable out-of-pocket expenses.

OTHER MATTERS

    At the date of this joint proxy statement/prospectus, the Wind River board
of directors does not know of any business to be presented at the special
meeting other than as set forth in the notice accompanying this joint proxy
statement/prospectus. If any other matters should properly come before the
special meeting, it is intended that the shares represented by proxies will be
voted with respect to such matters in accordance with the judgment of the
persons voting the proxies.

                                       30
<PAGE>
             THE SPECIAL MEETING OF INTEGRATED SYSTEMS SHAREHOLDERS

DATE, TIME AND PLACE

    The special meeting of Integrated Systems shareholders will be held on
Tuesday, February 15, 2000, at the principal executive offices of Integrated
Systems located at 201 Moffett Park Drive, Sunnyvale, California commencing at
9:00 a.m. local time. We are sending this joint proxy statement/ prospectus to
you in connection with the solicitation of proxies by the Integrated Systems
board of directors for use at the Integrated Systems special meeting and any
adjournments or postponements of the special meeting.

PURPOSE OF THE SPECIAL MEETING

    The purpose of the special meeting is to consider and vote upon a proposal
to approve the principal terms of the merger and to transact such other business
as may properly come before the special meeting or any adjournments or
postponements of the special meeting.

RECOMMENDATION OF INTEGRATED SYSTEMS' BOARD OF DIRECTORS

    THE INTEGRATED SYSTEMS BOARD OF DIRECTORS HAS CONCLUDED THAT THE PROPOSAL TO
APPROVE THE PRINCIPAL TERMS OF THE MERGER IS ADVISABLE AND IN THE BEST INTERESTS
OF INTEGRATED SYSTEMS AND ITS SHAREHOLDERS AND HAS UNANIMOUSLY APPROVED AND
ADOPTED THE PROPOSAL. ACCORDINGLY, THE INTEGRATED SYSTEMS BOARD OF DIRECTORS
UNANIMOUSLY RECOMMENDS THAT ALL INTEGRATED SYSTEMS SHAREHOLDERS VOTE "FOR" THE
APPROVAL OF THE PRINCIPAL TERMS OF THE MERGER.

RECORD DATE AND VOTING POWER

    Only holders of record of Integrated Systems common stock at the close of
business on the record date, December 23, 1999, are entitled to notice of, and
to vote at, the special meeting. There were approximately 178 holders of record
of Integrated Systems common stock at the close of business on the record date,
with 24,256,570 shares of Integrated Systems common stock issued and
outstanding. Each share of Integrated Systems common stock entitles the holder
thereof to one vote on each matter submitted for shareholder approval. See
"Security Ownership by Certain Beneficial Owners" for information regarding
persons known to the management of Integrated Systems to be the beneficial
owners of more than 5% of the outstanding shares of Integrated Systems common
stock.

VOTING AND REVOCATION OF PROXIES

    All properly executed proxies that are not revoked will be voted at the
special meeting and at any adjournments or postponements of the special meeting
in accordance with the instructions contained in the proxy. If a holder of
Integrated Systems common stock executes and returns a proxy and does not
specify otherwise, the shares represented by the proxy will be voted "for"
approval of the principal terms of the merger in accordance with the
recommendation of the Integrated Systems board of directors. An Integrated
Systems shareholder who has executed and returned a proxy may revoke it at any
time before it is voted at the special meeting by executing and returning a
proxy bearing a later date, filing written notice of revocation with the
Secretary of Integrated Systems stating that the proxy is revoked or attending
the special meeting and voting in person.

REQUIRED VOTE

    The presence, in person or by proxy, at the special meeting of the holders
of a majority of the shares of Integrated Systems common stock outstanding and
entitled to vote at the special meeting is necessary to constitute a quorum at
the meeting. The affirmative vote of the holders of a majority of the shares of
Integrated Systems common stock outstanding as of the record date is required to

                                       31
<PAGE>
approve the principal terms of the merger. In determining whether the principal
terms of the merger have received the requisite number of affirmative votes,
abstentions and broker non-votes will have the same effect as a vote against the
principal terms of the merger.

    At the record date for the special meeting, the directors and executive
officers of Integrated Systems owned approximately 27% of the outstanding shares
of Integrated Systems common stock entitled to vote at the meeting. Narendra K.
Gupta, Charles M. Boesenberg, John C. Bolger, Michael A. Brochu, Vinita Gupta,
Thomas Kailath, Richard C. Murphy and James E. Challenger, directors of
Integrated Systems, and, William C. Smith, J.C. Sarner, David Stepner, Scot
Morrison, Martin A. Caniff and Joseph Addiego, executive officers of Integrated
Systems, have each entered into a voting agreement with Wind River dated
October 21, 1999. They have agreed in the voting agreements to vote all shares
of Integrated Systems common stock owned by them as of the record date in favor
of the approval of the principal terms of the merger. They granted Wind River an
irrevocable proxy to vote their shares of Integrated Systems common stock in
favor of the approval of the principal terms of the merger. Approximately
6,474,095 shares of Integrated Systems common stock, which represents
approximately 27% of the outstanding shares of Integrated Systems common stock
as of the record date, are subject to the voting agreements. See "Voting
Agreements."

SOLICITATION OF PROXIES

    In addition to solicitation by mail, the directors, officers, employees and
agents of Integrated Systems may solicit proxies from Integrated Systems
shareholders by personal interview, telephone, telegram or otherwise. Integrated
Systems will bear the costs of the solicitation of proxies from its
shareholders, except that Wind River and Integrated Systems will each pay
one-half of the cost of printing this joint proxy statement/prospectus.
Arrangements will also be made with brokerage firms and other custodians,
nominees and fiduciaries who are record holders of Integrated Systems common
stock for the forwarding of solicitation materials to the beneficial owners of
Integrated Systems common stock. Integrated Systems will reimburse these
brokers, custodians, nominees and fiduciaries for the reasonable out-of-pocket
expenses they incur in connection with the forwarding of solicitation materials.
Integrated Systems has engaged the services of Corporate Investor Communications
to distribute proxy solicitation materials to brokers, banks and other nominees
and to assist in the solicitation of proxies from Integrated Systems
shareholders for a fee of approximately $5,700 plus reasonable out-of-pocket
expenses.

OTHER MATTERS

    At the date of this joint proxy statement/prospectus, the Integrated Systems
board of directors does not know of any business to be presented at the special
meeting other than as set forth in the notice accompanying this joint proxy
statement/prospectus. If any other matters should properly come before the
special meeting, it is intended that the shares represented by proxies will be
voted with respect to such matters in accordance with the judgment of the
persons voting the proxies.

                                       32
<PAGE>
                                   THE MERGER

GENERAL DESCRIPTION OF THE MERGER

    At the effective time, Merger Sub will be merged with and into Integrated
Systems. Integrated Systems will be the surviving corporation and will continue
as a wholly owned subsidiary of Wind River. In the merger, each share of
Integrated Systems common stock outstanding at the effective time will
automatically be converted into 0.92 of a share of Wind River common stock.

    Based on the number of shares of Wind River common stock and Integrated
Systems common stock outstanding as of the record date, 22,316,044 shares of
Wind River common stock will be issuable pursuant to the merger agreement,
representing approximately 35% of the total Wind River common stock to be
outstanding after such issuance. This assumes that no Integrated Systems or Wind
River stock options are exercised.

BACKGROUND

    Over the past several years, Wind River has identified and pursued as one of
its strategies growth through the acquisition of, or combination with,
complementary businesses. Integrated Systems has identified and pursued a
similar strategy.

    Wind River and Integrated Systems have been familiar with each other's
businesses for many years. Senior executives of the two companies have
encountered one another in a variety of business and industry settings over the
past several years.

    On August 16, 1999, Jerry L. Fiddler, Wind River's Chairman of the Board,
made a telephone call to Narendra Gupta, Integrated Systems' Chairman of the
Board. Dr. Gupta returned Mr. Fiddler's telephone call on August 20, 1999, and
Mr. Fiddler and Dr. Gupta agreed to meet face-to-face on August 24, 1999. At the
meeting on August 24, 1999, Mr. Fiddler and Dr. Gupta discussed the possibility
of a strategic combination of the two companies and considered the potential
business synergies of such a strategic combination.

    On September 7, 1999, Integrated Systems and Wind River entered into mutual
nondisclosure agreements. Thereafter, on September 7, 1999, Dr. Gupta and
Charles Boesenberg, President, Chief Executive Officer and a director of
Integrated Systems, and Mr. Fiddler, Thomas St. Dennis, Chief Executive Officer
of Wind River, and Richard Kraber, Chief Financial Officer of Wind River, met at
the Hotel Sofitel in Redwood City, California. At that meeting, both parties
made general presentations covering strategic directions, products and
organizational structure. The parties discussed the potential synergies they
believed existed and which made a strategic combination between the two
companies attractive. The parties engaged in preliminary discussions concerning
valuation issues.

    On September 8, 1999, Mr. Boesenberg called Mr. Kraber and indicated that
Integrated Systems was interested in pursuing the possibility of a business
combination with Wind River. On September 13, 1999, Mr. Fiddler called
Dr. Gupta and indicated that Wind River also was interested in continuing to
pursue a possible business combination with Integrated Systems. Mr. Fiddler
proposed another face-to-face meeting between the two companies' management
teams to discuss a possible business combination after Integrated Systems'
fiscal quarter earnings were reported.

    In early September, Wind River engaged Credit Suisse First Boston
Corporation to provide financial advisory services to the Wind River board of
directors in connection with a potential transaction with Integrated Systems.

    On September 21, 1999, Dr. Gupta and Messrs. Boesenberg, Fiddler, St. Dennis
and Kraber met at the Hotel Sofitel in Redwood City to further discuss financial
results, organizational issues, potential synergies and potential cultural and
technical integration issues. Having determined that a combination of the two
companies fit the strategic objectives of each company, Wind River and
Integrated Systems

                                       33
<PAGE>
discussed with greater specificity the possibility of a combination of
Integrated Systems and Wind River in a stock-for-stock transaction accounted for
as a pooling of interests.

    From September 21-23, 1999, the parties participated in various telephone
conferences to discuss valuation issues. On September 25, 1999, Dr. Gupta and
Messrs. Boesenberg, Fiddler, St. Dennis and Kraber met at the Hotel Sofitel in
Redwood City. General ranges of exchange ratios were discussed, but the parties
could not agree upon an exact exchange ratio. From time-to-time throughout the
discussions between the parties, the members of the boards of directors of Wind
River and Integrated Systems were advised of and discussed the progress of the
discussions.

    On September 27, 1999, the Integrated Systems board of directors met to
discuss the proposed merger with Wind River. The Integrated Systems board of
directors discussed, among other issues, issues related to valuation and
potential synergies of a potential combination. In late September, Integrated
Systems had discussions with Hambrecht & Quist regarding the desirability of
pursuing a combination with Wind River.

    On September 29, 1999, Wind River delivered to Integrated Systems a
non-binding term sheet containing an outline of the principal terms of a
possible transaction and a letter agreement which included "no shop" provisions
prohibiting Integrated Systems from soliciting or entertaining acquisition
proposals from third parties for a limited period of time and "standstill"
provisions prohibiting each party from acquiring the other party's securities or
taking certain other actions relating to the uninvited acquisition of the other
party.

    On September 29, 1999, the Integrated Systems board of directors met again
to discuss the proposed merger involving Integrated Systems and Wind River. The
Integrated Systems board of directors, members of Integrated Systems' management
and representatives of Integrated Systems' legal counsel and financial advisor
discussed, among other issues, issues related to the proposed term sheet and
letter agreement.

    On September 30, 1999, the chief financial officers of both companies
participated in a number of telephone calls with each other in which they
discussed the process for additional due diligence investigations.

    Between September 29, 1999 and October 3, 1999, senior executives of Wind
River and senior executives of Integrated Systems, and their respective outside
legal counsel, discussed the proposed term sheet and letter agreement. Various
changes were made to the proposed term sheet and letter agreement during that
period. On October 3, 1999, Wind River and Integrated Systems signed the letter
agreement and agreed to continue to investigate each other's businesses and to
continue to discuss the terms of a possible merger transaction.

    On October 1, 1999, the Wind River board of directors held a telephonic
meeting to discuss the status of the proposed merger.

    On October 4, 1999, due diligence request lists were exchanged and the chief
financial officers of both companies and the respective outside legal counsel
and financial advisors to both companies exchanged various telephone calls with
a view toward preparing for a subsequent due diligence meeting. Each party and
its legal counsel and financial advisors continued its due diligence
investigation of the other party through October 21, 1999.

    On October 6, 1999, the Integrated Systems board of directors held a meeting
to discuss the status of the proposed merger.

    On October 8, 1999, Integrated Systems engaged Hambrecht & Quist LLC to
provide financial advisory services to the Integrated Systems board of directors
in connection with a potential transaction with Wind River.

                                       34
<PAGE>
    On October 10, 1999, outside legal counsel to Wind River delivered a first
draft of a merger agreement to outside legal counsel to Integrated Systems. From
October 13, 1999 through October 21, 1999, representatives of Wind River and
representatives of Integrated Systems and the respective outside legal counsel
and financial advisors to Wind River and Integrated Systems had numerous
meetings and telephone conferences during which the merger agreement and various
related agreements were discussed and negotiated.

    On October 12, 1999, the Integrated Systems board of directors met again to
discuss the proposed merger. At that meeting, the Integrated Systems board of
directors, members of Integrated Systems management and representatives of
Integrated Systems' outside legal counsel and financial advisors discussed the
proposed merger, including the provisions contained in the draft merger
agreement.

    On October 13, 1999, Wind River held a telephonic meeting of its board of
directors. At that meeting, the Wind River board of directors, members of Wind
River management and representatives of Wind River's outside legal counsel and
financial advisor discussed the proposed merger, including the provisions
contained in the draft merger agreement, a range of possible exchange ratios and
the status of due diligence efforts.

    On October 15, 1999, the Integrated Systems board of directors met again to
discuss the proposed merger. At that meeting, the Integrated Systems board of
directors, members of Integrated Systems management and representatives of
Integrated Systems' outside legal counsel discussed the proposed merger,
including the provisions contained in the draft merger agreement, negotiation
points and the status of due diligence efforts.

    On October 20, 1999 and October 21, 1999, the Integrated Systems board of
directors met again to discuss the proposed merger. At the meeting on
October 20, 1999, Hambrecht & Quist presented its financial review of the
proposed merger. At both meetings, Hambrecht & Quist updated its financial
review with respect to the merger, and the board of directors, members of
Integrated Systems management and representatives of Integrated Systems' outside
legal counsel and financial advisor discussed the terms of the merger agreement
and related agreements. At the conclusion of the financial review and discussion
of the terms of the merger agreement and related agreements at the October 21,
1999 meeting, Hambrecht & Quist provided the Integrated Systems board of
directors with an oral opinion (subsequently confirmed in writing) that, based
upon certain assumptions and qualifications, the consideration to be received by
the holders of Integrated Systems common stock in the merger was fair to the
holders from a financial point of view. After full discussion, the Integrated
Systems board of directors unanimously approved the merger agreement, the
related agreements and the transactions contemplated by the merger agreement and
the related agreements and authorized the officers of Integrated Systems to
finalize and execute the merger agreement and related agreements.

    On October 21, 1999, the Wind River board of directors also met to consider
the proposed merger. At the meeting on October 21, 1999, Credit Suisse First
Boston made a presentation to the board of directors regarding the financial
aspects of the merger. In addition, the board of directors, members of Wind
River management and representatives of Wind River's outside legal counsel and
financial advisor discussed the terms of the merger agreement and related
agreements. At the conclusion of the financial presentation and the discussion
of the terms of the merger agreement and related agreements, Credit Suisse First
Boston provided the Wind River board of directors with an oral opinion
(subsequently confirmed in writing) that, based upon certain assumptions and
qualifications, the proposed exchange ratio pursuant to the merger agreement was
fair to Wind River from a financial point of view. The Wind River board of
directors voted unanimously to approve the merger agreement, the related
agreements and the transactions contemplated by the merger agreement and the
related agreements and authorized the officers of Wind River to finalize and
execute the merger agreement and related agreements.

                                       35
<PAGE>
    The merger agreement and related agreements were executed and delivered by
the parties on October 21, 1999.

    After the close of the market on October 21, 1999, Wind River and Integrated
Systems issued a joint press release announcing the execution of the merger
agreement.

REASONS FOR THE MERGER

    The following discussion of the parties' reasons for the merger contains a
number of forward-looking statements that reflect the current views of Wind
River and/or Integrated Systems with respect to future events that may have an
effect on their future financial performance. Forward-looking statements are
subject to risks and uncertainties. Actual results and outcomes may differ
materially from the results and outcomes discussed in the forward-looking
statements. Cautionary statements that identify important factors that could
cause or contribute to differences in results and outcomes include those
discussed in "Summary--Forward Looking Information" and "Risk Factors."

WIND RIVER'S REASONS FOR THE MERGER

    Wind River's primary reasons for seeking to consummate a business
combination with Integrated Systems are the beliefs of the Wind River board of
directors and management that a business combination would result in a number of
benefits, including:

    - the ability of the combined company to offer complementary product lines,
      which presents the opportunity to increase the breadth of products
      offered;

    - the ability of the two companies to combine their technological resources
      to develop new products with increased functionality and bring them to
      market faster; and

    - the opportunity for the combined company to compete more effectively in
      the increasingly competitive and rapidly changing market.

    The Wind River board of directors has determined that the merger is in the
best interests of Wind River and its stockholders. In reaching its
determination, the Wind River board of directors considered a number of factors,
including the factors discussed above and listed below. The Wind River board of
directors' conclusions with respect to each of these factors supported its
determination that the merger and the issuance of shares of Wind River common
stock in the merger were fair to, and in the best interests of, Wind River and
its stockholders:

    - the strategic benefits of the merger to Wind River associated with the
      integration of Integrated Systems' products into the Wind River product
      lines;

    - the combination of the Integrated Systems' sales organization with Wind
      River's sales and distribution network, particularly in international
      markets;

    - Integrated Systems' significant technical, engineering, management and
      sales expertise, which is in high demand and short supply;

    - Integrated Systems' significant professional services expertise;

    - the judgment, advice and analyses of Wind River's management with respect
      to the potential strategic, financial and operational benefits of the
      merger, including Wind River management's favorable recommendation of the
      merger, based in part on the business, technical, financial, accounting
      and legal due diligence investigations performed with respect to
      Integrated Systems;

    - the results of operations and financial condition of Wind River and
      Integrated Systems and the anticipated accretive effect of the combination
      on Wind River common stock;

                                       36
<PAGE>
    - the opinion of Credit Suisse First Boston Corporation rendered at the
      October 21, 1999 meeting of the Wind River board of directors that, based
      upon certain analyses performed by Credit Suisse First Boston Corporation
      and discussed with the Wind River board of directors over the course of a
      number of board meetings, including the October 21, 1999 meeting (portions
      of which analyses are described below under "--Opinion of Wind River's
      Financial Advisor"), and based upon and subject to the various conditions
      set forth in the opinion of Credit Suisse First Boston Corporation, the
      exchange ratio was fair to Wind River from a financial point of view as of
      October 21, 1999;

    - the complementary fit between Wind River's and Integrated Systems'
      cultures and market segments, which should facilitate integration of the
      two companies;

    - the terms of the merger agreement and related agreements, including price
      and structure, which were considered by both the board of directors and
      management of Wind River to provide a fair and equitable basis for the
      merger; and

    - the ability to effect the merger as a pooling of interests for financial
      accounting purposes.

    The Wind River board of directors also considered a number of potentially
negative factors in its deliberations concerning the merger. The negative
factors considered by the Wind River board of directors included:

    - the risk that the merger might not be completed in a timely manner or at
      all;

    - the negative impact of any customer or supplier confusion after
      announcement of the proposed merger;

    - the potential dilutive effect on Wind River's common stock price if
      revenue and earnings expectations of the combined company are not met;

    - the potential loss of key Integrated Systems employees critical to the
      ongoing success of the Integrated Systems products and to the successful
      integration of the Wind River and Integrated Systems product lines;

    - the lower rates of Integrated Systems' revenue and earnings growth
      relative to Wind River's revenues and earnings growth over the last two
      fiscal years;

    - the general difficulties of integrating products, technologies and
      companies;

    - the possibility of cultural conflicts between the two companies; and

    - the other risks and uncertainties discussed above under "Risk Factors."

    The foregoing discussion of information and factors considered by the Wind
River board of directors is not intended to be exhaustive but is believed to
include all material factors considered by the Wind River board of directors. In
view of the wide variety of factors considered by the Wind River board of
directors, the Wind River board of directors did not find it practicable to
quantify or otherwise assign relative weight to the specific factors considered.
In addition, the Wind River board did not reach any specific conclusion on each
factor considered, or any aspect of any particular factor, but conducted an
overall analysis of these factors. Individual members of the Wind River board
may have given different weight to different factors. However, after taking into
account all of the factors set forth above, the Wind River board of directors
unanimously agreed that the merger agreement and the merger were fair to, and in
the best interests of, Wind River and its stockholders and that Wind River
should proceed with the merger.

                                       37
<PAGE>
INTEGRATED SYSTEMS' REASONS FOR THE MERGER

    The Integrated Systems board of directors believes that, despite Integrated
Systems' success to date, increasing competition and industry consolidation
would make it increasingly important for Integrated Systems to grow and gain
critical mass in order to compete with larger companies with substantially
greater resources and broader, integrated product offerings. Integrated Systems'
management has considered a number of alternatives for enhancing its competitive
position, including by growing through the acquisition of smaller companies that
could extend Integrated Systems' product offering and enhance the distribution
of Integrated Systems' products and services, or merging with a larger company.
In the industry environment referred to above, the Integrated Systems board of
directors identified several potential benefits for the Integrated Systems
shareholders, employees and customers that it believes would result from the
merger. These potential benefits include:

    - providing Integrated Systems shareholders with shares of Wind River common
      stock in a tax-free exchange at a substantial premium over the market
      price for Integrated Systems common stock;

    - the ability of the combined company to offer complementary product lines,
      which presents the opportunity to increase the breadth of products
      offered;

    - the ability of the two companies to combine their technological resources
      to develop new products with increased functionality and bring them to
      market faster; and

    - the availability of greater resources for product marketing and
      distribution.

    In the course of its deliberations during the Integrated Systems board of
directors meetings, the Integrated Systems board of directors reviewed with
Integrated Systems' management and outside advisors a number of factors relevant
to the merger, including the strategic overview and prospects for Integrated
Systems. The Integrated Systems board of directors also considered the following
positive factors, among others, in connection with its review and analysis of
the merger. The Integrated Systems board of directors' conclusions with respect
to each of these factors supported its determination that the merger agreement,
the principal terms of the merger and the consummation of the merger were fair
to, and in the best interests of, Integrated Systems and its shareholders:

    - historical information concerning Wind River's and Integrated Systems'
      respective businesses, financial performance and condition, operations,
      technology, management and competitive position;

    - Integrated Systems management's view as to the financial condition,
      results of operations and businesses of Wind River and Integrated Systems
      before and after giving effect to the merger based on management due
      diligence and publicly available earnings estimates and, in particular,
      the view that, in light of, among other things, market and industry
      conditions, the potential synergy and compatibility between Integrated
      Systems and Wind River, the financial strength of Wind River and the
      ability to leverage Wind River's sales network to increase sales of
      Integrated Systems' products, the long-term financial condition, results
      of operations, prospects and competitive position of the combined company
      would be better than the long-term financial condition, results of
      operations, prospects and competitive position of Integrated Systems on a
      stand alone basis;

    - current financial market conditions and historical market prices,
      volatility and trading information with respect to Wind River common stock
      and Integrated Systems common stock, which supported a favorable view of
      Wind River's stock market presence and positive reputation with investors,
      as well as the greater liquidity to Integrated Systems shareholders of an
      investment in Wind River common stock compared to Integrated Systems
      common stock;

                                       38
<PAGE>
    - the belief that the terms of the merger agreement and the stock option
      agreement, including the parties' representations, warranties and
      covenants, and the conditions to the parties' respective obligations, are
      reasonable;

    - financial analysis and pro forma and other information with respect to the
      companies presented by Hambrecht & Quist in board presentations, including
      Hambrecht & Quist's opinion rendered at the October 21, 1999 meeting of
      the Integrated Systems board of directors that, based upon certain
      analyses performed by Hambrecht & Quist and discussed with the Integrated
      Systems board of directors over the course of a number of board meetings,
      including the October 21, 1999 meeting (portions of which analyses are
      described below under "--Opinion of Integrated Systems' Financial
      Advisor"), and based upon and subject to the various conditions set forth
      in the opinion of Hambrecht & Quist, the consideration to be received by
      the holders of Integrated Systems common stock in the merger was fair to
      the holders from a financial point of view as of October 21, 1999;

    - the impact of the merger on Integrated Systems' customers and employees;
      and

    - reports from management, legal advisors and financial advisors as to the
      results of their due diligence investigation of Wind River.

    The Integrated Systems board of directors also considered a number of
potentially negative factors in its deliberations concerning the merger. The
negative factors considered by the Integrated Systems board of directors
included:

    - the risk that because the exchange ratio will not be adjusted for changes
      in the market price of either Wind River common stock or Integrated
      Systems common stock, the per share value of the consideration to be
      received by Integrated Systems shareholders might be less than the price
      per share implied by the exchange ratio immediately before the
      announcement of the merger due to fluctuations in the market value of Wind
      River common stock and Integrated Systems common stock;

    - the risk that the merger might not be completed in a timely manner or at
      all;

    - the negative impact of any customer or supplier confusion after
      announcement of the proposed merger;

    - the challenges relating to the integration of the two companies;

    - the loss of control over the future operations of Integrated Systems
      following the merger;

    - the possibility of management and employee disruption associated with the
      potential merger and integrating the operations of the companies, and the
      risk that, despite the efforts of the combined company, key management,
      marketing, technical and administrative personnel of Integrated Systems
      might not continue with the combined company;

    - certain terms of the merger agreement and related agreements that prohibit
      Integrated Systems and its representatives from soliciting third party
      bids and from accepting, approving or recommending unsolicited third party
      bids except in very limited circumstances, which terms would reduce the
      likelihood that a third party would make a bid for Integrated Systems;

    - the risks relating to Wind River's business and how they would affect the
      operations of the combined company; and

    - the other risks described above under "Risk Factors."

    Integrated Systems's board of directors believed that these risks were
outweighed by the potential benefits of the merger.

                                       39
<PAGE>
    The foregoing discussion of information and factors considered by the
Integrated Systems board of directors is not intended to be exhaustive but is
believed to include all material factors considered by the Integrated Systems
board of directors. In view of the wide variety of factors considered by the
Integrated Systems board of directors, the Integrated Systems board of directors
did not find it practicable to quantify or otherwise assign relative weight to
the specific factors considered. In addition, the Integrated Systems board did
not reach any specific conclusion on each factor considered, or any aspect of
any particular factor, but conducted an overall analysis of these factors.
Individual members of the Integrated Systems board may have given different
weight to different factors. However, after taking into account all of the
factors set forth above, the Integrated Systems board of directors unanimously
agreed that the merger agreement and the merger were fair to, and in the best
interests of, Integrated Systems and its shareholders and that Integrated
Systems should proceed with the merger.

OPINION OF WIND RIVER'S FINANCIAL ADVISOR

    Wind River retained Credit Suisse First Boston Corporation to act as its
exclusive financial advisor in connection with the transaction. Credit Suisse
First Boston was selected by the Wind River board of directors to act as Wind
River's financial advisor based on Credit Suisse First Boston's qualifications,
expertise and reputation, as well as Credit Suisse First Boston's investment
banking relationship and familiarity with Wind River. On October 21, 1999, the
Wind River board of directors met to review the proposed transaction with
Integrated Systems and the final terms of the merger agreement. During this
meeting Credit Suisse First Boston rendered its oral opinion, subsequently
confirmed in writing on October 21, 1999, that, as of that date, based upon and
subject to the various considerations set forth in the Credit Suisse First
Boston opinion, the exchange ratio was fair from a financial point of view to
Wind River.

    THE FULL TEXT OF THE CREDIT SUISSE FIRST BOSTON OPINION SETS FORTH, AMONG
OTHER THINGS, ASSUMPTIONS MADE, PROCEDURES FOLLOWED, MATTERS CONSIDERED AND
LIMITATIONS SET ON THE SCOPE OF THE REVIEW UNDERTAKEN BY CREDIT SUISSE FIRST
BOSTON IN RENDERING ITS OPINION. THE FULL TEXT OF THE OPINION IS ATTACHED AS
ANNEX D TO THIS JOINT PROXY STATEMENT/PROSPECTUS AND IS INCORPORATED BY
REFERENCE IN ITS ENTIRETY. WIND RIVER STOCKHOLDERS ARE URGED TO, AND SHOULD,
READ THE CREDIT SUISSE FIRST BOSTON OPINION CAREFULLY AND IN ITS ENTIRETY. THE
CREDIT SUISSE FIRST BOSTON OPINION ADDRESSES ONLY THE FAIRNESS FROM A FINANCIAL
POINT OF VIEW OF THE EXCHANGE RATIO TO WIND RIVER AS OF THE DATE OF THE CREDIT
SUISSE FIRST BOSTON OPINION, AND DOES NOT CONSTITUTE A RECOMMENDATION TO ANY
STOCKHOLDER AS TO HOW SUCH STOCKHOLDER SHOULD VOTE AT THE WIND RIVER SPECIAL
MEETING. THE SUMMARY OF THE CREDIT SUISSE FIRST BOSTON OPINION IN THIS JOINT
PROXY STATEMENT/PROSPECTUS IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE FULL
TEXT OF THE CREDIT SUISSE FIRST BOSTON OPINION.

    In connection with its opinion, Credit Suisse First Boston, among other
things:

    - reviewed certain publicly available business and financial information
      relating to Wind River and Integrated Systems, as well as the merger
      agreement;

    - reviewed certain other information, including financial forecasts,
      provided to Credit Suisse First Boston by Wind River and Integrated
      Systems, and met with the managements of Wind River and Integrated Systems
      to discuss the business and prospects of Wind River and Integrated
      Systems;

    - relied upon the views of Wind River's and Integrated Systems' management
      concerning the business, operational and strategic benefits and
      implications of the transaction, including financial information provided
      to Credit Suisse First Boston by Wind River and Integrated Systems
      relating to the synergistic values and operating cost savings expected to
      be achieved through the combination of the operations of Wind River and
      Integrated Systems;

                                       40
<PAGE>
    - considered certain financial and stock market data of Wind River and
      Integrated Systems and compared that data with similar data for other
      publicly held companies in businesses Credit Suisse First Boston deemed
      similar to those of Wind River and Integrated Systems;

    - considered the financial terms, to the extent publicly available, of
      certain other business combinations and other transactions which have
      recently been effected; and

    - considered such other information, financial studies, analyses and
      investigations and financial, economic and market criteria which it deemed
      relevant.

    In connection with its review, Credit Suisse First Boston did not assume any
responsibility for independent verification of any of the foregoing information
and relied on its being complete and accurate in all material respects. With
respect to the financial forecasts, Credit Suisse First Boston assumed that they
have been reasonably prepared on bases reflecting the best currently available
estimates and judgments of Wind River's and Integrated Systems' management as to
the future financial performance of Wind River and Integrated Systems,
respectively, and as to the cost savings and other potential synergies
(including the amount, timing and achievability thereof) anticipated to result
from the merger. Wind River also has informed Credit Suisse First Boston, and
Credit Suisse First Boston has assumed, that the merger will be treated as a
tax-free reorganization for federal income tax purposes and accounted for as a
pooling-of-interests in accordance with generally accepted accounting
principles. In addition, Credit Suisse First Boston has assumed, with Wind
River's consent, that in the course of obtaining necessary regulatory approvals
in connection with the merger, no delay or restriction will be imposed that will
have a material adverse effect on the expected benefits of the merger. In
addition, Credit Suisse First Boston did not make an independent evaluation or
appraisal of the assets or liabilities (contingent or otherwise) of Wind River
or Integrated Systems, nor was Credit Suisse First Boston furnished with any
such evaluations or appraisals. The Credit Suisse First Boston opinion is
necessarily based upon financial, economic, market and other conditions as they
exist and can be evaluated on the date hereof.

    Credit Suisse First Boston did not express any opinion as to what the value
of the Wind River common stock actually will be when issued to the Integrated
Systems shareholders pursuant to the merger or as to the prices at which such
Wind River common stock will trade subsequent to merger.

    In preparing the Credit Suisse First Boston opinion, Credit Suisse First
Boston performed a variety of financial and comparative analyses. The
preparation of a fairness opinion is a complex process and is not necessarily
susceptible to partial analysis or summary description. Credit Suisse First
Boston believes that its analyses must be considered as a whole and that
selecting portions of its analyses and of the factors considered by it, without
considering all analyses and factors, could create a misleading view of the
processes underlying the Credit Suisse First Boston opinion. No company or
transaction used in the analysis performed by Credit Suisse First Boston as a
comparison is identical to Wind River, Integrated Systems or the contemplated
transaction. In addition, Credit Suisse First Boston may have given various
analyses more or less weight than other analyses, and may have deemed various
assumptions more or less probable than other assumptions, so that the range of
valuation resulting from any particular analysis described below should not be
taken to be Credit Suisse First Boston's view of the actual value of Wind River
or Integrated Systems. In performing its analyses, Credit Suisse First Boston
made numerous assumptions with respect to industry performance, general business
and economic conditions and other matters, many of which are beyond the control
of Wind River or Integrated Systems. The analyses performed by Credit Suisse
First Boston are not necessarily indicative of actual values or actual future
results, which may be significantly more or less favorable than suggested by
such analyses. In addition, analyses relating to the value of businesses or
assets do not purport to be appraisals or to necessarily reflect the prices at
which businesses or assets may actually be sold. The analyses performed were
prepared solely as part of Credit Suisse First Boston's analysis of the fairness
of the exchange ratio from a financial point of view to Wind River and were
provided to

                                       41
<PAGE>
the Wind River board of directors in connection with the delivery of the Credit
Suisse First Boston opinion.

    The following is a summary of the material financial analyses performed by
Credit Suisse First Boston in connection with the preparation of its opinion,
and reviewed with the Wind River board of directors at its meeting held on
October 21, 1999. Certain of the summaries of those financial analyses include
information presented in tabular format. In order to understand fully the
material financial analyses used by Credit Suisse First Boston, the tables
should be read together with the text of each summary. The tables alone do not
constitute a complete description of the material financial analyses.

    HISTORICAL STOCK PRICE ANALYSIS.  Credit Suisse First Boston analyzed the
closing prices of Integrated Systems common stock from January 2, 1998 through
October 20, 1999. Credit Suisse First Boston noted that the high closing price
for Integrated Systems common stock during such period was $23.13 on April 3,
1998, and the low closing price for Integrated Systems common stock during such
period was $6.25 on October 8, 1998.

    Credit Suisse First Boston also analyzed the closing prices of Wind River
common stock from January 2, 1998 through October 20, 1999. Credit Suisse First
Boston noted that the high closing price for Wind River common stock during such
period was $33.00 on January 21, 1999, and the low closing price for Wind River
common stock during such period was $11.88 on April 7, 1999.

    EXCHANGE RATIO ANALYSIS.  Credit Suisse First Boston reviewed the average of
the ratios of the closing price of Integrated Systems common stock to the
closing price of Wind River common stock observed on each trading day over
various periods ending on October 20, 1999 and computed the premium/(discount)
represented by these average exchange ratios when compared to the ratio of the
closing price of Integrated Systems common stock to the closing price of the
Wind River common stock as of October 20, 1999 (referred to as the current
market exchange ratio) and to the exchange ratio. The following table sets forth
the average exchange ratios over the various periods covered and the
premium/(discount) represented by the average exchange ratios when compared to
the current market exchange ratio and the exchange ratio:

<TABLE>
<CAPTION>
                                         PREMIUM/(DISCOUNT) REPRESENTED   PREMIUM REPRESENTED BY
                              AVERAGE      BY CURRENT MARKET EXCHANGE       THE EXCHANGE RATIO
      PERIOD ENDING          EXCHANGE         RATIO VERSUS AVERAGE                VERSUS
     OCTOBER 20, 1999         RATIOS            EXCHANGE RATIOS          AVERAGE EXCHANGE RATIOS
- --------------------------  -----------  ------------------------------  ------------------------
<S>                         <C>          <C>                             <C>
      1 trading day             0.497x                0.0%                        85.1%
     10 trading days            0.559x              (11.1)%                       64.5%
     30 trading days            0.570x              (12.9)%                       61.3%
     60 trading days            0.600x              (17.1)%                       53.4%
     90 trading days            0.628x              (20.8)%                       46.5%
  Since October 21, 1998        0.611x              (18.6)%                       50.7%
  Since January 2, 1997         0.684x              (27.3)%                       34.5%
</TABLE>

    CONTRIBUTION ANALYSIS.  Credit Suisse First Boston analyzed the relative
contributions of Integrated Systems and Wind River to various income statement
financial metrics for the latest twelve months reported historical financial
results as well as the projected financial results for fiscal years 2000, 2001,
2002 and 2003. Such financial projections were based on estimates prepared by
the managements of Wind River and Integrated Systems as well as estimates
published by research analysts. Credit Suisse First Boston calculated the
implied exchange ratios that resulted from the comparison of the income

                                       42
<PAGE>
statement financial metrics for the periods mentioned above. The following table
sets for the results of Credit Suisse First Boston's analysis:

<TABLE>
<CAPTION>
                                                                        IMPLIED EXCHANGE RATIO
                                                                        ----------------------
<S>                                                                     <C>
Median................................................................       1.121x - 1.389x
Mean..................................................................       1.029x - 1.225x
</TABLE>

    PRECEDENT TRANSACTIONS ANALYSIS.  Credit Suisse First Boston reviewed 14
precedent acquisition transactions in the software industry and compared certain
publicly available financial statistics for the selected acquisition
transactions to the comparable financial statistics for the Integrated Systems
transaction based on the value of Integrated Systems implied by the exchange
ratio and the closing price of the Wind River common stock as of October 20,
1999.

    The following table presents the median and mean transaction value paid by
the acquirors in the selected transactions, as a multiple of the next twelve
months (NTM) projected revenues and earnings estimates, as projected by research
analysts, for the respective targets and the comparable statistics for the
Integrated Systems transaction, assuming research analysts' estimates for
Integrated Systems:

<TABLE>
<CAPTION>
                                                                              TRANSACTION VALUE PAID
                                                                                AS A MULTIPLE OF:
                                                                        ----------------------------------
                                                                         NTM REVENUES     NTM NET INCOME
                                                                        ---------------  -----------------
<S>                                                                     <C>              <C>
Median................................................................          2.4x             25.4x
Mean..................................................................          2.6x             27.4x
Integrated Systems....................................................          2.4x             31.5x
</TABLE>

    No transaction utilized as a comparison in the precedent acquisition
transactions analysis is identical to the Integrated Systems transaction. In
evaluating the Integrated Systems transaction, Credit Suisse First Boston made
judgements and assumptions with regard to industry performance, general
business, economic, market and financial conditions and other matters, many of
which are beyond the control of Wind River and Integrated Systems, such as the
impact of competition on the businesses of Wind River and Integrated Systems and
the industry generally, industry growth and the absence of any adverse material
change in the financial condition and prospects of Wind River, Integrated
Systems or the industry or in the financial markets in general. Mathematical
analysis, such as determining the average or median, is not in itself a
meaningful method of using comparable transaction data.

    PRO FORMA EARNINGS IMPACT ANALYSIS.  Credit Suisse First Boston analyzed
certain pro forma effects of the merger, including, among other things, the
impact of the merger on the estimated earnings per share as reported and
estimated earnings per share as reported and including anticipated cost
synergies for Wind River's fiscal years 2001, 2002 and 2003 based on financial
estimates prepared by research analysts and by the managements of Wind River and
Integrated Systems. The following table sets forth, based on such financial
estimates, the resulting percentage accretion/(dilution) to Wind River's
estimated earnings per share excluding anticipated cost synergies and estimated
earnings per share including anticipated cost synergies for fiscal year 2001,
2002 and 2003 results:

<TABLE>
<CAPTION>
                                                                ACCRETION/(DILUTION)
                                             ----------------------------------------------------------
                                                FISCAL YEAR         FISCAL YEAR         FISCAL YEAR
                                               2001 ESTIMATE       2002 ESTIMATE       2003 ESTIMATE
                                             ------------------  ------------------  ------------------
<S>                                          <C>                 <C>                 <C>
Earnings Per Share Accretion/ (Dilution)
  Excluding Anticipated Cost Synergies.....    (1.5)% - 1.6%      (0.4)% - (1.1)%      (5.6)% - 0.8%
Earnings Per Share Accretion/ (Dilution)
  Including Anticipated Cost Synergies.....     7.8% - 11.8%        8.1% - 9.0%         0.6% - 8.4%
</TABLE>

                                       43
<PAGE>
    FUTURE VALUE ANALYSIS.  Credit Suisse First Boston computed the implied per
share value of Wind River common stock both on a stand-alone basis and assuming
the merger is completed. This analysis was based upon an estimated trading
multiple of future earnings per share of between 15.0x and 30.0x and Wind
River's estimated earnings per share in calendar year 2002, based on financial
estimates prepared by research analysts and by the managements of Wind River and
Integrated Systems and including anticipated cost synergies that may result from
the merger. The following table sets forth the resulting estimated ranges of the
future per share value for Wind River:

<TABLE>
<CAPTION>
                                                                            POTENTIAL FUTURE VALUE PER
                                                                                      SHARE
                                                                          ------------------------------
<S>                                                                       <C>
Wind River stand-alone..................................................         $15.92 - $43.64
Wind River pro forma after the merger...................................         $19.46 - $59.28
</TABLE>

    As described above, Credit Suisse First Boston's opinion and presentation to
the Wind River board of directors was one of many factors taken into
consideration by the Wind River board of directors in making its determination
to recommend the merger agreement and the transactions contemplated thereby.
Consequently, the analyses described above should not be viewed as determinative
of the opinion of the Wind River board of directors or the management of Wind
River with respect to the value of Wind River or Integrated Systems or whether
the Wind River board of directors would have been willing to agree to a
different exchange ratio.

    The Wind River board of directors retained Credit Suisse First Boston to act
as its financial advisor in connection with the transaction. Credit Suisse First
Boston was selected by the Wind River board of directors based on Credit Suisse
First Boston's qualifications, expertise and reputation, as well as its
familiarity with Wind River. Credit Suisse First Boston is an internationally
recognized investment banking and advisory firm. Credit Suisse First Boston, as
part of its investment banking business, is continuously engaged in the
valuation of businesses and securities in connection with mergers and
acquisitions, negotiated underwritings, competitive biddings, secondary
distributions of listed and unlisted securities, private placements and
valuations for corporate and other purposes. In the ordinary course of its
business, Credit Suisse First Boston and its affiliates may actively trade the
debt and equity securities of Wind River and Integrated Systems for their own
accounts and for the accounts of their customers and, accordingly, may at any
time hold a long or short position in such securities.

    Pursuant to an engagement letter dated September 15, 1999, Wind River
engaged Credit Suisse First Boston to provide financial advisory services to the
Wind River board of directors in connection with the transaction, including,
among other things, rendering its opinion and making the presentation referred
to above. Pursuant to the terms of the engagement letter, Wind River has agreed
to pay Credit Suisse First Boston a customary fee in connection therewith. In
addition, Wind River has agreed to reimburse Credit Suisse First Boston for its
out-of-pocket expenses, including attorney's fees, incurred in connection with
its engagement and to indemnify Credit Suisse First Boston and certain related
persons against certain liabilities and expenses arising out of or in
conjunction with its rendering of services under its engagement, including
liabilities arising under the federal securities laws.

                                       44
<PAGE>
OPINION OF INTEGRATED SYSTEMS' FINANCIAL ADVISOR

    Integrated Systems engaged Hambrecht & Quist to act as its exclusive
financial advisor in connection with the proposed transaction and to render an
opinion as to the fairness from a financial point of view to the holders of
outstanding shares of common stock of Integrated Systems of the consideration to
be received by such shareholders in the proposed transaction. Hambrecht & Quist
was selected by the Integrated Systems board of directors based on Hambrecht &
Quist's qualifications, expertise and reputation, as well as Hambrecht & Quist's
historic investment banking relationship and familiarity with Integrated Systems
and Wind River. Hambrecht & Quist rendered its oral opinion (subsequently
confirmed in writing) on October 21, 1999 to the Integrated Systems board that,
as of such date, the consideration to be received by the holders of Integrated
Systems common stock in the proposed transaction is fair from a financial point
of view.

    THE FULL TEXT OF THE OPINION DELIVERED BY HAMBRECHT & QUIST TO THE
INTEGRATED SYSTEMS BOARD OF DIRECTORS DATED OCTOBER 21, 1999, WHICH SETS FORTH
THE ASSUMPTIONS MADE, GENERAL PROCEDURES FOLLOWED, MATTERS CONSIDERED, AND
LIMITATIONS ON THE SCOPE OF REVIEW UNDERTAKEN BY HAMBRECHT & QUIST IN RENDERING
ITS OPINION, IS ATTACHED AS ANNEX E TO THIS JOINT PROXY STATEMENT/PROSPECTUS AND
IS INCORPORATED INTO THIS DOCUMENT BY REFERENCE. HAMBRECHT & QUIST'S OPINION IS
DIRECTED ONLY TO THE FAIRNESS, FROM A FINANCIAL POINT OF VIEW, OF THE
CONSIDERATION TO BE RECEIVED BY THE HOLDERS OF INTEGRATED SYSTEMS COMMON STOCK
IN THE PROPOSED TRANSACTION AND DOES NOT CONSTITUTE A RECOMMENDATION TO ANY
INTEGRATED SYSTEMS SHAREHOLDER AS TO HOW SUCH SHAREHOLDER SHOULD VOTE WITH
RESPECT TO THE PROPOSED TRANSACTION. THE SUMMARY OF HAMBRECHT & QUIST'S FAIRNESS
OPINION SET FORTH BELOW IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE FULL
TEXT OF ITS FAIRNESS OPINION ATTACHED TO THIS DOCUMENT AS ANNEX E. INTEGRATED
SYSTEMS SHAREHOLDERS ARE URGED TO READ CAREFULLY THE OPINION IN ITS ENTIRETY.

    In reviewing the proposed transaction, and in arriving at its opinion,
Hambrecht & Quist, among other things:

    - reviewed the publicly available consolidated financial statements of Wind
      River for recent years and interim periods to date, including certain
      projections and certain other relevant financial and operating data of
      Wind River (including its capital structure) made available to
      Hambrecht & Quist from published sources;

    - discussed the business, financial condition and prospects of Wind River
      with certain members of senior management;

    - reviewed the publicly available consolidated financial statements of
      Integrated Systems for recent years and interim periods to date, including
      certain projections and certain other relevant financial and operating
      data of Integrated Systems made available to Hambrecht & Quist from
      published sources;

    - discussed the business, financial condition and prospects of Integrated
      Systems with certain members of senior management;

    - reviewed the recent reported prices and trading activity for the common
      stocks of Wind River and Integrated Systems and compared such information
      and certain financial information for Wind River and Integrated Systems
      with similar information for certain other companies engaged in businesses
      Hambrecht & Quist considered comparable;

    - reviewed the financial terms, to the extent publicly available, of certain
      comparable merger and acquisition transactions;

    - reviewed a draft of the merger agreement; and

                                       45
<PAGE>
    - performed such other analyses and examinations and considered such other
      information, financial studies, analyses and investigations and financial,
      economic and market data as Hambrecht & Quist deemed relevant.

    Hambrecht & Quist did not independently verify any of the information
concerning Integrated Systems or Wind River in connection with its review of the
proposed transaction and, for purposes of its opinion, Hambrecht & Quist assumed
and relied upon the accuracy and completeness of all such information. In
connection with its opinion, Hambrecht & Quist did not prepare or obtain any
independent valuation or appraisal of any of the assets or liabilities of
Integrated Systems or Wind River, nor did it conduct a physical inspection of
the properties and facilities of Integrated Systems or Wind River. With respect
to the financial forecasts and projections used in its analyses, Hambrecht &
Quist assumed that they reflected the best currently available estimates and
judgments of the expected future financial performance of Wind River and
Integrated Systems. For the purposes of its opinion, Hambrecht & Quist also
assumed that neither Integrated Systems nor Wind River was a party to any
pending transactions, including external financings, recapitalizations or
material merger discussions, other than the proposed transaction and those
activities undertaken in the ordinary course of conducting their respective
businesses. For purposes of its opinion, Hambrecht & Quist assumed that the
proposed transaction will qualify as a tax-free reorganization under the
Internal Revenue Code of 1986, as amended, for the shareholders of Integrated
Systems and that the proposed transaction will be accounted for as a pooling of
interests. Hambrecht & Quist's opinion is necessarily based upon market,
economic, financial and other conditions as they existed and could be evaluated
as of the date of the opinion and any subsequent change in such conditions would
require a reevaluation of such opinion.

    The preparation of a fairness opinion is a complex process and is not
necessarily susceptible to partial analysis or summary description. The summary
of the Hambrecht & Quist analyses set forth below does not purport to be a
complete description of the presentation by Hambrecht & Quist to the Integrated
Systems board. In arriving at its opinion, Hambrecht & Quist did not attribute
any particular weight to any analyses or factors considered by it, but rather
made qualitative judgments as to the significance and relevance of each analysis
and factor. Accordingly, Hambrecht & Quist believes that its analyses and the
summary set forth below must be considered as a whole and that selecting
portions of its analyses, without considering all analyses, or of the following
summary, without considering all factors and analyses, could create an
incomplete view of the processes underlying the analyses set forth in the
Hambrecht & Quist presentation to the Integrated Systems board and its opinion.
In performing its analyses, Hambrecht & Quist made numerous assumptions with
respect to industry performance, general business and economic conditions and
other matters, many of which are beyond the control of Integrated Systems and
Wind River. The analyses performed by Hambrecht & Quist (and summarized below)
are not necessarily indicative of actual values or actual future results, which
may be significantly more or less favorable than suggested by such analyses.
Additionally, analyses relating to the values of businesses do not purport to be
appraisals or to reflect the prices at which businesses actually may be
acquired.

    In performing its analyses, Hambrecht & Quist used published Wall Street
research estimates for projections of Integrated Systems' and Wind River's
calendar 1999 and 2000 financial performance.

    The following is a brief summary of certain financial analyses performed by
Hambrecht & Quist in connection with providing its opinion to the Integrated
Systems board of directors on October 21, 1999. The summary of financial
analyses includes information presented in tabular format. You should read those
tables together with the text of each summary.

    CONTRIBUTION ANALYSIS.  Hambrecht & Quist analyzed the pro forma
contribution of each of Integrated Systems and Wind River to certain financial
statement categories of the pro forma combined company for the latest
12 months, calendar 1999 and calendar 2000, assuming no synergies. Categories
compared included revenue, gross profit, operating income and net income.
Hambrecht & Quist then

                                       46
<PAGE>
compared this contribution analysis to the pro forma ownership percentages that
the shareholders of Integrated Systems and stockholders of Wind River would have
in the combined company after the proposed transaction. Hambrecht & Quist
observed that on a fully diluted basis, Wind River stockholders are expected to
own approximately 65.1% and the Integrated Systems shareholders are expected to
own approximately 34.9% of the combined company equity following the proposed
transaction. The table below sets forth the percentages that Hambrecht & Quist
estimated that each company would contribute to the revenue, gross profit,
operating income and net income of the combined company for the latest
12 months, calendar 1999 and calendar 2000.

<TABLE>
<CAPTION>
                                                                                OPERATING
                                                  REVENUE     GROSS PROFIT       INCOME       NET INCOME
                                                -----------  ---------------  -------------  -------------
<S>                                             <C>          <C>              <C>            <C>
LATEST 12 MONTHS
  Wind River..................................        51.1%          54.9%           79.7%          75.8%
  Integrated Systems..........................        48.9%          45.1%           20.3%          24.2%
1999*
  Wind River..................................        53.4%          56.3%           81.2%          74.5%
  Integrated Systems..........................        46.6%          43.7%           18.8%          25.5%
2000*
  Wind River..................................        54.8%          57.2%           77.0%          72.3%
  Integrated Systems..........................        45.2%          42.8%           23.0%          27.7%
</TABLE>

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

* Estimated

    HISTORICAL ANALYSIS OF IMPLIED PREMIUM.  Hambrecht & Quist analyzed the
premium to the holders of common stock of Integrated Systems implied by the
exchange ratio in the proposed transaction based on the historical average
prices of Wind River common stock and Integrated Systems common stock for
periods ending on October 21, 1999. The following table sets forth the results
of this analysis:

<TABLE>
<S>                                                                     <C>
As of October 21, 1999................................................       74.7%
One-Week Average......................................................       76.2%
One-Month Average.....................................................       65.5%
Three-Month Average...................................................       53.2%
Six-Month Average.....................................................       38.5%
Twelve-Month Average..................................................       57.5%
</TABLE>

    ANALYSIS OF PUBLICLY TRADED COMPARABLE COMPANIES.  Hambrecht & Quist
compared selected historical and projected financial information of Integrated
Systems to publicly traded embedded systems and development tools companies that
Hambrecht & Quist deemed to be comparable to Integrated Systems. Companies
deemed comparable were:

    - Applied Microsystems;

    - GeoWorks;

    - Microware Systems;

    - Peerless Systems;

    - Inprise;

    - Ilog;

    - Merant;

    - Progress Software;

                                       47
<PAGE>
    - Rational Software;

    - Santa Cruz Operation;

    - Segue Software;

    - Rogue Wave Software; and

    - Sapiens

    Such information included the ratio of market value to projected net
earnings as well as the ratio of the enterprise value (market value plus debt
less cash) to historical and projected revenue. Hambrecht & Quist determined
that the median values of the foregoing multiples for the embedded systems and
development tools companies were 1.8 times latest twelve months revenue, 1.7
times projected calendar 1999 revenue, 1.4 times projected calendar 2000
revenue, 21.3 times projected calendar 1999 net earnings and 14.7 times
projected calendar 2000 net earnings. The foregoing multiples compared to
multiples of 3.1 times latest twelve months revenue, 3.0 times projected
calendar 1999 revenue, 2.5 times projected calendar 2000 revenue, 46.1 times
projected calendar 1999 net earnings and 31.8 times projected calendar 2000 net
earnings of Integrated Systems implied by the offer in the proposed transaction.

    PRESENT VALUE OF FUTURE EARNINGS ANALYSIS.  Hambrecht & Quist analyzed the
implied present value per share of Integrated Systems common stock on a
stand-alone basis based on Integrated Systems' projected calendar 2000 net
earnings. Hambrecht & Quist observed the following based on projected earnings
growth of 15.0-35.0% for calendar 2000:

       Calendar 2000

<TABLE>
<CAPTION>
                                      IMPLIED EQUITY VALUE PER
P/E MULTIPLE RANGE  DISCOUNT RATES             SHARE
- ------------------  --------------  ----------------------------
<S>                 <C>             <C>
   17.0x-19.0x          11.0-19.0%         $   9.53-14.81
</TABLE>

    Hambrecht & Quist also analyzed the implied present value per share of Wind
River common stock on a stand-alone basis based on Wind River's projected
calendar 2000 net earnings. Hambrecht & Quist observed the following based on
projected earnings growth of 15.0-35.0% for calendar 2000:

       Calendar 2000

<TABLE>
<CAPTION>
                                      IMPLIED EQUITY VALUE PER
P/E MULTIPLE RANGE  DISCOUNT RATES             SHARE
- ------------------  --------------  ----------------------------
<S>                 <C>             <C>
   20.0x-24.0x          11.0-19.0%         $  15.66-23.64
</TABLE>

    ANALYSIS OF SELECTED COMPARABLE MERGER AND ACQUISITION
TRANSACTIONS.  Hambrecht & Quist compared the proposed transaction with selected
comparable merger and acquisition transactions. This analysis included
twenty-four transactions involving companies in the software systems and
development tools industry.

    In examining these transactions, Hambrecht & Quist analyzed, among other
things, the multiples of offer prices to revenue for the latest twelve-month
period and the multiples of offer prices to projected net earnings for the
acquired companies. The median multiples offered in the selected transactions
were 3.7 times latest twelve months revenue, 27.5 times projected net earnings
for the calendar year in which the merger or acquisition was agreed to, and 25.7
times projected net earnings for the following calendar year. Applying a
representative range of multiples from the selected transactions to Integrated
Systems' latest twelve months revenue, calendar 1999 projected net earnings and
calendar 2000 projected net earnings, Hambrecht & Quist determined an implied
equity value per share of Integrated Systems common stock ranging from $10.00 to
$17.50. This compared to the offer in the proposed transaction of $18.46 per
share.

                                       48
<PAGE>
    Hambrecht & Quist also compared the implied premium of the offer in the
proposed transaction as of October 21, 1999 to similar premiums for the selected
merger and acquisition transactions. Hambrecht & Quist observed that the median
one-day and twenty-day premiums paid in the selected transactions was 37.0% and
47.9%, respectively. By comparison, the implied one-day and twenty-day premiums
represented by the offer in the proposed transaction were 74.7% and 54.6%,
respectively.

    No company or transaction used in the "Analysis of Publicly Traded
Comparable Companies" or "Analysis of Selected Comparable Merger and Acquisition
Transactions" is identical to Integrated Systems or the proposed transaction.
Accordingly, an analysis of the results of the foregoing is not mathematical;
rather, it involves complex considerations and judgments concerning differences
in financial and operating characteristics of the companies, the terms and
conditions of the transactions and other factors that could affect the public
trading values of the companies or transactions to which they are compared.

    OTHER ANALYSES.  Hambrecht & Quist conducted such other analyses as it
deemed necessary, including reviewing historical and projected financial,
operating and trading data for Integrated Systems and Wind River and selected
Wall Street research reports on each of the entities, including information
pertaining to the projected revenue and gross profit for each of the entities
and assessing growth opportunities for each of the companies.

    The foregoing description of Hambrecht & Quist's opinion is qualified in its
entirety by reference to the full text of such opinion which is attached as
Annex E to this document.

    FEE ARRANGEMENTS.  Hambrecht & Quist, as part of its investment banking
services, is regularly engaged in the valuation of businesses and their
securities in connection with mergers and acquisitions, strategic transactions,
corporate restructurings, negotiated underwritings, secondary distributions of
listed and unlisted securities, private placements and valuations for corporate
and other purposes. Hambrecht & Quist has acted as a financial advisor to the
board of directors of Integrated Systems in connection with the proposed
transaction, and it will receive a fee for its services, which include the
rendering of the fairness opinion.

    In the past, Hambrecht & Quist has provided investment banking and other
financial advisory services to Integrated Systems and Wind River, and has
received fees for rendering these services. Hambrecht & Quist lead-managed
Integrated Systems' 1996 equity follow-on offering and co-managed Wind River's
1996 equity follow-on offering. In the ordinary course of business, Hambrecht &
Quist acts as a market maker and broker in the publicly traded securities of
Integrated Systems and Wind River, and receives customary compensation in
connection with those activities, and also provides research coverage for
Integrated Systems and Wind River. In the ordinary course of business,
Hambrecht & Quist actively trades in the equity and derivative securities of
Integrated Systems and Wind River for its own account and for the accounts of
its customers and, accordingly, may at any time hold a long or short position in
such securities. Hambrecht & Quist may in the future provide additional
investment banking or other financial advisory services to Integrated Systems
and Wind River.

INTERESTS OF WIND RIVER'S OFFICERS AND DIRECTORS IN THE MERGER

    In considering the recommendation of the Wind River board of directors with
respect to approving the issuance of Wind River common stock in the merger, Wind
River stockholders should be aware that certain members of the board of
directors and management of Wind River have interests in the merger that are in
addition to the interests of stockholders of Wind River generally. The Wind
River board of directors was aware of these interests and considered them, among
other matters, in approving the issuance of Wind River common stock in the
merger.

                                       49
<PAGE>
    COMBINED COMPANY BOARD OF DIRECTORS.  The merger agreement provides that
after the effective time of the merger, the board of directors of the combined
company shall consist of seven directors, five of whom shall be designated by
Wind River and two of whom shall be designated by Integrated Systems.

    COMBINED COMPANY EXECUTIVE OFFICERS.  The merger agreement provides that
Mr. Fiddler will serve as Chairman and a director of the combined company after
the effective time of the merger. The merger agreement also provides that after
the effective time of the merger, Mr. St. Dennis will serve as Chief Executive
Officer and a director of the combined company.

INTERESTS OF INTEGRATED SYSTEMS' OFFICERS AND DIRECTORS IN THE MERGER

    In considering the recommendation of the Integrated Systems board of
directors with respect to approving the principal terms of the merger,
Integrated Systems shareholders should be aware that certain members of the
board of directors and management of Integrated Systems have interests in the
merger that are in addition to the interests of shareholders of Integrated
Systems generally. The Integrated Systems board of directors was aware of these
interests and considered them, among other matters, in approving the principal
terms of the merger, the merger agreement and the merger transactions.

    COMBINED COMPANY BOARD OF DIRECTORS.  The merger agreement provides that
after the merger, the board of directors of the combined company will consist of
seven directors, five of whom will be designated by Wind River and two of whom
will be designated by Integrated Systems and shall have been directors of
Integrated Systems. The directors designated by Integrated Systems will be
Narendra Gupta and one other current director of Integrated Systems. In
addition, the merger agreement provides that Dr. Gupta will serve as Vice
Chairman and a director of the combined company after the merger.

    INDEMNIFICATION AND INSURANCE.  The merger agreement provides for the
survival after the merger of all indemnification rights of the directors and
officers of Integrated Systems for acts and omissions occurring before the
merger, as their rights existed as of October 21, 1999, in the Integrated
Systems articles of incorporation and bylaws and in indemnification agreements
with Integrated Systems. Wind River will guarantee that the surviving company
observes all of these indemnification rights to the fullest extent permitted by
California law for a period of seven years after the merger. In addition, for a
period of seven years after the merger, Wind River will maintain a directors'
and officers' liability insurance policy covering those persons who are
currently covered by Integrated Systems' directors' and officers' liability
insurance policy with coverage in amount and scope at least as favorable as
Integrated Systems' existing coverage. If the annual premiums of such insurance
coverage exceed 200% of the current annual premium paid by Integrated Systems to
provide such coverage, Wind River will obtain a policy with the greatest
coverage available for a cost not exceeding that amount. If a policy of the type
described above is not available in the market, Wind River will obtain a policy
that is as close as possible to being as favorable as Integrated Systems'
existing policy.

    AUTOMATIC ACCELERATION OF STOCK OPTIONS; SEVERANCE PAYMENTS.  Before the
initiation of discussions relating to the merger, Integrated Systems entered
into change in control arrangements with Charles Boesenberg, the President,
Chief Executive Officer and a director of Integrated Systems, and the following
executive officers of Integrated Systems: William Smith, Joseph Addiego, Martin
Caniff, David Stepner, James Challenger and Scot Morrison. These arrangements
provide for benefits if there is a change in control of Integrated Systems. The
merger is a change in control for this purpose.

    Mr. Boesenberg's change in control benefits consist of the acceleration of
the vesting of his Integrated Systems stock options by 24 months, as long as he
continues to fulfill his duties until the merger is completed and assists the
combined company to facilitate a smooth transition after the

                                       50
<PAGE>
merger for a period of up to six months. Mr. Smith's change in control benefits
consist of acceleration of the vesting of all of his Integrated Systems options,
plus a cash payment equal to his current base salary and target bonus for one
year. The change in control benefits of the other executive officers consist of
acceleration of the vesting of 50% of their unvested Integrated Systems options,
plus a cash payment equal to their respective current base salary and target
bonus for one year. The change in control benefits for all of these executive
officers, except for Mr. Boesenberg, are conditioned upon:

    - the completion of the merger; and

    - termination of the executive's employment within one year after the
      completion of the merger, either by the combined company without cause or
      by the executive for good reason.

As of October 21, 1999, these executive officers as a group held a total of
1,150,480 unvested options to purchase Integrated Systems common stock.

    DIRECTORS' PLAN ACCELERATION.  Under the Integrated Systems 1994 Directors
Stock Option Plan, all unvested options will become exercisable immediately
before the completion of a change in control. The merger is a change in control
for this purpose. Therefore, all options held by the five non-employee directors
of Integrated Systems under this plan will be fully vested immediately before
the effective time of the merger. Assuming that the merger is completed on
February 15, 2000, options to purchase a total of 50,216 shares of Integrated
Systems common stock held by the five non-employee directors of Integrated
Systems would become exercisable in full.

MATERIAL FEDERAL INCOME TAX CONSEQUENCES

    The following discussion summarizes the material federal income tax
considerations of the merger that are expected to apply generally to Integrated
Systems shareholders upon an exchange of their Integrated Systems common stock
for Wind River common stock in the merger. This summary is based upon current
provisions of the Internal Revenue Code, existing regulations under the Internal
Revenue Code and current administrative rulings and court decisions, all of
which are subject to change. Any change, which may or may not be retroactive,
could alter the tax consequences to Wind River, Integrated Systems or the
shareholders of Integrated Systems as described in this summary. No attempt has
been made to comment on all federal income tax consequences of the merger that
may be relevant to particular holders, including holders:

    - who are subject to special tax rules such as dealers in securities,
      foreign persons, mutual funds, insurance companies or tax-exempt entities;

    - who are subject to the alternative minimum tax provisions of the Internal
      Revenue Code;

    - who acquired their shares in connection with stock option or stock
      purchase plans or in other compensatory transactions;

    - who hold their shares as a hedge or as part of a hedging, straddle or
      other risk reduction strategy;

    - whose shares are qualified small business stock for purposes of
      Section 1202 of the Internal Revenue Code; and

    - who do not hold their shares as capital assets.

    In addition, the following discussion does not address the tax consequences
of the merger under state, local and foreign tax laws or the tax consequences of
transactions effectuated before or after the merger, whether or not they are in
connection with the merger. Furthermore, the following discussion does not
address (i) the tax consequences of transactions effectuated before, after or at
the same time as the merger, whether or not they are in connection with the
merger, including, without limitation, transactions in which Integrated Systems
shares are acquired or Wind River shares are disposed of,

                                       51
<PAGE>
(ii) the tax consequences to holders of options issued by Integrated Systems
which are assumed, exercised or converted, as the case may be, in connection
with the merger, (iii) the tax consequences for Integrated Systems shareholders
who exercise dissenters' rights, (iv) the tax consequences of the receipt of
Wind River shares other than in exchange for Integrated Systems shares, or
(v) the tax implications of a failure of the merger to qualify as a
reorganization. Accordingly, holders of Integrated Systems common stock are
advised and expected to consult their own tax advisers regarding the federal
income tax consequences of the merger in light of their personal circumstances
and the consequences under state, local and foreign tax laws.

    As a condition to the consummation of the merger, Cooley Godward LLP and
Fenwick & West LLP must render tax opinions that the merger will constitute a
reorganization within the meaning of Section 368(a) of the Internal Revenue Code
(a "Reorganization"). The tax opinions discussed in this section assume and are
conditioned upon the following:

    - the truth and accuracy of the statements, covenants, representations and
      warranties contained in the merger agreement, in the tax representations
      received from Wind River, Merger Sub and Integrated Systems to support the
      tax opinions and in all other instruments and documents related to the
      formation, organization and operation of Wind River, Merger Sub and
      Integrated Systems examined by and relied upon by Cooley Godward LLP and
      Fenwick & West LLP in connection with the merger;

    - that original documents submitted to such counsel are authentic, documents
      submitted to such counsel as copies conform to the original documents, and
      that all of these documents have been (or will be by the effective time)
      duly and validly executed and delivered where due execution and delivery
      are a prerequisite to the effectiveness of these documents;

    - that all covenants contained in the merger agreement and the tax
      representations, described above, are performed without waiver or breach
      of any material provision of these covenants; and

    - that any representation or statement made "to the best of knowledge" or
      similarly qualified is correct without that qualification.

    No ruling from the Internal Revenue Service has been or will be requested in
connection with the merger. In addition, shareholders of Integrated Systems
should be aware that the tax opinions discussed in this section are not binding
on the IRS, the IRS could adopt a contrary position and a contrary position
could be sustained by a court.

    Subject to the assumptions and limitations discussed above, it is the
opinion of Cooley Godward LLP, tax counsel to Wind River, and Fenwick & West
LLP, tax counsel to Integrated Systems, that:

    - the merger will be treated for federal income tax purposes as a
      Reorganization;

    - Wind River, Merger Sub and Integrated Systems will each be a party to the
      Reorganization;

    - Wind River, Merger Sub and Integrated Systems will not recognize any gain
      or loss solely as a result of the merger;

    - shareholders of Integrated Systems will not recognize any gain or loss
      upon the receipt of solely Wind River common stock for their Integrated
      Systems common stock, other than with respect to cash received in lieu of
      fractional shares of Wind River common stock;

    - the aggregate basis of the shares of Wind River common stock received by
      an Integrated Systems shareholder in the merger (including any fractional
      share deemed received) will be the same as the aggregate basis of the
      shares of Integrated Systems common stock surrendered in exchange
      therefor;

                                       52
<PAGE>
    - the holding period of the shares of Wind River common stock received by an
      Integrated Systems shareholder in the merger will include the holding
      period of the shares of Integrated Systems common stock surrendered in
      exchange therefor, provided that such shares of Integrated Systems common
      stock are held as capital assets at the effective time of the merger; and

    - a shareholder of Integrated Systems who receives cash in lieu of a
      fractional share will recognize gain or loss equal to the difference, if
      any, between such shareholder's basis in the fractional share and the
      amount of cash received. Such gain or loss will be a capital gain or loss
      if the Integrated Systems common stock is held by such shareholder as a
      capital asset at the effective time of the merger.

ANTICIPATED ACCOUNTING TREATMENT

    The merger is expected to be accounted for using the "pooling of interests"
method of accounting pursuant to Opinion No. 16 of the Accounting Principles
Board. The pooling of interests method of accounting assumes that the combining
companies have been merged from inception, and the historical consolidated
financial statements for periods prior to consummation of the merger are
restated as though the companies had been combined from inception. Wind River
may terminate the merger agreement if the merger cannot be accounted for as a
pooling of interests.

REGULATORY APPROVALS

    Transactions such as the merger are subject to review by the Department of
Justice and the FTC to determine whether they comply with applicable antitrust
laws. Under the provisions of the HSR Act, the merger may not be consummated
until the specified waiting period requirements of the HSR Act have been
satisfied. Wind River and Integrated Systems filed notification reports,
together with requests for early termination of the waiting period, with the
Department of Justice and the FTC under the HSR Act on November 3, 1999, and the
waiting period terminated on December 3, 1999.

RESTRICTIONS ON RESALES BY AFFILIATES

    The shares of Wind River common stock to be received by Integrated Systems
shareholders in the merger have been registered under the Securities Act and,
except as described in this paragraph, may be freely traded without restriction.
The shares of Wind River common stock to be issued in the merger and received by
persons who may be considered to be "affiliates" (as that term is defined in
Rule 144 under the Securities Act) of Integrated Systems before the merger may
be resold by them only in transactions permitted by the resale provisions of
Rule 145 under the Securities Act or as otherwise permitted under the Securities
Act. Under guidelines published by the SEC, the sale or other disposition of
Wind River common stock or Integrated Systems common stock by an affiliate of
either Wind River or Integrated Systems within 30 days before the effective time
or the sale or other disposition of Wind River common stock after the merger and
before the publication of financial results that include at least 30 days of
post-merger combined operations of Wind River and Integrated Systems could
preclude pooling of interests accounting treatment of the merger. Accordingly,
the merger agreement provides that Wind River and Integrated Systems will obtain
a signed affiliate agreement from all persons who may be considered to be their
affiliates. The affiliate agreements provide that these persons will not sell,
transfer or otherwise dispose of any shares of Wind River common stock or
Integrated Systems common stock during the pooling period referred to above and,
with respect to affiliates of Integrated Systems, that they will not sell,
transfer or otherwise dispose of Wind River common stock at any time in
violation of the Securities Act or the rules and regulations promulgated under
the Securities Act, including Rule 145. Wind River and Integrated Systems have
obtained executed affiliate agreements from all persons known to the managements
of Wind River or Integrated Systems to be affiliates of such corporations.

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                     CERTAIN TERMS OF THE MERGER AGREEMENT

    THE FOLLOWING DESCRIPTION OF THE MERGER AGREEMENT DESCRIBES THE MATERIAL
TERMS OF THE MERGER AGREEMENT. THE FULL TEXT OF THE MERGER AGREEMENT IS ATTACHED
AS ANNEX A TO THIS JOINT PROXY STATEMENT/PROSPECTUS AND IS INCORPORATED HEREIN
BY REFERENCE. WE ENCOURAGE YOU TO READ THE ENTIRE MERGER AGREEMENT.

THE MERGER

    The merger agreement provides that at the effective time, Merger Sub will be
merged with and into Integrated Systems. Upon completion of the merger,
Integrated Systems will continue as the surviving corporation and will be a
wholly owned subsidiary of Wind River.

EFFECTIVE TIME OF THE MERGER

    The merger will become effective when an agreement of merger and related
certificates are filed with the Secretary of State of the State of California
and a certificate of merger is filed with the Secretary of State of the State of
Delaware. If all the conditions to the merger contained in the merger agreement
are satisfied or waived, we anticipate that the effective time will occur on the
date of the special meetings or as soon as practicable following the special
meetings.

MANNER AND BASIS OF CONVERTING SHARES

    At the effective time, each share of Integrated Systems common stock will
automatically be converted into a fraction of a share of Wind River common stock
equal to 0.92. This fraction is referred to in this joint proxy
statement/prospectus as the exchange ratio.

    Promptly following the effective time, American Stock Transfer and Trust
Company, which has been selected by Wind River to act as exchange agent, will
mail to each record holder of Integrated Systems common stock immediately before
the effective time, a letter indicating that the merger has been completed.
Record holders of Integrated Systems common stock will also be mailed a
transmittal letter which record holders will use to exchange Integrated Systems
common stock certificates for Wind River common stock certificates and cash for
any fractional share. Transmittal letters will also be available following
completion of the merger at the offices of the exchange agent at American Stock
Transfer and Trust Company, c/o Joseph Wolf, 6201 15th Avenue, Brooklyn,
New York 11219. Additionally, holders of certificates that previously evidenced
Integrated Systems common stock may, at their option after the effective time,
physically surrender in person at the offices of the exchange agent their
certificates for certificates evidencing Wind River common stock. Share
certificates should not be surrendered for exchange by Integrated Systems
shareholders before the effective time. After the effective time, transfers of
Integrated Systems common stock will not be registered on the stock transfer
books of Integrated Systems.

    No fractional shares of Wind River common stock will be issued in the
merger. Instead, each Integrated Systems shareholder entitled to a fractional
share will receive a cash amount (rounded to the nearest whole cent), without
interest, based on the closing price for Wind River common stock on the Nasdaq
National Market on the date the merger becomes effective.

    After the effective time, until it is surrendered and exchanged, each
certificate that previously evidenced Integrated Systems common stock will be
deemed to evidence shares of Wind River common stock and the right to receive
cash instead of any fractional share. Wind River will not pay dividends or other
distributions on any shares of Wind River common stock to be issued in exchange
for any unsurrendered Integrated Systems common stock certificate until the
Integrated Systems common stock certificate is surrendered as provided in the
merger agreement.

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INTEGRATED SYSTEMS STOCK OPTIONS

    At the effective time, Wind River will assume each outstanding Integrated
Systems stock option. Thus, each outstanding Integrated Systems stock option
will become an option to purchase a number of shares of Wind River common stock
determined by multiplying the number of shares of Integrated Systems common
stock subject to the Integrated Systems stock option immediately before the
effective time by the exchange ratio. The exercise price per share of Wind River
common stock subject to each assumed stock option will be equal to the exercise
price per share of the Integrated Systems common stock subject to the related
Integrated Systems stock option divided by the exchange ratio. All other terms
and conditions of the Integrated Systems stock options will not change and will
operate in accordance with their terms.

    Based on the Integrated Systems stock options outstanding at the record date
and assuming no Integrated Systems stock options are exercised before the
effective time, Wind River will be required at the effective time to reserve
4,618,993 shares of Wind River common stock for issuance upon exercise of
Integrated Systems stock options assumed by Wind River in the merger.

INTEGRATED SYSTEMS EMPLOYEE STOCK PURCHASE PLAN

    Integrated Systems' 1999 Employee Stock Purchase Plan will be terminated at
the effective time. The last business day before the effective time will be
treated as the last day of the offering period then underway under the Employee
Stock Purchase Plan. Pro-rata adjustments may be required under to the Employee
Stock Purchase Plan to reflect this reduced offering period, but the offering
period will otherwise be treated as a fully effective and completed offering
period for all purposes of the plan. The change in the offering period described
above is conditioned upon the completion of the merger.

REPRESENTATIONS AND WARRANTIES

    The merger agreement contains customary representations and warranties of
Integrated Systems and Wind River relating to, among other things, certain
aspects of the respective businesses and assets of the parties and other
matters. The representations and warranties expire at the effective time.

COVENANTS; CONDUCT OF BUSINESS PRIOR TO THE MERGER

    AFFIRMATIVE COVENANTS OF INTEGRATED SYSTEMS.  Integrated Systems has agreed
that before the effective time it will:

    - conduct its business and operations only in the ordinary course and in
      accordance with past practices, use all commercially reasonable efforts to
      preserve intact its current business organization, keep available the
      services of its current officers and employees and maintain its relations
      and goodwill with all suppliers, customers, landlords, creditors,
      licensors, licensees, employees and other persons having business
      relationships with it, and keep in full force all insurance policies;

    - provide Wind River with access to its books, records, tax returns and
      other documents during regular business hours;

    - deliver to Wind River certain financial statements and reports, any
      written materials sent by Integrated Systems to its shareholders, and any
      material or reports filed with or received from any governmental agency;

    - use all commercially reasonable efforts to file all notices, reports and
      other documents required to be filed with any governmental agency with
      respect to the merger, including the notifications required under the HSR
      Act and any applicable foreign antitrust laws or regulations in connection
      with the merger; and

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<PAGE>
    - call and hold a meeting of its shareholders to vote on a proposal to
      approve the principal terms of the merger.

    Integrated Systems has also agreed that its board of directors will
recommend that the Integrated Systems shareholders vote to approve the principal
terms of the merger. However, notwithstanding the foregoing, at any time before
the Integrated Systems special meeting, the Integrated Systems board of
directors is entitled to withdraw or modify its recommendation that the
Integrated Systems shareholders vote to approve the principal terms of the
merger if certain requirements, including the following, are satisfied:

    - an unsolicited, bona fide written offer to purchase all of the outstanding
      shares of Integrated Systems common stock is made and is not withdrawn;

    - Integrated Systems satisfies certain notice requirements; and

    - the Integrated Systems board of directors determines, based upon a written
      opinion of an independent financial advisor of nationally recognized
      reputation and after consultation with its legal counsel, that the offer
      constitutes a superior offer and that withdrawal or modification of its
      recommendation is required for the board of directors to comply with its
      fiduciary obligations to the Integrated Systems shareholders.

    For purposes of the merger agreement, the term "superior offer" means an
unsolicited, bona fide written offer made by a third party to purchase all of
the outstanding shares of Integrated Systems common stock on terms that the
Integrated Systems board of directors determines, in its reasonable judgment,
based upon a written opinion of an independent financial advisor of nationally
recognized reputation, to be more favorable to the Integrated Systems
shareholders than the merger and is financed or is reasonably capable of being
financed.

    If the Integrated Systems board of directors withdraws or modifies its
recommendation that the Integrated Systems shareholders vote to approve the
principal terms of the merger, Integrated Systems may be required to pay a fee
of $16.0 million to Wind River. See "--Expenses and Termination Fees."

    NEGATIVE COVENANTS OF INTEGRATED SYSTEMS.  Integrated Systems has agreed
that before the effective time, except as otherwise agreed to in writing by Wind
River, or as previously disclosed to Wind River, it will not, will not agree to,
and will not permit any of its subsidiaries to:

    - declare, accrue, set aside or pay any dividend or make any other
      distribution in respect of any shares of capital stock, or repurchase,
      redeem or otherwise reacquire any shares of capital stock or other
      securities;

    - subject to exceptions, sell, issue, or grant any capital stock or any
      option or right to acquire any capital stock;

    - amend or waive any of its rights under, or accelerate the vesting under,
      any provision of any of the Integrated Systems' stock option plans or any
      agreement evidencing any outstanding stock option;

    - amend its articles of incorporation or bylaws;

    - effect or become a party to any merger, consolidation, share exchange,
      business combination, recapitalization, reclassification of shares, stock
      split, reverse stock split or similar transaction;

    - form any subsidiary or acquire any equity interest or other interest in
      any other entity;

    - make any capital expenditure exceeding $500,000 in the aggregate in any
      fiscal quarter;

    - enter into, become bound by, amend or terminate any material contract;

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<PAGE>
    - acquire, lease or license any right or other asset from any other person
      or sell or otherwise dispose of, or lease or license, any right or other
      asset to any other person other than in the ordinary course of business
      and consistent with past practices;

    - subject to exceptions, incur or guarantee any indebtedness;

    - subject to exceptions, establish or amend any employee benefit plan, pay
      any bonus or make any profit-sharing payment to, or increase the amount of
      the wages, salary, commissions, fringe benefits or other compensation
      payable to, any of its directors, officers or employees;

    - hire any new employee at the level of vice president or above or with an
      annual base salary in excess of $120,000, promote any employee except in
      order to fill a position vacated after the date of the merger agreement,
      or engage any consultant or independent contractor other than under a
      contract that can be terminated without penalty on notice of 90 days or
      less;

    - materially change any of its pricing policies, product return policies,
      product maintenance polices, service policies, product modification or
      upgrade policies, personnel policies or other business policies, or any of
      its methods of accounting or accounting practices in any respect;

    - take any action that could preclude Wind River from accounting for the
      merger as a "pooling of interests;"

    - make any material tax election;

    - subject to certain exceptions, commence or settle any legal proceeding; or

    - enter into any material transaction or take any other material action
      outside the ordinary course of business or inconsistent with past
      practices.

    AFFIRMATIVE COVENANTS OF WIND RIVER.  Wind River has agreed that before the
effective time, it will:

    - provide Integrated Systems with access to its books, records, tax returns
      and other documents;

    - register under the Securities Act the issuance of the shares of Wind River
      common stock in the merger;

    - use all commercially reasonable efforts to file all notices, reports and
      other documents required to be filed with any governmental agency with
      respect to the merger, including the notifications required under the HSR
      Act and any applicable foreign antitrust laws or regulations in connection
      with the merger; and

    - call and hold a meeting of its stockholders to vote on the issuance of
      shares of Wind River common stock in the merger.

    Wind River has also agreed that its board of directors will recommend that
the Wind River stockholders vote to approve the issuance of shares of Wind River
common stock in the merger. The merger agreement prohibits the Wind River board
of directors from withdrawing or modifying its recommendation. If the Wind River
board of directors breaches the merger agreement and withdraws or modifies its
recommendation that the Wind River stockholders vote to approve the issuance of
shares of Wind River common stock in the merger, Wind River may be liable for
significant damages, including the payment of a $16.0 million fee to Integrated
Systems. See "--Expenses and Termination Fees."

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LIMITATION ON CONSIDERING OTHER ACQUISITION PROPOSALS

    As an inducement to Wind River to enter into the merger agreement,
Integrated Systems has agreed that it will not and that it will not authorize or
permit any of its representatives to:

    - solicit, initiate, knowingly encourage, induce or facilitate the making,
      submission or announcement of any offer, proposal, inquiry or indication
      of interest contemplating or otherwise relating to any of the following
      (individually, an "Acquisition Proposal" and collectively, "Acquisition
      Proposals"):

       - any merger, consolidation, share exchange, business combination,
         issuance of securities, acquisition of securities, tender offer,
         exchange offer or other similar transaction (i) involving Integrated
         Systems or any of its subsidiaries, (ii) in which a person directly or
         indirectly acquires ownership of securities representing more than 20%
         of the outstanding securities of any class of voting securities of
         Integrated Systems or any of its subsidiaries or (iii) in which
         Integrated Systems or any of its subsidiaries issues securities
         representing more than 20% of the outstanding securities of any class
         of voting securities of Integrated Systems or any of its subsidiaries;

       - any sale, lease, exchange, transfer, license, acquisition or
         disposition of any business or assets that account for 20% or more of
         the consolidated net revenues or assets of Integrated Systems or any of
         its subsidiaries; or

       - any liquidation or dissolution of Integrated Systems or any of its
         subsidiaries.

    - furnish any nonpublic information to any person in connection with or in
      response to an Acquisition Proposal or an inquiry or indication of
      interest that could lead to an Acquisition Proposal;

    - engage in discussions or negotiations with any person with respect to any
      Acquisition Proposal;

    - approve, endorse or recommend any Acquisition Proposal; or

    - enter into any letter of intent or similar agreement contemplating or
      relating to any Acquisition Proposal.

    However, the foregoing restrictions will not prohibit Integrated Systems
from furnishing nonpublic information to, or engaging in discussions or
negotiations with, a third party if:

    - it does so in response to a superior offer (defined above);

    - neither Integrated Systems nor any of its representatives shall have
      violated any of the restrictions referred to above;

    - the Integrated Systems board of directors, after consultation with its
      outside legal counsel, concludes that the action is required in order for
      the board of directors to comply with its fiduciary obligations to the
      Integrated Systems shareholders;

    - at least two business days prior to furnishing any nonpublic information
      to, or entering into discussions or negotiations with, the third party,
      Integrated Systems gives Wind River notice of the identity of the third
      party and the information is furnished under an appropriate
      confidentiality agreement; and

    - at least two business days prior to furnishing any nonpublic information
      to the third party, Integrated Systems provides the nonpublic information
      to Wind River.

    If the Integrated Systems board of directors receives an Acquisition
Proposal, then Integrated Systems must promptly inform Wind River of the terms
and conditions of the proposal and the identity of the person making it.
Integrated Systems must keep Wind River fully informed of the status and details
of any Acquisition Proposal and of all steps it is taking in response to an
Acquisition Proposal.

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CONDITIONS TO THE MERGER

    CONDITIONS TO THE OBLIGATIONS OF EACH PARTY.  The obligations of Wind River
and Integrated Systems to complete the merger are subject to the satisfaction of
the following conditions:

    - the registration statement on Form S-4 of which this joint proxy
      statement/prospectus is a part shall have become effective in accordance
      with the provisions of the Securities Act and shall not be subject to any
      stop order;

    - the Integrated Systems shareholders shall have approved the principal
      terms of the merger and the Wind River stockholders shall have approved
      the issuance of shares of Wind River common stock in the merger;

    - all applicable waiting periods under the HSR Act shall have expired or
      been terminated;

    - the shares of Wind River common stock to be issued in the merger shall
      have been approved for listing (subject to notice of issuance) on the
      Nasdaq National Market; and

    - no order shall be in effect that prohibits the consummation of the merger.

    CONDITIONS TO THE OBLIGATION OF WIND RIVER.  The obligation of Wind River to
complete the merger is subject to the satisfaction of the following additional
conditions:

    - the representations and warranties made by Integrated Systems in the
      merger agreement shall be accurate in all respects as of the closing date
      as if made on the closing date. Any inaccuracies in the representations
      and warranties will be disregarded if the circumstances giving rise to all
      inaccuracies considered collectively do not constitute, and would not
      reasonably be expected to have, a material adverse effect on Integrated
      Systems;

    - Integrated Systems shall have complied in all material respects with all
      of its covenants and obligations in the merger agreement at or prior to
      the closing date;

    - Integrated Systems shall have obtained all material consents required to
      be obtained in connection with the merger;

    - Wind River shall have received (1) agreements from each person considered
      to be an "affiliate" of Integrated Systems; (2) noncompetition agreements
      from two executive officers of Integrated Systems; (3) letters from
      PricewaterhouseCoopers LLP, dated as of the closing date, with respect to
      the availability of "pooling of interests" accounting treatment for the
      merger; (4) a tax opinion that the merger will constitute a reorganization
      for federal income tax purposes; and (5) the written resignations of all
      officers and directors of Integrated Systems effective as of completion of
      the merger;

    - not more than one of seven specific executive officers of Integrated
      Systems shall have ceased to be employed by Integrated Systems or shall
      have expressed an intention to terminate his or her employment with
      Integrated Systems;

    - there shall not have occurred any material adverse effect on Integrated
      Systems, and no event shall have occurred or circumstance shall exist
      that, alone or in combination with any other events or circumstances,
      could reasonably be expected to have a material adverse effect on
      Integrated Systems;

    - there shall not be pending or threatened any action or legal proceeding
      involving any governmental entity that challenges or prohibits the
      consummation of the merger;

    - there shall not be pending any action or legal proceeding in which there
      is a reasonable possibility of an outcome that would have a material
      adverse effect on Integrated Systems or

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      Wind River (not including any legal proceedings against Integrated Systems
      that result directly from the public announcement of the merger); and

    - Wind River shall have received assurances reasonably satisfactory to Wind
      River that there will be no options outstanding to purchase shares of
      Integrated Systems capital stock after the merger.

    As used in the merger agreement, "material adverse effect" means, with
respect to Integrated Systems, any event, violation, inaccuracy, circumstance or
other matter which when considered with all other events, violations,
inaccuracies, circumstances or other matters had or would have a material
adverse effect on (i) the business, condition, capitalization, assets,
liabilities, operations or financial performance of Integrated Systems and its
subsidiaries taken as a whole, (ii) the ability of Integrated Systems to
consummate the merger or any of the other transactions contemplated by the
merger agreement or to perform any of its obligations under the merger
agreement, or (iii) Wind River's ability to vote with respect to the stock of
Integrated Systems. In no event will any of the following constitute a material
adverse effect:

    - a material decline in revenues or net income recorded by Integrated
      Systems after the date of the merger agreement to the extent that the
      decline resulted directly from the public announcement or pendency of the
      merger;

    - a material loss of Integrated Systems' customers or employees after the
      date of the merger agreement to the extent that the loss resulted directly
      from the public announcement or pendency of the merger;

    - any other change in Integrated Systems' business after the date of the
      merger agreement to the extent that the change resulted directly from the
      public announcement or pendency of the merger; and

    - a change in the trading prices of Integrated Systems common stock.

    CONDITIONS TO THE OBLIGATION OF INTEGRATED SYSTEMS.  The obligation of
Integrated Systems to complete the merger is subject to the satisfaction of the
following additional conditions:

    - the representations and warranties made by Wind River in the merger
      agreement shall be accurate in all respects as of the closing date as if
      made on the closing date. Any inaccuracies in the representations and
      warranties will be disregarded if the circumstances giving rise to all
      inaccuracies considered collectively do not constitute, and would not
      reasonably be expected to have, a material adverse effect on Wind River;

    - Wind River shall have complied in all material respects with all of its
      covenants and obligations required to be complied with by it under the
      merger agreement at or prior to the closing date;

    - Integrated Systems shall have received a tax opinion that the merger will
      constitute a reorganization for federal income tax purposes; and

    - there shall not have occurred any material adverse effect on Wind River,
      and no event shall have occurred or circumstance shall exist that, alone
      or in combination with any other events or circumstances, could reasonably
      be expected to have a material adverse effect on Wind River.

    As used in the merger agreement, "material adverse effect" means, with
respect to Wind River, any event, violation, inaccuracy, circumstance or other
matter which when considered with all other events, violations, inaccuracies,
circumstances or other matters had or would have a material adverse effect on
the business, condition, capitalization, assets, liabilities, operations or
financial performance of

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Wind River and its subsidiaries taken as a whole. In no event will any of the
following constitute a material adverse effect on Wind River:

    - a material decline in revenues or net income recorded by Wind River after
      the date of the merger agreement to the extent that the decline resulted
      directly from the public announcement or pendency of the merger;

    - a material loss of Wind Rivers' customers or employees after the date of
      the merger agreement to the extent that the loss resulted directly from
      the public announcement or pendency of the merger;

    - any other change in Wind Rivers' business after the date of the merger
      agreement to the extent that the change resulted directly from the public
      announcement or pendency of the merger; and

    - a change in the trading prices of Wind River common stock.

TERMINATION OF THE MERGER AGREEMENT

    Wind River and Integrated Systems can agree by mutual written consent to
terminate the merger agreement at any time before the merger is completed. In
addition, either company can terminate the merger agreement if:

    - the merger is not completed on or before May 31, 2000, unless on May 31,
      2000, antitrust clearance is the only condition to the merger that has not
      been satisfied or waived, in which case either company can terminate the
      merger agreement if the merger is not completed on or before July 31,
      2000;

    - a court or government entity issues a final order prohibiting the merger;

    - the Integrated Systems shareholders do not approve the principal terms of
      the merger;

    - the Wind River stockholders do not approve the issuance of shares of Wind
      River common stock in the merger;

    - the other company materially breaches its representations, warranties or
      covenants in the merger agreement and the breach is not curable through
      the exercise of commercially reasonable efforts or the other company is
      not using commercially reasonable efforts to cure the breach; or

    - there is an event or circumstance that results in a material adverse
      effect with respect to the other company.

    In addition, Wind River may terminate the merger agreement if, before the
receipt of the Integrated Systems shareholder approval:

    - the Integrated Systems board of directors withdraws its recommendation of,
      or otherwise fails to support, the proposal to approve the principal terms
      of the merger, or recommends another Acquisition Proposal;

    - a tender or exchange offer relating to securities of Integrated Systems is
      commenced or another Acquisition Proposal is publicly announced, and
      Integrated Systems does not actively oppose such tender or exchange offer
      or Acquisition Proposal;

    - Integrated Systems breaches its agreement not to solicit, encourage or
      participate in discussions or negotiations with respect to Acquisition
      Proposals with parties other than Wind River; or

    - Integrated Systems fails to hold its special meeting within 45 days after
      the effective date of the registration statement of which this joint proxy
      statement/prospectus is a part.

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    In addition, Integrated Systems may terminate the merger agreement if,
before the receipt of the Wind River stockholder approval, the Wind River board
of directors withdraws its recommendation of the proposal to approve the
issuance of shares of Wind River common stock in the merger. Such withdrawal by
the Wind River board of directors would constitute a breach of the merger
agreement. Any such breach could result in significant damages to Wind River,
including the payment of a $16.0 million fee to Integrated Systems.

    Subject to limited exceptions, including the survival of Integrated Systems'
agreement to pay a termination fee to Wind River under certain circumstances, if
the merger agreement is terminated, then it is void. There will be no liability
on the part of Wind River, Merger Sub or Integrated Systems to the other, and
all rights and obligations of the parties will cease. However, no party will be
relieved from its obligations with respect to any willful breach of the merger
agreement.

EXPENSES AND TERMINATION FEES

    Except as provided below, if the merger is abandoned because the merger
agreement is terminated, all expenses will be paid by the party incurring them.

    - Integrated Systems will reimburse Wind River for merger expenses
      (including for up to $2.0 million in attorneys' fees, accountants' fees,
      financial advisory fees and filing fees) if the merger agreement is
      terminated because the Integrated Systems shareholders fail to approve the
      principal terms of the merger.

    - Wind River will reimburse Integrated Systems for merger expenses
      (including for up to $2.0 million in attorneys' fees, accountants' fees,
      financial advisory fees and filing fees) if the merger agreement is
      terminated because the Wind River stockholders fail to approve the
      issuance of shares of Wind River common stock in the merger.

    - Integrated Systems will pay to Wind River a termination fee of
      $16.0 million if the merger agreement is terminated because:

       1.  the Integrated Systems shareholders fail to approve the principal
           terms of the merger and, at or before that time, another Acquisition
           Proposal has been disclosed, announced, commenced, submitted or made;

       2.  the Integrated Systems board of directors withdraws or modifies in a
           manner adverse to Wind River its recommendation of, or otherwise
           fails to support, the proposal to approve the principal terms of the
           merger, or recommends another Acquisition Proposal;

       3.  the Integrated Systems board of directors shall have approved,
           endorsed or recommended any Acquisition Proposal;

       4.  a tender or exchange offer relating to securities of Integrated
           Systems is commenced or another Acquisition Proposal is publicly
           announced, and Integrated Systems does not actively oppose such
           tender or exchange offer or Acquisition Proposal;

       5.  Integrated Systems breaches its agreement not to solicit, encourage
           or participate in discussions or negotiations with respect to another
           Acquisition Proposal; or

       6.  Integrated Systems fails to hold its special meeting within 45 days
           after the effective date of the registration statement of which this
           joint proxy statement/prospectus is a part; and

    - Wind River will pay to Integrated Systems a termination fee of
      $16.0 million if Integrated Systems terminates the merger agreement
      because the Wind River board of directors withdraws or modifies in a
      manner adverse to Integrated Systems its recommendation of, the proposal
      to approve the issuance of shares of Wind River common stock in the
      merger.

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                             STOCK OPTION AGREEMENT

    THE FOLLOWING DESCRIPTION OF THE STOCK OPTION AGREEMENT DESCRIBES THE
MATERIAL TERMS OF THE STOCK OPTION AGREEMENT BETWEEN WIND RIVER AND INTEGRATED
SYSTEMS, DATED AS OF OCTOBER 21, 1999. THE FULL TEXT OF THE STOCK OPTION
AGREEMENT IS ATTACHED AS ANNEX B TO THIS JOINT PROXY STATEMENT/PROSPECTUS AND IS
INCORPORATED HEREIN BY REFERENCE. WE ENCOURAGE YOU TO READ THE ENTIRE STOCK
OPTION AGREEMENT.

    In order to induce Wind River to enter into the merger agreement, Integrated
Systems granted to Wind River an irrevocable option to purchase newly issued
shares of Integrated Systems common stock representing up to 10% of Integrated
Systems common stock outstanding as of October 21, 1999. The purchase price per
option share is $18.46.

PURPOSE OF THE OPTION

    The option is intended to increase the likelihood that the merger will be
completed on its agreed terms. The option could prevent an alternative
acquisition transaction with Integrated Systems from being accounted for as a
"pooling of interests" for financial accounting purposes. The option therefore
may have the effect of discouraging others from proposing acquisition proposals
to Integrated Systems before the completion of the merger with Wind River, even
from others prepared to offer to pay consideration to Integrated Systems
shareholders which has a higher current market price then the shares of Wind
River common stock to be received by Integrated Systems shareholders in the
merger.

EXERCISABILITY OF THE OPTION

    The option may be exercised at any time after an event that would allow Wind
River to terminate the merger agreement and receive a $16 million termination
fee from Integrated Systems. The events that would cause the option to become
exercisable are described under "Certain Terms of the Merger Agreement--Expenses
and Termination Fees." The option will remain in effect until the earliest to
occur of the effective time, 180 days after the receipt by Wind River of notice
from Integrated Systems of an exercise event, or termination of the merger
agreement before an exercise event. Wind River may exercise the option in whole
or in part, at any time during the option term following an exercise event.

PROFIT LIMITATION

    The stock option agreement limits the cash payment that Wind River may
receive after exercise of the option and sale of shares of Integrated Systems
common stock. If Wind River exercises the option and sells any option shares,
Wind River must promptly pay to Integrated Systems (a) the amount, if any, by
which $16,000,000, exceeds the amount of any payment received by Wind River as a
termination fee under the merger agreement, plus (b) the total exercise price
Wind River paid to exercise the option.

OTHER

    The stock option agreement contains provisions governing the procedure for
exercise of the option and payment for the shares purchased upon exercise and
other provisions that adjust the number of shares and the exercise price upon
the occurrence of certain events, such as stock dividends, divisions,
combinations and recapitalizations, exchange of shares or other similar
transactions.

    Finally, the stock option agreement contains provisions obligating
Integrated Systems to register under the Securities Act the offering, sale and
delivery by Wind River of shares of Integrated Systems common stock acquired by
Wind River upon the exercise of the option.

                                       63
<PAGE>
                               VOTING AGREEMENTS

    THE FOLLOWING DESCRIPTION OF THE VOTING AGREEMENTS DESCRIBES THE MATERIAL
TERMS OF THE VOTING AGREEMENTS. FORMS OF VOTING AGREEMENTS ARE ATTACHED AS ANNEX
C TO THIS JOINT PROXY STATEMENT/PROSPECTUS AND ARE INCORPORATED HEREIN BY
REFERENCE. WE ENCOURAGE YOU TO READ THE ENTIRE FORMS OF VOTING AGREEMENTS.

VOTING AGREEMENTS RELATING TO INTEGRATED SYSTEMS SHARES

    Narendra K. Gupta, Charles M. Boesenberg, John C. Bolger, Michael A. Brochu,
Vinita Gupta, Thomas Kailath, Richard C. Murphy and James E. Challenger, each a
director of Integrated Systems, and William C. Smith, J.C. Sarner, David
Stepner, Scot Morrison, Martin A. Caniff and Joseph Addiego, each an executive
officer of Integrated Systems, have each entered into voting agreements with
Wind River dated October 21, 1999. They have agreed in the voting agreements to
vote all shares of Integrated Systems common stock owned by them as of the
record date in favor of the approval of the principal terms of the merger. In
the voting agreements, they have granted Wind River an irrevocable proxy to vote
their shares of Integrated Systems common stock in favor of the principal terms
of the merger. Approximately 6,474,095 shares, or 27% of the Integrated Systems
common stock outstanding on the record date, is subject to voting agreements and
irrevocable proxies. They have also agreed that, before the termination of the
voting agreements, they will not transfer, assign, convey or dispose of any
shares of Integrated Systems common stock, or any option to purchase shares of
Integrated Systems common stock, owned by them unless each person to whom any
shares or option is transferred executes a voting agreement and agrees to hold
the shares or options subject to all of the terms and provisions of the voting
agreement.

VOTING AGREEMENTS RELATING TO WIND RIVER SHARES

    Jerry L. Fiddler, Thomas St. Dennis, Ronald A. Abelmann, William B. Elmore,
David B. Pratt and Grant M. Inman, each a director of Wind River, and
Richard W. Kraber, David G. Fraser, Graham D. Shenton, Curt Schacker, Peter J.
Richards, John Fogelin, Kamran Sokhanvari and Marla Ann Stark, each an executive
officer of Wind River, have each entered into voting agreements with Integrated
Systems dated October 21, 1999. They have agreed in the voting agreements to
vote all shares of Wind River common stock owned by them as of the record date
in favor of the issuance of shares of Wind River common stock in the merger.
Additionally, Jazem II Family Partners LP (of which Jerry L. Fiddler is a
General Partner); Jazem III Family Partners LP (of which Jerry L. Fiddler is a
partner); Grant M. Inman and Suanne B. Inman, Trustees FBO Inman Living Trust
UAD 5/9/89; Grant M. Inman Custodian SSB Keogh PS Custodian the West Ven Keogh;
GWIK a Partnership; and Suanne Inman Trustee FBO Bonner Trust 1988 MBI UAD
12/22/88 have also executed voting agreements with Integrated Systems dated
October 21, 1999, and have agreed to vote all shares of Wind River common stock
owned by them as of the record date in favor of the issuance of shares of Wind
River common stock in the merger. In the voting agreements, the Wind River
stockholders mentioned in this paragraph have also granted Integrated Systems an
irrevocable proxy to vote their shares of Wind River common stock in favor of
the issuance of shares of Wind River common stock in the merger. Approximately
4,885,522 shares, or approximately 12% of the shares of Wind River common stock
outstanding on the record date, is subject to voting agreements and irrevocable
proxies. The Wind River stockholders mentioned in this paragraph have also
agreed that, before the termination of the voting agreements, they will not
transfer, assign, convey or dispose of any of the shares of Wind River common
stock, or any options to purchase shares of Wind River common stock, owned by
them unless each person to whom any shares or options is transferred executes a
voting agreement and agrees to hold the shares or options subject to all of the
terms and provisions of the voting agreement.

                                       64
<PAGE>
                        MANAGEMENT AND OTHER INFORMATION

    After the merger, Integrated Systems will be a wholly owned subsidiary of
Wind River, and all of Integrated Systems' subsidiaries will be indirect wholly
owned subsidiaries of Wind River. After the merger, the Wind River board of
directors will consist of five persons nominated by Wind River and two persons
nominated by Integrated Systems. The merger agreement provides that the Wind
River board of directors must use all commercially reasonable efforts to attempt
to cause, as of the effective time, Jerry L. Fiddler to serve as Chairman of the
Board of Wind River, Thomas St. Dennis to serve as Chief Executive Officer and a
director of Wind River and Narendra Gupta to serve as Vice Chairman and a
director of Wind River. Information relating to the management, executive
compensation, certain relationships and related transactions and other related
matters pertaining to Wind River and Integrated Systems is contained in or
incorporated by reference in their respective annual reports on Form 10-K which
are incorporated in this joint proxy statement/prospectus. See "Where You Can
Find More Information."

                                       65
<PAGE>
                SECURITY OWNERSHIP BY CERTAIN BENEFICIAL OWNERS

BENEFICIAL OWNERSHIP OF WIND RIVER SHARES

    The following table and the notes thereto set forth certain information with
respect to the beneficial ownership of shares of Wind River common stock, as of
December 23, 1999 (except as noted in the footnotes), by each director and
executive officer of Wind River and by each person or group who is known to the
management of Wind River to be the beneficial owner of more than five percent of
the Wind River common stock outstanding as of December 23, 1999. This table is
based upon information supplied by officers, directors and principal
stockholders and Schedules 13D and 13G filed with the SEC. Where information
regarding stockholders is based on Schedules 13D and 13G, the number of shares
owned is as of the date for which information was provided in such schedules.
Unless otherwise indicated in the footnotes to this table and subject to
community property laws where applicable and the voting agreements entered into
between the executive officers and directors of Wind River and Integrated
Systems, Wind River believes that each of the stockholders named in this table
has sole voting and investment power with respect to the shares indicated as
beneficially owned. Applicable percentages are based on 42,214,854 shares
outstanding on December 23, 1999, adjusted as required by rules promulgated by
the SEC. Shares of Wind River common stock subject to options that are currently
exercisable or are exercisable within 60 days of December 23, 1999 are treated
as outstanding and beneficially owned by the person holding them for the purpose
of computing the percentage ownership of that person but are not treated as
outstanding for the purpose of computing the percentage ownership of any other
stockholder.

<TABLE>
<CAPTION>
                                                                                         BENEFICIAL OWNERSHIP
                                                                                   --------------------------------
                                                                                     NUMBER OF    PERCENT OF TOTAL
NAME OF BENEFICIAL OWNER                                                           SHARES OWNED    OUTSTANDING (%)
- ---------------------------------------------------------------------------------  -------------  -----------------
<S>                                                                                <C>            <C>
Jerry L. Fiddler (1).............................................................     4,285,815           10.15
  500 Wind River Way
  Alameda, CA 94501
David N. Wilner (2)..............................................................     2,760,614            6.54
  500 Wind River Way
  Alameda, CA 94501
Ronald A. Abelmann (3)...........................................................     1,098,373            2.60
William B. Elmore (4)............................................................       358,408           *
Graham D. Shenton (5)............................................................       275,885           *
Curtis B. Schacker (6)...........................................................       195,183           *
Richard W. Kraber (7)............................................................       188,974           *
Grant M. Inman...................................................................       144,000           *
Thomas St. Dennis................................................................       139,400           *
David G. Fraser (8)..............................................................       129,257           *
John Fogelin (9).................................................................       110,905           *
Peter J. Richards (10)...........................................................        88,220           *
Kamran Sokhanvari (11)...........................................................        67,583           *
David B. Pratt (12)..............................................................        44,733           *
Marla Ann Stark..................................................................       --               --
All executive officers and directors as a group (14 persons) (13)................     7,126,746           16.88
</TABLE>

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

* Less than 1%.

                                       66
<PAGE>
 (1) Includes 3,270,431 shares held by The Fiddler and Alden Family Trust, of
     which Mr. Fiddler is a trustee; 555,000 shares held by the Jazem II Family
     Partners LP, of which Mr. Fiddler is a general partner; and 328,704 shares
     held by Jazem III Family Partners LP, of which Mr. Fiddler is also a
     partner. Also includes 131,680 shares subject to stock options exercisable
     within 60 days of December 23, 1999.

 (2) Includes 384,600 shares held in trust for Mr. Wilner's minor child. Also
     includes 128,833 shares subject to stock options exercisable within
     60 days of December 23, 1999.

 (3) Includes 1,060,438 shares subject to stock options exercisable within
     60 days of December 23, 1999.

 (4) Includes 49,500 shares subject to stock options exercisable within 60 days
     of December 23, 1999.

 (5) Includes 217,986 shares subject to stock options exercisable within
     60 days of December 23, 1999.

 (6) Includes 191,329 shares subject to stock options exercisable within
     60 days of December 23, 1999.

 (7) Includes 188,974 shares subject to stock options exercisable within
     60 days of December 23, 1999.

 (8) Includes 121,516 shares subject to stock options exercisable within
     60 days of December 23, 1999.

 (9) Includes 90,632 shares subject to stock options exercisable within 60 days
     of December 23, 1999.

 (10) Includes 88,220 shares subject to stock options exercisable within
      60 days of December 23, 1999.

 (11) Includes 67,258 shares subject to stock options exercisable within
      60 days of December 23, 1999.

 (12) Includes 32,625 shares subject to stock options exercisable within
      60 days of December 23, 1999.

 (13) Includes 2,241,212 shares subject to stock options held by officers and
      directors exercisable within 60 days of December 23, 1999. See footnotes
      (3)--(12) above.

BENEFICIAL OWNERSHIP OF INTEGRATED SYSTEMS SHARES

    The following table and the related notes present information on the
beneficial ownership of shares of Integrated Systems common stock, as of
December 23, 1999 (except as noted in the footnotes), by each director and
executive officer of Integrated Systems and by each person or group who is known
to the management of Integrated Systems to be the beneficial owner of more than
5% of the Integrated Systems common stock outstanding as of December 23, 1999.
This table is based upon information supplied by officers, directors and
principal shareholders and Schedules 13D and 13G filed with the SEC. Where
information regarding shareholders is based on Schedules 13D and 13G, the number
of shares owned is as of the date for which information was provided in those
schedules, as noted. Unless otherwise indicated in the footnotes to this table
and subject to community property laws where applicable and the voting
agreements entered into between the executive officers and directors of
Integrated Systems and Wind River, Integrated Systems believes that each of the
shareholders named in this table has sole voting and investment power with
respect to the shares indicated as beneficially owned. Applicable percentages
are based on 24,256,570 shares outstanding on December 23, 1999, adjusted as
required by rules promulgated by the SEC. Shares of Integrated Systems common
stock subject to options that are currently exercisable or are exercisable
within 60 days of December 23, 1999 are treated as outstanding and beneficially
owned by the person holding

                                       67
<PAGE>
them for the purpose of computing the percentage ownership of that person but
are not treated as outstanding for the purpose of computing the percentage
ownership of any other shareholder.

<TABLE>
<CAPTION>
                                                                                         BENEFICIAL OWNERSHIP
                                                                                --------------------------------------
                                                                                    NUMBER OF       PERCENT OF TOTAL
NAME OF BENEFICIAL OWNER                                                          SHARES OWNED       OUTSTANDING (%)
- ------------------------------------------------------------------------------  -----------------  -------------------
<S>                                                                             <C>                <C>
Narendra K. and Vinita Gupta (1)..............................................       4,812,580               19.8
  201 Moffett Park Drive
  Sunnyvale, California 94089
Nevis Capital Management, Inc.(2).............................................       2,550,999               10.5
  1119 St. Paul Street
  Baltimore, Maryland 21202
Brown Investment Advisory and Trust Co.(3)....................................       2,448,401               10.1
  19 South Street
  Baltimore, Maryland 21202
Franklin Advisors, Inc. (4)...................................................       2,264,550                9.3
  901 Mariners Island Boulevard
  San Mateo, California 94404
James E. Challenger (5).......................................................         859,736                3.5
Thomas Kailath (6)............................................................         834,514                3.4
Charles M. Boesenberg (7).....................................................         211,322              *
Joseph Addiego (8)............................................................         190,353              *
David Stepner (9).............................................................         140,374              *
Scot Morrison (10)............................................................          59,196              *
Jean Claude Sarner (11).......................................................          58,591              *
John C. Bolger (12)...........................................................          54,916              *
Richard C. Murphy (13)........................................................          48,020
William C. Smith (14).........................................................          45,832              *
Martin Caniff (15)............................................................          22,499              *
Michael A. Brochu (16)........................................................           8,916              *
All current executive officers and directors as a group (14 persons) (17).....       7,346,849               29.2
</TABLE>

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

* Less than one percent.

 (1) Includes 3,730,200 shares held of record by Dr. and Mrs. Gupta in The
     Narendra and Vinita Gupta Living Trust. Also includes 1,000,000 shares held
     of record by Dr. and Mrs. Gupta, together with a third party, as trustees
     for their children, as to which they disclaim beneficial ownership and
     7,800 shares held of record by Dr. Gupta as custodian for his daughter, as
     to which he disclaims beneficial ownership. Options exercisable within
     60 days of December 23, 1999 consists of 22,916 shares subject to options
     held by Dr. Gupta and 51,664 shares subject to options held by Mrs. Gupta.
     Dr. Gupta is the Chairman of the Board and Secretary of Integrated Systems.
     Mrs. Gupta is a director of Integrated Systems.

 (2) Based upon a Schedule 13G filed June 10, 1999.

 (3) Based upon Amendment No. 1 to a Schedule 13G filed on April 13, 1999,
     indicating that Brown Advisory Incorporated may be the beneficial owner of
     1,647,226 of these shares.

 (4) Based upon a Schedule 13G/A filed on January 28, 1999, indicating that
     Franklin Advisors, Inc. may be the beneficial owner of 40,750 of these
     shares.

                                       68
<PAGE>
 (5) Mr. Challenger is the Chief Technology Officer and a director of Integrated
     Systems. Includes 429,867 shares held of record by Mr. Challenger as
     trustee of the James E. Challenger, Jr. 1994 GST Trust.

 (6) Includes 382,850 shares held of record by Dr. Kailath and his wife as
     trustees of a revocable trust and 400,000 shares held of record by them,
     together with a third party, as trustees for their children and as
     custodians for their son. Includes 51,664 shares subject to stock options
     exercisable within 60 days of December 23, 1999.

 (7) Mr. Boesenberg is the President, Chief Executive Officer and a director of
     Integrated Systems. Includes 204,166 shares subject to stock options
     exercisable within 60 days of December 23, 1999.

 (8) Mr. Addiego is the Vice President of Worldwide Sales of Integrated Systems.
     Includes 143,873 shares subject to stock options exercisable within
     60 days of December 23, 1999.

 (9) Dr. Stepner is the President of Diab-SDS. Includes 140,374 shares subject
     to stock options exercisable within 60 days of December 23, 1999.

 (10) Mr. Morrison is the Vice President and General Manager of Design
      Automation Solutions. Includes 51,569 shares subject to stock options
      exercisable within 60 days of December 23, 1999.

 (11) Mr. Sarner is the Vice President of the Embedded Platforms Group. Includes
      45,845 shares subject to stock options exercisable within 60 days of
      December 23, 1999.

 (12) Mr. Bolger is a director of Integrated Systems. Includes 50,416 shares
      subject to stock options exercisable within 60 days of December 23, 1999.

 (13) Mr. Murphy is a director of Integrated Systems. Includes 38,020 shares
      subject to stock options exercisable within 60 days of December 23, 1999.

 (14) Mr. Smith is Vice President of Finance and Chief Financial Officer of
      Integrated Systems. Includes 45,832 shares subject to stock options
      exercisable within 60 days of December 23, 1999.

 (15) Mr. Caniff is the President of Doctor Design. Includes 18,499 shares
      subject to stock options exercisable within 60 days of December 23, 1999.

 (16) Mr. Brochu is a director of Integrated Systems. Includes 7,916 shares
      subject to stock options exercisable within 60 days of December 23, 1999.

 (17) Includes 872,754 shares subject to stock options held by officers and
      directors exercisable within 60 days of December 23, 1999. See footnotes
      (1) and (5)--(16) above.

                                       69
<PAGE>
          UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS

    On October 21, 1999, Wind River entered into an agreement to merge with
Integrated Systems in a transaction to be accounted for as a pooling of
interests. Under the terms of the agreement, each issued and outstanding common
share of Integrated Systems will be exchanged for 0.92 of a share of Wind River
common stock. Additionally, Wind River will convert approximately
4,618,993 Integrated Systems stock options into approximately 4,249,474 Wind
River stock options.

    The following unaudited pro forma condensed combined financial statements
present the effect of the proposed merger between Wind River and Integrated
Systems. The unaudited pro forma condensed combined balance sheet presents the
combined financial position of Wind River and Integrated Systems as of their
respective fiscal year-ends of January 31, 1999 and February 28, 1999 after
including the effect of the subsequent acquisition of Routerware by Wind River
which was accounted for as a pooling of interests, respectively, assuming that
the proposed mergers had previously occurred. Such pro forma information is
based upon the historical consolidated balance sheet data of Wind River at
January 31, 1999 and Integrated Systems at February 28, 1999, each company's
respective year-end. The unaudited pro forma condensed combined statements of
operations give effect to the proposed merger of Wind River and Integrated
Systems by combining the results of operations of Wind River for each of the
three years in the period ended January 31, 1999, with the results of operations
of Integrated Systems for each of the three years in the period ended
February 28, 1999, respectively, on a pooling of interests basis. Additionally,
the unaudited pro forma condensed combined statements of operations reflect the
acquisition by Wind River and Integrated Systems of the acquired entities as if
such acquisitions had occurred previously.

    The unaudited pro forma condensed combined financial statements are based on
the estimates and assumptions set forth in the notes to such statements, which
are preliminary and have been made solely for purposes of developing such
pro forma information. The unaudited pro forma condensed combined financial
statements are not necessarily an indication of the results that would have been
achieved had such transactions been consummated as of the dates indicated or
that may be achieved in the future.

    Wind River and Integrated Systems estimate that they will incur direct
transaction costs of approximately $3.5 million in connection with the proposed
merger of Wind River with Integrated Systems, which will be charged to
operations in the quarter in which the merger is consummated. This amount is a
preliminary estimate and is therefore subject to change. There can be no
assurance that Wind River will not incur additional charges in subsequent
quarters to reflect costs associated with the proposed merger.

    These unaudited pro forma condensed combined financial statements should be
read in conjunction with the historical consolidated financial statements and
notes thereto to Wind River and Integrated Systems and other financial
information pertaining to Wind River and Integrated Systems including
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and "Risk Factors" incorporated by reference or included herein.

                                       70
<PAGE>
                   PRO FORMA CONDENSED COMBINED BALANCE SHEET

                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                                          INTEGRATED
                                                                            WIND RIVER     SYSTEMS
                                                                            -----------  ------------
                                                                            OCTOBER 31,  NOVEMBER 30,  PRO FORMA
                                                                               1999          1999       COMBINED
                                                                            -----------  ------------  ----------
<S>                                                                         <C>          <C>           <C>
ASSETS
Current Assets:
  Cash and Cash Equivalents...............................................   $  49,413    $   18,578   $   67,991
  Short-Term Investments..................................................      24,436         1,460       25,896
  Accounts Receivable, net of allowances..................................      33,329        39,416       72,745
  Prepaid and Other Current Assets........................................      12,081         9,898       21,979
                                                                             ---------    ----------   ----------
      Total Current Assets................................................     119,259        69,352      188,611

Investments...............................................................     172,972        24,743      197,715
Land and Equipment, net...................................................      35,505        21,008       56,513
Other Assets..............................................................       9,546        43,283       52,829
Restricted Cash...........................................................      35,544            --       35,544
                                                                             ---------    ----------   ----------
      Total Assets........................................................   $ 372,826    $  158,386   $  531,212
                                                                             =========    ==========   ==========

LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
  Accounts Payable........................................................   $   4,914    $    6,119   $   11,033
  Accrued Liabilities.....................................................      12,002         8,162       20,164
  Accrued Compensation....................................................      11,098         8,578       19,676
  Income Taxes Payable....................................................       8,605         2,950       11,555
  Deferred Revenue........................................................      19,951        21,956       41,907
                                                                             ---------    ----------   ----------
      Total Current Liabilities...........................................      56,570        47,765      104,335

Long-Term Debt............................................................          --           598          598
Convertible Subordinated Notes............................................     140,000            --      140,000
                                                                             ---------    ----------   ----------
      Total Liabilities...................................................     196,570        48,363      244,933
                                                                             =========    ==========   ==========

Minority Interest in Consolidated Subsidiary..............................         820            --          820

Stockholders' Equity:
  Common Stock............................................................          43            --           43
  Additional Paid in Capital..............................................     130,949        74,367      205,316
  Loan to Stockholder.....................................................      (1,000)           --       (1,000)
  Treasury Stock at Cost..................................................     (29,488)           --      (29,488)
  Accumulated Other Comprehensive Income (Loss)...........................       7,962        (1,569)       6,393
  Retained Earnings.......................................................      66,970        37,225      104,195
                                                                             ---------    ----------   ----------
      Total Stockholders' Equity..........................................     175,436       110,023      285,459
                                                                             ---------    ----------   ----------
        Total Liabilities and Stockholders' Equity........................   $ 372,826    $  158,386   $  531,212
                                                                             =========    ==========   ==========
</TABLE>

    The accompanying notes are an integral part of these unaudited pro forma
                        condensed financial statements.

                                       71
<PAGE>
                PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME

                    (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
                                                                            INTEGRATED     PRO FORMA    PRO FORMA
                                                              WIND RIVER     SYSTEMS      ADJUSTMENTS    COMBINED
                                                              -----------  ------------  -------------  ----------
                                                                  NINE MONTHS ENDED
                                                              -------------------------
                                                              OCTOBER 31,  NOVEMBER 30,
                                                                 1999          1999
                                                              -----------  ------------
<S>                                                           <C>          <C>           <C>            <C>
Revenues:
  Products..................................................   $  84,644    $   67,808     $    (130)   $  152,322
  Services..................................................      33,037        43,464                      76,501
                                                               ---------    ----------     ---------    ----------
      Total Revenues........................................     117,681       111,272          (130)      228,823

Cost of Revenues:
  Products..................................................       7,702        12,034          (130)       19,606
  Services..................................................      14,113        17,848                      31,961
                                                               ---------    ----------     ---------    ----------
      Total Cost of Revenues................................      21,815        29,882          (130)       51,567

      Gross Profit..........................................      95,866        81,390                     177,256

Operating Expenses:
  Selling and Marketing.....................................      42,486        45,508                      87,994
  Product Development and Engineering.......................      21,369        18,650                      40,019
  General and Administrative................................      11,961        11,070                      23,031
  Acquisition-Related and Other.............................          --         8,586                       8,586
  Amortization of Intangible Assets.........................          --         3,628                       3,628
                                                               ---------    ----------     ---------    ----------
      Total Operating Expenses..............................      75,816        87,442                     169,258

Income from Operations......................................      20,050        (6,052)                     13,998

Other Income (Expense):
  Interest Income...........................................      11,202         2,582                      13,784
  Interest Expense and Other................................      (7,636)           --                      (7,636)
                                                               ---------    ----------     ---------    ----------
      Total Other Income....................................       3,566         2,582                       6,148
                                                               ---------    ----------     ---------    ----------
  Income before Provision for Income Taxes..................      23,616        (3,470)                     20,146
  Provision for Income Taxes................................       9,210         1,007                      10,217
                                                               ---------    ----------     ---------    ----------

      Net Income............................................   $  14,406    $   (4,477)    $            $    9,929
                                                               =========    ==========     =========    ==========
Net Income per Share:
  Basic.....................................................   $    0.35    $    (0.19)                 $     0.16
  Diluted...................................................   $    0.33    $    (0.19)                 $     0.15
Weighted average common and common equivalent shares:
  Basic.....................................................      41,496        23,322                      62,952
  Diluted...................................................      43,881        23,322                      65,337
</TABLE>

    The accompanying notes are an integral part of these unaudited pro forma
                        condensed financial statements.

                                       72
<PAGE>
                PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME

                    (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
                                                                            INTEGRATED     PRO FORMA     PRO FORMA
                                                              WIND RIVER     SYSTEMS      ADJUSTMENTS    COMBINED
                                                              -----------  ------------  -------------  -----------
                                                                  NINE MONTHS ENDED
                                                              -------------------------
                                                              OCTOBER 31,  NOVEMBER 30,
                                                                 1998          1998
                                                              -----------  ------------
<S>                                                           <C>          <C>           <C>            <C>
Revenues:
  Products..................................................   $  69,119    $   55,488     $    (153)    $ 124,454
  Services..................................................      23,606        42,961                      66,567
                                                               ---------    ----------     ---------     ---------
      Total Revenues........................................      92,725        98,449          (153)      191,021

Cost of Revenues:
  Products..................................................       6,491        10,449          (153)       16,787
  Services..................................................       9,423        18,919                      28,342
                                                               ---------    ----------     ---------     ---------
      Total Cost of Revenues................................      15,914        29,368          (153)       45,129

      Gross Profit..........................................      76,811        69,081            --       145,892

Operating Expenses:
  Selling and Marketing.....................................      32,812        35,505                      68,317
  Product Development and Engineering.......................      13,629        14,498                      28,127
  General and Administrative................................       5,484         9,516                      15,000
  Acquisition-Related and Other.............................          --         2,177                       2,177
  Amortization of Intangible Assets.........................          --           416                         416
                                                               ---------    ----------     ---------     ---------
      Total Operating Expenses..............................      51,925        62,112                     114,037

Income from Operations......................................      24,886         6,969                      31,855

Other Income (Expense):
  Interest Income...........................................      10,027         3,575                      13,602
  Interest Expense and Other................................      (6,623)           --                      (6,623)
                                                               ---------    ----------     ---------     ---------
      Total Other Income....................................       3,404         3,575                       6,979
                                                               ---------    ----------     ---------     ---------
Income before Provision for Income Taxes....................      28,290        10,544                      38,834
Provision for Income Taxes..................................      11,037           974                      12,011
                                                               ---------    ----------     ---------     ---------

      Net Income............................................   $  17,253    $    9,570                   $  26,823
                                                               =========    ==========     =========     =========
Net Income per Share:
  Basic.....................................................   $    0.43    $     0.41                   $    0.44
  Diluted...................................................   $    0.40    $     0.40                   $    0.41
Weighted average common and common equivalent shares:
  Basic.....................................................      40,075        23,299                      61,510
  Diluted...................................................      43,661        23,984                      65,726
</TABLE>

    The accompanying notes are an integral part of these unaudited pro forma
                        condensed financial statements.

                                       73
<PAGE>
                PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME

                    (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
                                                                             INTEGRATED     PRO FORMA     PRO FORMA
                                                               WIND RIVER     SYSTEMS      ADJUSTMENTS    COMBINED
                                                               -----------  ------------  -------------  -----------
                                                                      YEAR ENDED
                                                               -------------------------
                                                               JANUARY 31,  FEBRUARY 28,
                                                                  1999          1999
                                                               -----------  ------------
<S>                                                            <C>          <C>           <C>            <C>
Revenues:
  Products...................................................   $  98,844    $   76,622     $    (250)    $ 175,216
  Services...................................................      33,059        56,882                      89,941
                                                                ---------    ----------     ---------     ---------
      Total Revenues.........................................     131,903       133,504          (250)      265,157

Cost of Revenues:
  Products...................................................       8,895        16,169          (250)       24,814
  Services...................................................      12,999        22,323                      35,322
                                                                ---------    ----------     ---------     ---------
      Total Cost of Revenues.................................      21,894        38,492          (250)       60,136

      Gross Profit...........................................     110,009        95,012                     205,021

Operating Expenses:
  Selling and Marketing......................................      45,927        48,743                      94,670
  Product Development and Engineering........................      19,177        18,625                      37,802
  General and Administrative.................................       8,295        12,940                      21,235
  Acquisition-Related and Other..............................          --         8,507                       8,507
  Amortization of Intangible Assets..........................          --           523                         523
                                                                ---------    ----------     ---------     ---------
      Total Operating Expenses...............................      73,399        89,338                     162,737

Income from Operations.......................................      36,610         5,674                      42,284

Other Income (Expense):
  Interest Income............................................      13,681         4,962                      18,643
  Interest Expense and Other.................................      (8,729)           --                      (8,729)
  Minority Interest in Consolidated Subsidiary...............        (151)           --                        (151)
                                                                ---------    ----------     ---------     ---------
      Total Other Income.....................................       4,801         4,962                       9,763
                                                                ---------    ----------     ---------     ---------
Income before Provision for Income Taxes.....................      41,411        10,636                      52,047
Provision for Income Taxes...................................      15,788         1,003                      16,791
                                                                ---------    ----------     ---------     ---------

      Net Income.............................................   $  25,623    $    9,633                   $  35,256
                                                                =========    ==========     =========     =========
Net Income per Share:
  Basic......................................................   $    0.64    $     0.42                   $    0.57
  Diluted....................................................   $    0.58    $     0.40                   $    0.54
Weighted average common and common equivalent shares:
  Basic......................................................      40,267        23,138                      61,554
  Diluted....................................................      43,843        23,840                      65,776
</TABLE>

    The accompanying notes are an integral part of these unaudited pro forma
                        condensed financial statements.

                                       74
<PAGE>
                PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
                    (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
                                                                             INTEGRATED     PRO FORMA     PRO FORMA
                                                               WIND RIVER     SYSTEMS      ADJUSTMENTS    COMBINED
                                                               -----------  ------------  -------------  -----------
                                                                      YEAR ENDED
                                                               -------------------------
                                                               JANUARY 31,  FEBRUARY 28,
                                                                  1998          1998
                                                               -----------  ------------
<S>                                                            <C>          <C>           <C>            <C>
Revenues:
  Products...................................................   $  68,380    $   68,619     $    (220)    $ 136,779
  Services...................................................   $  25,390        51,850                      77,240
                                                                ---------    ----------     ---------     ---------
      Total Revenues.........................................      93,770       120,469          (220)      214,019

Cost of Revenues:
  Products...................................................       6,349        14,373          (220)       20,502
  Services...................................................       9,633        27,430                      37,063
                                                                ---------    ----------     ---------     ---------
      Total Cost of Revenues.................................      15,982        41,803          (220)       57,565
      Gross Profit...........................................      77,788        78,666                     156,454

Operating Expenses:
  Selling and Marketing......................................      33,226        42,701                      75,927
  Product Development and Engineering........................      12,898        18,823                      31,721
  General and Administrative.................................       6,792        11,161                      17,953
  Acquired in-process Research and Development...............      15,159            --                      15,159
  Amortization of Intangible Assets..........................          --           688                         688
                                                                ---------    ----------     ---------     ---------
      Total Operating Expenses...............................      68,075        73,373                     141,448

Income from Operations.......................................       9,713         5,293                      15,006

Other Income (Expense):
  Interest Income............................................       7,743         3,908                      11,651
  Interest Expense and Other.................................      (4,213)           --                      (4,213)
  Minority Interest in Consolidated Subsidiary...............         (88)           --                         (88)
                                                                ---------    ----------     ---------     ---------
      Total Other Income.....................................       3,442         3,908                       7,350
                                                                ---------    ----------     ---------     ---------
Income before Provision for Income Taxes.....................      13,155         9,201                      22,356
Provision for Income Taxes...................................       8,829         3,128                      11,957
                                                                ---------    ----------     ---------     ---------
      Net Income.............................................   $   4,326    $    6,073     $             $  10,399
                                                                =========    ==========     =========     =========
Net Income per Share:
  Basic......................................................   $    0.11    $     0.26                   $    0.17
  Diluted....................................................   $    0.10    $     0.25                   $    0.16
Weighted average common and common equivalent shares:
  Basic......................................................      38,915        23,237                      60,293
  Diluted....................................................      43,567        24,078                      65,719
</TABLE>

    The accompanying notes are an integral part of these unaudited pro forma
                        condensed financial statements.

                                       75
<PAGE>
                PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME

                    (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
                                                                             INTEGRATED    PRO FORMA    PRO FORMA
                                                               WIND RIVER     SYSTEMS     ADJUSTMENTS   COMBINED
                                                               -----------  ------------  -----------  -----------
                                                                      YEAR ENDED
                                                               -------------------------
                                                               JANUARY 31,  FEBRUARY 28,
                                                                  1997          1997
                                                               -----------  ------------
<S>                                                            <C>          <C>           <C>          <C>
Revenues:
  Products...................................................   $  47,993    $   66,546    $    (140)   $ 114,399
  Services...................................................      17,811        38,917                    56,728
                                                                ---------    ----------    ---------    ---------
    Total Revenues...........................................      65,804       105,463         (140)     171,127

Cost of Revenues:
  Products...................................................       4,584         8,824         (140)      13,268
  Services...................................................       6,960        19,071                    26,031
                                                                ---------    ----------    ---------    ---------
    Total Cost of Revenues...................................      11,544        27,895         (140)      39,299

    Gross Profit.............................................      54,260        77,568                   131,828

Operating Expenses:
  Selling and Marketing......................................      24,241        38,963                    63,204
  Product Development and Engineering........................       8,325        17,264                    25,589
  General and Administrative.................................       5,322         8,377                    13,699
  Acquisition-Related and Other..............................          --         5,676                     5,676
  Amortization of Intangible Assets..........................          --           349                       349
                                                                ---------    ----------    ---------    ---------
    Total Operating Expenses.................................      37,888        70,629                   108,517

Income from Operations.......................................      16,372         6,939                    23,311

Other Income (Expense):
  Interest Income............................................       2,499         4,220                     6,719
  Minority Interest in Consolidated Subsidiary...............        (325)           --                      (325)
                                                                ---------    ----------    ---------    ---------
    Total Other Income.......................................       2,174         4,220                     6,394
                                                                ---------    ----------    ---------    ---------
Income before Provision for Income Taxes.....................      18,546        11,159                    29,705
Provision for Income Taxes...................................       7,021         3,905                    10,926
                                                                ---------    ----------    ---------    ---------
    Net Income...............................................   $  11,525    $    7,254    $            $  18,779
                                                                =========    ==========    =========    =========

Net Income per Share:
  Basic......................................................   $    0.33    $     0.32                 $    0.33
  Diluted....................................................   $    0.28    $     0.31                 $    0.30
Weighted average common and common equivalent shares:
  Basic......................................................      35,443        22,437                    56,085
  Diluted....................................................      40,515        23,508                    62,142
</TABLE>

    The accompanying notes are an integral part of these unaudited pro forma
                        condensed financial statements.

                                       76
<PAGE>
      NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS

NOTE 1

    Wind River's fiscal year ends on January 31. Integrated Systems' fiscal year
ends on February 28. The accompanying unaudited pro forma combined statement of
operations information gives effect to the proposed merger of Wind River and
Integrated Systems as if such merger occurred as of the beginning of the
earliest period presented. The pro forma combined statement of operations for
the year ended January 31, 1999 reflects the results of operations of Wind River
for the year ended January 31, 1999, combined with the results of operations of
Integrated Systems for the fiscal year ended February 28, 1999. The pro forma
combined statement of operations for the year ended January 31, 1998 reflects
the results of operations of Wind River for the year ended January 31, 1998,
combined with the results of operations of Integrated Systems for the fiscal
year ended February 28, 1998. The pro forma combined statement of operations for
the year ended January 31, 1997 reflects the results of operations of Wind River
for the year ended January 31, 1997, combined with the results of operations of
Integrated Systems for the fiscal year ended February 28, 1997. The pro forma
combined statement of operations for the nine-month periods ended October 31,
1999 and 1998 reflect the results of operations of Wind River for the nine-month
periods ended October 31, 1999 and 1998, combined with the results of operations
of Integrated Systems for the nine-month periods ended November 30, 1999 and
1998.

    The pro forma combined balance sheet as of October 31, 1999, combines the
assets, liablilties and stockholders' equity of Wind River at October 31, 1999
with the assets, liabilities and shareholders' equity of Integrated Systems at
November 30, 1999.

NOTE 2

    Basic net income per share is computed using the weighted average number of
common shares outstanding during the period. Diluted net income per share is
computed using the weighted average number of common and dilutive common
equivalent shares outstanding during the period. Potential dilutive common
shares consist of stock options and warrants (using the treasury stock method)
and convertible subordinated notes (using the if converted method). Common
equivalent shares are excluded from the computations if their effect is
anti-dilutive. Pro forma net income per share is computed by adding Wind River
historical weighted average shares outstanding to Integrated Systems historical
weighted average shares outstanding converted to give effect to the exchange
ratio of 0.92.

                                       77
<PAGE>
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS (CONTINUED)

NOTE 2 (CONTINUED)

    The following table reconciles the number of shares used in the pro forma
earnings per share computations to the numbers set forth in Wind River's and
Integrated Systems' historical statements of operations (in thousands, except
the exchange ratio and per share amounts):

<TABLE>
<CAPTION>
                                                                                           YEAR ENDED JANUARY 31,
                                              NINE MONTHS ENDED    NINE MONTHS ENDED   -------------------------------
                                              OCTOBER 31, 1999     OCTOBER 31, 1998      1999       1998       1997
                                             -------------------  -------------------  ---------  ---------  ---------
<S>                                          <C>                  <C>                  <C>        <C>        <C>
Shares used in basic per share computation:
  Historical Integrated Systems............          23,322               23,299          23,138     23,237     22,437
  Exchange ratio...........................            0.92                 0.92            0.92       0.92       0.92
                                                  ---------            ---------       ---------  ---------  ---------
                                                     21,456               21,435          21,287     21,378     20,642
  Historical Wind River Systems............          41,496               40,075          40,267     38,915     35,443
                                                  ---------            ---------       ---------  ---------  ---------
  Pro forma combined.......................          62,952               61,510          61,554     60,293     56,085
                                                  =========            =========       =========  =========  =========

Shares used in diluted per share
  computation:
  Historical Integrated Systems............          23,322               23,984          23,840     24,078     23,508
  Exchange ratio...........................            0.92                 0.92            0.92       0.92       0.92
                                                  ---------            ---------       ---------  ---------  ---------
                                                     21,456               22,065          21,933     22,152     21,627
  Historical Wind River Systems............          43,881               43,661          43,843     43,567     40,515
                                                  ---------            ---------       ---------  ---------  ---------
  Pro forma combined.......................          65,337               65,726          65,776     65,719     62,142
                                                  =========            =========       =========  =========  =========
</TABLE>

NOTE 3

    The historical financial statements of Wind River and Integrated Systems
have been adjusted to record the elimination of the effects of transactions
during the years 1999, 1998, 1997 and the nine-month period ended October 31,
1999 between Wind River and Integrated Systems pursuant to certain royalty
agreements.

NOTE 4

    It is anticipated that the combined company will incur estimated direct
transaction charges of $3.5 million related to the proposed merger of Wind River
with Integrated Systems, principally in the quarter in which the proposed merger
is consummated. These charges include estimated investment banking and financial
advisory fees of approximately $1.8 million, and other estimated merger related
expenses totaling $1.7 million consisting primarily of other professional
services and estimated registration expenses. These anticipated charges are
preliminary estimates and are subject to change. Actual amounts ultimately
incurred could differ from the estimated amounts. The actual amounts will be
charged to the statements of operations in the period the transaction is
consummated. Additionally, the direct transaction charges do not include
integration costs which may be incurred as of and subsequent to the merger.
Neither Wind River nor Integrated Systems has estimated the amount or nature of
integration costs.

                                       78
<PAGE>
                               DISSENTERS' RIGHTS

    If the principal terms of the merger are approved by the Integrated Systems
shareholders and the merger agreement is not terminated, and if Integrated
Systems shareholders holding 5% or more of the total shares of Integrated
Systems common stock outstanding on the record date "dissent" to the merger (as
described below), then any Integrated Systems shareholder may, by complying with
the applicable provisions of California law, require Integrated Systems to
purchase the holder's shares for cash at their fair market value. The following
summary of dissenters' rights is qualified in its entirety by Sections 1300
through 1312 of the California general corporation law, which is attached to
this joint proxy statement/prospectus as Annex F. If less than 5% of the total
shares of Integrated Systems common stock outstanding on the record date
"dissent" to the merger, then no Integrated Systems shareholders will have
dissenters' rights.

    If Integrated Systems shareholders holding 5% or more of the total shares of
Integrated Systems common stock outstanding on the record date "dissent" to the
merger, within 10 days after the date of the approval of the principal terms of
the merger, Integrated Systems will mail to each shareholder who voted against
approval of the principal terms of the merger a notice of approval of the
principal terms of the merger together with a copy of Sections 1300, 1301, 1302,
1303 and 1304 of the California general corporation law, a statement of the
price determined by Integrated Systems to represent the fair market value of
dissenting shares, and a brief description of the procedure to be followed if
the shareholder desires to pursue his or her dissenters' rights under California
law.

    A holder of shares of Integrated Systems common stock wishing to dissent
from the merger by requiring Integrated Systems to purchase his, her or its
shares must:

        (1) vote against approval of the principal terms of the merger;

        (2) make written demand upon Integrated Systems to have Integrated
    Systems purchase those shares for cash at the fair market value of such
    shares on the last trading day before the merger was first announced. The
    demand must be made by a person who was a shareholder of record on the
    record date of the special meeting, must state the number and class of
    dissenting shares held of record by the dissenting shareholder and must be
    received by Integrated Systems not later than the date of the special
    meeting of Integrated Systems shareholders; and

        (3) submit, within 30 days after the date on which the notice of
    approval of the principal terms of the merger is mailed to the shareholder,
    at the principal office of Integrated Systems, the certificates representing
    any shares in regard to which demand for purchase is being made, for
    endorsement with a statement that the shares are "dissenting shares."

    Written demands, notices or other communications concerning the exercise of
dissenters' rights should be addressed to:

                            Integrated Systems, Inc.
                             c/o Fenwick & West LLP
                              Two Palo Alto Square
                              3000 El Camino Real
                              Palo Alto, CA 94306
                          Attn: Fred M. Greguras, Esq.

    THE PROCESS OF DISSENTING REQUIRES STRICT COMPLIANCE WITH TECHNICAL
PREREQUISITES. THOSE WISHING TO DISSENT SHOULD CONSULT WITH THEIR OWN LEGAL
COUNSEL IN CONNECTION WITH COMPLIANCE UNDER SECTIONS 1300 THROUGH 1312 OF THE
CALIFORNIA GENERAL CORPORATION LAW.

                                       79
<PAGE>
                    DESCRIPTION OF WIND RIVER CAPITAL STOCK

GENERAL

    The following describes certain of the provisions of the certificate of
incorporation and bylaws of Wind River. Wind River's certificate of
incorporation and bylaws are included as exhibits to the registration statement
of which this joint proxy statement/prospectus is a part. The authorized capital
stock of Wind River consists of 125,000,000 shares of common stock, $.001 par
value, and 2,000,000 shares of preferred stock, $.001 par value.

WIND RIVER COMMON STOCK

    As of December 23, 1999, there were 42,214,854 shares of common stock
outstanding held of record by 665 stockholders. The holders of common stock are
entitled to one vote for each share held of record on all matters submitted to a
vote of the stockholders. The holders of common stock are not entitled to
cumulative voting rights with respect to the election of directors, and as a
consequence, minority stockholders will not be able to elect directors on the
basis of their votes alone. Subject to preferences that may apply to any then
outstanding preferred stock, holders of common stock are entitled to receive
ratably such dividends as may be declared by the board of directors out of funds
legally available therefor. In the event of a liquidation, dissolution or
winding up of Wind River, holders of the common stock are entitled to share
ratably in all assets remaining after payment of liabilities and the liquidation
preference of any then outstanding preferred stock. Holders of common stock have
no preemptive rights and no right to convert their common stock into any other
securities. No redemption or sinking fund provisions apply to the common stock.
All outstanding shares of common stock are fully paid and nonassessable. The
rights, preferences and privileges of holders of Wind River common stock are
subject to those of holders of Wind River preferred stock.

WIND RIVER PREFERRED STOCK

    The board of directors has the authority, without further action by the
stockholders, to issue up to 2,000,000 shares of preferred stock in one or more
series and to fix the rights, preferences, privileges and restrictions of any
series of preferred stock, including dividend rights, conversion rights, voting
rights, terms of redemption, liquidation preferences, sinking fund terms and the
number of shares constituting any series or the designation of any series. The
issuance of preferred stock could adversely affect the voting power of holders
of common stock. The likelihood that holders of preferred stock will receive
dividend payments and payments upon liquidation could have the effect of
delaying, deferring or preventing a change in control of Wind River. Wind River
has no present plan to issue any shares of preferred stock.

RIGHTS TO PURCHASE WIND RIVER PREFERRED STOCK

    On October 21, 1999, the Wind River board of directors declared a dividend
of one preferred share purchase right for each outstanding share of Wind River
common stock held of record on November 15, 1999 and approved the further
issuance of rights with respect to all shares of Wind River common stock that
are subsequently issued. This includes the shares of Wind River common stock to
be issued in the merger. The rights were issued subject to a rights agreement
dated as of October 22, 1999, between Wind River and American Stock Transfer and
Trust Company, as rights agent. Each right entitles the registered holder to
purchase from Wind River one-hundreth of a share of Wind River series A junior
participating preferred stock at a price of $160 per one-hundreth of a share,
subject to adjustment. Until the occurrence of events described below, the
rights are not exercisable, are evidenced by the certificates for Wind River
common stock and are not transferable apart from the Wind River common stock.

                                       80
<PAGE>
    SERIES A JUNIOR PARTICIPATING PREFERRED.  The preferred stock issuable upon
exercise of the rights would be non-redeemable and rank junior to any other
series of Wind River preferred stock. The dividend, liquidation and voting
rights, and the nonredemption features, of the preferred stock are designed so
the value of the 1/100 interest in a share of preferred stock purchasable with
each right will approximate the value of one share of common stock. Each whole
share of preferred stock would be entitled to receive a quarterly preferential
dividend of $1 per share but would be entitled to receive, in the aggregate, a
dividend of 100 times the dividend declared on the common stock. In the event of
liquidation, the holders of the preferred stock would be entitled to receive a
minimum preferential liquidation payment of $100 per share, but would be
entitled to receive, in the aggregate, a liquidation payment equal to 100 times
the payment made per share of common stock. Each share of preferred stock would
have 100 votes, voting together with the common stock. Finally, in the event of
any merger, consolidation or other transaction in which shares of common stock
are exchanged for or changed into other stock or securities, cash and/or other
property, each share of preferred stock would be entitled to receive 100 times
the amount received per share of common stock. These rights are protected
against dilution if additional shares of common stock are issued. Since the
rights are not exercisable immediately, registration with the SEC of the
preferred stock issuable upon exercise of the rights need not be effective until
the rights become exercisable.

    DETACHMENT OF RIGHTS; EXERCISE.  The rights will separate from the Wind
River common stock and a distribution date will occur upon the first to occur of
(a) the public announcement that a person or group has acquired beneficial
ownership of 15% or more of the Wind River common stock or (b) 10 business days
after a person or group commences or announces its intention to commence a
tender or exchange offer which would result in beneficial ownership by that
person or group of 15% or more of the Wind River common stock. Until then, the
rights are not exercisable and are not transferable apart from the Wind River
common stock. As soon as practicable after the rights become exercisable,
separate right certificates would be issued and the rights would become
transferable apart from the Wind River common stock. After detachment, the
rights would continue, until a triggering event as described below, to be
exercisable for the purchase of 1/100 of a share of the preferred stock per
right at the exercise price of $160 per 1/100 of a share.

    If a person or group were to acquire 15% or more of the Wind River common
stock, then, unless redeemed as described below, each right then outstanding
would become a right to receive upon exercise that number of shares of Wind
River common stock having a market value of two times the exercise price of the
right.

    At any time after a person acquires 15% or more of the Wind River common
stock and until that acquiring person has acquired beneficial ownership of 50%
or more of the outstanding Wind River common stock, the Wind River board of
directors could cause the exchange of the rights, in whole or in part, for
shares of Wind River common stock at an exchange ratio of one share of common
stock for each right, subject to adjustment.

    If, after the rights have detached and become exercisable, an acquiring
company were to merge or otherwise combine with Wind River, or Wind River were
to sell 50% or more of its assets or earning power, each right then outstanding
and not previously exercised or exchanged would become a right to buy that
number of shares of common stock of the acquiring company which at the time of
the transaction would have a market value of two times the exercise price of the
right.

    REDEMPTION.  The rights are redeemable by the Wind River board of directors
at a price of $0.01 per right at any time before the earliest of (i) the day of
the first public announcement that a person or group has acquired 15% or more of
the Wind River common stock or (ii) the expiration of the rights ten years after
adoption of the rights plan.

                                       81
<PAGE>
    AMENDMENT.  The rights may be amended or otherwise modified by the Wind
River board of directors at any time before the rights are distributed.
Thereafter the rights may be amended only in a manner that does not adversely
affect the holders of the rights.

    This summary of the rights does not purport to be complete and is qualified
in its entirety by reference to the rights agreement, which is incorporated
herein by reference and is available free of charge from Wind River.

TRANSFER AGENT AND REGISTRAR

    The transfer agent and registrar for the Wind River common stock is American
Stock Transfer and Trust Company.

                                       82
<PAGE>
                 COMPARATIVE RIGHTS OF WIND RIVER STOCKHOLDERS
                      AND INTEGRATED SYSTEMS SHAREHOLDERS

    After the merger, the Integrated Systems shareholders will become
stockholders of Wind River and the Integrated Systems shareholders' rights will
cease to be defined and governed by the California general corporation law, and
instead be defined and governed by the Delaware general corporation law. In
addition, rights of the Integrated Systems shareholders will no longer be
defined and governed by Integrated Systems' amended and restated articles of
incorporation and bylaws. Instead, each shareholder will become a new
stockholder of Wind River whose rights as a stockholder will be defined and
governed by Wind River's amended and restated certificate of incorporation and
amended and restated bylaws. While the rights and privileges of stockholders of
a Delaware corporation (such as Wind River) are, in many instances, comparable
to those of shareholders of a California corporation (such as Integrated
Systems), there are differences. The following is a summary of the material
differences between the rights of holders of Integrated Systems capital stock
and the rights of holders of Wind River common stock at the date of this joint
proxy statement/prospectus. These differences arise from differences between
Delaware law and California law and between the Wind River certificate of
incorporation and the Wind River bylaws on the one hand and the Integrated
Systems articles of incorporation and the Integrated Systems bylaws on the
other.

SIZE OF THE BOARD OF DIRECTORS

    Under California law, changes in the number of directors of a corporation
must generally be approved by a majority of the outstanding shares, although a
board of directors may fix the exact number of directors within a range stated
in the corporation's articles of incorporation or bylaws if that stated range
has been approved by the corporation's shareholders. Delaware law permits a
corporation's board of directors alone to change the authorized number or range
of directors by amendment of the corporation's bylaws, unless otherwise
prohibited by the corporation's certificate of incorporation (in which case a
change in the number of directors may be made only upon approval by the
stockholders). In any case, no reduction in the authorized number of directors
may have the effect of removing any director before that director's term of
office expires. The ability of the board of directors to change the number of
directors without stockholder approval enables a corporation to respond quickly
to a potential opportunity to attract the services of a qualified director or to
eliminate a vacancy for which a suitable candidate is not available.

    The Integrated Systems bylaws provide for a board of directors within a
range of five to nine. The exact number of directors is currently set at eight.
Directors are elected at each annual meeting of the Integrated Systems
shareholders. The stated range may be changed only by amending the Integrated
Systems bylaws, which requires the approval of the Integrated Systems
shareholders. The Wind River board currently consists of six members. Directors
are elected at each annual meeting of Wind River stockholders. The number of
directors of the Wind River board may be changed by resolution by the Wind River
board of directors.

    The merger agreement provides that after the merger, the Wind River board of
directors will consist of six persons nominated by Wind River and two persons
nominated by Integrated Systems. The merger agreement provides that the Wind
River board of directors must use all commercially reasonable efforts to attempt
to cause, as of the effective time, Jerry L. Fiddler to serve as Chairman of the
Board of Wind River, Thomas St. Dennis to serve as Chief Executive Officer and a
director of Wind River and Narendra Gupta to serve as Vice Chairman and a
director of Wind River.

ELIMINATION OF CUMULATIVE VOTING

    California law provides for cumulative voting in the election of directors,
unless, in the case of a listed corporation, its articles of incorporation or
bylaws provide otherwise. The Integrated Systems articles of incorporation
eliminate cumulative voting.

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    Under Delaware law, cumulative voting is not mandatory, and a corporation's
certificate of incorporation must provide for cumulative voting rights if
stockholders are to be entitled to such rights. The Wind River certificate of
incorporation does not provide for cumulative voting.

REMOVAL OF DIRECTORS

    Under California law, any director or the entire board of directors may be
removed, with or without cause, with the approval of a majority of the
outstanding shares entitled to vote. However, no individual director may be
removed (unless the entire board is removed) if the number of votes cast against
removal would be sufficient to elect the director under cumulative voting,
whether or not the corporation's articles of incorporation or bylaws provide for
cumulative voting. A corporation's board of directors may not remove a director
unless the director has been declared of unsound mind by an order of court or
convicted of a felony.

    Stockholders of a Delaware corporation holding a majority of the outstanding
shares entitled to vote for directors may remove a director with or without
cause, except in cases involving classified boards or where cumulative voting is
permitted. The Wind River bylaws provide for removal with or without cause.

FILLING NEW SEATS OR VACANCIES ON THE BOARD OF DIRECTORS

    Unless otherwise provided in a corporation's articles of incorporation or
bylaws, under California law, any vacancy on a board of directors other than one
created by removal of a director may be filled by the remainder of the
corporation's board of directors. A vacancy created by removal of a director may
be filled by the board of directors only if the board is so authorized by the
corporation's articles of incorporation or by a bylaw approved by the
corporation's shareholders.

    Under Delaware law, vacancies and newly created directorships may be filled
by a majority of the directors then in office (even though less than a quorum),
unless (i) otherwise provided in the corporation's certificate of incorporation
or bylaws, or (ii) the certificate of incorporation directs that a particular
class is to elect the director, in which case any other directors elected by
that class, or a sole remaining director, must fill the vacancy.

    The Integrated Systems bylaws provide that vacancies in the Integrated
Systems board of directors may be filled by a majority of the remaining
directors, even if less than a quorum, or by a sole remaining director; however,
a vacancy created by the removal of a director by the shareholders may be filled
only by a vote of the shareholders.

    The Wind River certificate of incorporation provides that new seats on the
Wind River board of directors or vacancies occurring for any cause may be filled
by an affirmative vote of the majority of stockholders generally entitled to
vote in the election of directors, or by the affirmative vote of a majority of
the directors then in office, even though less than a quorum. Newly created
directorships resulting from any increase in the authorized number of directors
are filled only by the affirmative vote of the directors then in office, even
though less than a quorum of the board, unless the board determines that the
position will be filled by the stockholders.

INDEMNIFICATION AND LIMITATION OF LIABILITY

    California and Delaware have similar laws governing indemnification by a
corporation of its officers, directors, employees and other agents. The laws of
both states also permit, with exceptions, a corporation to adopt charter
provisions eliminating the liability of its directors to the corporation or its
stockholders for monetary damages for breach of the directors' fiduciary duty of
care. There are nonetheless certain differences between the laws of the two
states respecting indemnification and limitation of liability, which are
summarized below.

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    The Integrated Systems articles of incorporation eliminate the liability of
directors to the corporation to the fullest extent permissible under California
law. California law does not permit the elimination of monetary liability based
on: (a) intentional misconduct or knowing and culpable violation of law;
(b) acts or omissions that a director believes to be contrary to the best
interests of the corporation or its shareholders or that involve the absence of
good faith on the part of the director; (c) receipt of an improper personal
benefit; (d) acts or omissions that show reckless disregard for the director's
duty to the corporation or its shareholders, where the director in the ordinary
course of performing a director's duties should be aware of a risk of serious
injury to the corporation or its shareholders; (e) acts or omissions that
constitute an unexcused pattern of inattention that amounts to an abdication of
the director's duty to the corporation and its shareholders; (f) transactions
between the corporation and a director who has a material financial interest in
the transaction; and (g) liability for improper distributions, loans or
guarantees.

    The Wind River certificate of incorporation eliminates the liability of
directors to Wind River or its stockholders for monetary damages for breach of
fiduciary duty as a director to the fullest extent permissible under Delaware
law, as it exists currently and as it may be amended in the future. Under
Delaware law, such provision may not eliminate or limit director monetary
liability for: (a) breaches of the director's duty of loyalty to the corporation
or its stockholders; (b) acts or omissions not in good faith or involving
intentional misconduct or knowing violations of law; (c) the payment of unlawful
dividends or unlawful stock repurchases or redemptions; or (d) transactions in
which the director received an improper personal benefit. The limitation of
liability provisions also may not limit a director's liability for violation of,
or otherwise relieve Wind River or its directors from the necessity of complying
with, federal or state securities laws, or affect the availability of
nonmonetary remedies such as injunctive relief or rescission.

    California law requires indemnification when the individual has defended the
action on the merits successfully while Delaware law requires indemnification
whether an action has been successfully defended on the merits or otherwise.
Delaware law generally permits indemnification of expenses, including attorneys'
fees, actually and reasonably incurred in the defense or settlement of a
derivative or third-party action, provided there is a determination by a
majority vote of a disinterested quorum of the directors, by independent legal
counsel or by a majority vote of a quorum of the stockholders that the person
seeking indemnification acted in good faith and in a manner reasonably believed
to be in the best interests of the corporation. Without court approval, however,
no indemnification may be made in respect of any derivative action in which such
person is adjudged liable for negligence or misconduct in the performance of his
or her duty to the corporation. Delaware law requires indemnification of
expenses when the individual being indemnified has successfully defended any
action, claim, issue or matter, on the merits or otherwise.

    Expenses incurred by an officer or director in defending an action may be
paid in advance, under Delaware law and California law, if the director or
officer undertakes to repay such amounts if it is ultimately determined that he
or she is not entitled to indemnification. In addition, the laws of both states
authorize a corporation's purchase of indemnity insurance for the benefit of its
officers, directors, employees and agents whether or not the corporation would
have the power to indemnify against the liability covered by the policy.

    California law permits a California corporation to provide rights to
indemnification beyond those provided by law to the extent the additional
indemnification is authorized in the corporation's articles of incorporation.
Thus, California corporations may, by agreements or bylaw provisions, make
mandatory the permissive indemnification provided by California law. The
Integrated Systems articles of incorporation permit indemnification beyond that
expressly mandated by California law, subject only to the limits on excess
indemnification under California law.

    Both the Integrated Systems bylaws and Wind River bylaws contain provisions
to further the indemnification provisions set forth in their respective
charters. Both Delaware and California law state

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that the indemnification provided by statute is not exclusive of any other
rights under any bylaw, agreement, vote of shareholders, or of disinterested
directors, or otherwise.

INTERESTED DIRECTOR TRANSACTIONS

    Under both California and Delaware law, contracts or transactions in which
one or more of a corporation's directors have an interest are not void or
voidable because of that interest if certain conditions are met. The conditions
are generally similar under California and Delaware law. Under California and
Delaware law, (a) either the shareholders or the board of directors must approve
the contract or transaction after full disclosure of the material facts, and, in
the case of board approval, the contract or transaction must also be "just and
reasonable" (in California) or "fair" (in Delaware) to the corporation, or
(b) the contract or transaction must have been "just and reasonable" or "fair"
(as applicable) as to the corporation at the time it was approved. In the latter
case, California law explicitly places the burden of proof on the interested
director. Under California law, if shareholder approval is sought, the
interested director is not entitled to vote his shares on any action regarding
the contract or transaction. If board approval is sought, the contract or
transaction must be approved by a majority vote of a quorum of the directors,
without counting the vote of any interested directors (except that interested
directors may be counted for purposes of establishing a quorum). Under Delaware
law, if stockholder approval is sought generally, the contract or transaction
must be approved in good faith by a majority of disinterested stockholders. If
board approval is sought, the contract or transaction must be approved by a
majority of the disinterested directors (even though less than a majority of a
quorum). Therefore, transactions that the Integrated Systems board of directors
might not be able to approve because of the number of interested directors could
be approved by a majority of the disinterested directors of Wind River, although
less than a majority of a quorum.

LOANS TO OFFICERS AND EMPLOYEES

    Under California law, a corporation cannot make any loan or guaranty to or
for the benefit of a director or officer of the corporation or its parent unless
the loan or guaranty, or a plan providing for the loan or guaranty, is approved
by shareholders owning a majority of the outstanding shares of the corporation.
However, under California law, any corporation with 100 or more shareholders of
record may seek approval by the outstanding shares of a bylaw provision
authorizing the board of directors alone to approve loans or guaranties to or on
behalf of officers (whether or not the officers are directors) if the board
determines that any loan or guaranty may reasonably be expected to benefit the
corporation. The Integrated Systems bylaws currently authorize the Integrated
Systems board of directors to approve such loans or guaranties.

    Under Delaware law, a corporation may make loans to, guaranty the
obligations of, or otherwise assist its officers or other employees and those of
its subsidiaries (including directors who are also officers or employees) when
such action, in the judgement of the directors, may reasonably be expected to
benefit the corporation.

STOCKHOLDER DERIVATIVE SUITS

    California law provides that a shareholder bringing a derivative action on
behalf of a corporation need not have been a shareholder at the time of the
transaction in question, provided that certain tests are met. Under Delaware
law, a stockholder may bring a derivative action on behalf of the corporation
only if the stockholder was a stockholder of the corporation at the time of the
transaction in question or his or her stock thereafter devolved upon him or her
by operation of law. California law also provides that the corporation or the
defendant in a derivative suit may make a motion to the court for an order
requiring the plaintiff shareholder to furnish a security bond. Delaware does
not have a similar bonding requirement.

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ELIMINATION OF ACTIONS BY WRITTEN CONSENT OF STOCKHOLDERS

    Under both California and Delaware law, shareholders may act by written
consent in lieu of a shareholder meeting. Both California and Delaware law
permit a corporation in its charter to eliminate actions by written consent. The
Integrated Systems bylaws permit shareholder actions by written consent. In
contrast, the Wind River certificate of incorporation does not permit
stockholder actions by written consent.

    Elimination of the ability of stockholders to act by written consent could
lengthen the amount of time required to take stockholder actions, since certain
actions by written consent are not subject to the minimum notice requirement of
a stockholders' meeting. The elimination of stockholder actions by written
consents, however, could deter hostile takeover attempts. A holder or group of
holders controlling a majority interest of Wind River's common stock would not
be able to amend the Wind River certificate of incorporation, the Wind River
bylaws or remove directors by a stockholder action by written consent, but
instead, would have to call a stockholders' meeting and observe the notice
periods determined by the Wind River board under the Wind River bylaws before
attempting to obtain approval of any such action.

POWER TO CALL SPECIAL MEETINGS OF STOCKHOLDERS

    Under California law and the Integrated Systems bylaws, a special meeting of
shareholders may be called by the board of directors, the chairman of the board,
the president, two or more members of the board, or by one or more holders of
shares entitled to cast not less than 10% of the votes at such meeting.

    Under Delaware law, special meetings of stockholders may be called by a
corporation's board of directors or by the other person or persons authorized by
the corporation's certificate of incorporation or bylaws. Wind River's bylaws
provide that special meetings of stockholders may be called by the chairman of
the board, the president, a majority of the total number of authorized
directors, or the holders of shares entitled to cast not less than 10% of the
votes at the meeting. The Wind River bylaws further provide that only the
business specified in the notice of a special meeting can be conducted at the
special meeting.

STOCKHOLDER APPROVAL OF CERTAIN BUSINESS COMBINATIONS

    In recent years, a number of states have adopted special laws designed to
make certain kinds of "unfriendly" corporate takeovers, or other transactions
involving a corporation and one or more of its significant shareholders, more
difficult. Under Section 203 of the Delaware law, certain "business
combinations" with "interested stockholders" of Delaware corporations are
subject to a three-year moratorium unless specified conditions are met. Under
Section 203 of the Delaware law, certain business combinations with a majority
shareholder require the delivery of a fairness opinion; however, there is no
equivalent provision in California law to Section 203, which addresses business
combinations with a significant but not majority holder.

    Section 203 prohibits a Delaware corporation from engaging in a "business
combination" with an "interested stockholder" for three years following the date
that the person becomes an interested stockholder. With certain exceptions, an
interested stockholder is a person or group who or which owns 15% or more of the
corporation's outstanding voting stock (including any rights to acquire stock
under an option, warrant, agreement, arrangement or understanding, or upon the
exercise of conversion or exchange rights, and stock with respect to which the
person has voting rights only), or is an affiliate or associate of the
corporation and was the owner of 15% or more of the voting stock at any time
within the previous three years.

    For purposes of Section 203, the term "business combination" is defined
broadly to include mergers with or caused by the interested stockholder; sales
or other dispositions to the interested

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stockholder (except proportionately with the corporation's other stockholders)
of assets of the corporation or a subsidiary equal to 10% or more of the total
market value of the corporation's consolidated assets or its outstanding stock;
the issuance or transfer by the corporation or a subsidiary of stock of the
corporation or the subsidiary to the interested stockholder (except for
transfers in a conversion or exchange or a pro rata distribution or certain
other transactions, none of which increase the interested stockholder's
proportionate ownership of any class or series of the corporation's or such
subsidiary's stock); or receipt by the interested stockholder of the benefit
(except proportionately as a stockholder), directly or indirectly, of any loans,
advances, guarantees, pledges, or other financial benefits provided by or
through the corporation or a subsidiary.

    The three-year moratorium imposed on business combinations by Section 203
does not apply if (a) before the stockholder becomes an interested stockholder,
the board of directors approves either the business combination or the
transaction which resulted in the person becoming an interested stockholder;
(b) the interested stockholder owns 85% of the corporation's voting stock upon
completion of the transaction which made him or her an interested stockholder
(excluding from the 85% calculation shares owned by directors who are also
officers of the target corporation and shares held by employee stock plans which
do not permit employees to decide confidentially whether to accept a tender or
exchange offer); or (c) after the person becomes an interested stockholder, the
board approves the business combination, and it is also approved at a
stockholder meeting by 66 2/3% of the voting stock not owned by the interested
stockholder.

    Section 203 only applies to Delaware corporations which, like Wind River,
(a) have a class of voting stock that is listed on a national securities
exchange, are quoted on an interdealer quotation system such as the Nasdaq
National Market or (b) are held of record by more than 2,000 shareholders.
However, a Delaware corporation may elect not to be governed by Section 203 by a
provision in its original certificate of incorporation or an amendment or in its
bylaws, which amendment must be approved by majority shareholder vote and may
not be further amended by the board of directors. Wind River has not elected not
to be governed by Section 203; therefore, Section 203 will apply to Wind River.

    Section 203 has been challenged in lawsuits arising out of ongoing takeover
disputes, and it is not yet clear whether and to what extent its
constitutionality will be upheld by the courts. Although the United States
District Court for the District of Delaware has consistently upheld the
constitutionality of Section 203, the Delaware Supreme Court has not yet
considered the issue. Section 203 has the effect of limiting the ability of a
potential acquiror to make a two-tiered bid for Wind River in which all
stockholders would not be treated equally. Integrated Systems shareholders
should note that the application of Section 203 to Wind River will confer upon
the Wind River board the power to reject a proposed business combination, even
though a potential acquiror could be offering a substantial premium for Wind
River's shares over the then current market price (assuming the stock is then
publicly traded). Section 203 may also discourage certain potential acquirors
unwilling to comply with its provisions.

MERGERS

    Both California and Delaware law generally require that a majority of the
holders of the stock of each of the acquiring and target corporations approve
statutory mergers. Delaware law does not require a stockholder vote of the
surviving corporation in a merger (unless the corporation provides otherwise in
its certificate of incorporation) if (a) the merger agreement does not amend the
existing certificate of incorporation, (b) each share of the surviving
corporation outstanding before the merger is an identical outstanding share
after the merger, and (c) the number of shares to be issued by the surviving
corporation in the merger does not exceed 20% of the shares outstanding
immediately before the merger. California law contains a similar exception to
its voting requirements for reorganizations where shareholders or the
corporation itself, or both, immediately before the reorganization own

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immediately after the reorganization equity securities constituting more than
five-sixths of the voting power of the surviving or acquiring corporation or its
parent entity.

    Both California and Delaware law also require that a sale of all or
substantially all of the assets of a corporation be approved by a majority of
the voting shares of the corporation transferring such assets.

    With exceptions, California law also requires that mergers, reorganizations,
certain sales of assets and similar transactions be approved by a majority vote
of each class of shares outstanding. By contrast, Delaware law generally does
not require class voting, except in certain transactions involving an amendment
to the certificate of incorporation which adversely affects a specific class of
shares. The Wind River certificate of incorporation does not require class
voting.

DISSENTERS' RIGHTS

    Under both California and Delaware law, a stockholder of a corporation
participating in major corporate transactions may, under varying circumstances,
be entitled to dissenters' rights under which the shareholder may receive cash
in the amount of the fair market value of his, her or its shares in lieu of the
consideration paid in the transaction.

    The limitations on the availability of dissenters' rights under California
law are different from those under Delaware law. Shareholders of a California
corporation whose shares are listed on a national securities exchange or on a
list of over-the-counter margin stocks issued by the Board of Governors of the
Federal Reserve System generally have dissenters' rights in certain instances.
As a result, dissenters' rights are available to the Integrated Systems
shareholders with respect to the merger. See "Dissenters' Rights."

    Under Delaware law, dissenters' rights are not available (a) with respect to
the sale, lease or exchange of all or substantially all of the assets of a
corporation, (b) with respect to a merger or consolidation by a corporation
whose shares are either listed on a national securities exchange or are held of
record by more than 2,000 holders if the stockholders receive only shares of the
surviving corporation or shares of any other corporation which are either listed
on a national securities exchange or held of record by more than 2,000 holders,
plus cash in lieu of fractional shares, or (c) to stockholders of a corporation
surviving a merger if, among other conditions, no vote of the stockholders of
the surviving corporation is required to approve the merger.

    THIS SUMMARY OF THE MATERIAL DIFFERENCES IN THE CORPORATION LAWS OF
CALIFORNIA AND DELAWARE, THE INTEGRATED SYSTEMS ARTICLES AND THE WIND RIVER
CERTIFICATE AND THE INTEGRATED SYSTEMS BYLAWS AND THE WIND RIVER BYLAWS DOES NOT
PURPORT TO BE A COMPLETE LISTING OF DIFFERENCES IN THE RIGHTS AND REMEDIES OF
HOLDERS OF SHARES OF CALIFORNIA, AS OPPOSED TO DELAWARE, CORPORATIONS AND
SHAREHOLDERS OF INTEGRATED SYSTEMS AND STOCKHOLDERS OF WIND RIVER IN PARTICULAR.
THE DIFFERENCES CAN BE DETERMINED IN FULL BY REFERENCE TO CALIFORNIA LAW, TO
DELAWARE LAW AND THE INTEGRATED SYSTEMS ARTICLES AND THE WIND RIVER CERTIFICATE
AND THE INTEGRATED SYSTEMS BYLAWS AND THE WIND RIVER BYLAWS. IN ADDITION, THE
LAWS OF CALIFORNIA AND DELAWARE PROVIDE THAT SOME OF THE STATUTORY PROVISIONS AS
THEY AFFECT VARIOUS RIGHTS OF HOLDERS OF SHARES MAY BE MODIFIED BY PROVISIONS IN
THE ARTICLES OF INCORPORATION OR BYLAWS OF THE CORPORATION.

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     APPROVAL OF THE AMENDMENT TO THE WIND RIVER 1998 EQUITY INCENTIVE PLAN

    In April 1998, the Board of Directors adopted, and the Wind River
stockholders subsequently approved, the Wind River Systems, Inc. 1998 Equity
Incentive Plan. At October 31, 1999, there were 1,500,000 shares of Wind River
common stock authorized for issuance under the 1998 Equity Incentive Plan.
Through October 31, 1999, stock options (net of canceled or expired options)
covering an aggregate of 1,381,614 shares of Wind River common stock had been
granted under the 1998 Equity Incentive Plan. Only 118,386 shares of Wind River
common stock remained available for future grant under the 1998 Equity Incentive
Plan.

    The 1998 Equity Incentive Plan provides for the grant of incentive and
nonstatutory stock options, stock appreciation rights, rights to purchase
restricted stock and stock bonuses. The Wind River board of directors adopted
the 1998 Equity Incentive Plan as a means to retain the services of persons who
are now employees and directors of and consultants to Wind River and its
affiliates, to secure and retain the services of new employees, directors and
consultants and to provide incentives for such persons to exert maximum efforts
on behalf of Wind River. No awards other than stock options have been granted
under the 1998 Equity Incentive Plan. In October 1999, the Wind River board of
directors approved an amendment to the 1998 Equity Incentive Plan, subject to
stockholder approval, to increase the number of shares of Wind River common
stock reserved for option grants under the 1998 Equity Incentive Plan by
2,600,000 shares to a total of 4,100,000 shares. Such additional shares may be
used only for grants of incentive and nonstatutory stock options whose exercise
prices must be at least 100% of the fair market value of the Wind River common
stock on the date of grant. Any repricing of such options is prohibited without
stockholder approval. The additional reserved shares and the restrictions on the
grants made with such reserved shares are provided in an amendment to Section
4(a) of the 1998 Equity Incentive Plan. The Wind River board of directors
approved this amendment to ensure that Wind River can continue to grant stock
options at levels determined appropriate by the Wind River board of directors.

    Wind River stockholders are requested to approve the amendment to the 1998
Equity Incentive Plan. The affirmative vote of the holders of a majority of the
shares present in person or represented by proxy and entitled to vote at the
special meeting of Wind River stockholders will be required to approve the
amendment to the 1998 Equity Incentive Plan.

    The essential features of the 1998 Equity Incentive Plan are outlined below.

GENERAL

    The 1998 Equity Incentive Plan provides for the grant of stock awards, which
may be incentive stock options, nonstatutory stock options, stock appreciation
rights, rights to purchase restricted stock or stock bonuses. Incentive stock
options granted under the 1998 Equity Incentive Plan are intended to qualify as
"incentive stock options" within the meaning of Section 422 of the Internal
Revenue Code. Nonstatutory stock options granted under the 1998 Equity Incentive
Plan are not intended to qualify as incentive stock options under the Internal
Revenue Code. See "--Federal Income Tax Information" for a discussion of the tax
treatment of awards.

PURPOSE

    The 1998 Equity Incentive Plan was adopted to provide a means by which
employees (including officers) and directors of and consultants to Wind River
and its affiliates may be given an opportunity to purchase stock of Wind River,
to secure and retain the services of persons holding or capable of filling such
positions and to provide incentives for such persons to exert maximum efforts on
behalf of Wind River.

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ADMINISTRATION

    The Wind River board of directors administers the 1998 Equity Incentive
Plan. Subject to the provisions of the 1998 Equity Incentive Plan, the Wind
River board of directors has the power to construe and interpret the 1998 Equity
Incentive Plan and to determine the persons to whom and the dates on which
awards will be granted, the number of shares of Wind River common stock to be
subject to each award, the time or times during the term of each award within
which all or a portion of such award may be exercised, the exercise price, the
type of consideration and other terms of the award.

    The Wind River board of directors is authorized to delegate administration
of the 1998 Equity Incentive Plan to a committee or committees composed of one
or more members of the Wind River board of directors and has delegated such
administration to the Compensation Committee. The Compensation Committee has the
powers to administer the 1998 Equity Incentive Plan which were originally
possessed by the Wind River board of directors, subject to such limitations as
the Wind River board of directors provides. As used herein with respect to the
1998 Equity Incentive Plan, the "Wind River board of directors" refers to the
Compensation Committee as well as to the Wind River board of directors.

    In order to maximize Wind River's ability to recognize a business expense
deduction under Section 162(m) of the Internal Revenue Code in connection with
compensation recognized by "covered employees" (defined in Section 162(m) as the
chief executive officer and other four most highly compensated officers), the
regulations under Section 162(m) require that the directors who serve as members
of the committee responsible for administering the 1998 Equity Incentive Plan
with respect to these covered employees must be "outside directors." The Wind
River board of directors currently intends to limit the directors who may serve
as members of the Compensation Committee to those who are "outside directors" as
defined in Section 162(m) of the Internal Revenue Code. This limitation excludes
from the Compensation Committee (i) current employees of Wind River,
(ii) former employees of Wind River receiving compensation for past services
(other than benefits under a tax-qualified pension plan), (iii) current and
former officers of Wind River, and (iv) directors currently receiving direct or
indirect remuneration from Wind River in any capacity (other than as a
director), unless any such person is otherwise considered an "outside director"
for purposes of Section 162(m).

    The Wind River board of directors or committee may delegate to a committee
of one or more members of the Wind River board of directors the authority to
grant stock awards to eligible persons who are not then subject to Section 16 of
the Securities Exchange Act and/or who are either (i) not then employees covered
by Section 162(m) of the Internal Revenue Code and are not expected to be
covered by Section 162(m) of the Internal Revenue Code at the time of
recognition of income resulting from such stock award, or (ii) not persons with
respect to whom Wind River wishes to avoid the application of Section 162(m) of
the Internal Revenue Code. The Wind River board of directors may abolish such
committee at any time and revest in the Wind River board of directors the
administration of the 1998 Equity Incentive Plan.

ELIGIBILITY

    Incentive stock options and stock appreciation rights appurtenant thereto
may be granted under the 1998 Equity Incentive Plan to employees (including
officers) of Wind River and any affiliates. Employees (including officers),
directors and consultants are eligible to receive awards other than incentive
stock options and stock appreciation rights appurtenant thereto under the 1998
Equity Incentive Plan. As of October 31, 1999, all of Wind River's approximately
800 employees, directors and consultants were eligible to participate in the
1998 Equity Incentive Plan.

    No incentive stock option may be granted under the 1998 Equity Incentive
Plan to any person who, at the time of the grant, owns (or is deemed to own)
stock possessing more than 10% of the total

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combined voting power of Wind River or any affiliate of Wind River, unless the
exercise price is at least 110% of the fair market value of the stock subject to
the option on the date of grant, and the term of the option does not exceed five
years from the date of grant. To the extent an optionee would have the right in
any calendar year to exercise for the first time one or more incentive stock
options for shares having an aggregate fair market value (under all plans of
Wind River and its affiliates and determined for each share as of the date the
option was granted) in excess of $100,000, any such excess options will be
treated as nonstatutory stock options.

    Wind River has included in the 1998 Equity Incentive Plan a per-employee
limitation of 750,000 shares of Wind River common stock subject to stock options
and stock appreciation rights that may be granted during a calendar year. The
purpose of including this limitation is to ensure that Wind River generally will
be able to deduct for tax purposes the compensation attributable to the exercise
of options and stock appreciation rights granted under the 1998 Equity Incentive
Plan.

STOCK SUBJECT TO THE PLAN

    Subject to this proposal, as aggregate of 4,100,000 shares of Wind River
common stock is reserved for issuance under the 1998 Equity Incentive Plan. If
awards granted under the 1998 Equity Incentive Plan expire or otherwise
terminate without being exercised (or vested in the case of restricted stock),
the Wind River common stock not purchased under such awards again becomes
available for issuance under the 1998 Equity Incentive Plan. Shares of stock
subject to exercised stock appreciation rights shall not again become available
for issuance under the 1998 Equity Incentive Plan.

TERMS OF OPTIONS

    The following is a description of the permissible terms of options under the
1998 Equity Incentive Plan. Individual option grants may be more restrictive as
to any or all of the permissible terms described below.

    EXERCISE PRICE; PAYMENT.  The exercise price of incentive stock options
under the 1998 Equity Incentive Plan may not be less than 100% of the fair
market value of the Wind River common stock subject to the option on the date of
the option grant (110% for optionees deemed to own more than 10% of the
outstanding voting power of Wind River), and the exercise price of nonstatutory
stock options under the 1998 Equity Incentive Plan may not be less than 85% of
the fair market value of Wind River common stock subject to the option on the
date of the option grant. With respect to any options granted with exercise
prices below fair market value to covered employees, deductions for compensation
attributable to the exercise of such options could be limited by
Section 162(m). See "--Federal Income Tax Information." As of January 6, 2000,
the closing price of Wind River common stock, as reported on the Nasdaq National
Market, was $32.00 per share.

    The exercise price of options granted under the 1998 Equity Incentive Plan
must be paid either in cash at the time the option is exercised or at the
discretion of the Wind River board of directors, (i) by delivery of other Wind
River common stock, (ii) pursuant to a deferred payment arrangement, or
(iii) in any other form of legal consideration acceptable to the Wind River
board of directors.

    EXERCISE/VESTING.  Options granted under the 1998 Equity Incentive Plan may
become exercisable ("vest") in cumulative increments as determined by the Wind
River board of directors. Such vesting typically is time-based or
performance-based. The Wind River board of directors has the power to accelerate
the time during which an option may be exercised. In addition, options granted
under the 1998 Equity Incentive Plan may permit exercise prior to vesting, but
in such event the optionee may be required to enter into an early exercise stock
purchase agreement that allows Wind River to repurchase shares not yet vested at
their exercise price should the optionee leave the employ of Wind River before
vesting. To the extent provided by the terms of an option, an optionee may
satisfy any federal, state or local tax withholding obligation relating to the
exercise of such option by a cash payment upon exercise,

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<PAGE>
by authorizing Wind River to withhold a portion of the stock otherwise issuable
to the optionee, by delivering already-owned and unencumbered stock of Wind
River or by a combination of these means.

    TERM.  The maximum term of stock options under the 1998 Equity Incentive
Plan is 10 years, except that in certain cases (see "--Eligibility") the maximum
term is five years. Options under the 1998 Equity Incentive Plan generally
terminate three months after termination of the optionee's employment or
relationship as a consultant or director of Wind River or any affiliate of Wind
River, unless (a) such termination is due to such person's permanent and total
disability (as defined in the Internal Revenue Code), in which case the option
may, but need not, provide that it may be exercised at any time within one year
of such termination; (b) the optionee dies while serving, or within in a
three-month period of having served, Wind River or any affiliate of Wind River,
in which case the option may, but need not, be exercisable (to the extent that
the option was exercisable at the time of the optionee's death) within
18 months of the optionee's death by the person or persons to whom the rights to
such option pass by will or by the laws of descent and distribution; or (c) the
option by its terms specifically provides otherwise. Individual options by their
terms may provide for exercise within a longer period of time following
termination of employment or the other relationship.

    RESTRICTIONS ON TRANSFER.  No stock option may be transferred by the
optionee other than by will or the laws of descent or distribution; provided,
however, that the Wind River board of directors may grant a nonstatutory stock
option that is transferable, and provided further that an optionee may designate
a beneficiary who may exercise the option following the optionee's death. In
addition, shares subject to repurchase by Wind River under an early exercise
stock purchase agreement may be subject to restrictions on transfer which the
Wind River board of directors deems appropriate.

TERMS OF STOCK BONUSES AND PURCHASES OF RESTRICTED STOCK

    PURCHASE PRICE; PAYMENT.  The purchase price under each stock purchase
agreement will be determined by the Wind River board of directors, but in no
event shall the purchase price be less than 85% of the stock's fair market value
on the date such award is made. The purchase price of stock pursuant to a stock
purchase agreement must be paid either: (i) in cash at the time of purchase;
(ii) at the discretion of the Wind River board of directors, according to a
deferred payment or other arrangement with the person to whom the Wind River
common stock is sold; or (iii) in any other form of legal consideration that may
be acceptable to the Wind River board of directors in its discretion. Eligible
participants may be awarded stock pursuant to a stock bonus agreement in
consideration of past services actually rendered to Wind River or for its
benefit. To date, no stock bonuses or restricted stock purchase agreements have
been granted under the 1998 Equity Incentive Plan.

    REPURCHASE.  Shares of Wind River common stock sold or awarded under the
1998 Equity Incentive Plan may, but need not, be subject to a repurchase option
in favor of Wind River in accordance with a vesting schedule determined by the
Wind River board of directors. In the event a person ceases to be an employee of
or ceases to serve as a director of or consultant to Wind River or an affiliate
of Wind River, Wind River may repurchase or otherwise reacquire any or all of
the shares of the bonus or restricted stock held by that person that have not
vested as of the date of termination under the terms of the stock bonus or
restricted stock purchase agreement between Wind River and such person. The Wind
River board of directors has the power to accelerate such vesting.

    RESTRICTIONS ON TRANSFER.  Rights under a stock bonus or restricted stock
bonus agreement may not be transferred except where such assignment is required
by law or expressly authorized by the terms of the applicable stock bonus or
restricted stock purchase agreement.

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<PAGE>
STOCK APPRECIATION RIGHTS

    The 1998 Equity Incentive Plan authorizes three types of stock appreciation
rights. To date, no stock appreciation rights have been granted under the 1998
Equity Incentive Plan.

    TANDEM STOCK APPRECIATION RIGHTS.  Tandem stock appreciation rights are tied
to an underlying option and require the holder to elect whether to exercise the
underlying option or to surrender the option for an appreciation distribution
equal to the market price of the vested shares purchasable under the surrendered
option less the aggregate exercise price payable for such shares. Appreciation
distributions payable upon exercise of tandem stock appreciation rights must be
made in cash.

    CONCURRENT STOCK APPRECIATION RIGHTS.  Concurrent stock appreciation rights
are tied to an underlying option and are exercised automatically at the same
time the underlying option is exercised. The holder receives an appreciation
distribution equal to the market price of the vested shares purchased under the
option less the aggregate exercise price payable for such shares. Appreciation
distributions payable upon exercise of concurrent stock appreciation rights must
be made in cash.

    INDEPENDENT STOCK APPRECIATION RIGHTS.  Independent stock appreciation
rights are granted independently of any option and entitle the holder to receive
upon exercise an appreciation distribution equal to the fair market value on the
date of exercise of a number of shares equal to the number of share equivalents
to which the holder is vested under the independent stock appreciation right
less the fair market value of such number of shares of stock on the date of
grant. Appreciation distributions payable upon exercise of independent stock
appreciation rights may, at the Wind River board of directors's discretion, be
made in cash, in shares of the Wind River common stock or a combination thereof.

ADJUSTMENT PROVISIONS

    If there is any change in the stock subject to the 1998 Equity Incentive
Plan or subject to any award granted under the 1998 Equity Incentive Plan
(through merger, consolidation, reorganization, recapitalization, stock
dividend, dividend in property other than cash, stock split, liquidating
dividend, combination of shares, exchange of shares, change in corporate
structure or otherwise), the 1998 Equity Incentive Plan and awards outstanding
thereunder will be appropriately adjusted as to the type of security and the
maximum number of shares subject to such plan, the maximum number of shares
which may be granted to an employee during any calendar year, and the type of
security, number of shares and price per share of stock subject to such
outstanding stock awards.

EFFECT OF CERTAIN CORPORATE EVENTS

    The 1998 Equity Incentive Plan provides that, in the event of a dissolution
or liquidation of Wind River, specified type of merger or other corporate
reorganization, at the sole discretion of the Wind River board of directors and
to the extent permitted by law, any surviving corporation will be required to
either assume stock awards outstanding under the 1998 Equity Incentive Plan or
substitute similar stock awards for those outstanding under the 1998 Equity
Incentive Plan, such outstanding stock awards will continue in full force and
effect or such stock awards will be accelerated. In the event that any surviving
corporation declines to assume or continue awards outstanding under the 1998
Equity Incentive Plan, or to substitute similar awards, then the time during
which such stock awards may be exercised will be accelerated and the stock
awards terminated if not exercised at or prior to such event. The acceleration
of a stock award in the event of an acquisition or similar corporate event may
be viewed as an anti-takeover provision, which may have the effect of
discouraging a proposal to acquire or otherwise obtain control of Wind River.

    The 1998 Equity Incentive Plan also provides for the acceleration of vesting
for stock awards which otherwise would vest within the 30 month period following
the occurrence of certain hostile changes of

                                       94
<PAGE>
control. A "hostile" change of control would involve either (i) the acquisition
by any person or related group of a majority of Wind River's voting securities
which has not been approved by the Wind River board of directors or (ii) a
change of a majority of the members of the Wind River board of directors in a
24-month period where the new directors were not approved by a majority of the
members of the Wind River board of directors at the beginning of such period or
were seated as the result of a proxy contest or other contest over election of
members of the Wind River board of directors.

DURATION, AMENDMENT AND TERMINATION

    The Wind River board of directors may suspend or terminate the 1998 Equity
Incentive Plan without stockholder approval or ratification at any time or from
time to time. Unless sooner terminated, the 1998 Equity Incentive Plan will
terminate on December 16, 2006.

    The Wind River board of directors may also amend the 1998 Equity Incentive
Plan at any time or from time to time. However, no amendment will be effective
unless approved by the stockholders of Wind River, to the extent stockholder
approval is necessary in order for the 1998 Equity Incentive Plan to satisfy
Section 422 of the Internal Revenue Code, if applicable, Rule 16b-3 or Nasdaq or
other securities exchange listing requirements. The Wind River board of
directors may submit any other amendment to the 1998 Equity Incentive Plan for
stockholder approval, including, but not limited to, amendments intended to
satisfy the requirements of Section 162(m) of the Internal Revenue Code
regarding the exclusion of performance-based compensation from the limitation on
the deductibility of compensation paid to certain employees.

FEDERAL INCOME TAX INFORMATION

    Long-term capital gains currently are generally subject to lower tax rates
than ordinary income or short-term capital gains. The maximum long-term capital
gains rate for federal income tax purposes is currently 20% while the maximum
ordinary income rate and short-term capital gains rate is effectively 39.6%.
Slightly different rules may apply to participants of the 1998 Equity Incentive
Plan who acquire stock subject to certain repurchase options or who are subject
to Section 16(b) of the Exchange Act.

    INCENTIVE STOCK OPTIONS.  Incentive stock options under the 1998 Equity
Incentive Plan are intended to be eligible for the favorable federal income tax
treatment accorded "incentive stock options" under the Internal Revenue Code.

    There generally are no federal income tax consequences to the participant or
Wind River by reason of the grant or exercise of an incentive stock option.
However, the exercise of an incentive stock option may increase the
participant's alternative minimum tax liability, if any.

    If a participant holds stock acquired through exercise of an incentive stock
option for at least two years from the date on which the option is granted and
at least one year from the date on which the shares are transferred to the
participant upon exercise of the option, any gain or loss on a disposition of
such stock will be a long-term capital gain or loss if the participant held the
stock for more than one year.

    Generally, if the participant disposes of the stock before the expiration of
either of these holding periods (a "disqualifying disposition"), then at the
time of disposition the participant will realize taxable ordinary income equal
to the lesser of (i) the excess of the stock's fair market value on the date of
exercise over the exercise price, or (ii) the participant's actual gain, if any,
on the purchase and sale. The participant's additional gain or any loss upon the
disqualifying disposition will be a capital gain or loss, which will be
long-term or short-term depending on whether the stock was held for more than
one year.

    To the extent the participant recognizes ordinary income by reason of a
disqualifying disposition, Wind River will generally be entitled (subject to the
requirement of reasonableness, the provisions of

                                       95
<PAGE>
Section 162(m) of the Internal Revenue Code and the satisfaction of a tax
reporting obligation) to a corresponding business expense deduction in the tax
year in which the disqualifying disposition occurs.

    NONSTATUTORY STOCK OPTIONS, RESTRICTED STOCK PURCHASE AWARDS AND STOCK
BONUSES.  Nonstatutory stock options, restricted stock purchase awards and stock
bonuses granted under the 1998 Equity Incentive Plan generally have the
following federal income tax consequences:

    - There are no tax consequences to the participant or Wind River by reason
      of the grant. Upon acquisition of the stock, the participant normally will
      recognize taxable ordinary income equal to the excess, if any, of the
      stock's fair market value on the acquisition date over the purchase price.
      However, to the extent the stock is subject to certain types of vesting
      restrictions, the taxable event will be delayed until the vesting
      restrictions lapse unless the participant elects to be taxed on receipt of
      the stock. With respect to employees, Wind River is generally required to
      withhold from regular wages or supplemental wage payments an amount based
      on the ordinary income recognized. Subject to the requirement of
      reasonableness, the provisions of Section 162(m) of the Internal Revenue
      Code and the satisfaction of a tax reporting obligation, Wind River will
      generally be entitled to a business expense deduction equal to the taxable
      ordinary income realized by the participant.

    - Upon disposition of the stock, the participant will recognize a capital
      gain or loss equal to the difference between the selling price and the sum
      of the amount paid for such stock plus any amount recognized as ordinary
      income upon acquisition (or vesting) of the stock. Such gain or loss will
      be long-term or short-term depending on whether the stock was held for
      more than one year. Slightly different rules may apply to participants who
      acquire stock subject to certain repurchase options or who are subject to
      Section 16(b) of the Exchange Act.

    STOCK APPRECIATION RIGHTS.  No taxable income is realized upon the receipt
of a stock appreciation right, but upon exercise of the stock appreciation right
the fair market value of the shares (or cash in lieu of shares) received must be
treated as compensation taxable as ordinary income to the participant in the
year of such exercise. Generally, with respect to employees, Wind River is
required to withhold from the payment made on exercise of the stock appreciation
right or from regular wages or supplemental wage payments an amount based on the
ordinary income recognized. Subject to the requirement of reasonableness,
Section 162(m) of the Internal Revenue Code and the satisfaction of a reporting
obligation, Wind River will be entitled to a business expense deduction equal to
the taxable ordinary income recognized by the participant.

    POTENTIAL LIMITATION ON WIND RIVER DEDUCTIONS.  Section 162(m) of the
Internal Revenue Code denies a deduction to any publicly-held corporation for
compensation paid to certain "covered employees" in a taxable year to the extent
that compensation to such covered employee exceeds $1 million. It is possible
that compensation attributable to awards, when combined with all other types of
compensation received by a covered employee from Wind River, may cause this
limitation to be exceeded in any particular year.

    Certain kinds of compensation, including qualified "performance-based
compensation," are disregarded for purposes of the deduction limitation. In
accordance with Treasury regulations issued under Section 162(m), compensation
attributable to stock options and stock appreciation rights will qualify as
performance-based compensation if the award is granted by a compensation
committee comprised solely of "outside directors" and either (i) the plan
contains a per-employee limitation on the number of shares for which such awards
may be granted during a specified period, the per-employee limitation is
approved by the stockholders, and the exercise price of the award is no less
than the fair market value of the stock on the date of grant, or (ii) the award
is granted (or exercisable) only upon the achievement (as certified in writing
by the compensation committee) of an

                                       96
<PAGE>
objective performance goal established in writing by the compensation committee
while the outcome is substantially uncertain, and the award is approved by
stockholders.

    Compensation attributable to restricted stock and stock bonuses will qualify
as performance-based compensation, provided that: (i) the award is granted by a
compensation committee comprised solely of "outside directors" and (ii) the
purchase price of the award is no less than the fair market value of the stock
on the date of grant. Stock bonuses qualify as performance-based compensation
under the Treasury regulations only if (i) the award is granted by a
compensation committee comprised solely of "outside directors," (ii) the award
is granted (or exercisable) only upon the achievement of an objective
performance goal established in writing by the compensation committee while the
outcome is substantially uncertain, (iii) the compensation committee certifies
in writing prior to the granting (or exercisability) of the award that the
performance goal has been satisfied and (iv) prior to the granting (or
exercisability) of the award, stockholders have approved the material terms of
the award (including the class of employees eligible for such award, the
business criteria on which the performance goal is based, and the maximum
amount--or formula used to calculate the amount--payable upon attainment of the
performance goal).

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<PAGE>
                              INDEPENDENT AUDITORS

    It is expected that representatives of PricewaterhouseCoopers LLP will be
present at the respective special meetings to respond to appropriate questions
of stockholders and to make a statement if they so desire.

                                 LEGAL MATTERS

    The validity of the Wind River common stock to be issued in the merger has
been passed upon for Wind River by Cooley Godward LLP. Certain tax consequences
of the merger have been passed upon for Wind River by Cooley Godward LLP and for
Integrated Systems by Fenwick & West LLP.

                                    EXPERTS

    The consolidated financial statements of Wind River incorporated in this
joint proxy statement/ prospectus by reference to the Annual Report on
Form 10-K for the year ended January 31, 1999, have been so incorporated in
reliance on the report of PricewaterhouseCoopers LLP, independent accountants,
given on the authority of said firm as experts in auditing and accounting.

    The consolidated financial statements of Integrated Systems incorporated in
this joint proxy statement/prospectus by reference to the Annual Report on
Form 10-K for the year ended February 28, 1999, have been so incorporated in
reliance on the report of PricewaterhouseCoopers LLP, independent accountants,
given on the authority of said firm as experts in auditing and accounting.

                             STOCKHOLDER PROPOSALS

    Any proposals of stockholders of Wind River intended to be presented at the
annual meeting of stockholders of Wind River to be held in 2000 must have been
received by Wind River, addressed to the Secretary of Wind River at 500 Wind
River Way, Alameda, California 94501, no later than January 25, 2000 to be
considered for inclusion in the proxy statement and form of proxy relating to
that meeting. Stockholders wishing to submit a proposal or a nomination for
director that is not to be included in that proxy statement and proxy must do so
between March 10, 2000 and April 10, 2000.

    If the merger is not consummated, any proposals of shareholders of
Integrated Systems intended to be presented at the annual meeting of
shareholders of Integrated Systems to be held in 2000 must have been received by
Integrated Systems, addressed to the Secretary of Integrated Systems at 201
Moffett Park Drive, San Jose, California 95134-1933, no later than February 29,
2000 to be considered for inclusion in the proxy statement and form of proxy
relating to that meeting. Proxies solicited by Integrated Systems for its 2000
annual meeting of shareholders will be voted in the discretion of the persons
voting them with respect to all proposals presented by shareholders for
consideration at that meeting after May 14, 2000.

                      WHERE YOU CAN FIND MORE INFORMATION

    Wind River and Integrated Systems each file annual, quarterly and current
reports, proxy statements and other information with the SEC. You may read and
copy any reports, statements or other information that the companies file at the
SEC's public reference rooms in Washington, D.C., New York, New York and
Chicago, Illinois. Please call the SEC at 1-800-SEC-0330 for further information
on the public reference rooms. Wind River's and Integrated Systems' public
filings are also available to the public from commercial document retrieval
services and at the Internet web site maintained by the SEC at
http://www.sec.gov. Reports, proxy statements and other information concerning
Wind River and Integrated Systems also may be inspected at the offices of the
National Association of Securities Dealers, Inc., Listing Section, 1735 K
Street, Washington, D.C. 20006.

                                       98
<PAGE>
    Wind River has filed a Form S-4 registration statement to register with the
SEC the offering and sale of the shares of Wind River common stock to be issued
to Integrated Systems shareholders in the merger. This joint proxy
statement/prospectus is a part of that registration statement and constitutes a
prospectus and proxy statement of Wind River and a proxy statement of Integrated
Systems for the special meeting.

    As allowed by SEC rules, this joint proxy statement/prospectus does not
contain all the information that stockholders can find in the registration
statement or the exhibits to the registration statement.

    The SEC allows Wind River and Integrated Systems to incorporate information
into this joint proxy statement/prospectus "by reference," which means that the
companies can disclose important information to you by referring you to another
document filed separately with the SEC. The information incorporated by
reference is considered to be part of this joint proxy statement/prospectus,
except for any information superseded by information contained directly in this
joint proxy statement/ prospectus. This joint proxy statement/prospectus
incorporates by reference the documents listed below that Wind River and
Integrated Systems have previously filed with the SEC. These documents contain
important information about the companies and their financial condition.

WIND RIVER FILINGS (FILE NO. 0-21342):

    - Annual Report on Form 10-K for fiscal year ended January 31, 1999

    - Quarterly Reports on Form 10-Q for fiscal quarters ended April 30, 1999,
      July 31, 1999 and October 31, 1999

    - Current Reports on Form 8-K filed May 3, 1999, July 16, 1999,
      September 13, 1999, November 4, 1999 and December 2, 1999

    - The description of the Wind River common stock set forth in the
      Registration Statement on Form 8-A filed with the SEC on March 12, 1993

INTEGRATED SYSTEMS FILINGS (FILE NO. 0-18268):

    - Annual Report on Form 10-K for fiscal year ended February 28, 1999

    - Quarterly Reports on Form 10-Q for fiscal quarters ended May 31, 1999,
      August 31, 1999 and November 30, 1999

    - Current Reports on Form 8-K filed on August 5, 1999 and November 5, 1999;
      and Current Reports on Form 8-K, as amended, filed on October 4, 1999 and
      November 2, 1999

    Wind River and Integrated Systems hereby incorporate by reference additional
documents that Wind River or Integrated Systems may file with the SEC between
the date of this joint proxy statement/prospectus and the date of the respective
special meetings. These include periodic reports, such as annual reports on
Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K, as
well as proxy statements.

    Wind River has supplied all information contained or incorporated by
reference in this joint proxy statement/prospectus relating to Wind River or
Merger Sub, and Integrated Systems has supplied all information relating to
Integrated Systems.

    If you are a stockholder, you may have received some of the documents
incorporated by reference. You may also obtain any of those documents from the
appropriate company or the SEC or the SEC's Internet web site described above.
Documents incorporated by reference are available from the appropriate company
without charge, excluding all exhibits unless specifically incorporated by
reference as an exhibit in this joint proxy statement/prospectus. Stockholders
may obtain documents incorporated

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<PAGE>
by reference in this joint proxy statement/ prospectus by requesting them in
writing or by telephone from the appropriate company at the following addresses:

                            WIND RIVER SYSTEMS, INC.
                               500 Wind River Way
                           Alameda, California 94501
                         Attention: Investor Relations
                              Tel: (510) 748-4100
                            Email: [email protected]

                            INTEGRATED SYSTEMS, INC.
                             201 Moffett Park Drive
                          Sunnyvale, California 94089
                         Attention: Investor Relations
                              Tel: (408) 542-1500
                               Email: [email protected]

    If you would like to request documents, please do so by February 8, 2000 to
receive them before the special meeting. If you request any incorporated
documents, the appropriate company will mail them to you by first-class mail, or
other equally prompt means, within one business day of receipt of your request.

    YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED OR INCORPORATED BY
REFERENCE IN THIS JOINT PROXY STATEMENT/PROSPECTUS TO VOTE YOUR SHARES AT THE
SPECIAL MEETING. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH INFORMATION
THAT DIFFERS FROM THAT CONTAINED IN THIS JOINT PROXY STATEMENT/PROSPECTUS. THIS
JOINT PROXY STATEMENT/PROSPECTUS IS DATED JANUARY 14, 2000. YOU SHOULD NOT
ASSUME THAT THE INFORMATION CONTAINED IN THIS JOINT PROXY STATEMENT/PROSPECTUS
IS ACCURATE AS OF ANY DATE OTHER THAN THAT DATE, AND NEITHER THE MAILING OF THIS
JOINT PROXY STATEMENT/ PROSPECTUS TO STOCKHOLDERS NOR THE ISSUANCE OF SHARES OF
WIND RIVER COMMON STOCK IN THE MERGER SHALL CREATE ANY IMPLICATION TO THE
CONTRARY.

    Wind River Systems, the Wind River Systems logos and all other Wind River
product and service names are registered trademarks or trademarks of Wind River
Systems, Inc. in the USA and in other select countries. Integrated Systems, the
Integrated Systems logos and all other Integrated Systems product and service
names are registered trademarks or trademarks of Integrated Systems, Inc. in the
USA and in other select countries. "-Registered Trademark-" and "-TM-" indicate
USA registration and USA trademark, respectively. Other third party logos and
product/trade names are registered trademarks or trade names of their respective
companies.

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                                                                         ANNEX A

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

                AGREEMENT AND PLAN OF MERGER AND REORGANIZATION

                                     among:

                           WIND RIVER SYSTEMS, INC.,
                            a Delaware corporation;

                         UNIVERSITY ACQUISITION CORP.,
                          a Delaware corporation; and

                           INTEGRATED SYSTEMS, INC.,
                            a California corporation

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

                          Dated as of October 21, 1999

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

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
                               TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                        PAGE
                                                                                      --------
<C>                     <S>                                                           <C>
 SECTION 1. DESCRIPTION OF TRANSACTION..................................                 A-2

        1.1             Merger of Merger Sub into the Company.......................     A-2

        1.2             Effect of the Merger........................................     A-2

        1.3             Closing; Effective Time.....................................     A-2

                        Articles of Incorporation and Bylaws; Directors and
        1.4             Officers....................................................     A-2

        1.5             Conversion of Shares........................................     A-2

        1.6             Closing of the Company's Transfer Books.....................     A-3

        1.7             Exchange of Certificates....................................     A-3

        1.8             Dissenting Shares...........................................     A-5

        1.9             Tax Consequences............................................     A-5

        1.10            Accounting Consequences.....................................     A-5

        1.11            Further Action..............................................     A-5

 SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY...............                 A-5

        2.1             Due Organization; Subsidiaries; Etc.........................     A-6

        2.2             Articles of Incorporation and Bylaws........................     A-6

        2.3             Capitalization, Etc.........................................     A-6

        2.4             SEC Filings; Financial Statements...........................     A-7

        2.5             Absence of Changes..........................................     A-8

        2.6             Title to Assets.............................................     A-9

        2.7             Receivables, Customers......................................    A-10

        2.8             Real Property; Equipment; Leasehold.........................    A-10

        2.9             Proprietary Assets..........................................    A-10

        2.10            Contracts...................................................    A-13

        2.11            Sale of Products; Performance of Services...................    A-15

        2.12            Liabilities.................................................    A-15

        2.13            Compliance with Legal Requirements..........................    A-15

        2.14            Certain Business Practices..................................    A-15

        2.15            Governmental Authorizations.................................    A-16

        2.16            Tax Matters.................................................    A-16

        2.17            Employee and Labor Matters; Benefit Plans...................    A-17

        2.18            Environmental Matters.......................................    A-19

        2.19            Insurance...................................................    A-19

        2.20            Transactions with Affiliates................................    A-20

        2.21            Legal Proceedings; Orders...................................    A-20

                        Authority; Inapplicability of Anti-takeover Statutes;
        2.22            Binding Nature of Agreement.................................    A-20
</TABLE>

                                      A-i
<PAGE>

<TABLE>
<CAPTION>
                                                                                        PAGE
                                                                                      --------
<C>                     <S>                                                           <C>
        2.23            No Existing Discussions.....................................    A-21

        2.24            Accounting Matters..........................................    A-21

        2.25            Vote Required...............................................    A-21

        2.26            Non-Contravention; Consents.................................    A-21

        2.27            Fairness Opinion............................................    A-22

        2.28            Financial Advisor...........................................    A-22

        2.29            Full Disclosure.............................................    A-22

        2.30            Company Rights Agreement....................................    A-23

 SECTION 3. REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB.....                A-23

        3.1             Due Organization; Subsidiaries; Etc.........................    A-23

        3.2             Certificate of Incorporation and Bylaws.....................    A-23

        3.3             Capitalization, Etc.........................................    A-23

        3.4             SEC Filings; Financial Statements...........................    A-24

        3.5             Absence of Certain Changes or Events........................    A-24

        3.6             Title to Assets.............................................    A-25

        3.7             Proprietary Assets..........................................    A-25

        3.8             Contracts...................................................    A-26

        3.9             Liabilities.................................................    A-27

        3.10            Compliance with Legal Requirements..........................    A-27

        3.11            Certain Business Practices..................................    A-27

        3.12            Governmental Authorizations.................................    A-27

        3.13            Tax Matters.................................................    A-27

        3.14            Employee and Labor Matters; Benefit Plans...................    A-28

        3.15            Environmental Matters.......................................    A-28

        3.16            Insurance...................................................    A-29

        3.17            Transactions with Affiliates................................    A-29

        3.18            Legal Proceedings; Orders...................................    A-29

        3.19            Authority; Binding Nature of Agreement......................    A-29

        3.20            Accounting Matters..........................................    A-30

        3.21            Vote Required...............................................    A-30

        3.22            Non-Contravention; Consents.................................    A-30

        3.23            Financial Advisor...........................................    A-30

        3.24            Full Disclosure.............................................    A-30

        3.25            Fairness Opinion............................................    A-31

        3.26            Valid Issuance..............................................    A-31

 SECTION 4. CERTAIN COVENANTS OF THE COMPANY AND PARENT.................                A-31

        4.1             Access and Investigation....................................    A-31

        4.2             Operation of the Company's Business.........................    A-32
</TABLE>

                                      A-ii
<PAGE>

<TABLE>
<CAPTION>
                                                                                        PAGE
                                                                                      --------
<C>                     <S>                                                           <C>
        4.3             No Solicitation.............................................    A-35

 SECTION 5. ADDITIONAL COVENANTS OF THE PARTIES.........................                A-36

        5.1             Registration Statement; Joint Proxy Statement...............    A-36

        5.2             Company Shareholders' Meeting...............................    A-37

        5.3             Parent Stockholders' Meeting................................    A-37

        5.4             Regulatory Approvals........................................    A-38

        5.5             Stock Options...............................................    A-38

        5.6             Employee Benefits...........................................    A-39

        5.7             Indemnification of Officers and Directors...................    A-40

        5.8             Pooling of Interests........................................    A-40

        5.9             Additional Agreements.......................................    A-40

        5.10            Disclosure..................................................    A-41

        5.11            Affiliate Agreements........................................    A-41

        5.12            Tax Matters.................................................    A-42

        5.13            Letter of the Company's Accountants.........................    A-42

        5.14            Resignation of Officers and Directors.......................    A-42

        5.15            Listing.....................................................    A-42

        5.16            Board of Directors..........................................    A-42

 SECTION 6. CONDITIONS PRECEDENT TO OBLIGATIONS OF PARENT AND MERGER SUB...             A-43

        6.1             Accuracy of Representations.................................    A-43

        6.2             Performance of Covenants....................................    A-43

        6.3             Effectiveness of Registration Statement.....................    A-43

        6.4             Shareholder Approval........................................    A-43

        6.5             Consents....................................................    A-43

        6.6             Agreements and Documents....................................    A-43

        6.7             Employees...................................................    A-44

        6.8             No Material Adverse Effect..................................    A-44

        6.9             HSR Act.....................................................    A-44

        6.10            Listing.....................................................    A-44

        6.11            No Restraints...............................................    A-44

        6.12            No Governmental Litigation..................................    A-45

        6.13            No Other Litigation.........................................    A-45

        6.14            Stock Options...............................................    A-45

 SECTION 7. CONDITIONS PRECEDENT TO OBLIGATION OF THE COMPANY...........                A-45

        7.1             Accuracy of Representations.................................    A-45

        7.2             Performance of Covenants....................................    A-45

        7.3             Effectiveness of Registration Statement.....................    A-46

        7.4             Shareholder Approval........................................    A-46
</TABLE>

                                     A-iii
<PAGE>

<TABLE>
<CAPTION>
                                                                                        PAGE
                                                                                      --------
<C>                     <S>                                                           <C>
        7.5             Documents...................................................    A-46

        7.6             No Material Adverse Effect..................................    A-46

        7.7             HSR Act.....................................................    A-46

        7.8             Listing.....................................................    A-46

        7.9             No Restraints...............................................    A-46

 SECTION 8. TERMINATION.................................................                A-47

        8.1             Termination.................................................    A-47

        8.2             Effect of Termination.......................................    A-48

        8.3             Expenses; Termination Fees..................................    A-49

 SECTION 9. MISCELLANEOUS PROVISIONS....................................                A-50

        9.1             Amendment...................................................    A-50

        9.2             Waiver......................................................    A-50

        9.3             No Survival of Representations and Warranties...............    A-50

        9.4             Entire Agreement; Counterparts..............................    A-50

        9.5             Applicable Law; Jurisdiction................................    A-50

        9.6             Disclosure Schedule.........................................    A-51

        9.7             Attorneys' Fees.............................................    A-51

        9.8             Assignability...............................................    A-51

        9.9             Notices.....................................................    A-51

        9.10            Cooperation.................................................    A-52

        9.11            Construction................................................    A-52
</TABLE>

                                      A-iv
<PAGE>
                               AGREEMENT AND PLAN
                          OF MERGER AND REORGANIZATION

    THIS AGREEMENT AND PLAN OF MERGER AND REORGANIZATION ("Agreement") is made
and entered into as of October 21, 1999, by and among: WIND RIVER
SYSTEMS, INC., a Delaware corporation ("Parent"); UNIVERSITY ACQUISITION CORP.,
a Delaware corporation and a wholly owned subsidiary of Parent ("Merger Sub");
and INTEGRATED SYSTEMS, INC., a California corporation (the "Company"). Certain
capitalized terms used in this Agreement are defined in Exhibit A.

                                    RECITALS

    A. Parent, Merger Sub and the Company intend to effect a merger of Merger
Sub into the Company in accordance with this Agreement and the California
General Corporation Law (the "Merger"). Upon consummation of the Merger, Merger
Sub will cease to exist, and the Company will become a wholly owned subsidiary
of Parent.

    B. It is intended that the Merger qualify as a tax-free reorganization
within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as
amended (the "Code"). For financial reporting purposes, it is intended that the
Merger be accounted for as a "pooling of interests."

    C. The respective boards of directors of Parent, Merger Sub and the Company
have approved this Agreement and approved the Merger.

    D. In order to induce Parent to enter into this Agreement and to consummate
the Merger, concurrently with the execution and delivery of this Agreement, the
Company is entering into a stock option agreement with Parent (the "Stock Option
Agreement"), pursuant to which the Company has granted to Parent an option,
exercisable under the circumstances specified therein, to purchase shares of
Company Common Stock.

                                      A-1
<PAGE>
                                   AGREEMENT

    The parties to this Agreement, intending to be legally bound, agree as
follows:

SECTION 1. DESCRIPTION OF TRANSACTION

    1.1 MERGER OF MERGER SUB INTO THE COMPANY.  Upon the terms and subject to
the conditions set forth in this Agreement, at the Effective Time (as defined in
Section 1.3), Merger Sub shall be merged with and into the Company, and the
separate existence of Merger Sub shall cease. The Company will continue as the
surviving corporation in the Merger (the "Surviving Corporation").

    1.2 EFFECT OF THE MERGER.  The Merger shall have the effects set forth in
this Agreement and in the applicable provisions of the California General
Corporation Law.

    1.3 CLOSING; EFFECTIVE TIME.  The consummation of the transactions
contemplated by this Agreement (the "Closing") shall take place at the offices
of Cooley Godward LLP, Five Palo Alto Square, 3000 El Camino Real, Palo Alto,
California, at 10:00 a.m. on a date to be designated by Parent (the "Closing
Date"), which shall be no later than the third business day after the
satisfaction or waiver of the latest to occur of the conditions set forth in
Sections 6 and 7 (other than those conditions that by their nature are to be
fulfilled at the Closing, but subject to the satisfaction or waiver of such
conditions). Subject to the provisions of this Agreement, (i) an agreement of
merger satisfying the applicable requirements of the California General
Corporation Law (the "California Agreement of Merger") shall be duly executed by
Merger Sub and by the Company as the Surviving Corporation and simultaneously
with or as soon as practicable following the Closing delivered to the Secretary
of the State of California for filing, along with appropriate certificates of
the officers of Merger Sub and the Company ("Officers' Certificates"), and
(ii) a certificate of merger satisfying the applicable requirements of the
Delaware General Corporation Law (the "Delaware Certificate of Merger") shall be
duly executed by the Company and simultaneously with or as soon as practicable
following the Closing delivered to the Secretary of State of the State of
Delaware for filing. The Merger shall become effective upon the latest of:
(a) the date and time of the filing of the California Agreement of Merger and
the Officers' Certificates with the Secretary of State of the State of
California, (b) the date and time of the filing of the Delaware Certificate of
Merger with the Secretary of State of the State of Delaware, or (c) such other
date and time as may be specified in the California Agreement of Merger or the
Delaware Certificate of Merger with the consent of Parent (the "Effective
Time").

    1.4 ARTICLES OF INCORPORATION AND BYLAWS; DIRECTORS AND OFFICERS.  Unless
otherwise determined by Parent prior to the Effective Time:

        (a) the Articles of Incorporation of the Surviving Corporation shall be
amended and restated as of the Effective Time to conform to Exhibit B;

        (b) the Bylaws of the Surviving Corporation shall be amended and
restated as of the Effective Time to conform to Exhibit C; and

        (c) the directors and officers of the Surviving Corporation immediately
after the Effective Time shall be the respective individuals who are directors
and officers of Merger Sub immediately prior to the Effective Time.

    1.5 CONVERSION OF SHARES.

        (a) At the Effective Time, by virtue of the Merger and without any
further action on the part of Parent, Merger Sub, the Company or any shareholder
of the Company:

            (i) any shares of Company Common Stock (together with the associated
Rights under the Company Rights Agreement, as defined in Section 2.3(b)) then
held by the Company or any wholly owned Subsidiary of the Company shall cease to
exist, and no consideration shall be delivered in exchange therefor;

                                      A-2
<PAGE>
            (ii) any shares of Company Common Stock (together with the
associated Rights under the Company Rights Agreement) then held by Parent,
Merger Sub or any other wholly owned Subsidiary of Parent shall cease to exist,
and no consideration shall be delivered in exchange therefor;

           (iii) except as provided in clauses "(i)" and "(ii)" above and
subject to Sections 1.5(b), 1.5(c), 1.5(d) and 1.8, each share of Company Common
Stock (together with the associated Right under the Company Rights Agreement)
then outstanding shall be converted into the right to receive 0.92 of a share of
Parent Common Stock; and

            (iv) each share of the common stock, $0.001 par value per share, of
Merger Sub then outstanding shall be converted into one share of common stock of
the Surviving Corporation.

        (b) The fraction of a share of Parent Common Stock specified in
Section 1.5(a)(iii) (as such fraction may be adjusted in accordance with this
Section 1.5(b)) is referred to as the "Exchange Ratio." If, between the date of
this Agreement and the Effective Time, the outstanding shares of Company Common
Stock or Parent Common Stock are changed into a different number or class of
shares by reason of any stock split, stock dividend, reverse stock split,
reclassification, recapitalization or other similar transaction, then the
Exchange Ratio shall be appropriately adjusted.

        (c) If any shares of Company Common Stock outstanding immediately prior
to the Effective Time are unvested or are subject to a repurchase option, risk
of forfeiture or other condition under any applicable restricted stock purchase
agreement or other agreement with the Company or under which the Company has any
rights, then the shares of Parent Common Stock issued in exchange for such
shares of Company Common Stock will also be unvested and subject to the same
repurchase option, risk of forfeiture or other condition, and the certificates
representing such shares of Parent Common Stock may accordingly be marked with
appropriate legends. The Company shall take all action that may be necessary to
ensure that, from and after the Effective Time, Parent is entitled to exercise
any such repurchase option or other right set forth in any such restricted stock
purchase agreement or other agreement.

        (d) No fractional shares of Parent Common Stock shall be issued in
connection with the Merger, and no certificates or scrip for any such fractional
shares shall be issued. Any holder of Company Common Stock who would otherwise
be entitled to receive a fraction of a share of Parent Common Stock (after
aggregating all fractional shares of Parent Common Stock issuable to such
holder) shall, in lieu of such fraction of a share and, upon surrender of such
holder's Company Stock Certificate(s) (as defined in Section 1.6), be paid in
cash the dollar amount (rounded to the nearest whole cent), without interest,
determined by multiplying such fraction by the closing price of a share of
Parent Common Stock on the Nasdaq National Market on the date the Merger becomes
effective.

    1.6 CLOSING OF THE COMPANY'S TRANSFER BOOKS.  At the Effective Time:
(a) all shares of Company Common Stock outstanding immediately prior to the
Effective Time shall automatically be canceled and retired and shall cease to
exist, and all holders of certificates representing shares of Company Common
Stock that were outstanding immediately prior to the Effective Time shall cease
to have any rights as shareholders of the Company; and (b) the stock transfer
books of the Company shall be closed with respect to all shares of Company
Common Stock outstanding immediately prior to the Effective Time. No further
transfer of any such shares of Company Common Stock shall be made on such stock
transfer books after the Effective Time. If, after the Effective Time, a valid
certificate previously representing any shares of Company Common Stock (a
"Company Stock Certificate") is presented to the Exchange Agent (as defined in
Section 1.7) or to the Surviving Corporation or Parent, such Company Stock
Certificate shall be canceled and shall be exchanged as provided in
Section 1.7.

    1.7 EXCHANGE OF CERTIFICATES.

        (a) On or prior to the Closing Date, Parent shall select a reputable
bank or trust company to act as exchange agent in the Merger (the "Exchange
Agent"). Within three days after the Effective

                                      A-3
<PAGE>
Time, Parent shall deposit with the Exchange Agent (i) certificates representing
the shares of Parent Common Stock issuable pursuant to this Section 1, and
(ii) cash sufficient to make payments in lieu of fractional shares in accordance
with Section 1.5(d). The shares of Parent Common Stock and cash amounts so
deposited with the Exchange Agent, together with any dividends or distributions
received by the Exchange Agent with respect to such shares, are referred to
collectively as the "Exchange Fund."

        (b) As soon as reasonably practicable after the Effective Time, the
Exchange Agent will mail to the record holders of Company Stock Certificates
(i) a letter of transmittal in customary form and containing such provisions as
Parent may reasonably specify (including a provision confirming that delivery of
Company Stock Certificates shall be effected, and risk of loss and title to
Company Stock Certificates shall pass, only upon delivery of such Company Stock
Certificates to the Exchange Agent), and (ii) instructions for use in effecting
the surrender of Company Stock Certificates in exchange for certificates
representing Parent Common Stock. Upon surrender of a Company Stock Certificate
to the Exchange Agent for exchange, together with a duly executed letter of
transmittal and such other documents as may be reasonably required by the
Exchange Agent or Parent, (1) the holder of such Company Stock Certificate shall
be entitled to receive in exchange therefor a certificate representing the
number of whole shares of Parent Common Stock that such holder has the right to
receive pursuant to the provisions of Section 1.5 (and cash in lieu of any
fractional share of Parent Common Stock), and (2) the Company Stock Certificate
so surrendered shall be canceled. Until surrendered as contemplated by this
Section 1.7, each Company Stock Certificate shall be deemed, from and after the
Effective Time, to represent only the right to receive shares of Parent Common
Stock (and cash in lieu of any fractional share of Parent Common Stock) as
contemplated by Section 1. If any Company Stock Certificate shall have been
lost, stolen or destroyed, Parent may, in its discretion and as a condition
precedent to the issuance of any certificate representing Parent Common Stock,
require the owner of such lost, stolen or destroyed Company Stock Certificate to
provide an appropriate affidavit and to deliver a bond (in such sum as Parent
may reasonably direct) as indemnity against any claim that may be made against
the Exchange Agent, Parent or the Surviving Corporation with respect to such
Company Stock Certificate.

        (c) Notwithstanding anything to the contrary contained in this
Agreement, no shares of Parent Common Stock (or certificates therefor) shall be
issued in exchange for any Company Stock Certificate to any Person who may be an
"affiliate" (as that term is defined in Rule 145 under the Securities Act) of
the Company until such Person shall have delivered to Parent and the Company a
duly executed Affiliate Agreement as contemplated by Section 5.11.

        (d) No dividends or other distributions declared or made with respect to
Parent Common Stock with a record date after the Effective Time shall be paid to
the holder of any unsurrendered Company Stock Certificate with respect to the
shares of Parent Common Stock that such holder has the right to receive in the
Merger until such holder surrenders such Company Stock Certificate in accordance
with this Section 1.7 (at which time such holder shall be entitled, subject to
the effect of applicable escheat or similar laws, to receive all such dividends
and distributions, without interest).

        (e) Any portion of the Exchange Fund that remains undistributed to
holders of Company Stock Certificates as of the date 180 days after the date on
which the Merger becomes effective shall be delivered to Parent upon demand, and
any holders of Company Stock Certificates who have not theretofore surrendered
their Company Stock Certificates in accordance with this Section 1.7 shall
thereafter look only to Parent for satisfaction of their claims for Parent
Common Stock, cash in lieu of fractional shares of Parent Common Stock and any
dividends or distributions with respect to Parent Common Stock.

        (f) Each of the Exchange Agent, Parent and the Surviving Corporation
shall be entitled to deduct and withhold from any consideration payable or
otherwise deliverable pursuant to this

                                      A-4
<PAGE>
Agreement to any holder or former holder of Company Common Stock such amounts as
may be required to be deducted or withheld therefrom under the Code or any
provision of state, local or foreign tax law or under any other applicable Legal
Requirement. To the extent such amounts are so deducted or withheld, such
amounts shall be treated for all purposes under this Agreement as having been
paid to the Person to whom such amounts would otherwise have been paid.

        (g) Neither Parent nor the Surviving Corporation shall be liable to any
holder or former holder of Company Common Stock or to any other Person with
respect to any shares of Parent Common Stock (or dividends or distributions with
respect thereto), or for any cash amounts, delivered to any public official
pursuant to any applicable abandoned property law, escheat law or similar Legal
Requirement.

    1.8 DISSENTING SHARES.

        (a) Notwithstanding anything to the contrary contained in this
Agreement, any shares of capital stock of the Company that, as of the Effective
Time, are or may become "dissenting shares" within the meaning of
Section 1300(b) of the California Corporations Code shall not be converted into
or represent the right to receive Parent Common Stock in accordance with
Section 1.5 (or cash in lieu of fractional shares in accordance with
Section 1.5(d)), and the holder or holders of such shares shall be entitled only
to such rights as may be granted to such holder or holders in Chapter 13 of the
California General Corporation Law; PROVIDED, HOWEVER, that if the status of any
such shares as "dissenting shares" shall not be perfected, or if any such shares
shall lose their status as "dissenting shares," then, as of the later of the
Effective Time or the time of the failure to perfect such status or the loss of
such status, such shares shall automatically be converted into and shall
represent only the right to receive (upon the surrender of the certificate or
certificates representing such shares) Parent Common Stock in accordance with
Section 1.5 (and cash in lieu of fractional shares in accordance with
Section 1.5(d)).

        (b) The Company shall give Parent (i) prompt notice of any written
demand received by the Company prior to the Effective Time to require the
Company to purchase shares of capital stock of the Company pursuant to Chapter
13 of the California General Corporation Law and of any other demand, notice or
instrument delivered to the Company prior to the Effective Time pursuant to the
California General Corporation Law, and (ii) the opportunity to participate in
all negotiations and proceedings with respect to any such demand, notice or
instrument. The Company shall not make any payment or settlement offer prior to
the Effective Time with respect to any such demand unless Parent shall have
consented in writing to such payment or settlement offer.

    1.9 TAX CONSEQUENCES.  For federal income tax purposes, the Merger is
intended to constitute a reorganization within the meaning of Section 368 of the
Code. The parties to this Agreement hereby adopt this Agreement as a "plan of
reorganization" within the meaning of Sections 1.368-2(g) and 1.368-3(a) of the
United States Treasury Regulations.

    1.10 ACCOUNTING CONSEQUENCES.  For financial reporting purposes, the Merger
is intended to be accounted for as a "pooling of interests."

    1.11 FURTHER ACTION.  If, at any time after the Effective Time, any further
action is determined by Parent to be necessary or desirable to carry out the
purposes of this Agreement or to vest the Surviving Corporation with full right,
title and possession of and to all rights and property of Merger Sub and the
Company, the officers and directors of the Surviving Corporation and Parent
shall be fully authorized (in the name of Merger Sub, in the name of the Company
and otherwise) to take such action.

SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY

    Except as set forth in the Company Disclosure Schedule, the Company
represents and warrants to Parent and Merger Sub as follows:

                                      A-5
<PAGE>
    2.1 DUE ORGANIZATION; SUBSIDIARIES; ETC.

        (a) The Company has no Subsidiaries, except for the corporations
identified in Part 2.1(a)(i) of the Company Disclosure Schedule; and neither the
Company nor any of the other corporations identified in Part 2.1(a)(i) of the
Company Disclosure Schedule owns any capital stock of, or any equity interest of
any nature in, any other Entity, other than the Entities identified in
Part 2.1(a)(ii) of the Company Disclosure Schedule. (The Company and each of its
Subsidiaries are referred to collectively in this Agreement as the "Acquired
Corporations.") None of the Acquired Corporations has agreed or is obligated to
make, or is bound by any Contract under which it may become obligated to make,
any future investment in or capital contribution to any other Entity. None of
the Acquired Corporations has, at any time, been a general partner of any
general partnership, limited partnership or other Entity.

        (b) Each of the Acquired Corporations is a corporation duly organized,
validly existing and in good standing (in jurisdictions that recognize such
concept) under the laws of the jurisdiction of its incorporation and has all
necessary power and authority: (i) to conduct its business in the manner in
which its business is currently being conducted; (ii) to own and use its assets
in the manner in which its assets are currently owned and used; and (iii) to
perform its obligations under all Contracts by which it is bound.

        (c) Each of the Acquired Corporations is qualified to do business as a
foreign corporation, and is in good standing (in jurisdictions that recognize
such concept), under the laws of all jurisdictions where the nature of its
business requires such qualification, except where the failure to be so
qualified would not have a Material Adverse Effect on the Acquired Corporations.

    2.2 ARTICLES OF INCORPORATION AND BYLAWS.  The Company has delivered or made
available to Parent accurate and complete copies of the articles of
incorporation, bylaws and other charter and organizational documents of the
respective Acquired Corporations, including all amendments thereto.

    2.3 CAPITALIZATION, ETC.

        (a) The authorized capital stock of the Company consists of:
(i) 50,000,000 shares of Company Common Stock, of which 23,831,517 shares have
been issued and are outstanding as of the date of this Agreement; and
(ii) 5,000,000 shares of Preferred Stock, of which no shares are outstanding.
All of the outstanding shares of Company Common Stock have been duly authorized
and validly issued, and are fully paid and nonassessable. As of the date of this
Agreement, there are no shares of Company Common Stock held by any of the other
Acquired Corporations. Except as set forth in Part 2.3(a)(i) of the Company
Disclosure Schedule: (i) none of the outstanding shares of Company Common Stock
is entitled or subject to any preemptive right, right of participation, right of
maintenance or any similar right; (ii) none of the outstanding shares of Company
Common Stock is subject to any right of first refusal in favor of the Company;
and (iii) there is no Acquired Corporation Contract relating to the voting or
registration of, or restricting any Person from purchasing, selling, pledging or
otherwise disposing of (or granting any option or similar right with respect
to), any shares of Company Common Stock. None of the Acquired Corporations is
under any obligation, or is bound by any Contract pursuant to which it may
become obligated, to repurchase, redeem or otherwise acquire any outstanding
shares of Company Common Stock.

        (b) As of the date of this Agreement: (i) 500,000 shares of Company
Preferred Stock, designated Series A Junior Participating Preferred Stock, are
reserved for future issuance upon exercise of the Rights issued pursuant to the
Rights Agreement, dated September 30, 1998, by and between the Company and
ChaseMellon Shareholder Services, as Rights Agent (the "Company Rights
Agreement"); (ii) 2,359,739 shares of Company Common Stock are reserved for
future issuance pursuant to stock options granted and outstanding under the
Company's 1998 Equity Incentive Plan; (iii) 2,566,959 shares of Company Common
Stock are reserved for future issuance pursuant to stock

                                      A-6
<PAGE>
options granted and outstanding under the Company's 1988 Stock Option Plan;
(iv) 49,903 shares of Company Common Stock are reserved for future issuance
pursuant to stock options granted and outstanding under the Dr. Design 1991
Stock Option Plan; (v) 225,000 shares of Company Common Stock are reserved for
future issuance pursuant to stock options granted and outstanding under the
Company's 1994 Directors Stock Option Plan; and (vi) 840,209 shares of Company
Common Stock (the "ESPP Shares") are reserved for future issuance pursuant to
the Company's 1999 Employee Stock Purchase Plan (the "ESPP"). (Stock options
granted by the Company pursuant to the Company's stock option plans and
otherwise are referred to in this Agreement as "Company Options.")
Part 2.3(b)(i) of the Company Disclosure Schedule sets forth the following
information (which is accurate in all material respects) with respect to each
Company Option outstanding as of the date of this Agreement: (i) the particular
plan pursuant to which such Company Option was granted; (ii) the name of the
optionee; (iii) the number of shares of Company Common Stock subject to such
Company Option; (iv) the exercise price of such Company Option; (v) the date on
which such Company Option was granted; (vi) the applicable vesting schedules,
and the extent to which such Company Option is vested and exercisable as of the
date of this Agreement; and (vii) the date on which such Company Option expires.
The Company has delivered or made available to Parent accurate and complete
copies of all stock option plans pursuant to which the Company has ever granted
stock options, and the forms of all stock option agreements evidencing such
options.

        (c) Except as set forth in Part 2.3(b) of the Company Disclosure
Schedule, as of the date of this Agreement there is no: (i) outstanding
subscription, option, call, warrant or right (whether or not currently
exercisable) to acquire any shares of the capital stock or other securities of
the Company; (ii) outstanding security, instrument or obligation that is or may
become convertible into or exchangeable for any shares of the capital stock or
other securities of the Company; (iii) shareholder rights plan (or similar plan
commonly referred to as a "poison pill") or Contract under which the Company is
or may become obligated to sell or otherwise issue any shares of its capital
stock or any other securities; or (iv) condition or circumstance that may give
rise to or provide a basis for the assertion of a claim by any Person to the
effect that such Person is entitled to acquire or receive any shares of capital
stock or other securities of the Company.

        (d) All outstanding shares of Company Common Stock, all outstanding
Company Options, all outstanding warrants to purchase Company Common Stock and
all outstanding shares of capital stock of each Subsidiary of the Company have
been issued and granted in compliance with (i) all applicable securities laws
and other applicable Legal Requirements, and (ii) all requirements set forth in
applicable Contracts.

        (e) All of the outstanding shares of capital stock of the corporations
identified in Part 2.1(a)(ii) of the Company Disclosure Schedule have been duly
authorized and are validly issued, are fully paid and nonassessable and are
owned beneficially and of record by the Company, free and clear of any
Encumbrances.

        (f) The Company has taken all necessary action to terminate the
Company's 1990 Employee Stock Purchase Plan (the "1990 ESPP"), and the 1990 ESPP
has been terminated and is no longer in effect.

    2.4 SEC FILINGS; FINANCIAL STATEMENTS.

        (a) The Company has delivered or made available to Parent accurate and
complete copies of all registration statements, proxy statements and other
statements, reports, schedules, forms and other documents filed by the Company
with the SEC since January 1, 1999 (the "Company SEC Documents"). All
statements, reports, schedules, forms and other documents required to have been
filed by the Company with the SEC have been so filed on a timely basis. As of
the time it was filed with the SEC (or, if amended or superseded by a filing
prior to the date of this Agreement, then on the date of such filing): (i) each
of the Company SEC Documents complied in all material respects

                                      A-7
<PAGE>
with the applicable requirements of the Securities Act or the Exchange Act (as
the case may be); and (ii) none of the Company SEC Documents contained any
untrue statement of a material fact or omitted to state a material fact required
to be stated therein or necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading.

        (b) The consolidated financial statements (including any related notes)
contained in the Company SEC Documents: (i) complied as to form in all material
respects with the published rules and regulations of the SEC applicable thereto;
(ii) were prepared in accordance with generally accepted accounting principles
applied on a consistent basis throughout the periods covered (except as may be
indicated in the notes to such financial statements or, in the case of unaudited
statements, as permitted by Form 10-Q of the SEC, and except that the unaudited
financial statements may not contain footnotes and are subject to normal and
recurring year-end adjustments which will not, individually or in the aggregate,
be material in amount), and (iii) fairly present the consolidated financial
position of the Company and its Subsidiaries as of the respective dates thereof
and the consolidated results of operations and cash flows of the Company and its
Subsidiaries for the periods covered thereby.

    2.5 ABSENCE OF CHANGES.  Except as set forth in Part 2.5 of the Company
Disclosure Schedule, between August 31, 1999 and the date hereof:

        (a) there has not been any material adverse change in the business,
condition, capitalization, assets, liabilities, operations or financial
performance of the Acquired Corporations taken as a whole, and no event has
occurred or circumstance exists that, in combination with any other events or
circumstances, could reasonably be expected to have a Material Adverse Effect on
the Acquired Corporations;

        (b) there has not been any material loss, damage or destruction to, or
any material interruption in the use of, any of the assets of any of the
Acquired Corporations (whether or not covered by insurance) that has had or
could reasonably be expected to have a Material Adverse Effect on the Acquired
Corporations;

        (c) none of the Acquired Corporations has (i) declared, accrued, set
aside or paid any dividend or made any other distribution in respect of any
shares of capital stock, or (ii) repurchased, redeemed or otherwise reacquired
any shares of its capital stock or other securities;

        (d) none of the Acquired Corporations has sold, issued or granted, or
authorized the issuance of, (i) any capital stock or other security (except for
Company Common Stock issued upon the valid exercise of outstanding Company
Options), (ii) any option, warrant or right to acquire any capital stock or any
other security (except for Company Options and ESPP Shares described in
Part 2.3(b)(i) of the Company Disclosure Schedule), or (iii) any instrument
convertible into or exchangeable for any capital stock or other security;

        (e) the Company has not amended or waived any of its rights under, or
permitted the acceleration of vesting under, (i) any provision of any of the
Company's stock option plans, (ii) any provision of any agreement evidencing any
outstanding Company Option, or (iii) any restricted stock purchase agreement;

        (f) there has been no amendment to the articles of incorporation, bylaws
or other charter or organizational documents of any of the Acquired
Corporations, and none of the Acquired Corporations has effected or been a party
to any merger, consolidation, share exchange, business combination,
recapitalization, reclassification of shares, stock split, reverse stock split
or similar transaction;

        (g) none of the Acquired Corporations has received any Acquisition
Proposal;

        (h) none of the Acquired Corporations has formed any Subsidiary or
acquired any equity interest or other interest in any other Entity;

                                      A-8
<PAGE>
        (i) none of the Acquired Corporations has made any capital expenditure
which, when added to all other capital expenditures made on behalf of the
Acquired Corporations between August 31, 1999 and the date of this Agreement,
exceeds $350,000 per month;

        (j) except in the ordinary course of business and consistent with past
practices, none of the Acquired Corporations has (i) entered into or permitted
any of the assets owned or used by it to become bound by any Material Contract
(as defined in Section 2.10), or (ii) amended or terminated, or waived any
material right or remedy under, any Material Contract;

        (k) except in the ordinary course of business and consistent with past
practices, none of the Acquired Corporations has (i) acquired, leased or
licensed any material right or other material asset from any other Person,
(ii) sold or otherwise disposed of, or leased or licensed, any material right or
other material asset to any other Person, or (iii) waived or relinquished any
right;

        (l) the Company has not written off as uncollectible, or established any
extraordinary reserve with respect to, any account receivable or other
indebtedness of more than $10,000, and the Acquired Corporations have not
written off as uncollectible, or established any extraordinary reserve with
respect to, any account receivables or other indebtedness of more than $100,000
in the aggregate;

        (m) none of the Acquired Corporations has made any pledge of any of its
assets or otherwise permitted any of its assets to become subject to any
Encumbrance, except for pledges of immaterial assets made in the ordinary course
of business and consistent with past practices;

        (n) none of the Acquired Corporations has (i) lent money of over
$100,000 to any Person, or (ii) incurred or guaranteed any indebtedness for
borrowed money of over $100,000;

        (o) none of the Acquired Corporations has (i) established or adopted any
Plan (as defined in Section 2.17), (ii) caused or permitted any Plan to be
amended in any material respect, or (iii) except in the ordinary course of
business and consistent with past practices, paid any bonus or made any
profit-sharing or similar payment to, or increased the amount of the wages,
salary, commissions, fringe benefits or other compensation or remuneration
payable to, any of its directors, officers or employees;

        (p) none of the Acquired Corporations has changed any of its methods of
accounting or accounting practices in any material respect;

        (q) none of the Acquired Corporations has made any material Tax
election;

        (r) none of the Acquired Corporations has commenced or settled any Legal
Proceeding;

        (s) none of the Acquired Corporations has entered into any material
transaction or taken any other material action outside the ordinary course of
business or inconsistent with past practices; and

        (t) none of the Acquired Corporations has agreed or committed to take
any of the actions referred to in clauses "(c)" through "(s)" above.

    2.6 TITLE TO ASSETS.  To the knowledge of the Company, the Acquired
Corporations own, and have good and valid title to, all assets purported to be
owned by them, including: (i) all assets reflected on the Company Unaudited
Interim Balance Sheet (except for assets sold or otherwise disposed of in the
ordinary course of business since the date of the Company Unaudited Interim
Balance Sheet); and (ii) all other assets reflected in the books and records of
the Acquired Corporations as being owned by the Acquired Corporations. To the
knowledge of the Company, all of said assets are owned by the Acquired
Corporations free and clear of any Encumbrances, except for (1) any lien for
current taxes not yet due and payable, (2) liens that have arisen in the
ordinary course of business and that do not (in any case or in the aggregate)
materially detract from the value of the assets subject thereto or materially
impair the operations of any of the Acquired Corporations, and (3) liens
described in Part 2.6 of the Company Disclosure Schedule.

                                      A-9
<PAGE>
    2.7 RECEIVABLES, CUSTOMERS.

        (a) All existing accounts receivable of the Acquired Corporations
(including those accounts receivable reflected on the Company Unaudited Interim
Balance Sheet that have not yet been collected and those accounts receivable
that have arisen since August 31, 1999, and have not yet been collected)
(i) represent valid obligations of customers of the Acquired Corporations
arising from bona fide transactions entered into in the ordinary course of
business, (ii) are current and, to the best of the Company's knowledge, will be
collected in full when due, without any counterclaim or set off (net of an
allowance for doubtful accounts not to exceed $1,500,000 in the aggregate).

        (b) Part 2.7(b) of the Company Disclosure Schedule contains an accurate
and complete list as of the date of this Agreement of all loans and advances
made by any of the Acquired Corporations to any employee, director, consultant
or independent contract, other than routine travel advances and other expenses
made to employees in the ordinary course of business.

        (c) Part 2.7(c) of the Company Disclosure Schedule accurately
identifies, and provides a breakdown that is accurate and complete in all
material respects of the revenues received from, (i) the top 20 customers of the
Company in terms of gross revenue generated in fiscal year 1998, fiscal year
1999 and the first quarter of fiscal year 2000 for the embedded business,
(ii) the top 20 customers of the Company in terms of gross revenue generated in
fiscal year 1998, fiscal year 1999 and the first quarter of fiscal year 2000 for
the design automation business of the Company and (iii) the top six customers in
terms of gross revenue generated in fiscal year 1998, fiscal year 1999 and the
first quarter of fiscal year 2000 for the Dr. Design business. The Company has
not received any notice or other communication (in writing or otherwise), and
has not received any other information, indicating that any of the customers
described in the preceding sentence may cease dealing with the Company or may
otherwise reduce the volume of business transacted by such Person with the
Company below historical levels.

    2.8 REAL PROPERTY; EQUIPMENT; LEASEHOLD.  All material items of equipment
and other tangible assets owned by or leased to the Acquired Corporations are
adequate for the uses to which they are being put, are in good and safe
condition and repair (ordinary wear and tear excepted) and are adequate for the
conduct of the business of the Acquired Corporations in the manner in which such
business is currently being conducted. Except as set forth in Part 2.8 of the
Company Disclosure Schedule, none of the Acquired Corporations own any real
property or any interest in real property. Part 2.8 of the Company Disclosure
Schedule (a) contains an accurate and complete list of (i) all the Acquired
Corporations' real property leases that involve real estate in the United States
and (ii) each location outside of the United States where any Acquired
Corporation leases any real property, and (b) accurately sets forth in all
material respects the aggregate amounts payable by the Acquired Corporations
under all leases pursuant to which any Acquired Corporation leases real property
outside the United States for each fiscal year beginning with fiscal year 2000
and ending with fiscal year 2004 and the period of fiscal year 2005 and
thereafter.

    2.9 PROPRIETARY ASSETS.

        (a) Part 2.9(a)(i) of the Company Disclosure Schedule sets forth, with
respect to each Proprietary Asset owned by the Acquired Corporations and
registered with any Governmental Body or for which an application has been filed
with any Governmental Body, (i) a brief description of such Proprietary Asset,
and (ii) the names of the jurisdictions covered by the applicable registration
or application. Part 2.9(a)(ii) of the Company Disclosure Schedule identifies
any ongoing royalty or payment obligations with respect to, each Proprietary
Asset that is licensed or otherwise made available to the Acquired Corporations
by any Person and is material to the business of the Acquired Corporations
(except for any Proprietary Asset that is licensed to the Acquired Corporations
under any third party software license generally available to the public), and
identifies the Contract under which such Proprietary Asset is being licensed or
otherwise made available to such Acquired Corporation.

                                      A-10
<PAGE>
The Acquired Corporations have good and valid title to all of the Acquired
Corporation Proprietary Assets identified in Part 2.9(a)(i) of the Company
Disclosure Schedule and otherwise owned by any of the Acquired Corporations,
free and clear of all Encumbrances, except for (i) any lien for current taxes
not yet due and payable, and (ii) minor liens that have arisen in the ordinary
course of business and that do not (individually or in the aggregate) materially
detract from the value of the assets subject thereto or materially impair the
operations of either of the Acquired Corporations. The Acquired Corporations
have a valid right to use, license and otherwise exploit all Proprietary Assets
identified in Part 2.9(a)(ii) of the Company Disclosure Schedule. Except as set
forth in Part 2.9(a)(iii) of the Company Disclosure Schedule, none of the
Acquired Corporations has developed jointly with any other Person any Acquired
Corporation Proprietary Asset that is material to the business of the Acquired
Corporations with respect to which such other Person has any rights. Except as
set forth in Part 2.9(a)(iv) of the Company Disclosure Schedule, there is no
Acquired Corporation Contract (with the exception of end user license or porting
agreements in the form previously delivered by the Company to Parent) pursuant
to which any Person has any right (whether or not currently exercisable) to use,
license or otherwise exploit any Acquired Corporation Proprietary Asset.

        (b) The Acquired Corporations have taken reasonable measures and
precautions to protect and maintain the confidentiality, secrecy and value of
all material Acquired Corporation Proprietary Assets (except Acquired
Corporation Proprietary Assets whose value would be unimpaired by disclosure).
Without limiting the generality of the foregoing, except as set forth in
Part 2.9(b) of the Company Disclosure Schedule, (i) all current and former
employees of the Acquired Corporations who are or were involved in, or who have
contributed to, the creation or development of any material Acquired Corporation
Proprietary Asset have executed and delivered to the Acquired Corporations an
agreement (containing no exceptions to or exclusions from the scope of its
coverage) that is substantially identical to the form of Confidential
Information and Invention Assignment Agreement previously delivered or made
available by the Company to Parent, and (ii) all current and former consultants
and independent contractors to the Acquired Corporations who are or were
involved in, or who have contributed to, the creation or development of any
material Acquired Corporation Proprietary Asset have executed and delivered to
the Company an agreement (containing no exceptions to or exclusions from the
scope of its coverage) that is substantially identical to the form of Consultant
Confidential Information and Invention Assignment Agreement previously delivered
or made available to Parent. No current or former employee, officer, director,
shareholder, consultant or independent contractor has any right, claim or
interest in or with respect to any Acquired Corporation Proprietary Asset.

        (c) To the knowledge of the Company: (i) all patents, trademarks,
service marks and copyrights held by any of the Acquired Corporations are valid,
enforceable and subsisting; (ii) none of the Acquired Corporation Proprietary
Assets and no Proprietary Asset that is currently being developed by any of the
Acquired Corporations (either by itself or with any other Person) infringes,
misappropriates or conflicts with any Proprietary Asset owned or used by any
other Person; (iii) none of the products that are or have been designed,
created, developed, assembled, manufactured or sold by any of the Acquired
Corporations is infringing, misappropriating or making any unlawful or
unauthorized use of any Proprietary Asset owned or used by any other Person, and
since January 1, 1998, none of the Acquired Corporations has received any notice
or other communication (in writing or otherwise) that it has committed any
actual, alleged, possible or potential infringement, misappropriation or
unlawful or unauthorized use of, any Proprietary Asset owned or used by any
other Person; (iv) no other Person is infringing, misappropriating or making any
unlawful or unauthorized use of, and no Proprietary Asset owned or used by any
other Person infringes or conflicts with, any material Acquired Corporation
Proprietary Asset.

        (d) The Acquired Corporation Proprietary Assets constitute all the
Proprietary Assets necessary to enable the Acquired Corporations to conduct
their business in the manner in which such

                                      A-11
<PAGE>
business is being conducted. None of the Acquired Corporations has (i) licensed
any of the material Acquired Corporation Proprietary Assets to any Person on an
exclusive basis, or (ii) entered into any covenant not to compete or Contract
limiting its ability to exploit fully any material Acquired Corporation
Proprietary Assets or to transact business in any market or geographical area or
with any Person.

        (e) None of the Acquired Corporations has disclosed or delivered to any
Person, or permitted the disclosure or delivery to any escrow agent or other
Person, of any Acquired Corporation Source Code, except for such disclosure or
delivery which has not materially impaired, and which would not reasonably be
expected to materially impair, the business of any of the Acquired Corporations
or the value of any of the Acquired Corporations to Parent. No event has
occurred, and no circumstance or condition exists, that (with or without notice
or lapse of time) will, or could reasonably be expected to, result in the
disclosure or delivery to any Person of any Acquired Corporation Source Code,
except for such disclosure or delivery which has not materially impaired, and
which would not reasonably be expected to materially impair, the business of any
of the Acquired Corporations or the value of any of the Acquired Corporations to
Parent. Part 2.10(a)(ii) of the Company Disclosure Schedule describes whether
the execution of this Agreement or the consummation of any of the transactions
contemplated hereby could reasonably be expected to result in the release or
disclosure of any Acquired Corporation Source Code.

        (f) To the knowledge of the Company, except as set forth in
Part 2.9(f)(i) of the Company Disclosure Schedule, each computer, computer
program and other item of software (whether installed on a computer or on any
other piece of equipment, including firmware) that is owned or used by any of
the Acquired Corporations for their internal business operations is Year 2000
Compliant. To the knowledge of the Company, except as set forth in
Part 2.9(f)(ii) of the Company Disclosure Schedule, each computer program and
other item of software that has been designed, developed, sold, licensed or
otherwise made available to any Person by any of the Acquired Corporations is
Year 2000 Compliant. To the knowledge of the Company, except as set forth in
Part 2.9(f)(iii) of the Company Disclosure Schedule, each of the Acquired
Corporations has conducted sufficient Year 2000 compliance testing for each
computer, computer program and item of software referred to in the preceding two
sentences to be able to determine whether such computer, computer program and
item of software is Year 2000 Compliant. Each of the Acquired Corporations has
obtained warranties or other written assurances to the extent offered or
otherwise made available from each of its suppliers of any material Acquired
Corporation Proprietary Assets to the effect that the Acquired Corporation
Proprietary Assets provided by such suppliers to the Acquired Corporations is
Year 2000 Compliant. As used in this Agreement, "Year 2000 Compliant" means,
with respect to a computer, computer program or other item of software (i) the
functions, calculations, and other computing processes of the computer, program
or software (collectively, "Processes") do not perform in an inconsistent or
incorrect manner or with interruption as a result of a correct date on which the
Processes are actually performed or as a result of a date correctly input to the
applicable computer system, whether before, on, or after January 1, 2000;
(ii) the computer, program or software accepts, calculates, compares, sorts,
extracts, sequences, and otherwise processes date inputs and date values;
(iii) the computer, program or software accepts and responds to correct year
input, if any, in a manner that resolves any ambiguities as to century in a
defined, predetermined, and appropriate manner; (iv) the computer, program or
software stores and displays date information in ways that are unambiguous as to
the determination of the century; and (v) leap years will be determined by the
following standard (A) if dividing the year by 4 yields an integer, it is a leap
year, except for years ending in 00, but (B) a year ending in 00 is a leap year
if dividing it by 400 yields an integer.

        (g) Except with respect to demonstration or trial copies, no product,
system, program or software module designed, developed, sold, licensed or
otherwise made available by any of the Acquired Corporations to any Person
contains any "back door," "time bomb," "Trojan horse," "worm,"

                                      A-12
<PAGE>
"drop dead device," "virus" or other software routines or hardware components
designed to permit unauthorized access or to disable or erase software, hardware
or data without the consent of the user.

    2.10 CONTRACTS.

        (a) Part 2.10 of the Company Disclosure Schedule identifies each
Acquired Corporation Contract that constitutes a "Material Contract." (For
purposes of this Agreement, each of the following shall be deemed to constitute
a "Material Contract":

            (i) any Contract relating to the employment of, or the performance
of services by, any employee or consultant, and any Contract pursuant to which
any of the Acquired Corporations is or may become obligated to make any
severance, termination or similar payment to any current or former employee or
director; and any Contract pursuant to which any of the Acquired Corporations is
or may become obligated to make any bonus or similar payment (other than
payments constituting base salary) in excess of $25,000 to any current or former
employee or director;

            (ii) any Contract (A) relating to the acquisition, transfer,
development, sharing or license of any Proprietary Asset (except for any
Contract pursuant to which (1) any Proprietary Asset is licensed to the Acquired
Corporations under any third party software license generally available to the
public, or (2) any Proprietary Asset is licensed by any of the Acquired
Corporations to any Person on a non-exclusive basis); or (B) of the type
referred to in Section 2.9(e);

           (iii) any Contract (A) entered into since January 1, 1996
(1) pursuant to which (x) any of the Acquired Corporations has agreed to provide
an unlimited number of production or "run time" licenses for any period of time,
and (y) no royalty or similar payments (other than up-front payments) are due
during the term of the Contract, and (2) which has not been delivered or made
available to Parent or Parent's counsel in the "data room" at the Company's
headquarters, except in the case of (1) and (2) above for those Contracts that
have up-front payments that would not result in a material reduction in the
future revenue of the Acquired Corporations when compared to the revenue that
the Acquired Corporations would have recognized had such licenses included a
requirement that the Company be paid royalty payments during the term of the
Contract at historical royalty rates charged by the Company under similar
Contracts that required royalty payments over time, or (B) granting any
exclusive rights to any Acquired Corporation Proprietary Asset;

            (iv) any Contract which provides for indemnification of any officer,
director, employee or agent;

            (v) any Contract imposing any restriction on the right or ability of
any Acquired Corporation (A) to compete with any other Person, (B) to acquire
any product or other asset or any services from any other Person, (C) to
solicit, hire or retain any Person as an employee, consultant or independent
contractor, (D) to develop, sell, supply, distribute, offer, support or service
any product or any technology or other asset to or for any other Person or class
or category of Persons, (E) to perform services for any other Person or class or
category of Persons, or (F) to transact business or deal in any other manner
with any other Person or class or category of Persons;

            (vi) any Contract (other than Contracts evidencing Company Options)
(A) relating to the acquisition, issuance, voting, registration, sale or
transfer of any securities, (B) providing any Person with any preemptive right,
right of participation, right of maintenance or any similar right with respect
to any securities, or (C) providing any of the Acquired Corporations with any
right of first refusal with respect to, or right to repurchase or redeem, any
securities;

           (vii) any Contract relating to any currency hedging;

          (viii) any Contract containing "standstill" or similar provisions
entered into by any of the Acquired Corporations since January 1, 1998 in
connection with a possible equity investment or Acquisition Transaction;

                                      A-13
<PAGE>
            (ix) any Contract (A) to which any Governmental Body is a party or
under which any Governmental Body has any rights or obligations, or
(B) directly or indirectly benefiting any Governmental Body (including any
subcontract or other Contract between any Acquired Corporation and any
contractor or subcontractor to any Governmental Body);

            (x) any Contract requiring that any of the Acquired Corporations
give any notice or provide any information to any Person prior to considering or
accepting any Acquisition Proposal or similar proposal, or prior to entering
into any discussions, agreement, arrangement or understanding relating to any
Acquisition Transaction or similar transaction;

            (xi) any Contract that contemplates or involves the payment or
delivery of cash or other consideration in an amount or having a value in excess
of $250,000 in the aggregate, or contemplates or involves the performance of
services having a value in excess of $250,000 in the aggregate;

           (xii) any Contract (not otherwise identified in clauses "(i)" through
"(xii)" of this sentence) that could reasonably be expected to have a material
effect on the business, condition, capitalization, assets, liabilities,
operations or financial performance of any of the Acquired Corporations or to
any of the transactions contemplated by this Agreement; and

          (xiii) any other Contract, if a breach of such Contract could
reasonably be expected to have a Material Adverse Effect on the Acquired
Corporations.)

The Company has delivered (or made available in the "data room" at the Company's
headquarters) to Parent as requested by Parent an accurate and complete copy of
each Material Contract.

        (b) Each Acquired Corporation Contract that constitutes a Material
Contract is valid and in full force and effect, and is enforceable in accordance
with its terms, subject to (i) laws of general application relating to
bankruptcy, insolvency and the relief of debtors, and (ii) rules of law
governing specific performance, injunctive relief and other equitable remedies.

        (c) Except as set forth in Part 2.10(c) of the Company Disclosure
Schedule: (i) none of the Acquired Corporations has violated or breached, or
committed any default under, any Acquired Corporation Contract, except for
violations, breaches and defaults that have not had and would not reasonably be
expected to have a Material Adverse Effect on the Acquired Corporations; and, to
the knowledge of the Company, no other Person has violated or breached, or
committed any default under, any Acquired Corporation Contract, except for
violations, breaches and defaults that have not had and would not reasonably be
expected to have a Material Adverse Effect on the Acquired Corporations;
(ii) to the knowledge of the Company, no event has occurred, and no circumstance
or condition exists, that (with or without notice or lapse of time) will or
would reasonably be expected to, (A) result in a violation or breach of any of
the provisions of any Acquired Corporation Contract, (B) give any Person the
right to declare a default or exercise any remedy under any Acquired Corporation
Contract, (C) give any Person the right to receive or require a material rebate,
chargeback, penalty or change in delivery schedule under any Acquired
Corporation Contract, (D) give any Person the right to accelerate the maturity
or performance of any Acquired Corporation Contract, (E) result in the
disclosure, release or delivery of any Acquired Corporation Source Code, or
(F) give any Person the right to cancel, terminate or modify any Acquired
Corporation Contract, except in each such case for defaults, acceleration
rights, termination rights and other rights that have not had and would not
reasonably be expected to have a Material Adverse Effect on the Acquired
Corporations; and (iii) since January 1, 1998, none of the Acquired Corporations
has received any notice or other communication regarding any actual or possible
violation or breach of, or default under, any Acquired Corporation Contract,
except in each such case for defaults, acceleration rights, termination rights
and other rights that have not had and would not reasonably be expected to have
a Material Adverse Effect on the Acquired Corporations.

                                      A-14
<PAGE>
    2.11 SALE OF PRODUCTS; PERFORMANCE OF SERVICES.

        (a) Except as set forth in Part 2.11(a) of the Company Disclosure
Schedule, to the knowledge of the Company, each product, system, program,
Proprietary Asset or other asset designed, developed, manufactured, assembled,
sold, installed, repaired, licensed or otherwise made available by any of the
Acquired Corporations to any Person:

            (i) conformed and complied in all material respects with the terms
and requirements of any applicable warranty or other Contract and with all
applicable Legal Requirements; and

            (ii) was free of any bug, virus, design defect or other defect or
deficiency at the time it was sold or otherwise made available, other than any
immaterial bug or similar defect that would not adversely affect the Acquired
Corporations in any material respect taken as a whole.

        (b) All installation services, programming services, repair services,
maintenance services, support services, training services, upgrade services and
other services that have been performed by the Acquired Corporations were
performed properly and in compliance in all material respects with the terms and
requirements of all applicable warranties and other Contracts and with all
applicable Legal Requirements.

        (c) Except as set forth in Part 2.11(c) of the Company Disclosure
Schedule and except as will not, and would not reasonably be expected to, have a
Material Adverse Effect on the Acquired Corporations, since January 1, 1998, no
customer or other Person has asserted in writing or, to the knowledge of the
Company, threatened to assert any claim against any of the Acquired Corporations
(i) under or based upon any warranty provided by or on behalf of any of the
Acquired Corporations, or (ii) under or based upon any other warranty relating
to any product, system, program, Proprietary Asset or other asset designed,
developed, manufactured, assembled, sold, installed, repaired, licensed or
otherwise made available by any of the Acquired Corporations or any services
performed by any of the Acquired Corporations.

    2.12 LIABILITIES.  None of the Acquired Corporations has any accrued,
contingent or other liabilities of any nature, either matured or unmatured, that
in the aggregate exceed $1,000,000, except for: (a) liabilities identified as
such in the Company Unaudited Interim Balance Sheet or the notes thereto;
(b) liabilities that have been incurred by the Acquired Corporations since
August 31, 1999 in the ordinary course of business and consistent with past
practices; (c) liabilities incurred under this Agreement and the other
agreements contemplated hereby; and (d) liabilities described in Part 2.12 of
the Company Disclosure Schedule.

    2.13 COMPLIANCE WITH LEGAL REQUIREMENTS.  Each of the Acquired Corporations
is in compliance in all material respects with all applicable Legal
Requirements. Without limiting the generality of the foregoing, except as set
forth in Part 2.13 of the Company Disclosure Schedule, none of the Acquired
Corporation has exported any product, system, program or other Acquired
Corporation Proprietary Asset in violation of any Legal Requirement. Since
January 1, 1998, none of the Acquired Corporations has received any notice or
other communication from any Governmental Body regarding any actual or possible
violation of, or failure to comply with, any Legal Requirement.

    2.14 CERTAIN BUSINESS PRACTICES.  None of the Acquired Corporations nor any
director, officer, agent or employee of any of the Acquired Corporations has
(i) used any funds for unlawful contributions, gifts, entertainment or other
unlawful expenses relating to political activity, (ii) made any unlawful payment
to foreign or domestic government officials or employees or to foreign or
domestic political parties or campaigns or violated any provision of the Foreign
Corrupt Practices Act of 1977, as amended, or (iii) made any other unlawful
payment.

                                      A-15
<PAGE>
    2.15 GOVERNMENTAL AUTHORIZATIONS.

        (a) The Acquired Corporations hold all Governmental Authorizations
necessary to enable the Acquired Corporations to conduct their respective
businesses in the manner in which such businesses are currently being conducted.
All such Governmental Authorizations are valid and in full force and effect.
Each Acquired Corporation is in substantial compliance with the terms and
requirements of such Governmental Authorizations. Since January 1, 1998, none of
the Acquired Corporations has received any notice or other communication from
any Governmental Body regarding (a) any actual or possible violation of or
failure to comply with any term or requirement of any material Governmental
Authorization, or (b) any actual or possible revocation, withdrawal, suspension,
cancellation, termination or modification of any material Governmental
Authorization.

        (b) Part 2.15(b) of the Company Disclosure Schedule describes the terms
of each grant, incentive or subsidy provided or made available to or for the
benefit of any of the Acquired Corporations by any U.S. or foreign Governmental
Body or otherwise. Each of the Acquired Corporations is in compliance in all
material respects with all of the terms and requirements of each grant,
incentive and subsidy identified or required to be identified in Part 2.15(b) of
the Company Disclosure Schedule. Neither the execution, delivery or performance
of this Agreement, nor the consummation of the Merger or any of the other
transactions contemplated by this Agreement, will (with or without notice or
lapse of time) give any Person the right to revoke, withdraw, suspend, cancel,
terminate or modify, any grant, incentive or subsidy identified or required to
be identified in Part 2.15(b) of the Company Disclosure Schedule.

2.16 TAX MATTERS.

        (a) Each Tax Return required to be filed by or on behalf of the
respective Acquired Corporations with any Governmental Body with respect to any
taxable period ending on or before the Closing Date (the "Acquired Corporation
Returns") (i) has been or will be filed on or before the applicable due date
(including any extensions of such due date), and (ii) has been, or will be when
filed, prepared in all material respects in compliance with all applicable Legal
Requirements. All amounts shown on the Acquired Corporation Returns to be due on
or before the Closing Date have been or will be paid on or before the Closing
Date.

        (b) The Company Unaudited Interim Balance Sheet fully accrues all actual
and contingent liabilities for Taxes with respect to all periods through
August 31, 1999 in accordance with generally accepted accounting principles.
Each Acquired Corporation will establish, in the ordinary course of business and
consistent with its past practices, reserves adequate for the payment of all
Taxes for the period from August 31, 1999 through the Closing Date.

        (c) No Acquired Corporation Return has ever been examined or audited by
any Governmental Body that has resulted in any additional payment by any
Acquired Corporation in excess of $100,000. No examination or audit by any
Governmental Body of any Acquired Corporation Return is currently taking place
that could reasonably be expected to have a Material Adverse Effect on the
Acquired Corporations. No extension or waiver of the limitation period
applicable to any of the Acquired Corporation Returns has been granted (by the
Company or any other Person), and no such extension or waiver has been requested
from any Acquired Corporation.

        (d) No claim or Legal Proceeding is pending or, to the knowledge of the
Company, has been threatened against or with respect to any Acquired Corporation
in respect of any material Tax. There are no unsatisfied liabilities for
material Taxes (including liabilities for interest, additions to tax and
penalties thereon and related expenses) with respect to any notice of deficiency
or similar document received by any Acquired Corporation with respect to any
material Tax (other than liabilities for Taxes asserted under any such notice of
deficiency or similar document which are being contested in good faith by the
Acquired Corporations and with respect to which adequate reserves for payment
have been

                                      A-16
<PAGE>
established on the Company Unaudited Interim Balance Sheet). There are no liens
for material Taxes upon any of the assets of any of the Acquired Corporations
except liens for current Taxes not yet due and payable. None of the Acquired
Corporations has entered into or become bound by any agreement or consent
pursuant to Section 341(f) of the Code (or any comparable provision of state or
foreign Tax laws). None of the Acquired Corporations has been, and none of the
Acquired Corporations will be, required to include any adjustment in taxable
income for any tax period (or portion thereof) pursuant to Section 481 or 263A
of the Code (or any comparable provision under state or foreign Tax laws) as a
result of transactions or events occurring, or accounting methods employed,
prior to the Closing.

        (e) There is no agreement, plan, arrangement or other Contract covering
any employee or independent contractor or former employee or independent
contractor of any of the Acquired Corporations that, considered individually or
considered collectively with any other such Contracts, will, or could reasonably
be expected to, give rise directly or indirectly to the payment of any amount
that would not be deductible pursuant to Section 280G or Section 162 of the Code
(or any comparable provision of state or foreign Tax laws). None of the Acquired
Corporations is, or has ever been, a party to or bound by any tax indemnity
agreement, tax sharing agreement, tax allocation agreement or similar Contract.

    2.17 EMPLOYEE AND LABOR MATTERS; BENEFIT PLANS.

        (a) Part 2.17(a) of the Company Disclosure Schedule identifies each
salary, bonus, deferred compensation, incentive compensation, stock purchase,
stock option, severance pay, termination pay, hospitalization, medical, life or
other insurance, supplemental unemployment benefits, profit-sharing, pension or
retirement plan, program or agreement (collectively, the "Plans") sponsored,
maintained, contributed to or required to be contributed to by any of the
Acquired Corporations for the benefit of any current or former employee of any
of the Acquired Corporations.

        (b) Except as set forth in Part 2.17(a) of the Company Disclosure
Schedule, none of the Acquired Corporations maintains, sponsors or contributes
to, and to the knowledge of the Company, none of the Acquired Corporations has
at any time in the past maintained, sponsored or contributed to, any employee
pension benefit plan (as defined in Section 3(2) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA")), or any pension benefit plan
under the laws of any foreign jurisdiction, whether or not excluded from
coverage under ERISA, for the benefit of employees or former employees of any of
the Acquired Corporations (a "Pension Plan").

        (c) Except as set forth in Part 2.17(a) of the Company Disclosure
Schedule, none of the Acquired Corporations maintains, sponsors or contributes
to any: (i) employee welfare benefit plan (as defined in Section 3(1) of ERISA)
or any welfare benefit plan under the laws of any foreign jurisdiction, whether
or not excluded from coverage under ERISA for the benefit of any current or
former employees or directors of any of the Acquired Corporations (a "Welfare
Plan"), or (ii) self-funded medical, dental or other similar Plan. None of the
Plans identified in the Company Disclosure Schedule is a multiemployer plan
(within the meaning of Section 3(37) of ERISA).

        (d) With respect to each Plan, the Company has delivered to Parent as
requested by Parent: (i) if such Plan is set forth in writing, an accurate and
complete copy of such Plan (including all amendments thereto); (ii) if such Plan
is not set forth in writing, an accurate and complete description of such Plan
(including all amendments thereto); (iii) an accurate and complete copy of the
annual report, if required under ERISA, with respect to such Plan for the last
two years; (iv) an accurate and complete copy of the most recent summary plan
description, together with each Summary of Material Modifications, if required
under ERISA, with respect to such Plan, (v) if such Plan is funded through a
trust or any third party funding vehicle, an accurate and complete copy of the
trust or other funding agreement (including all amendments thereto) and accurate
and complete copies the most recent financial statements thereof; (vi) accurate
and complete copies of all Contracts relating to such Plan, including service
provider agreements, insurance contracts, minimum premium contracts, stop-loss

                                      A-17
<PAGE>
agreements, investment management agreements, subscription and participation
agreements and recordkeeping agreements; and (vii) an accurate and complete copy
of the most recent determination letter received from the Internal Revenue
Service with respect to such Plan (if such Plan is intended to be qualified
under Section 401(a) of the Code).

        (e) To the knowledge of the Company, none of the Acquired Corporations
is or has ever been required to be treated as a single employer with any other
Person under Section 4001(b)(1) of ERISA or Section 414(b), (c), (m) or (o) of
the Code. None of the Acquired Corporations has ever been a member of an
"affiliated service group" within the meaning of Section 414(m) of the Code.
None of the Acquired Corporations has ever made a complete or partial withdrawal
from a multiemployer plan, as such term is defined in Section 3(37) of ERISA,
resulting in "withdrawal liability," as such term is defined in Section 4201 of
ERISA (without regard to subsequent reduction or waiver of such liability under
either Section 4207 or 4208 of ERISA).

        (f) None of the Acquired Corporations has any plan or commitment to
create any Welfare Plan or any Pension Plan, or to modify or change any existing
Welfare Plan or Pension Plan (other than to comply with applicable law) in a
manner that would affect any current or former employee or director of any of
the Acquired Corporations.

        (g) No Plan provides death, medical or health benefits (whether or not
insured) with respect to any current or former employee or director of any of
the Acquired Corporations after any termination of service of such employee or
director (other than (i) benefit coverage mandated by applicable law, including
coverage provided pursuant to Section 4980B of the Code, (ii) deferred
compensation benefits accrued as liabilities on the Company Unaudited Interim
Balance Sheet, and (iii) benefits the full cost of which are borne by current or
former employees or directors of any of the Acquired Corporations (or their
beneficiaries)).

        (h) With respect to any Plan constituting a group health plan within the
meaning of Section 4980B(g)(2) of the Code, the provisions of Section 4980B of
the Code ("COBRA") have been complied with in all material respects.

        (i) Each of the Plans has been operated and administered in all material
respects in accordance with applicable Legal Requirements, including ERISA, the
Code and applicable foreign Legal Requirements. Except for restrictions imposed
by applicable Legal Requirements, to the knowledge of the Company, there are no
restrictions on the rights of the Company or any of the other Acquired
Corporations to amend or terminate any Plan without incurring any liability
thereunder.

        (j) Each of the Plans intended to be qualified under Section 401(a) of
the Code has received a favorable determination letter from the Internal Revenue
Service, and the Company is not aware of any reason why any such determination
letter could be revoked.

        (k) Neither the execution, delivery or performance of this Agreement,
nor the consummation of the Merger or any of the other transactions contemplated
by this Agreement, will result in any bonus, golden parachute, severance or
other payment or obligation to any current or former employee or director of any
of the Acquired Corporations (whether or not under any Plan), or materially
increase the benefits payable or provided under any Plan, or result in any
acceleration of the time of payment or vesting of any such benefits. Without
limiting the generality of the foregoing (and except as set forth in
Part 2.17(k) of the Company Disclosure Schedule), the consummation of the Merger
will not result in the acceleration of vesting of any unvested Company Options.

        (l) Part 2.17(l) of the Company Disclosure Schedule contains a list of
all salaried employees of each of the Acquired Corporations as of the date of
this Agreement, and correctly reflects, in all material respects, their salaries
and certain bonus and commission arrangements, and their positions. None of the
Acquired Corporations is a party to any collective bargaining contract or other
Contract with a labor union involving any of its employees. All of the employees
of the Acquired Corporations are "at will" employees.

                                      A-18
<PAGE>
        (m) Each of the Acquired Corporations is in compliance in all material
respects with all applicable Legal Requirements and Contracts relating to
employment, employment practices, wages, bonuses and terms and conditions of
employment, including employee compensation matters.

        (n) Each of the Acquired Corporations has good labor relations, and none
of the Acquired Corporations has any knowledge of any facts indicating that
(i) the consummation of the Merger or any of the other transactions contemplated
by this Agreement will have a material adverse effect on the labor relations of
any of the Acquired Corporations, or (ii) any of the employees of any of the
Acquired Corporations intends to terminate his or her employment with the
Acquired Corporation with which such employee is employed. For purposes of all
applicable Legal Requirements, each Acquired Corporation has properly classified
each person providing services to such Acquired Corporation as either an
employee or an independent contractor.

    2.18 ENVIRONMENTAL MATTERS.  Each of the Acquired Corporations is in
compliance in all material respects with all applicable Environmental Laws,
which compliance includes the possession by each of the Acquired Corporations of
all permits and other Governmental Authorizations required under applicable
Environmental Laws, and compliance with the terms and conditions thereof. None
of the Acquired Corporations has received any notice or other communication (in
writing or otherwise), whether from a Governmental Body, citizens group,
employee or otherwise, that alleges that any of the Acquired Corporations is not
in compliance with any Environmental Law, and, to the knowledge of the Company,
there are no circumstances that may prevent or interfere with the compliance by
any of the Acquired Corporations with any Environmental Law in the future. To
the knowledge of the Company, (a) all property that is leased to, controlled by
or used by the Company, and all surface water, groundwater and soil associated
with or adjacent to such property, is free of any material environmental
contamination of any nature, (b) none of the property leased to, controlled by
or used by any of the Acquired Corporations contains any underground storage
tanks, asbestos, equipment using PCBs or underground injection wells, and
(c) none of the property leased to, controlled by or used by any of the Acquired
Corporations contains any septic tanks in which process wastewater or any
Materials of Environmental Concern have been disposed. No Acquired Corporation
has ever sent or transported, or arranged to send or transport, any Materials of
Environmental Concern to a site that, pursuant to any applicable Environmental
Law (i) has been placed on the "National Priorities List" of hazardous waste
sites or any similar state list, (ii) is otherwise designated or identified as a
potential site for remediation, cleanup, closure or other environmental remedial
activity, or (iii) is subject to a Legal Requirement to take "removal" or
"remedial' action as detailed in any applicable Environmental Law or to make
payment for the cost of cleaning up the site. (For purposes of this
Section 2.18: (i) "Environmental Law" means any federal, state, local or foreign
Legal Requirement relating to pollution or protection of human health or the
environment (including ambient air, surface water, ground water, land surface or
subsurface strata), including any law or regulation relating to emissions,
discharges, releases or threatened releases of Materials of Environmental
Concern, or otherwise relating to the manufacture, processing, distribution,
use, treatment, storage, disposal, transport or handling of Materials of
Environmental Concern; and (ii) "Materials of Environmental Concern" include
chemicals, pollutants, contaminants, wastes, toxic substances, petroleum and
petroleum products and any other substance that is now or hereafter regulated by
any Environmental Law or that is otherwise a danger to health, reproduction or
the environment.)

    2.19 INSURANCE.  The Company has delivered or made available to Parent a
copy, or summaries thereof, of all material insurance policies and all material
self insurance programs and arrangements relating to the business, assets and
operations of the Acquired Corporations. Each of such insurance policies is in
full force and effect. Since January 1, 1998, none of the Acquired Corporations
has received any notice or other communication regarding any actual or possible
(a) cancellation or invalidation of any insurance policy, (b) refusal of any
coverage or rejection of any material claim

                                      A-19
<PAGE>
under any insurance policy, or (c) material adjustment in the amount of the
premiums payable with respect to any insurance policy.

    2.20 TRANSACTIONS WITH AFFILIATES.  Except as set forth in the Company SEC
Documents filed prior to the date of this Agreement, between the date of the
Company's last proxy statement filed with the SEC and the date of this
Agreement, no event has occurred that would be required to be reported by the
Company pursuant to Item 404 of Regulation S-K promulgated by the SEC.
Part 2.20 of the Company Disclosure Schedule identifies each person who is (or
who may be deemed to be) an "affiliate" (as that term is defined in Rule 145
under the Securities Act) of the Company as of the date of this Agreement.

    2.21 LEGAL PROCEEDINGS; ORDERS.

        (a) There is no pending Legal Proceeding, and (to the knowledge of the
Company) no Person has threatened to commence any Legal Proceeding: (i) that
involves any of the Acquired Corporations or any of the assets owned or used by
any of the Acquired Corporations; or (ii) that challenges, or that may have the
effect of preventing, delaying, making illegal or otherwise interfering with,
the Merger or any of the other transactions contemplated by this Agreement. To
the knowledge of the Company, no event has occurred, and no claim, dispute or
other condition or circumstance exists, that could reasonably be expected to,
give rise to or serve as a basis for the commencement of any such Legal
Proceeding. Without limiting the generality of the foregoing, no Person has made
any claim or commenced any Legal Proceedings (and, to the knowledge of the
Company, no Person has threatened to make any claim or commence any Legal
Proceeding) involving any of the Acquired Corporations that relates directly or
indirectly to any malfunction, defect or deficiency in any product, system,
program or other item of property in or with which any Acquired Corporation
Proprietary Asset is incorporated, used or bundled.

        (b) There is no material order, writ, injunction, judgment or decree to
which any of the Acquired Corporations, or any of the assets owned or used by
any of the Acquired Corporations, is subject. To the knowledge of the Company,
no officer or key employee of any of the Acquired Corporations is subject to any
order, writ, injunction, judgment or decree that prohibits such officer or other
employee from engaging in or continuing any conduct, activity or practice
relating to the business of any of the Acquired Corporations.

    2.22 AUTHORITY; INAPPLICABILITY OF ANTI-TAKEOVER STATUTES; BINDING NATURE OF
AGREEMENT.  Subject to the approval of the Company's shareholders under
applicable law, the Company has all requisite right, power and authority to
enter into and to perform its obligations under this Agreement. The Company has
all requisite right, power and authority to enter into and to perform its
obligations under the Stock Option Agreement. The board of directors of the
Company (at a meeting duly called and held) has (a) unanimously determined that
the Merger is advisable and fair and in the best interests of the Company and
its shareholders, (b) unanimously authorized and approved the execution,
delivery and performance of this Agreement and the Stock Option Agreement by the
Company and unanimously approved the Merger, (c) unanimously recommended the
approval of this Agreement and the Merger by the holders of Company Common Stock
and directed tha t this Agreement and the Merger be submitted for consideration
by the Company's shareholders at the Company Shareholders' Meeting (as defined
in Section 5.2), and (d) to the extent necessary, adopted a resolution having
the effect of causing the Company not to be subject to any state takeover law or
similar Legal Requirement that might otherwise apply to the Merger or any of the
other transactions contemplated by this Agreement. This Agreement and the Stock
Option Agreement constitute the legal, valid and binding obligations of the
Company, enforceable against the Company in accordance with their terms, subject
to (i) laws of general application relating to bankruptcy, insolvency and the
relief of debtors, and (ii) rules of law governing specific performance,
injunctive relief and other equitable remedies. Prior to the execution of those
certain Voting Agreements of even date herewith between Parent and each of

                                      A-20
<PAGE>
the Persons identified in Part 2.20 of the Company Disclosure Schedule, the
Board of Directors of the Company approved said Voting Agreements and the
transactions contemplated thereby. To the knowledge of the Company, no state
takeover statute or similar statute or regulation applies or purports to apply
to the Merger, this Agreement or any of the transactions contemplated hereby.

    2.23 NO EXISTING DISCUSSIONS.  Since September 1, 1999, none of the Acquired
Corporations, and no Representative of any of the Acquired Corporations, has
been engaged, directly or indirectly, in any discussions or negotiations with
any other Person relating to any Acquisition Proposal.

    2.24 ACCOUNTING MATTERS.  As of the date hereof, to the knowledge of the
Company, neither the Company nor any "affiliate" (as that term is defined in
Rule 145 under the Securities Act) of any of the Acquired Corporations has taken
or agreed to take, or plans to take, any action that could prevent Parent from
accounting for the Merger as a "pooling of interests."

    2.25 VOTE REQUIRED.  The affirmative vote of the holders of a majority of
the shares of Company Common Stock outstanding on the record date for the
Company Shareholders' Meeting (the "Required Company Shareholder Vote") is the
only vote of the holders of any class or series of the Company's capital stock
necessary to approve this Agreement and the principal terms of the Merger and
the other transactions contemplated by this Agreement.

    2.26 NON-CONTRAVENTION; CONSENTS.  Neither (1) the execution, delivery or
performance of this Agreement or any of the other agreements referred to in this
Agreement by the Company, nor (2) the consummation by the Company of the Merger
or any of the other transactions contemplated by this Agreement or by any other
agreement referred to in this Agreement, will directly or indirectly (with or
without notice or lapse of time):

        (a) contravene, conflict with or result in a violation of (i) any of the
provisions of the articles of incorporation, bylaws or other charter or
organizational documents of any of the Acquired Corporations, or (ii) any
resolution adopted by the shareholders, the board of directors or any committee
of the board of directors of any of the Acquired Corporations;

        (b) contravene, conflict with or result in a violation of, or give any
Governmental Body or other Person the right to challenge the Merger or any of
the other transactions contemplated by this Agreement or to exercise any remedy
or obtain any relief under, any Legal Requirement or any order, writ,
injunction, judgment or decree to which any of the Acquired Corporations, or any
of the assets owned or used by any of the Acquired Corporations, is subject;

        (c) contravene, conflict with or result in a violation of any of the
terms or requirements of, or give any Governmental Body the right to revoke,
withdraw, suspend, cancel, terminate or modify, any Governmental Authorization
that is held by any of the Acquired Corporations or that otherwise relates to
the business of any of the Acquired Corporations or to any of the assets owned
or used by any of the Acquired Corporations;

        (d) contravene, conflict with or result in a violation or breach of, or
result in a default under, any provision of any Acquired Corporation Contract
that is or would constitute a Material Contract, or give any Person the right to
(i) declare a default or exercise any remedy under any such Acquired Corporation
Contract, (ii) a rebate, chargeback, penalty or change in delivery schedule
under any such Acquired Corporation Contract, (iii) accelerate the maturity or
performance of any such Acquired Corporation Contract, or (iv) cancel, terminate
or modify any term of such Acquired Corporation Contract;

        (e) result in the imposition or creation of any Encumbrance upon or with
respect to any asset owned or used by any of the Acquired Corporations (except
for liens that will not, in any case or in the aggregate, materially detract
from the value of the assets subject thereto or materially impair the operations
of any of the Acquired Corporations); or

                                      A-21
<PAGE>
        (f) result in, or increase the likelihood of, the disclosure or delivery
to any escrowholder or other Person of the Acquired Corporation Source Code, or
the transfer of any material asset of any of the Acquired Corporations to any
Person.

Except as may be required by the Exchange Act, the California General
Corporation Law, the HSR Act, any foreign antitrust law or regulation and the
NASD Bylaws (as they relate to the Form S-4 Registration Statement and the Joint
Proxy Statement), none of the Acquired Corporations was, is or will be required
to make any filing with or give any notice to, or to obtain any Consent from,
any Person in connection with (x) the execution, delivery or performance of this
Agreement or any of the other agreements referred to in this Agreement by the
Company, or (y) the consummation by the Company of the Merger or any of the
other transactions contemplated by this Agreement.

    2.27 FAIRNESS OPINION.  The Company's board of directors has received the
written opinion of Hambrecht & Quist LLC, financial advisor to the Company,
dated the date of this Agreement, to the effect that the consideration to be
received by the shareholders of the Company in the Merger is fair to the
shareholders of the Company from a financial point of view. The Company has
furnished an accurate and complete copy of said written opinion to Parent.

    2.28 FINANCIAL ADVISOR.  Except for Hambrecht & Quist LLC, no broker, finder
or investment banker is entitled to any brokerage, finder's or other fee or
commission in connection with the Merger or any of the other transactions
contemplated by this Agreement based upon arrangements made by or on behalf of
any of the Acquired Corporations. The total of all fees, commissions and other
amounts that have been paid by the Company to Hambrecht & Quist LLC and its
affiliates and all fees, commissions and other amounts that may become payable
to Hambrecht & Quist LLC and its affiliates by the Company if the Merger is
consummated will not exceed $1,000,000. The Company has furnished to Parent
accurate and complete copies of all agreements under which any such fees,
commissions or other amounts have been paid to may become payable and all
indemnification and other agreements related to the engagement of Hambrecht &
Quist LLC.

    2.29 FULL DISCLOSURE.

        (a) This Agreement (including the Company Disclosure Schedule) does not,
and the certificate referred to in Section 6.6(h) will not, (i) contain any
representation, warranty or information that is false or misleading with respect
to any material fact, or (ii) omit to state any material fact necessary in order
to make the representations, warranties and information contained and to be
contained herein and therein (in the light of the circumstances under which such
representations, warranties and information were or will be made or provided)
not false or misleading.

        (b) None of the information supplied or to be supplied by or on behalf
of the Company for inclusion or incorporation by reference in the Form S-4
Registration Statement will, at the time the Form S-4 Registration Statement is
filed with the SEC or at the time it becomes effective under the Securities Act,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they are made, not
misleading. None of the information supplied or to be supplied by or on behalf
of the Company for inclusion or incorporation by reference in the Joint Proxy
Statement will, at the time the Joint Proxy Statement is mailed to the
shareholders of the Company or the stockholders of Parent or at the time of the
Company Shareholders' Meeting or the Parent Stockholders' Meeting, contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein, in
the light of the circumstances under which they are made, not misleading. The
Joint Proxy Statement will comply as to form in all material respects with the
provisions of the Exchange Act and the rules and regulations promulgated by the
SEC thereunder.

                                      A-22
<PAGE>
    2.30 COMPANY RIGHTS AGREEMENT.  The Company has amended the Company Rights
Agreement to provide that neither Parent nor Merger Sub nor any of their
respective affiliates shall be deemed to be an Acquiring Person (as such term is
defined in the Company Rights Agreement), that neither a Distribution Date nor a
Shares Acquisition Date (as each such term is defined in the Company Rights
Agreement) shall be deemed to occur, and the Rights will not separate from the
Company Common Stock, as a result of the execution, delivery or performance of
this Agreement, the Stock Option Agreement or the Voting Agreements or the
consummation of the Merger or the other transactions contemplated hereby or
thereby, and that none of the Company, Parent, Merger Sub, nor the Surviving
Corporation, nor any of their respective affiliates, shall have any obligations
under the Company Rights Agreement to any holder (or former holder) of Rights as
of and following the Effective Time.

SECTION 3. REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB

    Except as set forth in the Parent Disclosure Schedule, Parent and Merger Sub
represent and warrant to the Company as follows:

    3.1 DUE ORGANIZATION; SUBSIDIARIES; ETC.

        (a) Each of Parent and Merger Sub is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
and has all necessary power and authority: (i) to conduct its business in the
manner in which its business is currently being conducted; (ii) to own and use
its assets in the manner in which its assets are currently owned and used; and
(iii) to perform its obligations under all Contracts by which it is bound.

        (b) Parent and each of Parent's Subsidiaries is duly qualified to do
business as a foreign corporation, and is in good standing, under the laws of
all jurisdictions where the nature of its business requires such qualification,
except where the failure to be so qualified would not have a Material Adverse
Effect on Parent.

    3.2 CERTIFICATE OF INCORPORATION AND BYLAWS.  Parent has delivered or made
available to the Company accurate and complete copies of the certificate of
incorporation and bylaws of Parent, including all amendments thereto.

    3.3 CAPITALIZATION, ETC.

        (a) The authorized capital stock of Parent consists of: (i) 125,000,000
shares of Parent Common Stock; and (ii) 2,000,000 shares of Parent Preferred
Stock. As of October 18, 1999, 41,913,459 (net of 1,276,895 treasury shares)
shares of Parent Common Stock were issued and outstanding. As of the date of
this Agreement, no shares of Parent Preferred Stock are issued or outstanding.
All of the outstanding shares of Parent Common Stock have been duly authorized
and validly issued, and are fully paid and nonassessable. Except as set forth in
Part 3.3(a)(i) of the Parent Disclosure Schedule: (i) none of the outstanding
shares of Parent Common Stock is entitled or subject to any preemptive right,
right of participation, right of maintenance or any similar right; (ii) none of
the outstanding shares of Parent Common Stock is subject to any right of first
refusal in favor of Parent; and (iii) there is no Contract to which Parent is a
party relating to the voting or registration of, or restricting any Person from
purchasing, selling, pledging or otherwise disposing of (or granting any option
or similar right with respect to), any shares of Parent Common Stock. Parent is
not under any obligation, nor bound by any Contract pursuant to which it may
become obligated, to repurchase, redeem or otherwise acquire any outstanding
shares of Parent Common Stock.

        (b) As of the date of this Agreement: (i) 6,438,459 shares of Parent
Common Stock are reserved for future issuance pursuant to stock options granted
and outstanding under Parent's Amended and Restated 1987 Equity Incentive Plan;
(ii) 320,625 shares of Parent Common Stock are reserved for future issuance
pursuant to stock options granted and outstanding under Parent's 1995
Non-Employee Directors' Stock Option Plan; (iii) 3,450,000 shares of Parent
Common Stock are

                                      A-23
<PAGE>
reserved for future issuance pursuant to stock options granted and outstanding
under Parent's 1998 Non-Officer Stock Option Plan; (iv) 1,500,000 shares of
Parent Common Stock are reserved for future issuance pursuant to stock options
granted and outstanding under Parent's 1998 Equity Incentive Plan; (v) 245,586
shares of Parent Common Stock are reserved for future issuance pursuant to stock
options granted and outstanding under the 1994 RouterWare Stock Option Plan;
(vi) 401,141 shares of Parent Common Stock are reserved for future issuance
pursuant to Parent's Employee Stock Purchase Plan; and (vii) 4,329,897 shares of
Parent Common Stock are reserved for future issuance upon conversion of 5%
Convertible Subordinated Notes due 2002. (Stock options granted by Parent
pursuant to Parent's stock option plans and otherwise are referred to in this
Agreement as "Parent Options").

        (c) Except as set forth in Section 3.3(b), as of the date of this
Agreement there is no: (i) outstanding subscription, option, call, warrant or
right (whether or not currently exercisable) to acquire any shares of the
capital stock or other securities of Parent; (ii) outstanding security,
instrument or obligation that is or may become convertible into or exchangeable
for any shares of the capital stock or other securities of Parent;
(iii) shareholder rights plan (or similar plan commonly referred to as a "poison
pill") or Contract under which Parent is or may become obligated to sell or
otherwise issue any shares of its capital stock or any other securities; or
(iv) condition or circumstance that may give rise to or provide a basis for the
assertion of a claim by any Person to the effect that such Person is entitled to
acquire or receive any shares of capital stock or other securities of Parent.

        (d) All outstanding shares of Parent Common Stock, all outstanding
Parent Options and all outstanding shares of capital stock of each Subsidiary of
Parent have been issued and granted in compliance with (i) all applicable
securities laws and other applicable Legal Requirements, and (ii) all
requirements set forth in applicable Contracts.

    3.4 SEC FILINGS; FINANCIAL STATEMENTS.

        (a) Parent has delivered or made available to the Company accurate and
complete copies (excluding copies of exhibits) of each report, registration
statement and definitive proxy statement filed by Parent with the SEC since
January 1, 1999 (the "Parent SEC Documents"). All statements, reports,
schedules, forms and other documents required to have been filed by Parent with
the SEC have been so filed on a timely basis. As of the time it was filed with
the SEC (or, if amended or superseded by a filing prior to the date of this
Agreement, then on the date of such filing): (i) each of the Parent SEC
Documents complied in all material respects with the applicable requirements of
the Securities Act or the Exchange Act (as the case may be); and (ii) none of
the Parent SEC Documents contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading.

        (b) The consolidated financial statements contained in the Parent SEC
Documents: (i) complied as to form in all material respects with the published
rules and regulations of the SEC applicable thereto; (ii) were prepared in
accordance with generally accepted accounting principles applied on a consistent
basis throughout the periods covered (except as may be indicated in the notes to
such financial statements and, in the case of unaudited statements, as permitted
by Form 10-Q of the SEC, and except that unaudited financial statements may not
contain footnotes and are subject to normal and recurring year-end audit
adjustments which will not, individually or in the aggregate, be material in
amount); and (iii) fairly present the consolidated financial position of Parent
and its subsidiaries as of the respective dates thereof and the consolidated
results of operations of Parent and its subsidiaries for the periods covered
thereby.

    3.5 ABSENCE OF CERTAIN CHANGES OR EVENTS.  Between July 31, 1999 and the
date of this Agreement: (i) there has not been any event that has had a Material
Adverse Effect on Parent; and (ii) Parent has not declared, accrued, set aside
or paid any dividend.

                                      A-24
<PAGE>
    3.6 TITLE TO ASSETS.  To the knowledge of Parent, Parent owns, and has good
and valid title to, all assets purported to be owned by it, including: (i) all
assets reflected on the Parent Unaudited Interim Balance Sheet (except for
assets sold or otherwise disposed of in the ordinary course of business since
the date of the Parent Unaudited Interim Balance Sheet); and (ii) all other
assets reflected in the books and records of Parent as being owned by Parent. To
the knowledge of Parent, all of said assets are owned by Parent free and clear
of any Encumbrances, except for (1) any lien for current taxes not yet due and
payable, (2) liens that have arisen in the ordinary course of business and that
do not (in any case or in the aggregate) materially detract from the value of
the assets subject thereto or materially impair the operations of Parent, and
(3) liens described in Part 3.6 of the Parent Disclosure Schedule.

    3.7 PROPRIETARY ASSETS.

        (a) Parent has good and valid title to all of the Proprietary Assets
owned by Parent that are material to the business of the Parent ("Parent
Proprietary Assets"), free and clear of all Encumbrances, except for (i) any
lien for current taxes not yet due and payable, and (ii) minor liens that have
arisen in the ordinary course of business and that do not (individually or in
the aggregate) materially detract from the value of the assets subject thereto
or materially impair the operations of Parent.

        (b) Parent has taken reasonable measures and precautions to protect and
maintain the confidentiality, secrecy and value of all material Parent
Proprietary Assets (except Parent Proprietary Assets whose value would be
unimpaired by disclosure). Without limiting the generality of the foregoing,
except as set forth in Part 3.7(b) of the Parent Disclosure Schedule, (i) all
current and former employees of Parent who are or were involved in, or who have
contributed to, the creation or development of any material Parent Proprietary
Asset have executed and delivered to Parent an agreement (containing no
exceptions to or exclusions from the scope of its coverage) that is
substantially identical to the form of Confidential Information and Invention
Assignment Agreement previously delivered or made available by Parent to the
Company, and (ii) all current and former consultants and independent contractors
to Parent who are or were involved in, or who have contributed to, the creation
or development of any material Parent Proprietary Asset have executed and
delivered to Parent an agreement (containing no exceptions to or exclusions from
the scope of its coverage) that is substantially identical to the form of
Consultant Confidential Information and Invention Assignment Agreement
previously delivered or made available to the Company. No current or former
employee, officer, director, stockholder, consultant or independent contractor
has any right, claim or interest in or with respect to any material Parent
Proprietary Asset.

        (c) To the knowledge of Parent: (i) all patents, trademarks, service
marks and copyrights held by Parent are valid, enforceable and subsisting;
(ii) none of the Parent Proprietary Assets and no Proprietary Asset that is
currently being developed by Parent (either by itself or with any other Person)
infringes, misappropriates or conflicts with any Proprietary Asset owned or used
by any other Person; (iii) none of the products that are or have been designed,
created, developed, assembled, manufactured or sold by Parent is infringing,
misappropriating or making any unlawful or unauthorized use of any Proprietary
Asset owned or used by any other Person, and, except as set forth in
Part 3.7(c) of the Parent Disclosure Schedule, since January 1, 1998, Parent has
not received any notice or other communication (in writing or otherwise) that it
has committed any actual, alleged, possible or potential infringement,
misappropriation or unlawful or unauthorized use of, any Proprietary Asset owned
or used by any other Person; (iv) except as set forth in Part 3.7(c) of the
Parent Disclosure Schedule, no other Person is infringing, misappropriating or
making any unlawful or unauthorized use of, and no Proprietary Asset owned or
used by any other Person infringes or conflicts with, any material Parent
Proprietary Asset.

                                      A-25
<PAGE>
        (d) The Parent Proprietary Assets, together with any Proprietary Assets
currently being licensed to Parent by third parties, constitute all the
Proprietary Assets necessary to enable Parent to conduct its business in the
manner in which such business is being conducted.

        (e) To the knowledge of Parent, each computer, computer program and
other item of software (whether installed on a computer or on any other piece of
equipment, including firmware) that is owned or used by Parent for its internal
business operations is Year 2000 Compliant. To the knowledge of Parent, except
as set forth in Part 3.7(e) of the Parent Disclosure Schedule, each computer
program and other item of software that has been designed, developed, sold,
licensed or otherwise made available to any Person by Parent is Year 2000
Compliant. To the knowledge of Parent, except as set forth in Part 3.7(e) of the
Parent Disclosure Schedule, Parent has conducted sufficient Year 2000 compliance
testing for each computer, computer program and item of software referred to in
the preceding two sentences to be able to determine whether such computer,
computer program and item of software is Year 2000 Compliant. Parent has
obtained warranties or other written assurances to the extent offered or
otherwise reasonably made available from each of its suppliers of material
Proprietary Assets to the effect that the Proprietary Assets provided by such
suppliers to Parent is Year 2000 Compliant.

        (f) Except with respect to demonstration or trial copies, no product,
system, program or software module designed, developed, sold, licensed or
otherwise made available by Parent to any Person contains any "back door," "time
bomb," "Trojan horse," "worm," "drop dead device," "virus" or other software
routines or hardware components designed to permit unauthorized access or to
disable or erase software, hardware or data without the consent of the user.

    3.8 CONTRACTS.

        (a) Parent (i) has not violated or breached, or committed any default
under, any material Contract to which Parent is a party, except for violations,
breaches and defaults that have not had and would not reasonably be expected to
have a Material Adverse Effect on Parent; and, to the knowledge of Parent, no
other Person has violated or breached, or committed any default under, any
material Contract to which Parent is a party, except for violations, breaches
and defaults that have not had and would not reasonably be expected to have a
Material Adverse Effect on Parent; (ii) to the knowledge of Parent, no event has
occurred, and no circumstance or condition exists, that (with or without notice
or lapse of time) will or would reasonably be expected to, (A) result in a
violation or breach of any of the provisions of any material Contract to which
Parent is a party, (B) give any Person the right to declare a default or
exercise any remedy under any material Contract to which Parent is a party,
(C) give any Person the right to receive or require a material rebate,
chargeback, penalty or change in delivery schedule under any material Contract
to which Parent is a party, (D) give any Person the right to accelerate the
maturity or performance of any material Contract to which Parent is a party, or
give any Person the right to cancel, terminate or modify any material Contract,
except in each such case for defaults, acceleration rights, termination rights
and other rights that have not had and would not reasonably be expected to have
a Material Adverse Effect on Parent; and (iii) since January 1, 1998, Parent has
not received any notice or other communication regarding any actual or possible
violation or breach of, or default under, any material Contract, except in each
such case for defaults, acceleration rights, termination rights and other rights
that have not had and would not reasonably be expected to have a Material
Adverse Effect on Parent.

        (b) Each material Contract to which Parent is a party is valid and in
full force and effect, and is enforceable in accordance with its terms, subject
to (i) laws of general application relating to bankruptcy, insolvency and the
relief of debtors, and (ii) rules of law governing specific performance,
injunctive relief and other equitable remedies.

                                      A-26
<PAGE>
    3.9 LIABILITIES.

    As of the date of this Agreement, Parent has no accrued, contingent or other
liabilities of any nature, either matured or unmatured, that in the aggregate
exceed $1,000,000, except for: (a) liabilities identified as such in the Parent
Unaudited Interim Balance Sheet; (b) liabilities that have been incurred by
Parent since July 31, 1999 in the ordinary course of business and consistent
with past practices; and (c) liabilities incurred under this Agreement and the
other agreements contemplated hereby.

    3.10 COMPLIANCE WITH LEGAL REQUIREMENTS.

    Parent is in compliance in all material respects with all applicable Legal
Requirements. Without limiting the generality of the foregoing, except as set
forth in Part 3.10 of the Parent Disclosure Schedule, Parent has not exported
any product, system, program or other Parent Proprietary Asset in violation of
any Legal Requirement. Since January 1, 1998, Parent has not received any notice
or other communication from any Governmental Body regarding any actual or
possible violation of, or failure to comply with, any Legal Requirement.

    3.11 CERTAIN BUSINESS PRACTICES.

    Neither Parent nor any director, officer, agent or employee of Parent has
(i) used any funds for unlawful contributions, gifts, entertainment or other
unlawful expenses relating to political activity, (ii) made any unlawful payment
to foreign or domestic government officials or employees or to foreign or
domestic political parties or campaigns or violated any provision of the Foreign
Corrupt Practices Act of 1977, as amended, or (iii) made any other unlawful
payment.

    3.12 GOVERNMENTAL AUTHORIZATIONS.

    Parent holds all Governmental Authorizations necessary to enable Parent to
conduct its business in the manner in which such business is currently being
conducted. All such Governmental Authorizations are valid and in full force and
effect. Parent is in substantial compliance with the terms and requirements of
such Governmental Authorizations, except where the failure to be in compliance
with the terms and requirements of such Governmental Authorizations. Since
January 1, 1998, Parent has not received any notice or other communication from
any Governmental Body regarding (a) any actual or possible violation of or
failure to comply with any term or requirement of any material Governmental
Authorization, or (b) any actual or possible revocation, withdrawal, suspension,
cancellation, termination or modification of any material Governmental
Authorization.

    3.13 TAX MATTERS.

        (a) Each Tax Return required to be filed by or on behalf of Parent with
any Governmental Body with respect to any taxable period ending on or before the
Closing Date (the "Parent Returns") (i) has been or will be filed on or before
the applicable due date (including any extensions of such due date), and
(ii) has been, or will be when filed, prepared in all material respects in
compliance with all applicable Legal Requirements. All amounts shown on Parent
Returns to be due on or before the Closing Date have been or will be paid on or
before the Closing Date.

        (b) The Parent Unaudited Interim Balance Sheet fully accrues all actual
and contingent liabilities for Taxes with respect to all periods through
July 31, 1999 in accordance with generally accepted accounting principles.
Parent will establish, in the ordinary course of business and consistent with
its past practices, reserves adequate for the payment of all Taxes for the
period from July 31, 1999 through the Closing Date.

        (c) No claim or Legal Proceeding is pending or, to the knowledge of
Parent, has been threatened against or with respect to Parent in respect of any
material Tax. There are no unsatisfied liabilities for material Taxes (including
liabilities for interest, additions to tax and penalties thereon and

                                      A-27
<PAGE>
related expenses) with respect to any notice of deficiency or similar document
received by Parent with respect to any material Tax (other than liabilities for
Taxes asserted under any such notice of deficiency or similar document which are
being contested in good faith by Parent and with respect to which adequate
reserves for payment have been established on the Parent Unaudited Interim
Balance Sheet). There are no liens for material Taxes upon any of the assets of
Parent except liens for current Taxes not yet due and payable. Parent has not
entered into or become bound by any agreement or consent pursuant to
Section 341(f) of the Code (or any comparable provision of state or foreign Tax
laws). Parent has not been, and will not be, required to include any adjustment
in taxable income for any tax period (or portion thereof) pursuant to
Section 481 or 263A of the Code (or any comparable provision under state or
foreign Tax laws) as a result of transactions or events occurring, or accounting
methods employed, prior to the Closing.

    3.14 EMPLOYEE AND LABOR MATTERS; BENEFIT PLANS.

        (a) To Parent's knowledge, Parent is not and has never been required to
be treated as a single employer with any other Person under Section 4001(b)(1)
of ERISA or Section 414(b), (c), (m) or (o) of the Code. Parent has never been a
member of an "affiliated service group" within the meaning of Section 414(m) of
the Code. Parent has never made a complete or partial withdrawal from a
multiemployer plan, as such term is defined in Section 3(37) of ERISA, resulting
in "withdrawal liability," as such term is defined in Section 4201 of ERISA
(without regard to subsequent reduction or waiver of such liability under either
Section 4207 or 4208 of ERISA).

        (b) Each employee benefit plan of Parent has been operated and
administered in all material respects in accordance with applicable Legal
Requirements, including ERISA, the Code and applicable foreign Legal
Requirements. Except for restrictions imposed by applicable Legal Requirements,
to the knowledge of Parent, there are no restrictions on the rights of Parent to
amend or terminate any employee benefit plan of Parent without incurring any
liability thereunder.

        (c) Each employee benefit plan of Parent intended to be qualified under
Section 401(a) of the Code has received a favorable determination letter from
the Internal Revenue Service, and Parent is not aware of any reason why any such
determination letter could be revoked.

        (d) Parent is in compliance in all material respects with all applicable
Legal Requirements and Contracts relating to employment, employment practices,
wages, bonuses and terms and conditions of employment, including employee
compensation matters. For purposes of all applicable Legal Requirements, Parent
has properly classified each person providing services to Parent as either an
employee or an independent contractor.

    3.15 ENVIRONMENTAL MATTERS.

    Parent is in compliance in all material respects with all applicable
Environmental Laws, which compliance includes the possession by Parent of all
permits and other Governmental Authorizations required under applicable
Environmental Laws, and compliance with the terms and conditions thereof. Parent
has not received any notice or other communication (in writing or otherwise),
whether from a Governmental Body, citizens group, employee or otherwise, that
alleges that Parent is not in compliance with any Environmental Law, and, to the
knowledge of Parent, there are no circumstances that may prevent or interfere
with the compliance by Parent with any Environmental Law in the future. To the
knowledge of Parent, (a) all property that is leased to, controlled by or used
by Parent, and all surface water, groundwater and soil associated with or
adjacent to such property, is free of any material environmental contamination
of any nature, (b) none of the property leased to, controlled by or used by
Parent contains any underground storage tanks, asbestos, equipment using PCBs or
underground injection wells, and (c) none of the property leased to, controlled
by or used by Parent contains any septic tanks in which process wastewater or
any Materials of Environmental Concern have been disposed. Parent has never sent
or transported, or arranged to send or transport, any Materials of

                                      A-28
<PAGE>
Environmental Concern to a site that, pursuant to any applicable Environmental
Law (i) has been placed on the "National Priorities List" of hazardous waste
sites or any similar state list, (ii) is otherwise designated or identified as a
potential site for remediation, cleanup, closure or other environmental remedial
activity, or (iii) is subject to a Legal Requirement to take "removal" or
"remedial' action as detailed in any applicable Environmental Law or to make
payment for the cost of cleaning up the site.

    3.16 INSURANCE.

    Each material insurance policy of Parent is in full force and effect. Since
January 1, 1998, Parent has not received any notice or other communication
regarding any actual or possible (a) cancellation or invalidation of any
insurance policy, (b) refusal of any coverage or rejection of any material claim
under any insurance policy, or (c) material adjustment in the amount of the
premiums payable with respect to any insurance policy.

    3.17 TRANSACTIONS WITH AFFILIATES.

    Except as set forth in the Parent SEC Documents filed prior to the date of
this Agreement, between the date of Parent's last proxy statement filed with the
SEC and the date of this Agreement, no event has occurred that would be required
to be reported by Parent pursuant to Item 404 of Regulation S-K promulgated by
the SEC. Part 3.17 of the Parent Disclosure Schedule identifies each person who
is (or who may be deemed to be) an "affiliate" (as that term is defined in
Rule 145 under the Securities Act) of Parent as of the date of this Agreement.

    3.18 LEGAL PROCEEDINGS; ORDERS.

        (a) As of the date of this Agreement, there is no pending Legal
Proceeding, and (to the knowledge of Parent) no Person has threatened to
commence any Legal Proceeding: (i) that involves Parent or any of the assets
owned or used by Parent; or (ii) that challenges, or that may have the effect of
preventing, delaying, making illegal or otherwise interfering with, the Merger
or any of the other transactions contemplated by this Agreement. To the
knowledge of Parent, as of the date of this Agreement, no event has occurred,
and no claim, dispute or other condition or circumstance exists, that could
reasonably be expected to, give rise to or serve as a basis for the commencement
of any such Legal Proceeding.

        (b) There is no material order, writ, injunction, judgment or decree to
which Parent, or any of the assets owned or used by Parent, is subject. To the
knowledge of Parent, no officer or key employee of Parent is subject to any
order, writ, injunction, judgment or decree that prohibits such officer or other
employee from engaging in or continuing any conduct, activity or practice
relating to the business of Parent.

    3.19 AUTHORITY; BINDING NATURE OF AGREEMENT.

    Subject to the approval of Parent's stockholders, Parent and Merger Sub have
all requisite right, power and authority to perform their obligations under this
Agreement. Parent has all requisite right, power and authority to perform its
obligations under the Stock Option Agreement. The execution, delivery and
performance by Parent and Merger Sub of this Agreement and by Parent of the
Stock Option Agreement have been duly authorized by all necessary action on the
part of the respective boards of directors of Parent and Merger Sub. The board
of directors of Parent (at a meeting duly called and held) has (a) unanimously
authorized and approved the execution, delivery and performance of this
Agreement by Parent and unanimously approved the Merger, and (b) unanimously
recommended the approval of the issuance of Parent Common Stock in the Merger by
the holders of Parent Common Stock and directed that such proposal be submitted
for consideration by Parent's stockholders at the Parent Stockholders' Meeting
(as defined in Section 5.3). This Agreement constitutes the legal, valid and
binding obligation of Parent and Merger Sub, and the Stock Option

                                      A-29
<PAGE>
Agreement constitutes the legal, valid and binding obligation of Parent,
enforceable against them in accordance with their terms, subject to (i) laws of
general application relating to bankruptcy, insolvency and the relief of
debtors, and (ii) rules of law governing specific performance, injunctive relief
and other equitable remedies.

    3.20 ACCOUNTING MATTERS.

    As of the date hereof, to the knowledge of Parent, neither Parent nor any
"affiliate" (as that term is defined in Rule 145 under the Securities Act) of
Parent has taken or agreed to take, or plans to take, any action that could
prevent Parent from accounting for the Merger as a "pooling of interests."

    3.21 VOTE REQUIRED.

    The only vote of Parent's stockholders required to approve the issuance of
Parent Common Stock in the Merger is the vote prescribed by Marketplace
Rule 4310 of the National Association of Securities Dealers (the "Required
Parent Stockholder Vote").

    3.22 NON-CONTRAVENTION; CONSENTS.

    Neither the execution and delivery of this Agreement by Parent and Merger
Sub nor the consummation by Merger Sub of the Merger will (a) contravene,
conflict with or result in any breach of any provision of the certificate of
incorporation or bylaws of Parent or the certificate of incorporation or bylaws
of Merger Sub or of any resolution adopted by the stockholders, the board of
directors or any committee of the board of directors of Parent; (b) contravene,
conflict with or result in a violation of, or give any Governmental Body or
other Person the right to challenge the Merger or any of the other transactions
contemplated by this Agreement or to exercise any remedy or obtain any relief
under, any Legal Requirement or any order, writ, injunction, judgment or decree
to which Parent, or any of the assets owned or used by Parent, is subject;
(c) contravene, conflict with or result in a violation or breach of, or result
in a default under, any provision of any material Contract to which Parent is a
party, or give any Person the right to declare a default or exercise any remedy
under any such Contract to which Parent is a party; or (d) result in a violation
by Parent or Merger Sub of any order, writ, injunction, judgment or decree to
which Parent or Merger Sub is subject. Except as may be required by the
Securities Act, the Exchange Act, state securities or "blue sky" laws, the
Delaware General Corporation Law, the HSR Act, any foreign antitrust law or
regulation and the NASD Bylaws (as they relate to the S-4 Registration Statement
and the Joint Proxy Statement), Parent is not and will not be required to make
any filing with or give any notice to, or to obtain any Consent from, any Person
in connection with the execution, delivery or performance of this Agreement by
Parent or Merger Sub or the consummation by Merger Sub of the Merger.

    3.23 FINANCIAL ADVISOR.

    Except for Credit Suisse First Boston Corporation, no broker, finder or
investment banker is entitled to any brokerage, finder's or other fee or
commission in connection with the Merger or any of the other transactions
contemplated by this Agreement based upon arrangements made by or on behalf of
Parent.

    3.24 FULL DISCLOSURE.

        (a) This Agreement (including the Parent Disclosure Schedule) does not,
and the certificate referred to in Section 7.5(b) will not, (i) contain any
representation, warranty or information that is false or misleading with respect
to any material fact, or (ii) omit to state any material fact necessary in order
to make the representations, warranties and information contained and to be
contained herein and therein (in the light of the circumstances under which such
representations, warranties and information were or will be made or provided)
not false or misleading.

                                      A-30
<PAGE>
        (b) None of the information to be supplied by or on behalf of Parent for
inclusion in the Form S-4 Registration Statement will, at the time the Form S-4
Registration Statement becomes effective under the Securities Act, contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein, in
the light of the circumstances under which they are made, not misleading. None
of the information to be supplied by or on behalf of Parent for inclusion in the
Joint Proxy Statement will, at the time the Joint Proxy Statement is mailed to
the shareholders of the Company or the stockholders of Parent or at the time of
the Company Shareholders' Meeting or the Parent Stockholders' Meeting, contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they are made, not
misleading. The Joint Proxy Statement will comply as to form in all material
respects with the provisions of the Exchange Act and the rules and regulations
promulgated by the SEC thereunder, except that no representation or warranty is
made by Parent with respect to statements made or incorporated by reference
therein based on information supplied by the Company for inclusion or
incorporation by reference in the Joint Proxy Statement.

    3.25 FAIRNESS OPINION.

    Parent's board of directors has received the written opinion of Credit
Suisse First Boston Corporation, financial advisor to Parent, dated the date of
this Agreement, to the effect that the Exchange Ratio is fair to Parent from a
financial point of view.

    3.26 VALID ISSUANCE.

    The Parent Common Stock to be issued in the Merger will, when issued in
accordance with the provisions of this Agreement, be validly issued, fully paid
and nonassessable.

SECTION 4.  CERTAIN COVENANTS OF THE COMPANY AND PARENT

    4.1 ACCESS AND INVESTIGATION.

        (a) During regular business hours in the period from the date of this
Agreement through the Effective Time (the "Pre-Closing Period"), subject to
applicable antitrust laws and regulations relating to the exchange of
information, the Company shall, and shall cause the respective Representatives
of the Acquired Corporations to: (i) provide Parent and Parent's Representatives
with reasonable access to the Acquired Corporations' Representatives, personnel
and assets and to all existing books, records, Tax Returns, work papers and
other documents and information relating to the Acquired Corporations; and
(ii) provide Parent and Parent's Representatives with such copies of the
existing books, records, Tax Returns, work papers and other documents and
information relating to the Acquired Corporations, and with such additional
financial, operating and other data and information regarding the Acquired
Corporations, as Parent may reasonably request. Without limiting the generality
of the foregoing, during the Pre-Closing Period, the Company shall as promptly
as practicable after any of the following reports, materials, communications,
notices or documents are prepared, sent, filed or received, as the case may be,
provide Parent with copies of: (A) all material operating and financial reports
prepared by the Company and its Subsidiaries for the Company's senior
management, including (1) copies of the unaudited monthly consolidated income
statements of the Company and its consolidated Subsidiaries and the related
unaudited quarterly consolidated balance sheets, statements of shareholders'
equity and statements of cash flows and (2) copies of any sales forecasts,
marketing plans, development plans and hiring reports prepared for the Company's
senior management; (B) any written materials or communications sent by or on
behalf of the Company to its shareholders; (C) any material notice, document or
other communication sent by or on behalf of any of the Acquired Corporations to
any party with respect to any Acquired Corporation Contract or sent to any of
the Acquired Corporations by any party with respect to any Acquired Corporation
Contract (other than any communication that relates solely to commercial
transactions between the Company and the other party to any such

                                      A-31
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Acquired Corporation Contract and that is of the type sent in the ordinary
course of business and consistent with past practices); (D) any notice, report
or other document filed with or sent to any Governmental Body in connection with
the Merger or any of the other transactions contemplated by this Agreement; and
(E) any material notice, report or other document received by any of the
Acquired Corporations from any Governmental Body.

        (b) During the period from the date of this Agreement through the
Effective Time (the "Pre-Closing Period"), subject to applicable antitrust laws
and regulations relating to the exchange of information, Parent shall, and shall
cause the respective Representatives of Parent to: (i) provide the Company and
the Company's Representatives with reasonable access to Parent's
Representatives, personnel and assets and to all existing books, records, Tax
Returns, work papers and other documents and information relating to Parent; and
(ii) provide the Company and the Company's Representatives with such copies of
the existing books, records, Tax Returns, work papers and other documents and
information relating to Parent, and with such additional financial, operating
and other data and information regarding Parent, as the Company may reasonably
request. Without limiting the generality of the foregoing, during the
Pre-Closing Period, Parent shall as promptly as practicable after any of the
following reports, materials, communications, notices or documents are prepared,
sent, filed or received, as the case may be, provide the Company with copies of:
(A) any written materials or communications sent by or on behalf of Parent to
its stockholders; and (B) any notice, report or other document filed by Parent
with or sent by Parent to any Governmental Body in connection with the Merger or
any of the other transactions contemplated by this Agreement.

    4.2 OPERATION OF THE COMPANY'S BUSINESS.

        (a) During the Pre-Closing Period: (i) the Company shall ensure that
each of the Acquired Corporations conducts its business and operations (A) in
the ordinary course and in accordance with past practices and (B) in compliance
with all applicable Legal Requirements and the requirements of all Acquired
Corporation Contracts that constitute Material Contracts; (ii) the Company shall
use all commercially reasonable efforts to ensure that each of the Acquired
Corporations preserves intact its current business organization, keeps available
the services of its current officers and employees and maintains its relations
and goodwill with all suppliers, customers, landlords, creditors, licensors,
licensees, employees and other Persons having business relationships with the
respective Acquired Corporations; (iii) the Company shall keep in full force all
insurance policies referred to in Section 2.19; (iv) the Company shall provide
all notices, assurances and support required by any Acquired Corporation
Contract relating to any Proprietary Asset in order to ensure that no condition
under such Acquired Corporation Contract occurs which could result in, or could
increase the likelihood of, (A) any transfer or disclosure by any Acquired
Corporation of any Acquired Corporation Source Code that is outside the
Company's ordinary course of business or inconsistent with past practices, or
(B) a release from any escrow of any Acquired Corporation Source Code which has
been deposited or is required to be deposited in escrow under the terms of such
Acquired Corporation Contract; (v) the Company shall promptly notify Parent of
(A) any notice or other communication from any Person alleging that the Consent
of such Person is or may be required in connection with the transactions
contemplated by this Agreement, and (B) any Legal Proceedings commenced or, to
the best of its knowledge threatened against, relating to or involving or
otherwise affecting any of the Acquired Corporations which relate to the
consummation of the transactions contemplated by this Agreement; and (vi) the
Company shall (to the extent requested by Parent) cause its officers to report
regularly to Parent concerning the status of the Company's business.

                                      A-32
<PAGE>
        (b) During the Pre-Closing Period, the Company shall not (without the
prior written consent of Parent), and shall not permit any of the other Acquired
Corporations to:

            (i) declare, accrue, set aside or pay any dividend or make any other
distribution in respect of any shares of capital stock, or repurchase, redeem or
otherwise reacquire any shares of capital stock or other securities;

            (ii) sell, issue, grant or authorize the issuance or grant of
(A) any capital stock or other security, (B) any option, call, warrant or right
to acquire any capital stock or other security, or (C) any instrument
convertible into or exchangeable for any capital stock or other security (except
that (1) the Company may issue Company Common Stock (x) upon the valid exercise
of Company Options outstanding as of the date of this Agreement and
(y) pursuant to the ESPP, and (2) the Company may, in the ordinary course of
business and consistent with past practices (x) grant options under its stock
option plans to employees hired by the Company after the date of this Agreement,
and (y) in addition to options granted to employees hired by the Company after
the date of this Agreement, grant options under its stock option plans to
purchase no more than a total of 250,000 shares of Company Common Stock to
employees of the Company);

           (iii) amend or waive any of its rights under, or accelerate the
vesting under, any provision of any of the Company's stock option plans, any
provision of any agreement evidencing any outstanding stock option or any
restricted stock purchase agreement, or otherwise modify any of the terms of any
outstanding option, warrant or other security or any related Contract;

            (iv) amend or permit the adoption of any amendment to its articles
of incorporation or bylaws or other charter or organizational documents, or
effect or become a party to any merger, consolidation, share exchange, business
combination, recapitalization, reclassification of shares, stock split, reverse
stock split or similar transaction;

            (v) form any Subsidiary or acquire any equity interest or other
interest in any other Entity;

            (vi) make any capital expenditure (except that the Acquired
Corporations may make capital expenditures that, when added to all other capital
expenditures made on behalf of the Acquired Corporations during the Pre-Closing
Period, do not exceed $500,000 in the aggregate in any fiscal quarter);

           (vii) enter into or become bound by, or permit any of the assets
owned or used by it to become bound by, any Material Contract, or amend or
terminate, or waive or exercise any material right or remedy under, any Material
Contract;

          (viii) acquire, lease or license any right or other asset from any
other Person or sell or otherwise dispose of, or lease or license, any right or
other asset to any other Person (except in each case for assets acquired,
leased, licensed or disposed of by the Company in the ordinary course of
business and consistent with past practices), or waive or relinquish any
material right;

            (ix) lend money to any Person, or incur or guarantee any
indebtedness (except that the Company may make routine borrowings in the
ordinary course of business and in accordance with past practices under its line
of credit with Bank One);

            (x) establish, adopt or amend any employee benefit plan, pay any
bonus or make any profit-sharing or similar payment to, or increase the amount
of the wages, salary, commissions, fringe benefits or other compensation or
remuneration payable to, any of its directors, officers or employees (except
that the Company may make (i) routine, reasonable salary increases in connection
with the Company's customary employee review process and may pay customary
bonuses, (ii) compensation and severance payments pursuant to contractual
obligations that exist as of the date of this Agreement and are disclosed in the
Company Disclosure Schedule, and (iii) customary profit-sharing and similar
payments consistent with past practices payable in accordance with existing
bonus and profit-sharing plans referred to in Part 2.17(a) of the Company
Disclosure Schedule);

                                      A-33
<PAGE>
            (xi) hire any new employee at the level of vice president or above
or with an annual base salary in excess of $120,000, or promote any employee
except in order to fill a position vacated after the date of this Agreement, or
engage any consultant or independent contractor other than pursuant to a
Contract that can be terminated (without penalty) on notice of 90 days or less;

           (xii) materially change any of its pricing policies, product return
policies, product maintenance polices, service policies, product modification or
upgrade policies, personnel policies or other business policies, or any of its
methods of accounting or accounting practices in any respect;

          (xiii) take or permit to be taken any action that could preclude
Parent from accounting for the merger as a "pooling of interests" for accounting
purposes;

           (xiv) make any material Tax election;

           (xv) commence any Legal Proceeding or settle any Legal Proceeding
except for Legal Proceedings involving only the receipt of money by the Acquired
Corporations or the payment by the Acquired Corporations of no more than
$250,000 in the aggregate;

           (xvi) enter into any material transaction or take any other material
action outside the ordinary course of business or inconsistent with past
practices; or

          (xvii) agree or commit to take any of the actions described in clauses
"(i)" through "(xvi)" of this Section 4.2(b).

        (c) During the Pre-Closing Period, the Company shall promptly notify
Parent in writing of: (i) the discovery by the Company of any event, condition,
fact or circumstance that occurred or existed on or prior to the date of this
Agreement and that caused or constitutes a material inaccuracy in any
representation or warranty made by the Company in this Agreement; (ii) any
event, condition, fact or circumstance that occurs, arises or exists after the
date of this Agreement and that would cause or constitute a material inaccuracy
in any representation or warranty made by the Company in this Agreement if
(A) such representation or warranty had been made as of the time of the
occurrence, existence or discovery of such event, condition, fact or
circumstance, or (B) such event, condition, fact or circumstance had occurred,
arisen or existed on or prior to the date of this Agreement; (iii) any material
breach of any covenant or obligation of the Company; and (iv) any event,
condition, fact or circumstance that would make the timely satisfaction of any
of the conditions set forth in Section 6 impossible or unlikely or that has had
or could reasonably be expected to have a Material Adverse Effect on the
Acquired Corporations. Without limiting the generality of the foregoing, the
Company shall promptly advise Parent in writing of any Legal Proceeding or
material claim threatened, commenced or asserted against or with respect to any
of the Acquired Corporations. No notification given to Parent pursuant to this
Section 4.2(c) shall limit or otherwise affect any of the representations,
warranties, covenants or obligations of the Company contained in this Agreement.

        (d) During the Pre-Closing Period, Parent shall promptly notify the
Company in writing of: (i) the discovery by Parent of any event, condition, fact
or circumstance that occurred or existed on or prior to the date of this
Agreement and that caused or constitutes a material inaccuracy in any
representation or warranty made by Parent in this Agreement; (ii) any event,
condition, fact or circumstance that occurs, arises or exists after the date of
this Agreement and that would cause or constitute a material inaccuracy in any
representation or warranty made by Parent in this Agreement if (A) such
representation or warranty had been made as of the time of the occurrence,
existence or discovery of such event, condition, fact or circumstance, or
(B) such event, condition, fact or circumstance had occurred, arisen or existed
on or prior to the date of this Agreement; (iii) any material breach of any
covenant or obligation of Parent; and (iv) any event, condition, fact or
circumstance that would make the timely satisfaction of any of the conditions
set forth in Section 7 impossible or unlikely or that has had or could
reasonably be expected to have a Material Adverse Effect on Parent. Without
limiting the generality of the foregoing, Parent shall promptly advise the

                                      A-34
<PAGE>
Company in writing of any Legal Proceeding or material claim threatened,
commenced or asserted against or with respect to Parent. No notification given
to the Company pursuant to this Section 4.2(d) shall limit or otherwise affect
any of the representations, warranties, covenants or obligations of Parent
contained in this Agreement.

    4.3 NO SOLICITATION.

        (a) The Company shall not directly or indirectly, and shall not
authorize or permit any of the other Acquired Corporations or any Representative
of any of the Acquired Corporations directly or indirectly to, (i) solicit,
initiate, knowingly encourage, induce or facilitate the making, submission or
announcement of any Acquisition Proposal (including by amending, or granting any
waiver under, the Company Rights Agreement) or take any action that could
reasonably be expected to lead to an Acquisition Proposal, (ii) furnish any
nonpublic information regarding any of the Acquired Corporations to any Person
in connection with or in response to an Acquisition Proposal or an inquiry or
indication of interest that could lead to an Acquisition Proposal, (iii) engage
in discussions or negotiations with any Person with respect to any Acquisition
Proposal, (iv) approve, endorse or recommend any Acquisition Proposal or
(v) enter into any letter of intent or similar document or any Contract
contemplating or otherwise relating to any Acquisition Transaction; PROVIDED,
HOWEVER, that prior to the approval of the principal terms of the Merger by the
Required Company Shareholder Vote, this Section 4.3(a) shall not prohibit the
Company from furnishing nonpublic information regarding the Acquired
Corporations to, or entering into discussions or negotiations with, any Person
in response to a Superior Offer that is submitted to the Company by such Person
(and not withdrawn) if (1) neither the Company nor any Representative of any of
the Acquired Corporations shall have violated any of the restrictions set forth
in this Section 4.3, (2) the board of directors of the Company concludes in good
faith, after consultation with its outside legal counsel, that such action is
required in order for the board of directors of the Company to comply with its
fiduciary obligations to the Company's shareholders under applicable law,
(3) at least two business days prior to furnishing any such nonpublic
information to, or entering into discussions or negotiations with, such Person,
the Company gives Parent written notice of the identity of such Person and of
the Company's intention to furnish nonpublic information to, or enter into
discussions with, such Person, and the Company receives from such Person an
executed confidentiality agreement containing customary limitations on the use
and disclosure of all nonpublic written and oral information furnished to such
Person or any of such Person's Representatives by or on behalf of the Company
and containing "standstill" provisions no less favorable to the Company than the
"standstill" provisions contained in paragraph 3.B. of that certain letter
agreement dated October 2, 1999 between the Company and Parent (the "Letter
Agreement"), and (4) at least two business days prior to furnishing any such
nonpublic information to such Person, the Company furnishes such nonpublic
information to Parent (to the extent such nonpublic information has not been
previously furnished by the Company to Parent). Without limiting the generality
of the foregoing, the Company acknowledges and agrees that any violation of any
of the restrictions set forth in the preceding sentence by any Representative of
any of the Acquired Corporations, whether or not such Representative is
purporting to act on behalf of any of the Acquired Corporations, shall be deemed
to constitute a breach of this Section 4.3 by the Company.

        (b) The Company shall promptly (and in no event later than 24 hours
after receipt of any Acquisition Proposal, any inquiry or indication of interest
that could lead to an Acquisition Proposal or any request for nonpublic
information) advise Parent orally and in writing of any Acquisition Proposal,
any inquiry or indication of interest that could lead to an Acquisition Proposal
or any request for nonpublic information relating to any of the Acquired
Corporations (including the identity of the Person making or submitting such
Acquisition Proposal, inquiry, indication of interest or request, and the terms
thereof) that is made or submitted by any Person during the Pre-Closing Period.
The Company shall keep Parent fully informed with respect to the status of any
such Acquisition Proposal, inquiry, indication of interest or request and any
modification or proposed modification thereto.

                                      A-35
<PAGE>
        (c) The Company shall immediately cease and cause to be terminated any
existing discussions with any Person that relate to any Acquisition Proposal.

        (d) The Company agrees not to release any Person from or waive any
provision of any confidentiality, "standstill" or similar agreement to which the
Company is a party and will use its commercially reasonable efforts to enforce
each such agreement at the request of Parent. The Company also will promptly
request each Person that has executed, within 12 months prior to the date of
this Agreement, a confidentiality or similar agreement in connection with its
consideration of a possible Acquisition Transaction or equity investment to
return all confidential information heretofore furnished to such Person by or on
behalf of the Company.

SECTION 5.  ADDITIONAL COVENANTS OF THE PARTIES

    5.1 REGISTRATION STATEMENT; JOINT PROXY STATEMENT.

        (a) As promptly as practicable after the date of this Agreement, Parent
and the Company shall prepare and cause to be filed with the SEC the Joint Proxy
Statement and Parent shall prepare and cause to be filed with the SEC the
Form S-4 Registration Statement, in which the Joint Proxy Statement will be
included as a prospectus; PROVIDED, HOWEVER, that notwithstanding anything to
the contrary contained in this Section 5.1(a), if (and to the extent) Parent so
elects: (i) the Joint Proxy Statement shall initially be filed with the SEC on a
confidential basis as a proxy statement of Parent and the Company under
Section 14 of the Exchange Act; (ii) until such time as Parent has determined
that it is reasonably likely that the SEC will promptly declare the Form S-4
Registration Statement effective under the Securities Act, all amendments to the
Joint Proxy Statement shall be filed with the SEC on a confidential basis as
amendments to the proxy statement of Parent and the Company under Section 14 of
the Exchange Act; and (iii) Parent shall not be obligated to file the Form S-4
Registration Statement with the SEC until such time as Parent has determined
that it is reasonably likely that the SEC will promptly declare the Form S-4
Registration Statement effective under the Securities Act. Each of Parent and
the Company shall use all commercially reasonable efforts to cause the Form S-4
Registration Statement and the Joint Proxy Statement to comply with the rules
and regulations promulgated by the SEC, to respond promptly to any comments of
the SEC or its staff and to have the Form S-4 Registration Statement declared
effective under the Securities Act as promptly as practicable after it is filed
with the SEC. Parent will use all commercially reasonable efforts to cause the
Joint Proxy Statement to be mailed to Parent's stockholders, and the Company
will use all commercially reasonable efforts to cause the Joint Proxy Statement
to be mailed to the Company's shareholders, as promptly as practicable after the
Form S-4 Registration Statement is declared effective under the Securities Act.
The Company shall promptly furnish to Parent all information concerning the
Acquired Corporations and the Company's shareholders that may be required or
reasonably requested in connection with any action contemplated by this
Section 5.1. If any event relating to any of the Acquired Corporations occurs,
or if the Company becomes aware of any information, that should be disclosed in
an amendment or supplement to the Form S-4 Registration Statement or the Joint
Proxy Statement, then the Company shall promptly inform Parent thereof and shall
cooperate with Parent in filing such amendment or supplement with the SEC and,
if appropriate, in mailing such amendment or supplement to the shareholders of
the Company.

        (b) Prior to the Effective Time, Parent shall use all commercially
reasonable efforts to obtain all regulatory approvals needed to ensure that the
Parent Common Stock to be issued in the Merger will be registered or qualified
under the securities law of every jurisdiction of the United States in which any
registered holder of Company Common Stock has an address of record on the record
date for determining the shareholders entitled to notice of and to vote at the
Company Shareholders' Meeting; PROVIDED, HOWEVER, that Parent shall not be
required (i) to qualify to do business as a foreign corporation in any
jurisdiction in which it is not now qualified or (ii) to file a general consent
to service of process in any jurisdiction.

                                      A-36
<PAGE>
    5.2 COMPANY SHAREHOLDERS' MEETING.

        (a) The Company shall take all action necessary under all applicable
Legal Requirements to call, give notice of and hold a meeting of the holders of
Company Common Stock to vote on a proposal to approve the principal terms of the
Merger (the "Company Shareholders' Meeting"). The Company Shareholders' Meeting
shall be held (on a date selected by the Company in consultation with Parent) as
promptly as practicable after the Form S-4 Registration Statement is declared
effective under the Securities Act. The Company shall ensure that all proxies
solicited in connection with the Company Shareholders' Meeting are solicited in
compliance with all applicable Legal Requirements.

        (b) Subject to Section 5.2(c): (i) the Joint Proxy Statement shall
include a statement to the effect that the board of directors of the Company
recommends that the Company's shareholders vote to approve the principal terms
of the Merger at the Company Shareholders' Meeting (the recommendation of the
Company's board of directors that the Company's shareholders vote to approve the
principal terms of the Merger being referred to as the "Company Board
Recommendation"); and (ii) the Company Board Recommendation shall not be
withdrawn or modified in a manner adverse to Parent, and no resolution by the
board of directors of the Company or any committee thereof to withdraw or modify
the Company Board Recommendation in a manner adverse to Parent shall be adopted
or proposed.

        (c) Notwithstanding anything to the contrary contained in
Section 5.2(b), at any time prior to the approval of the principal terms of the
Merger by the Required Company Shareholder Vote, the Company Board
Recommendation may be withdrawn or modified in a manner adverse to Parent if:
(i) an unsolicited, bona fide written offer to purchase all of the outstanding
shares of Company Common Stock is made to the Company and is not withdrawn;
(ii) the Company provides Parent with at least two business days prior notice of
any meeting of the Company's board of directors at which such board of directors
will consider and determine whether such offer is a Superior Offer; (iii) the
Company's board of directors determines in good faith (based upon a written
opinion of an independent financial advisor of nationally recognized reputation)
that such offer constitutes a Superior Offer; (iv) the Company's board of
directors determines in good faith, based upon the written advice of the
Company's outside counsel, that, in light of such Superior Offer, the withdrawal
or modification of the Company Board Recommendation is required in order for the
Company's board of directors to comply with its fiduciary obligations to the
Company's shareholders under applicable law; (v) the Company Board
Recommendation is not withdrawn or modified in a manner adverse to Parent at any
time within five business days after Parent receives written notice from the
Company confirming that the Company's board of directors has determined that
such offer is a Superior Offer; and (vi) neither the Company nor any of its
Representatives shall have violated any of the restrictions set forth in
Section 4.3.

        (d) The Company's obligation to call, give notice of and hold the
Company Shareholders' Meeting in accordance with Section 5.2(a) shall not be
limited or otherwise affected by the commencement, disclosure, announcement or
submission of any Superior Offer or other Acquisition Proposal, or by any
withdrawal or modification of the Company Board Recommendation.

    5.3 PARENT STOCKHOLDERS' MEETING.

        (a) Parent shall take all action necessary to call, give notice of and
hold a meeting of the holders of Parent Common Stock to vote on the issuance of
Parent Common Stock in the Merger (the "Parent Stockholders' Meeting"). The
Parent Stockholders' Meeting will be held as promptly as practicable after the
Company Shareholders' Meeting is held and the Company's shareholders shall have
taken a final vote on a proposal to approve, and shall have approved, the
principal terms of the Merger. Parent shall ensure that all proxies solicited in
connection with the Parent Stockholders' Meeting are solicited in compliance
with all applicable Legal Requirements.

                                      A-37
<PAGE>
        (b) The Joint Proxy Statement shall include a statement to the effect
that the board of directors of Parent recommends that Parent's stockholders vote
to approve the issuance of Parent Common Stock in the Merger (the recommendation
of Parent's board of directors that Parent's stockholders vote to approve the
issuance of Parent Common Stock in the Merger being referred to as the "Parent
Board Recommendation"). The Parent Board Recommendation shall not be withdrawn
or modified in a manner adverse to the Company, and no resolution by the board
of directors of Parent or any committee thereof to withdraw or modify the Parent
Board Recommendation in a manner adverse to the Company shall be adopted or
proposed.

    5.4 REGULATORY APPROVALS.

    The Company and Parent shall use all commercially reasonable efforts to
file, as soon as practicable after the date of this Agreement, all notices,
reports and other documents required to be filed with any Governmental Body with
respect to the Merger and the other transactions contemplated by this Agreement,
and to submit promptly any additional information requested by any such
Governmental Body. Without limiting the generality of the foregoing, the Company
and Parent shall, promptly after the date of this Agreement, prepare and file
the notifications required under the HSR Act and any applicable foreign
antitrust laws or regulations in connection with the Merger. The Company and
Parent shall respond as promptly as practicable to (i) any inquiries or requests
received from the Federal Trade Commission or the Department of Justice for
additional information or documentation and (ii) any inquiries or requests
received from any state attorney general, foreign antitrust authority or other
Governmental Body in connection with antitrust or related matters. Each of the
Company and Parent shall (1) give the other party prompt notice of the
commencement or threat of commencement of any Legal Proceeding by or before any
Governmental Body with respect to the Merger or any of the other transactions
contemplated by this Agreement, (2) keep the other party informed as to the
status of any such Legal Proceeding or threat, and (3) promptly inform the other
party of any communication to or from (as well as the content of such
communication except as may be prohibited by any Governmental Body or by any
Legal Requirement) the Federal Trade Commission, the Department of Justice or
any other Governmental Body regarding the Merger. Except as may be prohibited by
any Governmental Body or by any Legal Requirement, the Company and Parent will
consult and cooperate with one another, and will consider in good faith the
views of one another, in connection with any analysis, appearance, presentation,
memorandum, brief, argument, opinion or proposal made or submitted in connection
with any Legal Proceeding under or relating to the HSR Act or any other foreign,
federal or state antitrust or fair trade law. In addition, except as may be
prohibited by any Governmental Body or by any Legal Requirement, in connection
with any Legal Proceeding under or relating to the HSR Act or any other foreign,
federal or state antitrust or fair trade law or any other similar Legal
Proceeding, each of the Company and Parent will permit authorized
Representatives of the other party to be present at each meeting or conference
relating to any such Legal Proceeding and to have access to and be consulted in
connection with any document, opinion or proposal made or submitted to any
Governmental Body in connection with any such Legal Proceeding.

    5.5 STOCK OPTIONS.

    (a) Subject to Section 5.5(b), at the Effective Time, all rights with
respect to Company Common Stock under each Company Option then outstanding shall
be converted into and become rights with respect to Parent Common Stock, and
Parent shall assume each such Company Option in accordance with the terms (as in
effect as of the date of this Agreement) of the stock option plan under which it
was issued and the terms of the stock option agreement by which it is evidenced.
From and after the Effective Time, (i) each Company Option assumed by Parent may
be exercised solely for shares of Parent Common Stock, (ii) the number of shares
of Parent Common Stock subject to each such Company Option shall be equal to the
number of shares of Company Common Stock subject to such Company Option
immediately prior to the Effective Time multiplied by the Exchange Ratio,
rounding

                                      A-38
<PAGE>
down to the nearest whole share, (iii) the per share exercise price under each
such Company Option shall be adjusted by dividing the per share exercise price
under such Company Option by the Exchange Ratio and rounding up to the nearest
cent and (iv) any restriction on the exercise of any such Company Option shall
continue in full force and effect and the term, exercisability, vesting schedule
and other provisions of such Company Option shall otherwise remain unchanged;
PROVIDED, HOWEVER, that (A) in accordance with the terms of those certain
agreements between the Company and each of the individuals identified on
Part 2.17(k) of the Company Disclosure Schedule, certain unvested Company
Options referred to therein shall become immediately exercisable as of the
Effective Time, and (B) each Company Option assumed by Parent in accordance with
this Section 5.5(a) shall, in accordance with its terms, be subject to further
adjustment as appropriate to reflect any stock split, stock dividend, reverse
stock split, reclassification, recapitalization or other similar transaction
subsequent to the Effective Time. Parent shall file with the SEC, no later than
10 days after the date on which the Merger becomes effective, a registration
statement on Form S-8 relating to the shares of Parent Common Stock issuable
with respect to the Company Options assumed by Parent in accordance with this
Section 5.5(a).

    (b) Prior to the Effective Time, the Company shall take all action that may
be necessary (under the plans pursuant to which Company Options are outstanding
and otherwise) or may be requested by Parent to effectuate the provisions of
this Section 5.5 and to ensure that, from and after the Effective Time, holders
of Company Options have no rights with respect thereto other than those
specifically provided in this Section 5.5.

    (c) As of the Effective Time, the ESPP shall be terminated. The rights of
participants in the ESPP with respect to any offering period then underway under
the ESPP shall be determined by treating the last business day prior to the
Effective Time as the last day of such offering period and by making such other
pro-rata adjustments as may be necessary to reflect the shortened offering
period but otherwise treating such shortened offering period as a fully
effective and completed offering period for all purposes under such Plan. Prior
to the Effective Time, the Company shall take all actions (including, if
appropriate, amending the terms of the ESPP) that are necessary to give effect
to the transactions contemplated by this Section 5.4(d).

    5.6 EMPLOYEE BENEFITS.

    Parent agrees that all employees of the Company who continue employment with
Parent or the Surviving Corporation after the Effective Time ("Continuing
Employees") shall be eligible to continue to participate in the Surviving
Corporation's health, vacation and other non-equity based employee benefit
plans; PROVIDED, HOWEVER, that (a) nothing in this Section 5.6 or elsewhere in
this Agreement shall limit the right of Parent or the Surviving Corporation to
amend or terminate any such health, vacation or other employee benefit plan at
any time, and (b) if Parent or the Surviving Corporation terminates any such
health, vacation or other employee benefit plan, then, (i) subject to any
necessary transition period, the Continuing Employees shall be eligible to
participate in Parent's health, vacation and other non-equity based employee
benefit plans, to substantially the same extent as employees of Parent in
similar positions and at similar grade levels, and (ii) if a Continuing Employee
becomes eligible to participate (and participates) in Parent's health, vacation
and other non-equity based employee benefit plans pursuant to clause "(b)(i)" of
this sentence, then, to the extent permitted by such health, vacation or other
non-equity based employee benefit plan, Parent shall credit such Continuing
Employee's service with the Company to the same extent as such service was
credited under the similar employee benefit plans of the Company immediately
prior to the Effective Time, for purposes of determining eligibility to
participate in and vesting under, and for purposes of calculating the benefits
under, such employee benefit plan of Parent (it being understood, however, that
such crediting of service shall not result in the receipt by any Continuing
Employee of duplicate benefits for the same period of service). Nothing in this
Section 5.6 or elsewhere in this Agreement shall be construed to create a right
in any employee to employment with Parent, the Surviving Corporation or

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<PAGE>
any other Subsidiary of Parent and, subject to any other binding agreement
between an employee and Parent, the Surviving Corporation or any other
Subsidiary of Parent, the employment of each Continuing Employee shall be "at
will" employment.

    5.7 INDEMNIFICATION OF OFFICERS AND DIRECTORS.

    (a) All rights to indemnification existing in favor of those Persons who are
directors and officers of the Company as of the date of this Agreement (the
"Indemnified Persons") for acts and omissions occurring prior to the Effective
Time, as provided in the Company's Articles of Incorporation, Bylaws (as in
effect as of the date of this Agreement) and as provided in the indemnification
agreements between the Company and said Indemnified Persons (as in effect as of
the date of this Agreement) in the forms disclosed by the Company to Parent
prior to the date of this Agreement, shall survive the Merger, and Parent shall
guarantee that all such rights are observed by the Surviving Corporation to the
fullest extent permitted by California law for a period of seven years from the
Effective Time.

    (b) From the Effective Time until the seventh anniversary of the Effective
Time, the Surviving Corporation shall maintain in effect, for the benefit of the
Indemnified Persons with respect to acts or omissions occurring prior to the
Effective Time, the existing policy of directors' and officers' liability
insurance maintained by the Company as of the date of this Agreement in the form
disclosed by the Company to Parent prior to the date of this Agreement (the
"Existing Policy"); PROVIDED, HOWEVER, that (i) the Surviving Corporation may
substitute for the Existing Policy a policy or policies of comparable coverage,
and (ii) the Surviving Corporation shall not be required to pay annual premiums
for the Existing Policy (or for any substitute policies) in excess of $235,638
in the aggregate. In the event any future annual premiums for the Existing
Policy (or any substitute policies) exceed $235,638 in the aggregate, the
Surviving Corporation shall be entitled to reduce the amount of coverage of the
Existing Policy (or any substitute policies) to the amount of coverage that can
be obtained for a premium equal to $235,638.

    5.8 POOLING OF INTERESTS.

    Each of the Company and Parent agrees, and the Company agrees to cause the
Acquired Corporations, (a) not to take any action during the Pre-Closing Period
that would adversely affect the ability of Parent to account for the Merger as a
"pooling of interests," and (b) to use all commercially reasonable efforts to
attempt to ensure that none of its "affiliates" (as that term is defined in
Rule 145 under the Securities Act) takes any action that could adversely affect
the ability of Parent to account for the Merger as a "pooling of interests."
Each party agrees to provide to PricewaterhouseCoopers LLP such letters as shall
be reasonably requested by PricewaterhouseCoopers LLP in connection with the
letters referred to in Section 6.6.

    5.9 ADDITIONAL AGREEMENTS.

    (a) Subject to Section 5.9(b), Parent and the Company shall use all
commercially reasonable efforts to take, or cause to be taken, all actions
necessary to consummate the Merger and make effective the other transactions
contemplated by this Agreement. Without limiting the generality of the
foregoing, but subject to Section 5.9(b), each party to this Agreement
(i) shall make all filings (if any) and give all notices (if any) required to be
made and given by such party in connection with the Merger and the other
transactions contemplated by this Agreement, (ii) shall use all commercially
reasonable efforts to obtain each Consent (if any) required to be obtained
(pursuant to any applicable Legal Requirement or Contract, or otherwise) by such
party in connection with the Merger or any of the other transactions
contemplated by this Agreement, and (iii) shall use all commercially reasonable
efforts to lift any restraint, injunction or other legal bar to the Merger. The
Company shall promptly deliver to Parent a copy of each such filing made, each
such notice given and each such Consent obtained by the Company during the
Pre-Closing Period. Parent shall promptly deliver to the Company a copy of each
such filing made, each such notice given and each such Consent obtained by
Parent

                                      A-40
<PAGE>
during the Pre-Closing Period. Nothing contained in this Section 5.9(a) or
elsewhere in this Agreement shall limit the obligation of the Company to obtain
Parent's consent to the taking of any action that would otherwise give rise to a
violation of Section 4.2.

    (b) Notwithstanding anything to the contrary contained in this Agreement,
Parent shall not have any obligation under this Agreement: (i) to dispose or
transfer or cause any of its Subsidiaries to dispose of or transfer any assets,
or to commit to cause any of the Acquired Corporations to dispose of any assets;
(ii) to discontinue or cause any of its Subsidiaries to discontinue offering any
product or service, or to commit to cause any of the Acquired Corporations to
discontinue offering any product or service; (iii) to license or otherwise make
available, or cause any of its Subsidiaries to license or otherwise make
available, to any Person, any technology, software or other Proprietary Asset,
or to commit to cause any of the Acquired Corporations to license or otherwise
make available to any Person any technology, software or other Proprietary
Asset; (iv) to hold separate or cause any of its Subsidiaries to hold separate
any assets or operations (either before or after the Closing Date), or to commit
to cause any of the Acquired Corporations to hold separate any assets or
operations; (v) to make or cause any of its Subsidiaries to make any commitment
(to any Governmental Body or otherwise) regarding its future operations or the
future operations of any of the Acquired Corporations; or (vi) to contest any
Legal Proceeding relating to the Merger if Parent determines in good faith that
contesting such Legal Proceeding might not be advisable.

    5.10 DISCLOSURE.

    (a) The Company shall not, and shall not permit any of its Representatives
to, issue any press release or otherwise publicly disseminate any document or
other written material relating to the Merger or any of the other transactions
contemplated by this Agreement unless (i) Parent shall have approved such press
release or written material (it being understood that Parent shall not
unreasonably withhold its approval of any such press release or written
material), or (ii) the Company shall have been advised by its outside legal
counsel that the issuance of such press release or the dissemination of such
written material is required by any applicable law or regulation, and the
Company shall have consulted with Parent prior to issuing such press release or
disseminating such written material. The Company shall use all commercially
reasonable efforts to ensure that none of its Representatives makes any public
statement that is materially inconsistent with any press release issued or any
written material publicly disseminated by the Company with respect to the Merger
or with respect to any of the other transactions contemplated by this Agreement.

    (b) Parent shall not, and shall not permit any of its Representatives to,
issue any press release or otherwise publicly disseminate any document or other
written material relating to the Merger or any of the other transactions
contemplated by this Agreement unless (i) the Company shall have approved such
press release or written material (it being understood that the Company shall
not unreasonably withhold its approval of any such press release or written
material), or (ii) Parent shall have been advised by its outside legal counsel
that the issuance of such press release or the dissemination of such written
material is required by any applicable law or regulation, and Parent shall have
consulted with the Company prior to issuing such press release or disseminating
such written material. Parent shall use all commercially reasonable efforts to
ensure that none of its Representatives makes any public statement that is
materially inconsistent with any press release issued or any written material
publicly disseminated by Parent with respect to the Merger or with respect to
any of the other transactions contemplated by this Agreement.

    5.11 AFFILIATE AGREEMENTS.

    (a) The Company shall use all commercially reasonable efforts to cause each
Person identified in Part 2.20 of the Company Disclosure Schedule and each other
Person who is or becomes (or may be deemed to be) an "affiliate" (as that term
is defined in Rule 145 under the Securities Act) of the Company to execute and
deliver to Parent, prior to the date of the mailing of the Joint Proxy

                                      A-41
<PAGE>
Statement to the Company's shareholders, an Affiliate Agreement in the form of
Exhibit D. Neither Parent nor the Company shall register, or allow its transfer
agent to register, on its books any transfer of any shares of Parent Common
Stock or Company Common Stock of any "affiliate" of the Company who has not
provided a signed Affiliate Agreement in accordance with this Section 5.11.

    (b) Parent shall use all commercially reasonable efforts to cause each
Person identified in Part 3.17 of the Parent Disclosure Schedule and each other
Person who is or becomes (or may be deemed to be) an "affiliate" (as that term
is defined in Rule 145 under the Securities Act) of Parent to execute and
deliver to the Company, prior to the date of the mailing of the Joint Proxy
Statement to Parent's stockholders, an Affiliate Agreement in the form of
Exhibit E.

    5.12 TAX MATTERS.

    At or prior to the filing of the Form S-4 Registration Statement, the
Company and Parent shall execute and deliver to Cooley Godward LLP and to
Fenwick & West LLP tax representation letters in customary form. Parent, Merger
Sub and the Company shall each confirm to Cooley Godward LLP and to Fenwick &
West LLP the accuracy and completeness as of the Effective Time of the tax
representation letters delivered pursuant to the immediately preceding sentence.
Parent and the Company shall use all commercially reasonable efforts prior to
the Effective Time to cause the Merger to qualify as a tax-free reorganization
under Section 368(a)(1) of the Code. Following delivery of the tax
representations letters pursuant to the first sentence of this Section 5.12,
each of Parent and the Company shall use its commercially reasonable efforts to
cause Cooley Godward LLP and Fenwick & West LLP, respectively, to deliver to it
a tax opinion satisfying the requirements of Item 601 of Regulation S-K
promulgated under the Securities Act. In rendering such opinions, each of such
counsel shall be entitled to rely on the tax representation letters referred to
in this Section 5.12.

    5.13 LETTER OF THE COMPANY'S ACCOUNTANTS.

    The Company shall use all commercially reasonable efforts to cause to be
delivered to Parent a letter of PricewaterhouseCoopers LLP, dated no more than
two business days before the date on which the Form S-4 Registration Statement
becomes effective (and reasonably satisfactory in form and substance to Parent),
that is customary in scope and substance for letters delivered by independent
public accountants in connection with registration statements similar to the
Form S-4 Registration Statement.

    5.14 RESIGNATION OF OFFICERS AND DIRECTORS.

    The Company shall use all commercially reasonable efforts to obtain and
deliver to Parent prior to the Closing the resignation of each officer and
director of each of the Acquired Corporations.

    5.15 LISTING.

    Parent shall use commercially reasonable efforts to cause the shares of
Parent Common Stock being issued in the Merger to be approved for listing
(subject to notice of issuance) on the Nasdaq National Market.

    5.16 BOARD OF DIRECTORS.

    Prior to the Effective Time, Parent shall use all commercially reasonable
efforts to cause the board of directors of Parent to consist, as of the
Effective Time, of seven directors, (a) five of whom shall be Persons designated
by Parent, and (b) two of whom shall be Persons designated by the Company who
were directors of the Company prior to the Effective Time. If any such Persons
are not able to serve as directors of Parent as of the Effective Time, the party
on whose board such Person presently sits shall select a replacement. Prior to
the Effective Time, Parent's board of directors shall use all commercially
reasonable efforts to attempt to cause Jerry L. Fiddler to serve as Chairman of
the Board of Parent as of the Effective Time, Thomas St. Dennis to serve as
Chief Executive Officer and a director of Parent as of the Effective Time, and
Narendra Gupta to serve as Vice Chairman and a director of Parent as of the
Effective Time.

                                      A-42
<PAGE>
SECTION 6. CONDITIONS PRECEDENT TO OBLIGATIONS OF PARENT AND MERGER SUB

    The obligations of Parent and Merger Sub to effect the Merger and otherwise
consummate the transactions contemplated by this Agreement are subject to the
satisfaction, at or prior to the Closing, of each of the following conditions:

    6.1 ACCURACY OF REPRESENTATIONS.

    The representations and warranties of the Company contained in this
Agreement shall be accurate in all respects as of the Closing Date as if made on
and as of the Closing Date, except that any inaccuracies in such representations
and warranties will be disregarded if the circumstances giving rise to all such
inaccuracies (considered collectively) do not constitute, and would not
reasonably be expected to have, a Material Adverse Effect on the Acquired
Corporations; PROVIDED, HOWEVER that, for purposes of determining the accuracy
of such representations and warranties, (i) all "Material Adverse Effect"
qualifications and other materiality qualifications, and any similar
qualifications, contained in such representations and warranties shall be
disregarded and (ii) any update of or modification to the Company Disclosure
Schedule made or purported to have been made after the date of this Agreement
shall be disregarded.

    6.2 PERFORMANCE OF COVENANTS.

    Each covenant or obligation that the Company is required to comply with or
to perform at or prior to the Closing shall have been complied with and
performed in all material respects.

    6.3 EFFECTIVENESS OF REGISTRATION STATEMENT.

    The Form S-4 Registration Statement shall have become effective in
accordance with the provisions of the Securities Act, and no stop order shall
have been issued, and no proceeding for that purpose shall have been initiated
or be threatened, by the SEC with respect to the Form S-4 Registration
Statement.

    6.4 SHAREHOLDER APPROVAL.

    The principal terms of the Merger shall have been duly approved by the
Required Company Shareholder Vote, and the issuance of Parent Common Stock in
the Merger shall have been duly approved by the Required Parent Stockholder
Vote.

    6.5 CONSENTS.

    All material Consents required to be obtained in connection with the Merger
and the other transactions contemplated by this Agreement (including the
Consents identified in Part 6.5 of the Company Disclosure Schedule) shall have
been obtained and shall be in full force and effect.

    6.6 AGREEMENTS AND DOCUMENTS.

    Parent and the Company shall have received the following agreements and
documents, each of which shall be in full force and effect:

    (a) Affiliate Agreements in the form of Exhibit D, executed by each Person
who could reasonably be deemed to be an "affiliate" (as that term is defined in
Rule 145 under the Securities Act) of the Company;

    (b) Noncompetition Agreements in the form of Exhibit G, executed by the
individuals identified on Exhibit F;

    (c) a letter from PricewaterhouseCoopers LLP, dated as of the Closing Date
and addressed to Parent, reasonably satisfactory in form and substance to
Parent, updating the letter referred to in Section 5.13;

    (d) a letter from PricewaterhouseCoopers LLP, dated as of the Closing Date
(which may contain customary qualifications and assumptions), to the effect that
PricewaterhouseCoopers LLP concurs with

                                      A-43
<PAGE>
the Company management's conclusion that no condition exists related to the
Company which would preclude Parent from accounting for the Merger as a "pooling
of interests" in accordance with generally accepted accounting principles,
Accounting Principles Board Opinion No. 16 and all published rules, regulations
and policies of the SEC;

    (e) a letter from PricewaterhouseCoopers LLP, dated as of the Closing Date
(which may contain customary qualifications and assumptions), and addressed to
Parent, reasonably satisfactory in form and substance to Parent, to the effect
that PricewaterhouseCoopers LLP concurs with Parent management's conclusion that
Parent may account for the Merger as a "pooling of interests" in accordance with
generally accepted accounting principles, Accounting Principles Board Opinion
No. 16 and all published rules, regulations and policies of the SEC;

    (f) a legal opinion of Cooley Godward LLP, dated as of the Closing Date and
addressed to Parent, to the effect that the Merger will constitute a
reorganization within the meaning of Section 368 of the Code (it being
understood that (i) in rendering such opinion, Cooley Godward LLP may rely upon
the tax representation letters referred to in Section 5.12, and (ii) if Cooley
Godward LLP does not render such opinion or withdraws or modifies such opinion,
this condition shall nonetheless be deemed to be satisfied if Fenwick & West LLP
renders such opinion to Parent);

    (g) a certificate executed on behalf of the Company by its Chief Executive
Officer confirming that the conditions set forth in Sections 6.1, 6.2, 6.4 (as
it relates to the Required Company Shareholder Vote), 6.5, 6.6(a), 6.7, 6.8,
6.11, 6.12, and 6.13 have been duly satisfied; and

    (h) the written resignations of all officers and directors of each of the
Acquired Corporations, effective as of the Effective Time.

    6.7 EMPLOYEES.

    Not more than one of the seven executive officers identified on
Schedule 6.7 shall have ceased to be employed by the Company (other than by
reason of death or permanent disability) or shall have expressed an intention to
terminate his or her employment with the Company or to decline to accept
employment with Parent.

    6.8 NO MATERIAL ADVERSE EFFECT.

    Since the date of this Agreement, there shall not have occurred any Material
Adverse Effect on the Acquired Corporations, and no event shall have occurred or
circumstance shall exist that, alone or in combination with any other events or
circumstances, could reasonably be expected to have a Material Adverse Effect on
the Acquired Corporations.

    6.9 HSR ACT.

    The waiting period applicable to the consummation of the Merger under the
HSR Act shall have expired or been terminated and, on the Closing Date, there
shall not be in effect any voluntary agreement between Parent and the Federal
Trade Commission or the Department of Justice pursuant to which Parent has
agreed not consummate the Merger for a period of time; any similar waiting
period under any applicable foreign antitrust law or regulation shall have
expired or been terminated; and any Consent required under any applicable
foreign antitrust law or regulation shall have been obtained.

    6.10 LISTING.

    The shares of Parent Common Stock to be issued in the Merger shall have been
approved for listing (subject to notice of issuance) on the Nasdaq National
Market.

    6.11 NO RESTRAINTS.

    No temporary restraining order, preliminary or permanent injunction or other
order preventing the consummation of the Merger shall have been issued by any
court of competent jurisdiction and remain

                                      A-44
<PAGE>
in effect, and there shall not be any Legal Requirement enacted or deemed
applicable to the Merger that makes consummation of the Merger illegal.

    6.12 NO GOVERNMENTAL LITIGATION.

    There shall not be pending or threatened any Legal Proceeding in which a
Governmental Body is or is threatened to become a party or is otherwise
involved: (a) challenging or seeking to restrain or prohibit the consummation of
the Merger or any of the other transactions contemplated by this Agreement;
(b) relating to the Merger and seeking to obtain from Parent or any of its
Subsidiaries any damages that would reasonably be expected to be material to
Parent; (c) seeking to prohibit or limit in any material respect Parent's
ability to vote, receive dividends with respect to or otherwise exercise
ownership rights with respect to the stock of the Surviving Corporation;
(d) which would materially and adversely affect the right of Parent, the
Surviving Corporation or any Subsidiary of Parent to own the assets or operate
the business of the Acquired Corporations; or (e) seeking to compel Parent or
the Company, or any Subsidiary of Parent or the Company, to dispose of or hold
separate any material assets, as a result of the Merger or any of the other
transactions contemplated by this Agreement.

    6.13 NO OTHER LITIGATION.

    There shall not be pending any Legal Proceeding in which, in the reasonable
judgment of Parent, there is a reasonable possibility of an outcome that would
have a Material Adverse Effect on the Acquired Corporations or on Parent (it
being understood that a pending Legal Proceeding against the Acquired
Corporations that resulted directly from the public announcement or pendency of
the Merger shall be disregarded for purposes of determining whether this
condition is satisfied).

    6.14 STOCK OPTIONS.

    Parent shall have received assurances reasonably satisfactory to Parent that
there will be no Company Options outstanding to purchase capital stock of the
Surviving Corporation after the Effective Time.

SECTION 7. CONDITIONS PRECEDENT TO OBLIGATION OF THE COMPANY

    The obligation of the Company to effect the Merger and otherwise consummate
the transactions contemplated by this Agreement are subject to the satisfaction,
at or prior to the Closing, of the following conditions:

    7.1 ACCURACY OF REPRESENTATIONS.

    The representations and warranties of Parent contained in this Agreement
shall be accurate in all respects as of the Closing Date as if made on and as of
the Closing Date, except that any inaccuracies in such representations and
warranties will be disregarded if the circumstances giving rise to all such
inaccuracies (considered collectively) do not constitute, and would not
reasonably be expected have, a Material Adverse Effect on Parent; PROVIDED,
HOWEVER, that, for purposes of determining the accuracy of such representations
and warranties as of the Closing Date, (i) all "Material Adverse Effect"
qualifications and other materiality qualifications, and any similar
qualifications, contained in such representations and warranties shall be
disregarded and (ii) any update of or modification to the Parent Disclosure
Schedule made or purported to have been made after the date of this Agreement
shall be disregarded.

    7.2 PERFORMANCE OF COVENANTS.

    All of the covenants and obligations that Parent and Merger Sub are required
to comply with or to perform at or prior to the Closing shall have been complied
with and performed in all material respects.

                                      A-45
<PAGE>
    7.3 EFFECTIVENESS OF REGISTRATION STATEMENT.

    The Form S-4 Registration Statement shall have become effective in
accordance with the provisions of the Securities Act, and no stop order shall
have been issued, and no proceeding for that purpose shall have been initiated
or be threatened, by the SEC with respect to the Form S-4 Registration
Statement.

    7.4 SHAREHOLDER APPROVAL.

    The principal terms of the Merger shall have been duly approved by the
Required Company Shareholder Vote, and the issuance of Parent Common Stock in
the Merger shall have been duly approved by the Required Parent Stockholder
Vote.

    7.5 DOCUMENTS.

    The Company shall have received the following documents:

    (a) a legal opinion of Fenwick & West LLP, dated as of the Closing Date, to
the effect that the Merger will constitute a reorganization within the meaning
of Section 368 of the Code (it being understood that (i) in rendering such
opinion, Fenwick & West LLP may rely upon the tax representation letters
referred to in Section 5.12, and (ii) if Fenwick & West LLP does not render such
opinion or withdraws or modifies such opinion, this condition shall nonetheless
be deemed to be satisfied if Cooley Godward LLP renders such opinion to the
Company); and

    (b) a certificate executed on behalf of Parent by an executive officer of
Parent, confirming that conditions set forth in Sections 7.1, 7.2, 7.4 (as it
relates to the Required Parent Stockholder Vote) and 7.6 have been duly
satisfied.

    7.6 NO MATERIAL ADVERSE EFFECT.

    Since the date of this Agreement, there shall not have occurred any Material
Adverse Effect on Parent, and no event shall have occurred or circumstance shall
exist that, alone or in combination with any other events or circumstances,
could reasonably be expected to have a Material Adverse Effect on Parent.

    7.7 HSR ACT.

    The waiting period applicable to the consummation of the Merger under the
HSR Act shall have expired or been terminated and, on the Closing Date, there
shall not be in effect any voluntary agreement between Parent and the Federal
Trade Commission or the Department of Justice pursuant to which Parent has
agreed not consummate the Merger for a period of time.

    7.8 LISTING.

    The shares of Parent Common Stock to be issued in the Merger shall have been
approved for listing (subject to notice of issuance) on the Nasdaq National
Market.

    7.9 NO RESTRAINTS.

    No temporary restraining order, preliminary or permanent injunction or other
order preventing the consummation of the Merger by the Company shall have been
issued by any court of competent jurisdiction and remain in effect, and there
shall not be any Legal Requirement enacted or deemed applicable to the Merger
that makes consummation of the Merger by the Company illegal.

                                      A-46
<PAGE>
SECTION 8. TERMINATION

    8.1 TERMINATION.

    This Agreement may be terminated prior to the Effective Time (whether before
or after approval of the principal terms of the Merger by the Company's
shareholders and whether before or after approval of the issuance of Parent
Common Stock in the Merger by Parent's stockholders):

    (a) by mutual written consent of Parent and the Company;

    (b) by either Parent or the Company if the Merger shall not have been
consummated by the End Date (as defined below in this Section 8.1) (unless the
failure to consummate the Merger is attributable to a failure on the part of the
party seeking to terminate this Agreement to perform any material obligation
required to be performed by such party at or prior to the Effective Time);

    (c) by either Parent or the Company if a court of competent jurisdiction or
other Governmental Body shall have issued a final and nonappealable order,
decree or ruling, or shall have taken any other action, having the effect of
permanently restraining, enjoining or otherwise prohibiting the Merger;

    (d) by either Parent or the Company if (i) the Company Shareholders' Meeting
(including any adjournments or postponements thereof) shall have been held and
completed and the Company's shareholders shall have taken a final vote on a
proposal to approve the principal terms of the Merger, and (ii) the principal
terms of the Merger shall not have been approved at such meeting by the Required
Company Shareholder Vote (and shall not have been approved at any adjournment or
postponement thereof); PROVIDED, HOWEVER, that (A) a party shall not be
permitted to terminate this Agreement pursuant to this Section 8.1(d) if the
failure to obtain such shareholder approval is attributable to a failure on the
part of such party to perform any material obligation required to be performed
by such party at or prior to the Effective Time, and (B) the Company shall not
be permitted to terminate this Agreement pursuant to this Section 8.1(d) unless
the Company shall have made the payment required to be made to Parent pursuant
to Section 8.3(a) and shall have paid to Parent any fee required to be paid to
Parent pursuant to Section 8.3(b);

    (e) by either Parent or the Company if (i) the Parent Stockholders' Meeting
(including any adjournments or postponements thereof) shall have been held and
completed and Parent's stockholders shall have taken a final vote on the
issuance of shares of Parent Common Stock in the Merger, and (ii) the issuance
of Parent Common Stock in the Merger shall not have been approved at such
meeting (and shall not have been approved at any adjournment or postponement
thereof) by the Required Parent Stockholder Vote; PROVIDED, HOWEVER, that (A) a
party shall not be permitted to terminate this Agreement pursuant to this
Section 8.1(e) if the failure to obtain such stockholder vote is attributable to
a failure on the part of the party seeking to terminate this Agreement to
perform any material obligation required to be performed by such party at or
prior to the Effective Time, and (B) Parent shall not be permitted to terminate
this Agreement pursuant to this Section 8.1(e) unless Parent shall have made the
payment required to be made to the Company pursuant to Section 8.3(a);

    (f) by Parent (at any time prior to the approval of the principal terms of
the Merger by the Required Company Shareholder Vote) if a Company Triggering
Event shall have occurred;

    (g) by the Company (at any time prior to the approval of the issuance of
Parent Common Stock in the Merger by the Required Parent Stockholder Vote) if a
Parent Triggering Event shall have occurred;

    (h) by Parent if (i) any of the Company's representations and warranties
contained in this Agreement shall be inaccurate as of the date of this
Agreement, or shall have become inaccurate as of a date subsequent to the date
of this Agreement (as if made on such subsequent date), such that the condition
set forth in Section 6.1 would not be satisfied (it being understood that, for
purposes of determining the accuracy of such representations and warranties as
of the date of this Agreement or at any subsequent date, (A) all "Material
Adverse Effect" qualifications and other materiality qualifications, and any
similar qualifications, contained in such representations and warranties shall
be

                                      A-47
<PAGE>
disregarded and (B) any update of or modification to the Company Disclosure
Schedule made or purported to have been made after the date of this Agreement
shall be disregarded), or (ii) any of the Company's covenants contained in this
Agreement shall have been breached such that the condition set forth in
Section 6.2 would not be satisfied; PROVIDED, HOWEVER, that if an inaccuracy in
the Company's representations and warranties or a breach of a covenant by the
Company is curable by the Company and the Company is continuing to exercise all
commercially reasonable efforts to cure such inaccuracy or breach, then Parent
may not terminate this Agreement under this Section 8.1(h) on account of such
inaccuracy or breach;

    (i) by the Company if (i) any of Parent's representations and warranties
contained in this Agreement shall be inaccurate as of the date of this
Agreement, or shall have become inaccurate as of a date subsequent to the date
of this Agreement (as if made on such subsequent date), such that the condition
set forth in Section 7.1 would not be satisfied (it being understood that, for
purposes of determining the accuracy of such representations and warranties as
of the date of this Agreement or at any subsequent date, (A) all "Material
Adverse Effect" qualifications and other materiality qualifications, and any
similar qualifications, contained in such representations and warranties shall
be disregarded and (B) any update of or modification to the Parent Disclosure
Schedule made or purported to have been made after the date of this Agreement
shall be disregarded), or (ii) if any of Parent's covenants contained in this
Agreement shall have been breached such that the condition set forth in
Section 7.2 would not be satisfied; PROVIDED, HOWEVER, that if an inaccuracy in
Parent's representations and warranties or a breach of a covenant by Parent is
curable by Parent and Parent is continuing to exercise all commercially
reasonable efforts to cure such inaccuracy or breach, then the Company may not
terminate this Agreement under this Section 8.1(i) on account of such inaccuracy
or breach;

    (j) by Parent if, since the date of this Agreement, there shall have
occurred any Material Adverse Effect on the Acquired Corporations, or there
shall have occurred any event or circumstance that, in combination with any
other events or circumstances, could reasonably be expected to have a Material
Adverse Effect on the Acquired Corporations; or

    (k) by the Company if, since the date of this Agreement, there shall have
occurred any Material Adverse Effect on Parent, or there shall have occurred any
event or circumstance that, in combination with any other events or
circumstances, could reasonably be expected to have a Material Adverse Effect on
Parent.

    For purposes of Section 8.1(b), the term "End Date" shall mean May 31, 2000;
PROVIDED, HOWEVER, that if on May 31, 2000 (i) (A) the waiting period applicable
to the consummation of the Merger under the HSR Act shall not have expired or
been terminated or there shall be in effect a voluntary agreement between Parent
and the Federal Trade Commission or the Department of Justice pursuant to which
Parent has agreed not to consummate the Merger for a period of time or a
temporary restraining order issued upon the motion of the Federal Trade
Commission or the Department of Justice is in effect precluding the consummation
of the Merger, (B) any similar waiting period under any applicable foreign
antitrust law or regulation shall not have expired or been terminated, or
(C) any Consent required under any applicable foreign antitrust law or
regulation shall not have been obtained, and (ii) all other conditions contained
in Sections 6 and 7 that are not related to any of the matters referred to in
clause "(A)," "(B)" or "(C)" of this sentence shall have been satisfied or
waived, then the End Date shall be July 31, 2000.

    8.2 EFFECT OF TERMINATION.

    In the event of the termination of this Agreement as provided in
Section 8.1, this Agreement shall be of no further force or effect; PROVIDED,
HOWEVER, that (i) this Section 8.2, Section 8.3 and Section 9 (and those certain
letter agreements dated September 7, 1999 and referred to in Section 9.4) shall
survive the termination of this Agreement and shall remain in full force and
effect, and (ii) the

                                      A-48
<PAGE>
termination of this Agreement shall not relieve any party from any liability for
any willful breach of any representation, warranty or covenant contained in this
Agreement.

    8.3 EXPENSES; TERMINATION FEES.

    (a) Except as set forth in this Section 8.3, all fees and expenses incurred
in connection with this Agreement and the transactions contemplated by this
Agreement shall be paid by the party incurring such expenses, whether or not the
Merger is consummated; PROVIDED, HOWEVER, that: (i) Parent and the Company shall
share equally all fees and expenses, other than attorneys' fees, incurred in
connection with (A) the filing, printing and mailing of the Form S-4
Registration Statement and the Joint Proxy Statement and any amendments or
supplements thereto and (B) the filing of the premerger notification and report
forms relating to the Merger under the HSR Act and the filing of any notice or
other document under any applicable foreign antitrust law or regulation;
(ii) if this Agreement is terminated by Parent or the Company pursuant to
Section 8.1(d), then, at the time specified in the next sentence, the Company
shall make a nonrefundable cash payment to Parent (in addition to any other
amount that may be payable pursuant to Section 8.3(b) or otherwise) in an amount
equal to the aggregate amount of all fees and expenses (including all reasonable
attorneys' fees, accountants' fees, financial advisory fees and filing fees up
to a maximum of $2,000,000) that have been paid or that may become payable by or
on behalf of Parent in connection with the preparation and negotiation of this
Agreement and the Stock Option Agreement and otherwise in connection with the
Merger; and (iii) if this Agreement is terminated by Parent or the Company
pursuant to Section 8.1(e), then, at the time specified in the last sentence of
this Section 8.3(a), Parent shall make a nonrefundable cash payment to the
Company in an amount equal to the aggregate amount of all fees and expenses
(including all reasonable attorneys' fees, accountants fees, financial advisory
fees and filing fees up to a maximum of $2,000,000) that have been paid or that
may become payable by or on behalf of the Company in connection with the
preparation and negotiation of this Agreement and the Stock Option Agreement and
otherwise in connection with the Merger. In the case of termination of this
Agreement by the Company pursuant to Section 8.1(d), the nonrefundable payment
referred to in clause "(ii)" of the proviso to the first sentence of this
Section 8.3(a) shall be made by the Company prior to such termination; and in
the case of termination of this Agreement by Parent pursuant to Section 8.1(d),
the nonrefundable payment referred to in clause "(ii)" of the proviso to the
first sentence of this Section 8.3(a) shall be made by the Company within two
business days after such termination. In the case of termination of this
Agreement by Parent pursuant to Section 8.1(e), the nonrefundable payment
referred to in clause "(iii)" of the proviso to the first sentence of this
Section 8.3(a) shall be made by Parent prior to such termination; and in the
case of termination of this Agreement by the Company pursuant to
Section 8.1(e), the nonrefundable payment referred to in clause "(iii)" of the
proviso to the first sentence of this Section 8.3(a) shall be paid by Parent
within two business days after such termination.

    (b) If (i) (A) this Agreement is terminated by Parent or the Company
pursuant to Section 8.1(d) and (B) at or prior to the time of such termination
an Acquisition Proposal shall have been disclosed, announced, commenced,
submitted or made, or (ii) this Agreement is terminated by Parent pursuant to
Section 8.1(f), then, in either such case, the Company shall pay to Parent, in
cash at the time specified in the next sentence (and in addition to any payment
required to be made pursuant to Section 8.3(a)), a nonrefundable fee in the
amount of $16,000,000. In the case of termination of this Agreement by the
Company pursuant to Section 8.1(d), the fee referred to in the preceding
sentence shall be paid by the Company prior to such termination, and in the case
of termination of this Agreement by Parent pursuant to Section 8.1(d) or
Section 8.1(f), the fee referred to in the preceding sentence shall be paid by
the Company within two business days after such termination.

    (c) If this Agreement is terminated by the Company pursuant to
Section 8.1(g), then Parent shall pay to the Company, in cash within two
business days after such termination, a nonrefundable fee in the amount of
$16,000,000.

                                      A-49
<PAGE>
SECTION 9. MISCELLANEOUS PROVISIONS

    9.1 AMENDMENT.

    This Agreement may be amended with the approval of the respective boards of
directors of the Company and Parent at any time (whether before or after
approval of the principal terms of the Merger by the shareholders of the Company
and whether before or after approval of the issuance of Parent Common Stock in
the Merger by Parent's stockholders); PROVIDED, HOWEVER, that (i) after any such
approval of the principal terms of the Merger by the Company's shareholders, no
amendment shall be made which by law requires further approval of the
shareholders of the Company without the further approval of such shareholders,
and (ii) after any such approval of the issuance of Parent Common Stock in the
Merger by Parent's stockholders, no amendment shall be made which by law or NASD
regulation requires further approval of Parent's stockholders without the
further approval of such stockholders. This Agreement may not be amended except
by an instrument in writing signed on behalf of each of the parties hereto.

    9.2 WAIVER.

    (a) No failure on the part of any party to exercise any power, right,
privilege or remedy under this Agreement, and no delay on the part of any party
in exercising any power, right, privilege or remedy under this Agreement, shall
operate as a waiver of such power, right, privilege or remedy; and no single or
partial exercise of any such power, right, privilege or remedy shall preclude
any other or further exercise thereof or of any other power, right, privilege or
remedy.

    (b) No party shall be deemed to have waived any claim arising out of this
Agreement, or any power, right, privilege or remedy under this Agreement, unless
the waiver of such claim, power, right, privilege or remedy is expressly set
forth in a written instrument duly executed and delivered on behalf of such
party; and any such waiver shall not be applicable or have any effect except in
the specific instance in which it is given.

    9.3 NO SURVIVAL OF REPRESENTATIONS AND WARRANTIES.

    None of the representations and warranties contained in this Agreement or in
any certificate delivered pursuant to this Agreement shall survive the Merger.

    9.4 ENTIRE AGREEMENT; COUNTERPARTS.

    This Agreement and the Stock Option Agreement constitute the entire
agreement and supersede the Letter Agreement and all other prior agreements and
understandings, both written and oral, among or between any of the parties with
respect to the subject matter hereof and thereof; PROVIDED, HOWEVER, that those
certain letter agreements dated September 7, 1999 between the Company and Parent
(relating to the protection of confidential information) shall not be superceded
and shall remain in full force and effect. This Agreement may be executed in
several counterparts, each of which shall be deemed an original and all of which
shall constitute one and the same instrument.

    9.5 APPLICABLE LAW; JURISDICTION.

    This Agreement shall be governed by, and construed in accordance with, the
laws of the State of California, regardless of the laws that might otherwise
govern under applicable principles of conflicts of laws thereof. In any action
between any of the parties arising out of or relating to this Agreement or any
of the transactions contemplated by this Agreement: (a) each of the parties
irrevocably and unconditionally consents and submits to the exclusive
jurisdiction and venue of the state and federal courts located in the State of
California; (b) if any such action is commenced in a state court, then, subject
to applicable law, no party shall object to the removal of such action to any
federal court located in the Northern District of California; (c) each of the
parties irrevocably waives the right to trial by jury; and (d) each of the
parties irrevocably consents to service of process by first class certified
mail, return receipt requested, postage prepaid, to the address at which such
party is to receive notice in accordance with Section 9.9.

                                      A-50
<PAGE>
    9.6 DISCLOSURE SCHEDULE.

    The Company Disclosure Schedule shall be arranged in separate parts
corresponding to the numbered and lettered sections contained in Section 2, and
the information disclosed in any numbered or lettered part shall be deemed to
relate to and to qualify the particular representation or warranty set forth in
the corresponding numbered or lettered section in Section 2 and all other
applicable representations or warranties to which the relevancy of such
disclosure is readily apparent. The Parent Disclosure Schedule shall be arranged
in separate parts corresponding to the numbered and lettered sections contained
in Section 3, and the information disclosed in any numbered or lettered part
shall be deemed to relate to and to qualify the particular representation or
warranty set forth in the corresponding numbered or lettered section in
Section 3 and all other applicable representations or warranties to which the
relevancy of such disclosure is readily apparent.

    9.7 ATTORNEYS' FEES.

    In any action at law or suit in equity to enforce this Agreement or the
rights of any of the parties hereunder, the prevailing party in such action or
suit shall be entitled to receive a reasonable sum for its attorneys' fees and
all other reasonable costs and expenses incurred in such action or suit.

    9.8 ASSIGNABILITY.

    This Agreement shall be binding upon, and shall be enforceable by and inure
solely to the benefit of, the parties hereto and their respective successors and
assigns; PROVIDED, HOWEVER, that neither this Agreement nor any of the rights
hereunder may be assigned by any party without the prior written consent of the
other parties, and any attempted assignment of this Agreement or any of such
rights hereunder without such consent shall be void and of no effect. Nothing in
this Agreement, express or implied, is intended to or shall confer upon any
Person (other than the parties hereto) any right, benefit or remedy of any
nature whatsoever under or by reason of this Agreement.

    9.9 NOTICES.

    Any notice or other communication required or permitted to be delivered to
any party under this Agreement shall be in writing and shall be deemed properly
delivered, given and received when delivered (by hand, by registered mail, by
courier or express delivery service or by facsimile) to the address or facsimile
telephone number set forth beneath the name of such party below (or to such
other address or facsimile telephone number as such party shall have specified
in a written notice given to the other parties hereto):

        IF TO PARENT OR MERGER SUB:

           Richard W. Kraber
           Wind River Systems, Inc.
           500 Wind River Way
           Alameda, CA 94501
           Facsimile No. (510) 749-2880

           WITH A COPY TO:

           Alan C. Mendelson, Esq.
           Richard E. Climan, Esq.
           Keith A. Flaum, Esq.
           Cooley Godward LLP
           Five Palo Alto Square
           3000 El Camino Real
           Palo Alto, CA 94306-2155
           Facsimile No. (650) 857-0663

                                      A-51
<PAGE>
        IF TO THE COMPANY:

           Charles M. Boesenberg
           Integrated Systems, Inc.
           201 Moffett Park Drive
           Sunnyvale, CA 94089
           Facsimile No. (650) 857-0663

           WITH A COPY TO:

           Fred M. Greguras, Esq.
           William Schreiber, Esq.
           Fenwick & West LLP
           Two Palo Alto Square
           3000 El Camino Real
           Palo Alto, CA 94306
           Facsimile No. (650) 494-1417

    9.10 COOPERATION.

    The Company agrees to cooperate fully with Parent and to execute and deliver
such further documents, certificates, agreements and instruments and to take
such other actions as may be reasonably requested by Parent to evidence or
reflect the transactions contemplated by this Agreement and to carry out the
intent and purposes of this Agreement.

    9.11 CONSTRUCTION.

    (a) For purposes of this Agreement, whenever the context requires: the
singular number shall include the plural, and vice versa; the masculine gender
shall include the feminine and neuter genders; the feminine gender shall include
the masculine and neuter genders; and the neuter gender shall include masculine
and feminine genders.

    (b) The parties hereto agree that any rule of construction to the effect
that ambiguities are to be resolved against the drafting party shall not be
applied in the construction or interpretation of this Agreement.

    (c) As used in this Agreement, the words "include" and "including," and
variations thereof, shall not be deemed to be terms of limitation, but rather
shall be deemed to be followed by the words "without limitation."

    (d) Except as otherwise indicated, all references in this Agreement to
"Sections" and "Exhibits" are intended to refer to Sections of this Agreement
and Exhibits to this Agreement.

                                      A-52
<PAGE>
    IN WITNESS WHEREOF, the parties have caused this Agreement to be executed as
of the date first above written.

<TABLE>
<S>                                                    <C>  <C>
                                                       WIND RIVER SYSTEMS, INC.

                                                       By:  /s/ JERRY L. FIDDLER
                                                            -----------------------------------------
                                                            Name: Jerry L. Fiddler
                                                            Title:  Chairman

                                                       UNIVERSITY ACQUISITION CORP.

                                                       By:  /s/ THOMAS ST. DENNIS
                                                            -----------------------------------------
                                                            Name: Thomas St. Dennis
                                                            Title:  President

                                                       INTEGRATED SYSTEMS, INC.

                                                       By:  /s/ NARENDRA K. GUPTA
                                                            -----------------------------------------
                                                            Name: Narendra K. Gupta
                                                            Title:  Chairman
</TABLE>

                                      A-53
<PAGE>
                                   EXHIBIT A
                              CERTAIN DEFINITIONS

    For purposes of the Agreement (including this Exhibit A):

    ACQUIRED CORPORATION CONTRACT.  "Acquired Corporation Contract" shall mean
any Contract: (a) to which any of the Acquired Corporations is a party; (b) by
which any of the Acquired Corporations or any asset of any of the Acquired
Corporations is or may become bound or under which any of the Acquired
Corporations has, or may become subject to, any obligation; or (c) under which
any of the Acquired Corporations has or may acquire any right or interest.

    ACQUIRED CORPORATION PROPRIETARY ASSET.  "Acquired Corporation Proprietary
Asset" shall mean any Proprietary Asset owned by or licensed to any of the
Acquired Corporations or otherwise used by any of the Acquired Corporations.

    ACQUIRED CORPORATION SOURCE CODE.  "Acquired Corporation Source Code" shall
mean any source code, or any portion, aspect or segment of any source code,
relating to any Proprietary Asset owned by or licensed to any of the Acquired
Corporations or otherwise used by any of the Acquired Corporations.

    ACQUISITION PROPOSAL.  "Acquisition Proposal" shall mean any offer,
proposal, inquiry or indication of interest (other than an offer, proposal,
inquiry or indication of interest by Parent) contemplating or otherwise relating
to any Acquisition Transaction.

    ACQUISITION TRANSACTION.  "Acquisition Transaction" shall mean any
transaction or series of transactions involving:

        (a) any merger, consolidation, share exchange, business combination,
    issuance of securities, acquisition of securities, tender offer, exchange
offer or other similar transaction (i) in which any of the Acquired Corporations
is a constituent corporation, (ii) in which a Person or "group" (as defined in
the Exchange Act and the rules promulgated thereunder) of Persons directly or
indirectly acquires beneficial or record ownership of securities representing
more than 20% of the outstanding securities of any class of voting securities of
any of the Acquired Corporations, or (iii) in which any of the Acquired
Corporations issues securities representing more than 20% of the outstanding
securities of any class of voting securities of any of the Acquired
Corporations;

        (b) any sale, lease, exchange, transfer, license, acquisition or
    disposition of any business or businesses or assets that constitute or
account for 20% or more of the consolidated net revenues, net income or assets
of any of the Acquired Corporations; or

        (c) any liquidation or dissolution of any of the Acquired Corporations.

    AGREEMENT.  "Agreement" shall mean the Agreement and Plan of Merger and
Reorganization to which this Exhibit A is attached, as it may be amended from
time to time.

    COMPANY COMMON STOCK.  "Company Common Stock" shall mean the Common Stock,
no par value, of the Company.

    COMPANY DISCLOSURE SCHEDULE.  "Company Disclosure Schedule" shall mean the
disclosure schedule that has been prepared by the Company in accordance with the
requirements of Section 9.6 of the Agreement and that has been delivered by the
Company to Parent on the date of this Agreement and signed by the President of
the Company.

    COMPANY PREFERRED STOCK.  "Company Preferred Stock" shall mean the Preferred
Stock, no par value, of the Company.

                                      A-54
<PAGE>
    COMPANY TRIGGERING EVENT.  A "Company Triggering Event" shall be deemed to
have occurred if: (i) the board of directors of the Company shall have failed to
recommend that the Company's shareholders vote to approve the principal terms of
the Merger, or shall have withdrawn or modified in a manner adverse to Parent
the Company Board Recommendation, or shall have taken any other action which is
reasonably determined by Parent to suggest that the board of directors of the
Company might not support the Merger or might not believe that the Merger is in
the best interests of the Company's shareholders; (ii) the Company shall have
failed to include in the Proxy Statement the Company Board Recommendation or a
statement to the effect that the board of directors of the Company has
determined and believes that the Merger is in the best interests of the
Company's shareholders; (iii) the board of directors of the Company fails to
reaffirm the Company Board Recommendation, or fails to reaffirm its
determination that the Merger is in the best interests of the Company's
shareholders, within five business days after Parent requests in writing that
such recommendation or determination be reaffirmed; (iv) the board of directors
of the Company shall have approved, endorsed or recommended any Acquisition
Proposal; (v) the Company shall have entered into any letter of intent or
similar document or any Contract relating to any Acquisition Proposal; (vi) the
Company shall have failed to hold the Company Shareholders' Meeting as promptly
as practicable and in any event within 45 days after the Form S-4 Registration
Statement is declared effective under the Securities Act; (vii) a tender or
exchange offer relating to securities of the Company shall have been commenced
and the Company shall not have sent to its securityholders, within 10 business
days after the commencement of such tender or exchange offer, a statement
disclosing that the Company recommends rejection of such tender or exchange
offer; (viii) an Acquisition Proposal is publicly announced, and the Company
(A) fails to issue a press release announcing its opposition to such Acquisition
Proposal within five business days after such Acquisition Proposal is announced
or (B) otherwise fails to actively oppose such Acquisition Proposal; or
(ix) any of the Acquired Corporations or any Representative of any of the
Acquired Corporations shall have violated any of the restrictions set forth in
Section 4.3.

    COMPANY UNAUDITED INTERIM BALANCE SHEET.  "Company Unaudited Interim Balance
Sheet" shall mean the unaudited consolidated balance sheet of the Company and
its consolidated Subsidiaries as of August 31, 1999 included in the Company SEC
Documents.

    CONSENT.  "Consent" shall mean any approval, consent, ratification,
permission, waiver or authorization (including any Governmental Authorization).

    CONTRACT.  "Contract" shall mean any written, oral or other agreement,
contract, subcontract, lease, understanding, instrument, note, option, warranty,
purchase order, license, sublicense, insurance policy, benefit plan or legally
binding commitment or undertaking of any nature.

    ENCUMBRANCE.  "Encumbrance" shall mean any lien, pledge, hypothecation,
charge, mortgage, security interest, encumbrance, claim, infringement,
interference, option, right of first refusal, preemptive right, community
property interest or restriction of any nature (including any restriction on the
voting of any security, any restriction on the transfer of any security or other
asset, any restriction on the receipt of any income derived from any asset, any
restriction on the use of any asset and any restriction on the possession,
exercise or transfer of any other attribute of ownership of any asset).

    ENTITY.  "Entity" shall mean any corporation (including any non-profit
corporation), general partnership, limited partnership, limited liability
partnership, joint venture, estate, trust, company (including any limited
liability company or joint stock company), firm or other enterprise,
association, organization or entity.

    EXCHANGE ACT.  "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended.

                                      A-55
<PAGE>
    FORM S-4 REGISTRATION STATEMENT.  "Form S-4 Registration Statement" shall
mean the registration statement on Form S-4 to be filed with the SEC by Parent
in connection with issuance of Parent Common Stock in the Merger, as said
registration statement may be amended prior to the time it is declared effective
by the SEC.

    GOVERNMENTAL AUTHORIZATION.  "Governmental Authorization" shall mean any:
(a) permit, license, certificate, franchise, permission, variance, clearance,
registration, qualification or authorization issued, granted, given or otherwise
made available by or under the authority of any Governmental Body or pursuant to
any Legal Requirement; or (b) right under any Contract with any Governmental
Body.

    GOVERNMENTAL BODY.  "Governmental Body" shall mean any: (a) nation, state,
commonwealth, province, territory, county, municipality, district or other
jurisdiction of any nature; (b) federal, state, local, municipal, foreign or
other government; or (c) governmental or quasi-governmental authority of any
nature (including any governmental division, department, agency, commission,
instrumentality, official, organization, unit, body or Entity and any court or
other tribunal).

    HSR ACT.  "HSR Act" shall mean the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended.

    JOINT PROXY STATEMENT.  "Joint Proxy Statement" shall mean the joint proxy
statement/prospectus to be sent to the Company's shareholders in connection with
the Company Shareholders' Meeting and to Parent's stockholders in connection
with the Parent Stockholders' Meeting.

    LEGAL PROCEEDING.  "Legal Proceeding" shall mean any action, suit,
litigation, arbitration, proceeding (including any civil, criminal,
administrative, investigative or appellate proceeding), hearing, inquiry, audit,
examination or investigation commenced, brought, conducted or heard by or
before, or otherwise involving, any court or other Governmental Body or any
arbitrator or arbitration panel.

    LEGAL REQUIREMENT.  "Legal Requirement" shall mean any federal, state,
local, municipal, foreign or other law, statute, constitution, principle of
common law, resolution, ordinance, code, edict, decree, rule, regulation, ruling
or requirement issued, enacted, adopted, promulgated, implemented or otherwise
put into effect by or under the authority of any Governmental Body (or under the
authority of the Nasdaq National Market).

    MATERIAL ADVERSE EFFECT.  An event, violation, inaccuracy, circumstance or
other matter will be deemed to have a "Material Adverse Effect" on the Acquired
Corporations if such event, violation, inaccuracy, circumstance or other matter
(considered together with all other matters that would constitute exceptions to
the representations and warranties set forth in the Agreement but for the
presence of "Material Adverse Effect" or other materiality qualifications, or
any similar qualifications, in such representations and warranties) had or would
have a material adverse effect on (i) the business, condition, capitalization,
assets, liabilities, operations or financial performance of the Acquired
Corporations taken as a whole, (ii) the ability of the Company to consummate the
Merger or any of the other transactions contemplated by the Agreement or to
perform any of its obligations under the Agreement, or (iii) Parent's ability to
vote, receive dividends with respect to or otherwise exercise ownership rights
with respect to the stock of the Surviving Corporation; PROVIDED, HOWEVER, that
in no event shall any of the following, in and of themselves, constitute a
Material Adverse Effect on the Acquired Corporations: (A) a material decline in
revenues or net income recorded by the Acquired Corporations after the date of
the Agreement, or a material loss of customers or employees by the Acquired
Corporations after the date of the Agreement, or any other change in the
business of the Acquired Corporations after the date of the Agreement, to the
extent that such decline, loss or change resulted directly from the public
announcement or pendency of the Merger, and (B) a change in the Company's stock
price. An event, violation, inaccuracy, circumstance or other matter will be
deemed to have a "Material Adverse Effect" on Parent if such event, violation,
inaccuracy, circumstance or other

                                      A-56
<PAGE>
matter (considered together with all other matters that would constitute
exceptions to the representations and warranties set forth in the Agreement but
for the presence of "Material Adverse Effect" or other materiality
qualifications, or any similar qualifications, in such representations and
warranties) had or would have a material adverse effect on the business,
condition, capitalization, assets, liabilities, operations or financial
performance of Parent and its Subsidiaries taken as a whole; PROVIDED, HOWEVER,
that in no event shall any of the following, in and of themselves, constitute a
Material Adverse Effect on Parent: (A) a material decline in revenues or net
income recorded by Parent after the date of the Agreement, or a material loss of
customers or employees by Parent after the date of the Agreement, or any other
change in the business of Parent after the date of the Agreement, to the extent
that such decline, loss or change resulted directly from the public announcement
or pendency of the Merger, and (B) a change in Parent's stock price.

    PARENT COMMON STOCK.  "Parent Common Stock" shall mean the Common Stock,
$.001 par value per share, of Parent.

    PARENT PREFERRED STOCK.  "Parent Preferred Stock" shall mean the Preferred
Stock, $0.001 par value, of Parent.

    PARENT TRIGGERING EVENT.  A "Parent Triggering Event" shall be deemed to
have occurred if: (i) the board of directors of Parent shall have failed to
recommend that Parent's stockholders vote to approve the issuance of Parent
Common Stock in the Merger, or shall for any reason have withdrawn or shall have
modified in a manner adverse to the Company the Parent Board Recommendation; or
(ii) Parent shall have failed to include in the Joint Proxy Statement the Parent
Board Recommendation.

    PARENT UNAUDITED INTERIM BALANCE SHEET.  "Parent Unaudited Interim Balance
Sheet" shall mean the unaudited consolidated balance sheet of Parent and its
consolidated Subsidiaries as of July 31, 1999 included in the Parent SEC
Documents.

    PERSON.  "Person" shall mean any individual, Entity or Governmental Body.

    PROPRIETARY ASSET.  "Proprietary Asset" shall mean any: (a) patent, patent
application, trademark (whether registered or unregistered), trademark
application, trade name, fictitious business name, service mark (whether
registered or unregistered), service mark application, copyright (whether
registered or unregistered), copyright application, maskwork, maskwork
application, trade secret, know-how, customer list, franchise, system, computer
software, computer program, source code, algorithm, invention, design,
blueprint, engineering drawing, proprietary product, technology, proprietary
right or other intellectual property right or intangible asset; or (b) right to
use or exploit any of the foregoing.

    REPRESENTATIVES.  "Representatives" shall mean officers, directors,
employees, agents, attorneys, accountants, advisors and representatives.

    SEC.  "SEC" shall mean the United States Securities and Exchange Commission.

    SECURITIES ACT.  "Securities Act" shall mean the Securities Act of 1933, as
amended.

    SUBSIDIARY.  An entity shall be deemed to be a "Subsidiary" of another
Person if such Person directly or indirectly owns, beneficially or of record, an
amount of voting securities of other interests in such Entity that is sufficient
to enable such Person to elect at leased a majority of the members of such
Entity's board of directors or other governing body, or (b) at least 50% of the
outstanding equity or financial interests of such Entity.

    SUPERIOR OFFER.  "Superior Offer" shall mean an unsolicited, bona fide
written offer made by a third party to purchase all of the outstanding Company
Common Stock on terms that the board of directors of the Company determines, in
its reasonable judgment, based upon a written opinion of an

                                      A-57
<PAGE>
independent financial advisor of nationally recognized reputation, to be more
favorable to the Company's shareholders than the terms of the Merger; PROVIDED,
HOWEVER, that any such offer shall not be deemed to be a "Superior Offer" if any
financing required to consummate the transaction contemplated by such offer is
not committed and is not reasonably capable of being obtained by such third
party.

    TAX.  "Tax" shall mean any tax (including any income tax, franchise tax,
capital gains tax, gross receipts tax, value-added tax, surtax, excise tax, ad
valorem tax, transfer tax, stamp tax, sales tax, use tax, property tax, business
tax, withholding tax or payroll tax), levy, assessment, tariff, duty (including
any customs duty), deficiency or fee, and any related charge or amount
(including any fine, penalty or interest), imposed, assessed or collected by or
under the authority of any Governmental Body.

    TAX RETURN.  "Tax Return" shall mean any return (including any information
return), report, statement, declaration, estimate, schedule, notice,
notification, form, election, certificate or other document or information filed
with or submitted to, or required to be filed with or submitted to, any
Governmental Body in connection with the determination, assessment, collection
or payment of any Tax or in connection with the administration, implementation
or enforcement of or compliance with any Legal Requirement relating to any Tax.

                                      A-58
<PAGE>
                                                                         ANNEX B

                             STOCK OPTION AGREEMENT

    THIS STOCK OPTION AGREEMENT (the "Option Agreement") is entered into as of
October 21, 1999, by and between INTEGRATED SYSTEMS, INC., a California
corporation (the "Company"), and WIND RIVER SYSTEMS, INC., a Delaware
corporation (the "Grantee").

                                    RECITALS

    A.  The Grantee, University Acquisition Corp., a Delaware corporation and a
wholly owned subsidiary of the Grantee ("Merger Sub"), and the Company are
entering into an Agreement and Plan of Merger and Reorganization of even date
(as amended from time to time, the "Reorganization Agreement"), which provides
(subject to the conditions set forth therein) for the merger of Merger Sub into
the Company (the "Merger").

    B.  As a condition to the willingness of the Grantee to enter into the
Reorganization Agreement, the Grantee has required that the Company enter into,
and in order to induce the Grantee to enter into the Reorganization Agreement,
the Company has agreed to enter into, this Option Agreement.

                                   AGREEMENT

    The parties to this Option Agreement, intending to be legally bound, agree
as follows:

    1.  CERTAIN DEFINITIONS.  Capitalized terms used but not defined in this
Option Agreement shall have the meanings ascribed to such terms in the
Reorganization Agreement.

    2.  GRANT OF OPTION.  The Company hereby grants to the Grantee an
irrevocable option (the "Option") to purchase, out of the authorized but
unissued Company Common Stock, a number of shares of Company Common Stock equal
to up to 10% of the shares of Company Common Stock outstanding as of the date
hereof (as adjusted as set forth herein, the "Option Shares"), at a price per
Option Share equal to the Exercise Price. For purposes of this Option Agreement,
the "Exercise Price" shall be equal to $18.46.

    3.  TERM.  The Option shall terminate on the earliest of the following dates
(the "Termination Date"): (a) the date on which the Merger becomes effective;
(b) 180 days after the date on which the Grantee receives written notice from
the Company of the occurrence of an Exercise Event (as defined in Section 4(b));
or (c) the date on which the Reorganization Agreement is validly terminated
pursuant to Section 8.1 thereof, if an Exercise Event shall not have occurred on
or prior to such date; PROVIDED, HOWEVER, that with respect to clause "(b)" of
this sentence, if the Option cannot be exercised within such 180 day period by
reason of any applicable law, regulation, order, judgment, decree or other legal
impediment, then (subject to the additional limitations set forth in Section
4(d) hereof) the Termination Date shall be extended until the date 30 days after
the date on which such impediment is removed. The rights and obligations set
forth in Section 7 shall not terminate on the Termination Date, but shall extend
to such time as is provided in that Section.

    4.  EXERCISE OF OPTION.

        (A) The Grantee may exercise the Option, in whole or in part, at any
    time and from time to time on or before the Termination Date following the
    occurrence of an Exercise Event (as defined in Section 4(b)).
    Notwithstanding the occurrence of the Termination Date, the Grantee shall be
    entitled to purchase those Option Shares with respect to which it has
    exercised the Option in accordance with the terms hereof prior to the
    Termination Date.

        (B) As used herein, an "Exercise Event" shall be deemed to have occurred
    if:

                                      B-1
<PAGE>
           (I) either the Grantee or the Company shall have the right to
       terminate the Reorganization Agreement pursuant to Section 8.1(d) thereof
       and an Acquisition Proposal shall have been previously disclosed,
       announced, commenced, submitted or made; or

           (II) the Grantee shall have the right to terminate the Reorganization
       Agreement pursuant to Section 8.1(f) thereof.

        (C) In the event the Grantee wishes to exercise the Option with respect
    to any Option Shares, the Grantee shall send to the Company a written notice
    (the date of which being herein referred to as the "Notice Date")
    specifying: (i) the number of Option Shares the Grantee will purchase;
    (ii) the place at which such Option Shares are to be purchased; and
    (iii) the date on which such Option Shares are to be purchased, which shall
    not be earlier than two business days nor later than twenty business days
    after the Notice Date. The closing of the purchase of such Option Shares
    (the "Closing") shall take place at the place specified in such written
    notice and on the date specified in such written notice (the "Closing
    Date"); PROVIDED, HOWEVER, that: (A) if such purchase cannot be consummated
    by reason of any applicable law, regulation, order, judgment, decree or
    other legal impediment, the Closing Date may be extended by the Grantee to a
    date not more than 30 days after the date on which such impediment is
    removed; and (B) if prior notification to or approval of any governmental
    authority is required (or if any waiting period must expire or be
    terminated) in connection with such purchase, the Company shall promptly
    cause to be filed the required notice or application for approval and shall
    expeditiously process the same (and the Company shall cooperate with the
    Grantee in the filing of any such notice or application required to be filed
    by the Grantee and the obtaining of any such approval required to be
    obtained by the Grantee), and the Closing Date may be extended by the
    Grantee to a date not more than 30 days after the date on which any required
    notification has been made, approval has been obtained or waiting period has
    expired or been terminated.

        (D) Notwithstanding Sections 3 and 4(c), in no event shall any Closing
    Date be more than 12 months after the related Notice Date, and, if the
    Closing Date shall not have occurred within 12 months after the related
    Notice Date, the exercise of the Option effected on the Notice Date shall be
    deemed to have expired.

    5.  PAYMENT AND DELIVERY OF CERTIFICATES.

        (A) On each Closing Date, the Grantee shall pay to the Company in
    immediately available funds by wire transfer to a bank account designated by
    the Company an amount equal to the Exercise Price multiplied by the Option
    Shares to be purchased on such Closing Date.

        (B) At each Closing, simultaneously with the delivery of immediately
    available funds as provided in Section 5(a), the Company shall deliver to
    the Grantee a certificate or certificates representing the Option Shares to
    be purchased at such Closing, which Option Shares shall be duly authorized,
    validly issued, fully paid and nonassessable and free and clear of all
    liens, security interests, charges or other encumbrances ("Encumbrances").

        (C) Certificates for the Option Shares delivered at each Closing shall
    be endorsed with a restrictive legend that shall read substantially as
    follows:

     THE TRANSFER OF THE STOCK REPRESENTED BY THIS CERTIFICATE IS SUBJECT TO
    RESTRICTIONS ARISING UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND
    PURSUANT TO THE TERMS OF A STOCK OPTION AGREEMENT DATED AS OF OCTOBER 21,
    1999. A COPY OF SUCH AGREEMENT WILL BE PROVIDED TO THE HOLDER HEREOF WITHOUT
    CHARGE UPON RECEIPT BY THE COMPANY OF A WRITTEN REQUEST THEREFOR.

                                      B-2
<PAGE>
    A new certificate or certificates evidencing the same number of shares of
    the Company Common Stock will be issued to the Grantee in lieu of the
    certificate bearing the above legend, and such new certificate shall not
    bear such legend, insofar as it applies to the Securities Act, if the
    Grantee shall have delivered to the Company a copy of a letter from the
    staff of the SEC, or an opinion of counsel in form and substance reasonably
    satisfactory to the Company and its counsel, to the effect that such legend
    is not required for purposes of the Securities Act.

    6.  ADJUSTMENT UPON CHANGES IN CAPITALIZATION, ETC.

        (A) In the event of any change in the Company Common Stock by reason of
    a stock divided, split-up, combination, recapitalization, exchange of shares
    or similar transaction, the type and number of shares or securities subject
    to the Option, and the Exercise Price therefor, shall be adjusted
    appropriately, and proper provision shall be made in the agreements
    governing such transaction, so that the Grantee shall receive upon exercise
    of the Option the same class and number of outstanding shares or other
    securities or property that Grantee would have received in respect of the
    Company Common Stock if the Option had been exercised immediately prior to
    such event or the record date therefor, as applicable. If any additional
    shares of Company Common Stock are issued after the date of this Option
    Agreement (other than pursuant to an event described in the first sentence
    of this Section 6(a)), the number of shares of Company Common Stock then
    remaining subject to the Option shall be adjusted so that, after such
    issuance of additional shares, such number of shares then remaining subject
    to the Option, together with any shares theretofore issued pursuant to the
    Option, equals 10% of the number of shares of the Company Common Stock then
    issued and outstanding.

        (B) If the Company shall enter into an agreement (i) to consolidate,
    exchange, shares or merge with any Person, other than the Grantee or one of
    the Grantee's subsidiaries, and, in the case of a merger, shall not be the
    continuing or surviving corporation, (ii) to permit any Person, other than
    the Grantee or one of the Grantee's subsidiaries, to merge into the Company
    and the Company shall be the continuing or surviving corporation, but, in
    connection with such merger, the then outstanding shares of Company Common
    Stock shall be changed into or exchanged for stock or other securities of
    the Company or any other Person or cash or any other property, or the shares
    of Company Common Stock outstanding immediately before such merger shall
    after such merger represent less than 50% of the common shares and common
    share equivalents of the Company outstanding immediately after the merger,
    or (iii) to sell, lease or otherwise transfer all or substantially all of
    its assets to any Person, other than the Grantee or one of the Grantee's
    subsidiaries, then, and in each such case, proper provision shall be made in
    the agreement governing such transactions so that the Option shall, upon the
    consummation of any such transaction and upon the terms and conditions set
    forth herein, become exercisable for the stock, securities, cash or other
    property that would have been received by the Grantee if the Grantee had
    exercised this Option immediately prior to such transaction or the record
    date for determining the stockholders entitled to participate therein, as
    appropriate.

        (C) The provisions of Section 7 shall apply with appropriate adjustments
    to any securities for which the Option becomes exercisable pursuant to this
    Section 6.

    7.  REGISTRATION RIGHTS.

        (A) The Company shall, if requested by the Grantee at any time and from
    time to time within two years of the first exercise of the Option (the
    "Registration Period"), as expeditiously as practicable, prepare, file and
    cause to be made effective up to two registration statements under the
    Securities Act if such registration is necessary or desirable in order to
    permit the offering, sale and delivery of any or all shares of Company
    Common Stock or other securities that have been acquired by or are issuable
    to the Grantee upon exercise of the Option in accordance with the intended
    method of sale or other disposition stated by the Grantee, including, at the
    sole

                                      B-3
<PAGE>
    discretion of the Company, a "shelf" registration statement under Rule 415
    under the Securities Act or any successor provision, and the Company shall
    use all reasonable efforts to qualify such shares or other securities under
    any applicable state securities laws. Without the Grantee's prior written
    consent, no other securities may be included in any such registration. The
    Company shall use all reasonable efforts to cause each such registration
    statement to become effective, to obtain all consents or waivers of other
    parties that are required therefor and to keep such registration effective
    for such period not in excess of 60 days from the day such registration
    statement first becomes effective as may be as reasonably necessary to
    effect such sale or other disposition. The obligations of the Company
    hereunder to file a registration statement and to maintain its effectiveness
    may be suspended for one or more periods of time not exceeding 60 days in
    the aggregate if the Board of Directors of the Company shall have determined
    in good faith that the filing of such registration or the maintenance of its
    effectiveness would require disclosure of nonpublic information that would
    materially and adversely affect the Company. For purposes of determining
    whether two requests have been made under this Section 7, only requests
    relating to a registration statement that has become effective under the
    Securities Act and pursuant to which the Grantee has disposed of all shares
    covered thereby in the manner contemplated therein shall be counted unless
    the Grantee has requested that the registration request be withdrawn.

        (B) The expenses associated with the preparation and filing of any such
    registration statement pursuant to this Section 7 and any sale covered
    thereby (including any fees related to blue sky qualifications and filing
    fees in respect of the National Association of Securities Dealers, Inc.)
    ("Registration Expenses") shall be for the account of the Company except for
    underwriting discounts or commissions or brokers' fees in respect to shares
    to be sold by the Grantee and the fees and disbursement of the Grantee's
    counsel; PROVIDED, HOWEVER, that the Company shall not be required to pay
    for any Registration Expenses with respect to such registration if the
    registration request is subsequently withdrawn at the request of the Grantee
    unless the Grantee agrees to forfeit its right to request one registration;
    and PROVIDED, FURTHER that, if at the time of such withdrawal the Grantee
    has learned of a material adverse change in the results of operations,
    condition (financial or other), business or prospects of the Company from
    that known to the Grantee at the time of its request and has withdrawn the
    request with reasonable promptness following disclosure by the Company of
    such material adverse change, then the Grantee shall not be required to pay
    any of such expenses and shall retain all remaining rights to request
    registration.

        (C) The Grantee shall provide all information reasonably requested by
    the Company for inclusion in any registration statement to be filed
    hereunder. If during the Registration Period the Company shall propose to
    register under the Securities Act the offering, sale and delivery of Company
    Common Stock for cash for its own account or for any other the Company of
    the Company pursuant to a firm underwriting, it shall, in addition to the
    Company's other obligations under this Section 7, allow the Grantee the
    right to participate in such registration provided that the Grantee
    participates in the underwriting; PROVIDED, HOWEVER, that, if the managing
    underwriter of such offering advises the Company in writing that in its
    opinion the number of shares of Company Common Stock requested to be
    included in such registration exceeds the number that can be sold in such
    offering, the Company shall, after fully including therein all securities to
    be sold by the Company, include the shares requested to be included therein
    by Grantee pro rata (based on the number of shares intended to be included
    therein) with the shares intended to be included therein by Persons other
    than the Company. In connection with any offering, sale and delivery of
    Company Common Stock pursuant to a registration statement effected pursuant
    to this Section 7, the Company and the Grantee shall provide each other and
    each underwriter of the offering with customary representations, warranties
    and covenants, including covenants of indemnification and contribution.

                                      B-4
<PAGE>
    8.  PROFIT LIMITATION.  If the Grantee receives proceeds in connection with
any sales of Option Shares plus any dividends (or equivalent distributions)
received by the Grantee declared on Option Shares, of more than the sum of (a)
the amount, if any, by which (i) $16,000,000, EXCEEDS (ii) the amount of any
payment received by the Grantee pursuant to Section 8.3(b) of the Reorganization
Agreement, plus (b) the Exercise Price multiplied by the number of Company
Shares purchased by the Grantee pursuant to the Option, then all proceeds to the
Grantee in excess of such sum shall be promptly remitted in cash by the Grantee
to the Company.

    9.  LISTING.  If at the time of the occurrence of an Exercise Event the
Company Common Stock is (or any other securities subject to the Option are) then
listed on The Nasdaq National Market or on any other market or exchange, the
Company, upon the occurrence of an Exercise Event, shall promptly file an
application to list on The Nasdaq National Market and on such other market or
exchange the shares of the Company Common Stock or other securities then subject
to the Option, and shall use all reasonable efforts to cause such listing
application to be approved as promptly as practicable.

    10.  REPLACEMENT OF AGREEMENT.  Upon receipt by the Company of evidence
reasonably satisfactory to it of the loss, theft, destruction or mutilation of
this Option Agreement, and (in the case of loss, theft or destruction) of
reasonably satisfactory indemnification, and upon surrender and cancellation of
this Option Agreement, if mutilated, the Company will execute and deliver a new
Option Agreement of like tenor and date.

    11.  MISCELLANEOUS.

        (A)  WAIVER.  No failure on the part of any party to exercise any power,
right, privilege or remedy under this Option Agreement, and no delay on the part
of any party in exercising any power, right, privilege or remedy under this
Option Agreement, shall operate as a waiver of such power, right, privilege or
remedy; and no single or partial exercise of any such power, right, privilege or
remedy shall preclude any other or further exercise thereof or of any other
power, right, privilege or remedy. No party shall be deemed to have waived any
claim arising out of this Option Agreement, or any power, right, privilege or
remedy under this Option Agreement, unless the waiver of such claim, power,
right, privilege or remedy is expressly set forth in a written instrument duly
executed and delivered on behalf of such party; and any such waiver shall not be
applicable or have any effect except in the specific instance in which it is
given.

        (B)  NOTICES.  Any notice or other communication required or permitted
to be delivered to any party under this Option Agreement shall be in writing and
shall be deemed properly delivered, given and received when delivered (by hand,
by registered mail, by courier or express delivery service or by facsimile) to
the address or facsimile telephone number set forth beneath the name of such
party below (or to such other address or facsimile telephone number as such
party shall have specified in a written notice given to the other parties
hereto):

               if to the Company, to it at:
               Integrated Systems, Inc.
               201 Moffett Park Drive
               Sunnyvale, CA 94089
               Attention: Charles M. Boesenberg
               Facsimile No.: (408) 542-1959

                                      B-5
<PAGE>
               with a copy to:
               Fenwick & West
               2 Palo Alto Square
               Palo Alto, CA 94306
               Attention: Fred M. Greguras
                        Bill Schreiber

               Facsimile No. (650) 949-1417

               if to the Grantee, to it at:

               Wind River Systems, Inc.
               500 Wind River Way
               Alameda, CA 94501
               Attention: Richard W. Kraber
               Facsimile No.: (510) 749-2880

               with a copy to:

               Cooley Godward LLP
               Five Palo Alto Square
               3000 EL Camino Real
               Palo Alto, CA 94306-2155
               Attention: Richard E. Climan
                        Keith A. Flaum

               Facsimile No.: (650) 857-0663

        (C)  ENTIRE AGREEMENT; COUNTERPARTS.  This Option Agreement and the
Reorganization Agreement constitute the entire agreement and supersede all other
prior agreements and understandings, both written and oral, among or between any
of the parties with respect to the subject matter hereof and thereof. This
Option Agreement may be executed in several counterparts, each of which shall be
deemed an original and all of which shall constitute one and the same
instrument.

        (D)  BINDING EFFECT; BENEFIT; ASSIGMENT.  This Option Agreement shall
inure to the benefit of and be binding upon the parties hereto and their
respective successors and permitted assigns, but neither this Option Agreement
nor any of the rights, interest or obligations hereunder shall be assigned by
any of the parties hereto without the prior written consent of the other
parties. Notwithstanding anything contained in this Option Agreement to the
contrary, nothing in this Option Agreement, expressed or implied, is intended to
confer on any Person other than the parties hereto or their respective
successors and assigns any rights, remedies, obligations or liabilities under or
by reason of this Option Agreement.

        (E)  AMENDMENT AND MODIFICATION.  Subject to applicable law, this Option
Agreement may be amended, modified and supplemented, or provisions hereof
waived, in writing by the parties hereto in any and all respects before the
Termination Date, by action taken by the respective Boards of Directors of the
Company or the Grantee or by the respective officers authorized by such Boards
of Directors. This Option Agreement may not be amended except by an instrument
in writing signed on behalf of each of the parties hereto.

        (F)  FURTHER ACTIONS.  Each of the parties hereto agrees that, subject
to its legal obligations, it will use its reasonable efforts to do all things
reasonably necessary to consummate the transactions contemplated hereby.

                                      B-6
<PAGE>
        (G)  HEADINGS.  The descriptive headings of the several Sections of this
Option Agreement are inserted for convenience only, do not constitute a part of
this Option Agreement and shall not affect in any way the meaning or
interpretation of this Option Agreement.

        (H)  APPLICABLE LAW; JURISDICTION.  This Option Agreement shall be
governed by, and construed in accordance with, the laws of the State of
California, regardless of the laws that might otherwise govern under applicable
principles of conflicts of laws thereof. In any action between any of the
parties arising out of or relating to this Option Agreement or any of the
transactions contemplated by this Option Agreement: (i) each of the parties
irrevocably and unconditionally consents and submits to the exclusive
jurisdiction and venue of the state and federal courts located in the State of
California; (ii) if any such action is commenced in a state court, then, subject
to applicable law, no party shall object to the removal of such action to any
federal court located in the Northern District of California; (iii) each of the
parties irrevocably waives the right to trial by jury; and (iv) each of the
parties irrevocably consents to service of process by first class certified
mail, return receipt requested, postage prepaid, to the address at which such
party is to receive notice in accordance with Section 11(b).

        (I)  SEVERABILITY.  If any term, provision, covenant or restriction
contained in this Option Agreement is held by a court of competent jurisdiction
or other authority to be invalid, void, unenforceable or against its regulatory
policy, the remainder of the terms, provisions, covenants and restrictions
contained in this Option Agreement shall remain in full force and effect and
shall in no way be affected, impaired or invalidated.

        (J)  SPECIFIC PERFORMANCE.  The Company agrees that (i) in the event of
any breach or threatened breach by the Company of any covenant, obligation or
other provision set forth in this Option Agreement, the Grantee shall be
entitled (in addition to any other remedy that may be available to them), to (A)
a decree or order of specific performance or mandamus to enforce the observance
and performance of such covenant, obligation or other provision, and (B) an
injunction restraining such breach or threatened breach, and (ii) neither the
Grantee nor any other Person shall be required to provide any bond or other
security in connection with any such decree, order or injunction or in
connection with any related action or proceeding.

        (K)  ATTORNEYS' FEES.  In any action at law or suit in equity to enforce
this Option Agreement or the rights of any of the parties hereunder, the
prevailing party in such action or suit shall be entitled to receive a
reasonable sum for its attorneys' fees and all other reasonable costs and
expenses incurred in such action or suit.

        (L)  NON-EXCLUSIVITY.  The rights and remedies of the Grantee under this
Option Agreement are not exclusive of or limited by any other rights or remedies
which it may have, whether at law, in equity, by contract or otherwise, all of
which shall be cumulative (and not alternative). Without limiting the generality
of the foregoing, the rights and remedies of the Grantee under this Option
Agreement, and the obligations and liabilities of the Company under this Option
Agreement, are in addition to their respective rights, remedies, obligations and
liabilities under common law requirements and under all applicable statutes,
rules and regulations. The covenants and obligations of the Company set forth in
this Option Agreement shall be construed as independent of any other agreement
or arrangement between the Company, on the one hand, and the Grantee, on the
other. The existence of any claim or cause of action by the Company against the
Grantee shall not constitute a defense to the enforcement of any of such
covenants or obligations against the Company.

                                      B-7
<PAGE>
    IN WITNESS WHEREOF, the Company and the Grantee have caused this Option
Agreement to be signed by their respective officers thereupon duly authorized,
all as of the day and year first written above.

<TABLE>
<S>                                            <C>
                                               INTEGRATED SYSTEMS, INC.:

                                               By: -----------------------------------------

                                               Name: --------------------------------------

                                               Title:
                                               ---------------------------------------

                                               WIND RIVER SYSTEMS, INC.:

                                               By: -----------------------------------------

                                               Name: --------------------------------------

                                               Title:
                                               ---------------------------------------
</TABLE>

                                      B-8
<PAGE>
                                                                         ANNEX C

                                VOTING AGREEMENT

    THIS VOTING AGREEMENT is entered into as of October   , 1999, by and between
WIND RIVER SYSTEMS, INC., a Delaware corporation ("Parent"), and
("Shareholder").

                                    RECITALS

    A.  Parent, University Acquisition Corp., a Delaware corporation and a
wholly owned subsidiary of Parent ("Merger Sub"), and Integrated Systems, Inc.,
a California corporation (the "Company"), are entering into an Agreement and
Plan of Merger and Reorganization of even date herewith (the "Reorganization
Agreement") which provides (subject to the conditions set forth therein) for the
merger of Merger Sub into the Company (the "Merger").

    B.  In order to induce Parent and Merger Sub to enter into the
Reorganization Agreement, Shareholder is entering into this Voting Agreement.

                                   AGREEMENT

    The parties to this Voting Agreement, intending to be legally bound, agree
as follows:

    SECTION 1.  CERTAIN DEFINITIONS

        For purposes of this Voting Agreement:

           (A) "COMPANY COMMON STOCK" shall mean the common stock, no par value,
       of the Company.

           (B) "EXPIRATION DATE" shall mean the earlier of (i) the date upon
       which the Reorganization Agreement is validly terminated, or (ii) the
       date upon which the Merger becomes effective.

           (C) Shareholder shall be deemed to "OWN" or to have acquired
       "Ownership" of a security if Shareholder: (i) is the record owner of such
       security; or (ii) is the "beneficial owner" (within the meaning of
       Rule 13d-3 under the Securities Exchange Act of 1934) of such security.

           (D) "PERSON" shall mean any (i) individual, (ii) corporation, limited
       liability company, partnership or other entity, or (iii) governmental
       authority.

           (E) "SUBJECT SECURITIES" shall mean: (i) all securities of the
       Company (including all shares of Company Common Stock and all options,
       warrants and other rights to acquire shares of Company Common Stock)
       Owned by Shareholder as of the date of this Agreement; and (ii) all
       additional securities of the Company (including all additional shares of
       Company Common Stock and all additional options, warrants and other
       rights to acquire shares of Company Common Stock) of which Shareholder
       acquires Ownership during the period from the date of this Agreement
       through the Expiration Date.

           (F) A Person shall be deemed to have effected a "TRANSFER" of a
       security if such Person directly or indirectly: (i) sells, pledges,
       encumbers, grants an option with respect to, transfers or disposes of
       such security or any interest in such security; or (ii) enters into an
       agreement or commitment contemplating the possible sale of, pledge of,
       encumbrance of, grant of an option with respect to, transfer of or
       disposition of such security or any interest therein.

                                      C-1
<PAGE>
    SECTION 2.  TRANSFER OF SUBJECT SECURITIES

        2.1  TRANSFEREE OF SUBJECT SECURITIES TO BE BOUND BY THIS
    AGREEMENT.  Shareholder agrees that, during the period from the date of this
    Voting Agreement through the Expiration Date, Shareholder shall not cause or
    permit any Transfer of any of the Subject Securities to be effected unless
    each Person to which any of such Subject Securities, or any interest in any
    of such Subject Securities, is or may be transferred shall have:
    (a) executed a counterpart of this Voting Agreement and a proxy in the form
    attached hereto as Exhibit A (with such modifications as Parent may
    reasonably request); and (b) agreed to hold such Subject Securities (or
    interest in such Subject Securities) subject to all of the terms and
    provisions of this Voting Agreement.

        2.2  TRANSFER OF VOTING RIGHTS.  Shareholder agrees that, during the
    period from the date of this Voting Agreement through the Expiration Date,
    Shareholder shall ensure that: (a) none of the Subject Securities is
    deposited into a voting trust; and (b) except pursuant to this Voting
    Agreement, no proxy is granted, and no voting agreement or similar agreement
    is entered into, with respect to any of the Subject Securities which is
    inconsistent with the purposes of this Voting Agreement.

    SECTION 3.  VOTING OF SHARES

        3.1  VOTING AGREEMENT.  Shareholder agrees that, during the period from
    the date of this Voting Agreement through the Expiration Date:

           (A) at any meeting of shareholders of the Company, however called,
       Shareholder shall (unless otherwise directed in writing by Parent) cause
       all outstanding shares of Company Common Stock that are Owned by
       Shareholder as of the record date fixed for such meeting to be voted in
       favor of the approval of the Reorganization Agreement and the approval of
       the principal terms of the Merger, and in favor of each of the other
       actions contemplated by the Reorganization Agreement; and

           (B) in the event written consents are solicited or otherwise sought
       from shareholders of the Company with respect to the approval of the
       Reorganization Agreement, with respect to the approval of the principal
       terms of the Merger or with respect to any of the other actions
       contemplated by the Reorganization Agreement, Shareholder shall (unless
       otherwise directed in writing by Parent) cause to be executed, with
       respect to all shares of Company Common Stock that are Owned by
       Shareholder as of the record date fixed for the consent to the proposed
       action, a written consent or written consents to such proposed action.

           (C) This Voting Agreement is intended to bind Shareholder only with
       respect to the specific matters set forth herein, and shall not prohibit
       Shareholder from acting in accordance with his fiduciary duties as an
       officer or director of the Company. Shareholder will retain at all times
       the right to vote the Shareholder's Subject Securities, in Shareholder's
       sole discretion, on all matters other than those set forth in this
       Section 3.1 which are at any time or from time to time presented to the
       Company's shareholders generally.

        3.2  PROXY.  Contemporaneously with the execution of this Voting
    Agreement: (i) Shareholder shall deliver to Parent a proxy in the form
    attached to this Voting Agreement as Exhibit A, which shall be irrevocable
    to the fullest extent permitted by law, with respect to the shares referred
    to therein (the "Proxy"); and (ii) Shareholder shall cause to be delivered
    to Parent an additional proxy (in the form attached hereto as Exhibit A)
    executed on behalf of the record owner of any outstanding shares of Company
    Common Stock that are owned beneficially (within the meaning of Rule 13d-3
    under the Securities Exchange Act of 1934), but not of record, by
    Shareholder.

                                      C-2
<PAGE>
    SECTION 4.  WAIVER OF APPRAISAL RIGHTS

    Shareholder hereby irrevocably and unconditionally waives, and agrees to
cause to be waived and to prevent the exercise of, any rights of appraisal, any
dissenters' rights and any similar rights relating to the Merger or any related
transaction that Shareholder or any other Person may have by virtue of the
ownership of any outstanding shares of Company Common Stock or other security
Owned by Shareholder.

    SECTION 5.  NO SOLICITATION

    Shareholder agrees that, during the period from the date of this Voting
Agreement through the Expiration Date, Shareholder shall not, directly or
indirectly, and Shareholder shall ensure that his Representatives (as defined in
the Reorganization Agreement) do not, directly or indirectly: (i) solicit,
initiate, encourage or induce the making, submission or announcement of any
Acquisition Proposal (as defined in the Reorganization Agreement) or take any
action that could reasonably be expected to lead to an Acquisition Proposal;
(ii) furnish any information regarding the Company or any direct or indirect
subsidiary of the Company to any Person in connection with or in response to an
Acquisition Proposal or inquiry or indication of interest that could lead to an
Acquisition Proposal; or (iii) engage in discussions with any Person with
respect to any Acquisition Proposal. Shareholder shall immediately cease and
discontinue, and Shareholder shall ensure that his Representatives immediately
cease and discontinue, any existing discussions with any Person that relate to
any Acquisition Proposal. The restrictions and covenants in this Section 5 shall
apply to Shareholder only in his capacity as a shareholder and not to
Shareholder in his capacity as a director or officer of the Company.

    SECTION 6.  REPRESENTATIONS AND WARRANTIES OF SHAREHOLDER

    Shareholder hereby represents and warrants to Parent as follows:

        6.1  AUTHORIZATION, ETC.  Shareholder has the absolute and unrestricted
    right, power, authority and capacity to execute and deliver this Voting
    Agreement and the Proxy and to perform his obligations hereunder and
    thereunder. This Voting Agreement and the Proxy have been duly executed and
    delivered by Shareholder and constitute legal, valid and binding obligations
    of Shareholder, enforceable against Shareholder in accordance with their
    terms, subject to (i) laws of general application relating to bankruptcy,
    insolvency and the relief of debtors, and (ii) rules of law governing
    specific performance, injunctive relief and other equitable remedies.

        6.2  NO CONFLICTS OR CONSENTS

           (A) The execution and delivery of this Voting Agreement and the Proxy
       by Shareholder do not, and the performance of this Voting Agreement and
       the Proxy by Shareholder will not: (i) conflict with or violate any law,
       rule, regulation, order, decree or judgment applicable to Shareholder or
       by which he or any of his properties is or may be bound or affected; or
       (ii) result in or constitute (with or without notice or lapse of time)
       any breach of or default under, or give to any other Person (with or
       without notice or lapse of time) any right of termination, amendment,
       acceleration or cancellation of, or result (with or without notice or
       lapse of time) in the creation of any encumbrance or restriction on any
       of the Subject Securities pursuant to, any contract to which Shareholder
       is a party or by which Shareholder or any of his affiliates or properties
       is or may be bound or affected.

           (B) The execution and delivery of this Voting Agreement and the Proxy
       by Shareholder do not, and the performance of this Voting Agreement and
       the Proxy by Shareholder will not, require any consent or approval of any
       Person.

        6.3  TITLE TO SECURITIES.  As of the date of this Voting Agreement:
    (a) Shareholder holds of record (free and clear of any encumbrances or
    restrictions) the number of outstanding shares of Company Common Stock set
    forth under the heading "Shares Held of Record" on the signature

                                      C-3
<PAGE>
    page hereof; (b) Shareholder holds (free and clear of any encumbrances or
    restrictions) the options, warrants and other rights to acquire shares of
    Company Common Stock set forth under the heading "Options and Other Rights"
    on the signature page hereof; (c) Shareholder Owns the additional securities
    of the Company set forth under the heading "Additional Securities
    Beneficially Owned" on the signature page hereof; and (d) Shareholder does
    not directly or indirectly Own any shares of capital stock or other
    securities of the Company, or any option, warrant or other right to acquire
    (by purchase, conversion or otherwise) any shares of capital stock or other
    securities of the Company, other than the shares and options, warrants and
    other rights set forth on the signature page hereof.

        6.4  ACCURACY OF REPRESENTATIONS.  The representations and warranties
    contained in this Voting Agreement are accurate in all respects as of the
    date of this Voting Agreement, will be accurate in all respects at all times
    through the Expiration Date and will be accurate in all respects as of the
    date of the consummation of the Merger as if made on that date.

    SECTION 7.  MISCELLANEOUS

        7.1  FURTHER ASSURANCES.  From time to time and without additional
    consideration, Shareholder shall (at Parent's expense) execute and deliver,
    or cause to be executed and delivered, such additional transfers,
    assignments, endorsements, proxies, consents and other instruments, and
    shall (at Parent's expense) take such further actions, as Parent may
    reasonably request for the purpose of carrying out and furthering the intent
    of this Voting Agreement.

        7.2  EXPENSES.  Except as contemplated by Section 7.1, all costs and
    expenses incurred in connection with the transactions contemplated by this
    Voting Agreement shall be paid by the party incurring such costs and
    expenses.

        7.3  NOTICES.  Any notice or other communication required or permitted
    to be delivered to either party under this Voting Agreement shall be in
    writing and shall be deemed properly delivered, given and received (a) upon
    receipt when delivered by hand, or (b) two business days after sent by
    courier or express delivery service or by facsimile, provided that in each
    case the notice or other communication is sent to the address or facsimile
    telephone number set forth beneath the name of such party below (or to such
    other address or facsimile telephone number as such party shall have
    specified in a written notice given to the other party):

       IF TO SHAREHOLDER:

           at the address set forth below Shareholder's signature on the
           signature page hereof

       IF TO PARENT:

           Wind River Systems, Inc.
           500 Wind River Way
           Alameda, CA 94501
           Attention: Richard W. Kraber
           Facsimile: (510)749-2880

        7.4  SEVERABILITY.  If any provision of this Voting Agreement or any
    part of any such provision is held under any circumstances to be invalid or
    unenforceable in any jurisdiction, then (a) such provision or part thereof
    shall, with respect to such circumstances and in such jurisdiction, be
    deemed amended to conform to applicable laws so as to be valid and
    enforceable to the fullest possible extent, (b) the invalidity or
    unenforceability of such provision or part thereof under such circumstances
    and in such jurisdiction shall not affect the validity or enforceability of
    such provision or part thereof under any other circumstances or in any other
    jurisdiction, and (c) the invalidity or unenforceability of such provision
    or part thereof shall not affect the validity or

                                      C-4
<PAGE>
    enforceability of the remainder of such provision or the validity or
    enforceability of any other provision of this Voting Agreement. Each
    provision of this Voting Agreement is separable from every other provision
    of this Voting Agreement, and each part of each provision of this Voting
    Agreement is separable from every other part of such provision.

        7.5  ENTIRE AGREEMENT.  This Voting Agreement, the Proxy and any other
    documents delivered by the parties in connection herewith constitute the
    entire agreement between the parties with respect to the subject matter
    hereof and thereof and supersede all prior agreements and understandings
    between the parties with respect thereto. No addition to or modification of
    any provision of this Voting Agreement shall be binding upon either party
    unless made in writing and signed by both parties.

        7.6  ASSIGNMENT; BINDING EFFECT.  Except as provided herein, neither
    this Voting Agreement nor any of the interests or obligations hereunder may
    be assigned or delegated by Shareholder and any attempted or purported
    assignment or delegation of any of such interests or obligations shall be
    void. Subject to the preceding sentence, this Voting Agreement shall be
    binding upon Shareholder and his heirs, estate, executors, personal
    representatives, successors and assigns, and shall inure to the benefit of
    Parent and its successors and assigns. Without limiting any of the
    restrictions set forth in Section 2 or elsewhere in this Voting Agreement,
    this Voting Agreement shall be binding upon any Person to whom any Subject
    Securities are transferred. Nothing in this Voting Agreement is intended to
    confer on any Person (other than Parent and its successors and assigns) any
    rights or remedies of any nature.

        7.7  SPECIFIC PERFORMANCE.  The parties agree that irreparable damage
    would occur in the event that any of the provisions of this Voting Agreement
    or the Proxy was not performed in accordance with its specific terms or was
    otherwise breached. Shareholder agrees that, in the event of any breach or
    threatened breach by Shareholder of any covenant or obligation contained in
    this Voting Agreement or in the Proxy, Parent shall be entitled (in addition
    to any other remedy that may be available to it, including monetary damages)
    to seek and obtain (a) a decree or order of specific performance to enforce
    the observance and performance of such covenant or obligation, and (b) an
    injunction restraining such breach or threatened breach. Shareholder further
    agrees that neither Parent nor any other Person shall be required to obtain,
    furnish or post any bond or similar instrument in connection with or as a
    condition to obtaining any remedy referred to in this Section 7.7, and
    Shareholder irrevocably waives any right he may have to require the
    obtaining, furnishing or posting of any such bond or similar instrument.

        7.8  NON-EXCLUSIVITY.  The rights and remedies of Parent under this
    Voting Agreement are not exclusive of or limited by any other rights or
    remedies which it may have, whether at law, in equity, by contract or
    otherwise, all of which shall be cumulative (and not alternative). Without
    limiting the generality of the foregoing, the rights and remedies of Parent
    under this Voting Agreement, and the obligations and liabilities of
    Shareholder under this Voting Agreement, are in addition to their respective
    rights, remedies, obligations and liabilities under common law requirements
    and under all applicable statutes, rules and regulations. Nothing in this
    Voting Agreement shall limit any of Shareholder's obligations, or the rights
    or remedies of Parent, under any Affiliate Agreement between Parent and
    Shareholder; and nothing in any such Affiliate Agreement shall limit any of
    Shareholder's obligations, or any of the rights or remedies of Parent, under
    this Voting Agreement.

        7.9  GOVERNING LAW; VENUE.

           (A) This Voting Agreement and the Proxy shall be construed in
       accordance with, and governed in all respects by, the laws of the State
       of California (without giving effect to principles of conflicts of laws).

                                      C-5
<PAGE>
           (B) In any action between any of the parties arising out of or
       relating to this Voting Agreement or any of the transactions contemplated
       by this Voting Agreement: (a) each of the parties irrevocably and
       unconditionally consents and submits to the exclusive jurisdiction and
       venue of the state and federal courts located in the State of California;
       (b) if any such action is commenced in a state court, then, subject to
       applicable law, no party shall object to the removal of such action to
       any federal court located in the Northern District of California;
       (c) each of the parties irrevocably waives the right to trial by jury;
       and (d) each of the parties irrevocably consents to service of process by
       first class certified mail, return receipt requested, postage prepaid, to
       the address at which such party is to receive notice in accordance with
       Section 7.3.

        7.10  COUNTERPARTS.  This Voting Agreement may be executed by the
    parties in separate counterparts, each of which when so executed and
    delivered shall be an original, but all such counterparts shall together
    constitute one and the same instrument.

        7.11  CAPTIONS.  The captions contained in this Voting Agreement are for
    convenience of reference only, shall not be deemed to be a part of this
    Voting Agreement and shall not be referred to in connection with the
    construction or interpretation of this Voting Agreement.

        7.12  ATTORNEYS' FEES.  If any legal action or other legal proceeding
    relating to this Voting Agreement or the enforcement of any provision of
    this Voting Agreement is brought by one party against the other party, the
    prevailing party shall be entitled to recover reasonable attorneys' fees,
    costs and disbursements (in addition to any other relief to which the
    prevailing party may be entitled).

        7.13  WAIVER.  No failure on the part of Parent to exercise any power,
    right, privilege or remedy under this Voting Agreement, and no delay on the
    part of Parent in exercising any power, right, privilege or remedy under
    this Voting Agreement, shall operate as a waiver of such power, right,
    privilege or remedy; and no single or partial exercise of any such power,
    right, privilege or remedy shall preclude any other or further exercise
    thereof or of any other power, right, privilege or remedy. Parent shall not
    be deemed to have waived any claim available to Parent arising out of this
    Voting Agreement, or any power, right, privilege or remedy of Parent under
    this Voting Agreement, unless the waiver of such claim, power, right,
    privilege or remedy is expressly set forth in a written instrument duly
    executed and delivered on behalf of Parent; and any such waiver shall not be
    applicable or have any effect except in the specific instance in which it is
    given.

        7.14  CONSTRUCTION.

           (A) For purposes of this Voting Agreement, whenever the context
       requires: the singular number shall include the plural, and vice versa;
       the masculine gender shall include the feminine and neuter genders; the
       feminine gender shall include the masculine and neuter genders; and the
       neuter gender shall include masculine and feminine genders.

           (B) The parties agree that any rule of construction to the effect
       that ambiguities are to be resolved against the drafting party shall not
       be applied in the construction or interpretation of this Voting
       Agreement.

           (C) As used in this Voting Agreement, the words "include" and
       "including," and variations thereof, shall not be deemed to be terms of
       limitation, but rather shall be deemed to be followed by the words
       "without limitation."

           (D) Except as otherwise indicated, all references in this Voting
       Agreement to "Sections" and "Exhibits" are intended to refer to Sections
       of this Voting Agreement and Exhibits to this Voting Agreement.

                                      C-6
<PAGE>
    IN WITNESS WHEREOF, Parent and Shareholder have caused this Voting Agreement
to be executed as of the date first written above.

<TABLE>
<S>                                                    <C>  <C>
                                                       WIND RIVER SYSTEMS, INC.

                                                       By:
                                                            -----------------------------------------
                                                                           (SIGNATURE)

                                                        ---------------------------------------------
                                                                        (Print Name)

                                                       SHAREHOLDER

                                                        ---------------------------------------------
                                                                         (SIGNATURE)

                                                        ---------------------------------------------
                                                                        (Print Name)
</TABLE>

<TABLE>
<S>                                                    <C>       <C>
                                                       Address:  -------------------------------------

                                                                 -------------------------------------
</TABLE>

<TABLE>
<S>                                                    <C>         <C>
                                                       Facsimile:  ------------------------------------
</TABLE>

                                      C-7
<PAGE>
                                   EXHIBIT A
                           FORM OF IRREVOCABLE PROXY

    The undersigned shareholder of Integrated Systems, Inc., a California
corporation (the "Company"), hereby irrevocably (to the fullest extent permitted
by law) appoints and constitutes Richard W. Kraber, Marla Ann Stark and Wind
River Systems, Inc., a Delaware corporation ("Parent"), and each of them, the
attorneys and proxies of the undersigned with full power of substitution and
resubstitution, to the full extent of the undersigned's voting rights on the
matters referred to in the third paragraph of this proxy with respect to
(i) the outstanding shares of capital stock of the Company owned of record by
the undersigned as of the date of this proxy, which shares are specified on the
final page of this proxy, and (ii) any and all other shares of capital stock of
the Company which the undersigned may acquire record ownership of on or after
the date hereof. (The shares of the capital stock of the Company referred to in
clauses "(i)" and "(ii)" of the immediately preceding sentence are collectively
referred to as the "Shares.") Upon the execution hereof, all prior proxies given
by the undersigned with respect to any of the Shares are hereby revoked, and the
undersigned agrees that no subsequent proxies will be given with respect to any
of the Shares.

    This proxy is irrevocable, is coupled with an interest and is granted in
connection with the Voting Agreement, dated as of the date hereof, between
Parent and the undersigned (the "Voting Agreement"), and is granted in
consideration of Parent entering into the Agreement and Plan of Merger and
Reorganization, dated as of the date hereof, among Parent, Merger Sub and the
Company (the "Reorganization Agreement"). The attorneys and proxies named above
will be empowered, and may exercise this proxy, to vote the Shares at any time
until the earlier to occur of the valid termination of the Reorganization
Agreement or the effective time of the merger contemplated thereby (the
"Merger") at any meeting of the shareholders of the Company, however called, or
in connection with any solicitation of written consents from shareholders of the
Company, in favor of the approval of the Reorganization Agreement and the
approval of the principal terms of the Merger, and in favor of each of the other
actions contemplated by the Reorganization Agreement.

    The undersigned may vote the Shares on all other matters.

    This proxy shall be binding upon the heirs, estate, executors, personal
representatives, successors and assigns of the undersigned (including any
transferee of any of the Shares).

    If any provision of this proxy or any part of any such provision is held
under any circumstances to be invalid or unenforceable in any jurisdiction, then
(a) such provision or part thereof shall, with respect to such circumstances and
in such jurisdiction, be deemed amended to conform to applicable laws so as to
be valid and enforceable to the fullest possible extent, (b) the invalidity or
unenforceability of such provision or part thereof under such circumstances and
in such jurisdiction shall not affect the validity or enforceability of such
provision or part thereof under any other circumstances or in any other
jurisdiction, and (c) the invalidity or unenforceability of such provision or
part thereof shall not affect the validity or enforceability of the remainder of
such provision or the validity or enforceability of any other provision of this
proxy. Each provision of this proxy is separable from every other provision of
this proxy, and each part of each provision of this proxy is separable from
every other part of such provision.

                                      C-8
<PAGE>
    This proxy shall terminate upon the earlier of the valid termination of the
Reorganization Agreement or the effective time of the Merger.

<TABLE>
<S>                                                    <C>
Dated: October   , 1999.                               ---------------------------------------------
                                                                        (SIGNATURE)

                                                       ---------------------------------------------
                                                                        (Print Name)

                                                       NUMBER OF SHARES OF COMMON STOCK OF THE
                                                       COMPANY OWNED OF RECORD AS OF THE DATE OF THIS
                                                       PROXY:

                                                       ---------------------------------------------
</TABLE>

                                      C-9
<PAGE>
                                VOTING AGREEMENT

    THIS VOTING AGREEMENT is entered into as of October   , 1999, by and between
Integrated Systems, Inc., a California corporation (the "Company"), and
            ("Stockholder").

                                    RECITALS

    A.  Wind River Systems, Inc. ("Parent"), University Acquisition Corp., a
Delaware corporation and a wholly owned subsidiary of Parent ("Merger Sub"), and
the Company, are entering into an Agreement and Plan of Merger and
Reorganization of even date herewith (the "Reorganization Agreement") which
provides (subject to the conditions set forth therein) for the merger of Merger
Sub into the Company (the "Merger").

    B.  In order to induce the Company to enter into the Reorganization
Agreement, Stockholder is entering into this Voting Agreement.

                                   AGREEMENT

    The parties to this Voting Agreement, intending to be legally bound, agree
as follows:

    SECTION 1.  CERTAIN DEFINITIONS

        For purposes of this Voting Agreement:

        (A) "PARENT COMMON STOCK" shall mean the common stock, par value $.001
    per share, of Parent.

        (B) "EXPIRATION DATE" shall mean the earlier of (i) the date upon which
    the Reorganization Agreement is validly terminated, or (ii) the date upon
    which the Merger becomes effective.

        (C) Stockholder shall be deemed to "OWN" or to have acquired "Ownership"
    of a security if Stockholder: (i) is the record owner of such security; or
    (ii) is the "beneficial owner" (within the meaning of Rule 13d-3 under the
    Securities Exchange Act of 1934) of such security.

        (D) "PERSON" shall mean any (i) individual, (ii) corporation, limited
    liability company, partnership or other entity, or (iii) governmental
    authority.

        (E) "SUBJECT SECURITIES" shall mean: (i) all securities of Parent
    (including all shares of Parent Common Stock and all options, warrants and
    other rights to acquire shares of Parent Common Stock) Owned by Stockholder
    as of the date of this Agreement; and (ii) all additional securities of
    Parent (including all additional shares of Parent Common Stock and all
    additional options, warrants and other rights to acquire shares of Parent
    Common Stock) of which Stockholder acquires Ownership during the period from
    the date of this Agreement through the Expiration Date.

        (F) A Person shall be deemed to have effected a "TRANSFER" of a security
    if such Person directly or indirectly: (i) sells, pledges, encumbers, grants
    an option with respect to, transfers or disposes of such security or any
    interest in such security; or (ii) enters into an agreement or commitment
    contemplating the possible sale of, pledge of, encumbrance of, grant of an
    option with respect to, transfer of or disposition of such security or any
    interest therein.

    SECTION 2.  TRANSFER OF SUBJECT SECURITIES

        2.1  TRANSFEREE OF SUBJECT SECURITIES TO BE BOUND BY THIS
    AGREEMENT.  Stockholder agrees that, during the period from the date of this
    Voting Agreement through the Expiration Date, Stockholder shall not cause or
    permit any Transfer of any of the Subject Securities to be effected unless
    each Person to which any of such Subject Securities, or any interest in any
    of such Subject Securities, is or may be transferred shall have:
    (a) executed a counterpart of this Voting

                                      C-10
<PAGE>
    Agreement and a proxy in the form attached hereto as Exhibit A (with such
    modifications as the Company may reasonably request); and (b) agreed to hold
    such Subject Securities (or interest in such Subject Securities) subject to
    all of the terms and provisions of this Voting Agreement.

        2.2  TRANSFER OF VOTING RIGHTS.  Stockholder agrees that, during the
    period from the date of this Voting Agreement through the Expiration Date,
    Stockholder shall ensure that: (a) none of the Subject Securities is
    deposited into a voting trust; and (b) except pursuant to this Voting
    Agreement, no proxy is granted, and no voting agreement or similar agreement
    is entered into, with respect to any of the Subject Securities which is
    inconsistent with the purposes of this Voting Agreement.

    SECTION 3.  VOTING OF SHARES

        3.1  VOTING AGREEMENT.  Stockholder agrees that, during the period from
    the date of this Voting Agreement through the Expiration Date:

           (A) at any meeting of Stockholders of Parent, however called,
       Stockholder shall (unless otherwise directed in writing by the Company)
       cause all outstanding shares of Parent Common Stock that are Owned by
       Stockholder as of the record date fixed for such meeting to be voted in
       favor of the issuance of Parent Common Stock in the Merger, and in favor
       of each of the other actions contemplated by the Reorganization
       Agreement; and

           (B) in the event written consents are solicited or otherwise sought
       from stockholders of Parent with respect to the approval of the
       Reorganization Agreement, with respect to the approval of the issuance of
       Parent Common Stock in the Merger or with respect to any of the other
       actions contemplated by the Reorganization Agreement, Stockholder shall
       (unless otherwise directed in writing by the Company) cause to be
       executed, with respect to all shares of Parent Common Stock that are
       Owned by Stockholder as of the record date fixed for the consent to the
       proposed action, a written consent or written consents to such proposed
       action.

           (C) This Voting Agreement is intended to bind Stockholder only with
       respect to the specific matters set forth herein, and shall not prohibit
       Stockholder from acting in accordance with his fiduciary duties as an
       officer or director of Parent. Stockholder will retain at all times the
       right to vote the Stockholder's Subject Securities, in Stockholder's sole
       discretion, on all matters other than those set forth in this Section 3.1
       which are at any time or from time to time presented to Parent's
       stockholders generally.

        3.2  PROXY.  Contemporaneously with the execution of this Voting
    Agreement: (i) Stockholder shall deliver to the Company a proxy in the form
    attached to this Voting Agreement as Exhibit A, which shall be irrevocable
    to the fullest extent permitted by law, with respect to the shares referred
    to therein (the "Proxy"); and (ii) Stockholder shall cause to be delivered
    to the Company an additional proxy (in the form attached hereto as Exhibit
    A) executed on behalf of the record owner of any outstanding shares of
    Parent Common Stock that are owned beneficially (within the meaning of
    Rule 13d-3 under the Securities Exchange Act of 1934), but not of record, by
    Stockholder.

    SECTION 4.  WAIVER OF APPRAISAL RIGHTS

    Stockholder hereby irrevocably and unconditionally waives, and agrees to
cause to be waived and to prevent the exercise of, any rights of appraisal, any
dissenters' rights and any similar rights relating to the Merger or any related
transaction that Stockholder or any other Person may have by virtue of the
ownership of any outstanding shares of Parent Common Stock or other security
Owned by Stockholder.

    SECTION 5.  REPRESENTATIONS AND WARRANTIES OF STOCKHOLDER

                                      C-11
<PAGE>
    Stockholder hereby represents and warrants to the Company as follows:

        5.1  AUTHORIZATION, ETC.  Stockholder has the absolute and unrestricted
    right, power, authority and capacity to execute and deliver this Voting
    Agreement and the Proxy and to perform his obligations hereunder and
    thereunder. This Voting Agreement and the Proxy have been duly executed and
    delivered by Stockholder and constitute legal, valid and binding obligations
    of Stockholder, enforceable against Stockholder in accordance with their
    terms, subject to (i) laws of general application relating to bankruptcy,
    insolvency and the relief of debtors, and (ii) rules of law governing
    specific performance, injunctive relief and other equitable remedies.

        5.2  NO CONFLICTS OR CONSENTS

           (A) The execution and delivery of this Voting Agreement and the Proxy
       by Stockholder do not, and the performance of this Voting Agreement and
       the Proxy by Stockholder will not: (i) conflict with or violate any law,
       rule, regulation, order, decree or judgment applicable to Stockholder or
       by which he or any of his properties is or may be bound or affected; or
       (ii) result in or constitute (with or without notice or lapse of time)
       any breach of or default under, or give to any other Person (with or
       without notice or lapse of time) any right of termination, amendment,
       acceleration or cancellation of, or result (with or without notice or
       lapse of time) in the creation of any encumbrance or restriction on any
       of the Subject Securities pursuant to, any contract to which Stockholder
       is a party or by which Stockholder or any of his affiliates or properties
       is or may be bound or affected.

           (B) The execution and delivery of this Voting Agreement and the Proxy
       by Stockholder do not, and the performance of this Voting Agreement and
       the Proxy by Stockholder will not, require any consent or approval of any
       Person.

        5.3  TITLE TO SECURITIES.  As of the date of this Voting Agreement: (a)
    Stockholder holds of record (free and clear of any encumbrances or
    restrictions) the number of outstanding shares of Parent Common Stock set
    forth under the heading "Shares Held of Record" on the signature
    page hereof; (b) Stockholder holds (free and clear of any encumbrances or
    restrictions) the options, warrants and other rights to acquire shares of
    Parent Common Stock set forth under the heading "Options and Other Rights"
    on the signature page hereof; (c) Stockholder Owns the additional securities
    of Parent set forth under the heading "Additional Securities Beneficially
    Owned" on the signature page hereof; and (d) Stockholder does not directly
    or indirectly Own any shares of capital stock or other securities of Parent,
    or any option, warrant or other right to acquire (by purchase, conversion or
    otherwise) any shares of capital stock or other securities of Parent, other
    than the shares and options, warrants and other rights set forth on the
    signature page hereof.

        5.4  ACCURACY OF REPRESENTATIONS.  The representations and warranties
    contained in this Voting Agreement are accurate in all respects as of the
    date of this Voting Agreement, will be accurate in all respects at all times
    through the Expiration Date and will be accurate in all respects as of the
    date of the consummation of the Merger as if made on that date.

    SECTION 6.  MISCELLANEOUS

        6.1  FURTHER ASSURANCES.  From time to time and without additional
    consideration, Stockholder shall (at the Company's expense) execute and
    deliver, or cause to be executed and delivered, such additional transfers,
    assignments, endorsements, proxies, consents and other instruments, and
    shall (at the Company's expense) take such further actions, as the Company
    may reasonably request for the purpose of carrying out and furthering the
    intent of this Voting Agreement.

                                      C-12
<PAGE>
        6.2  EXPENSES.  Except as contemplated by Section 6.1, all costs and
    expenses incurred in connection with the transactions contemplated by this
    Voting Agreement shall be paid by the party incurring such costs and
    expenses.

        6.3  NOTICES.  Any notice or other communication required or permitted
    to be delivered to either party under this Voting Agreement shall be in
    writing and shall be deemed properly delivered, given and received (a) upon
    receipt when delivered by hand, or (b) two business days after sent by
    courier or express delivery service or by facsimile, provided that in each
    case the notice or other communication is sent to the address or facsimile
    telephone number set forth beneath the name of such party below (or to such
    other address or facsimile telephone number as such party shall have
    specified in a written notice given to the other party):

       IF TO STOCKHOLDER:

           at the address set forth below Stockholder's signature on the
           signature page hereof

       IF TO THE COMPANY:

           Integrated Systems, Inc.
           201 Moffett Park Drive
           Sunnyvale, CA 94089
           Attention: Charles M. Boesenberg
           Facsimile: (408) 542-1959

        6.4  SEVERABILITY.  If any provision of this Voting Agreement or any
    part of any such provision is held under any circumstances to be invalid or
    unenforceable in any jurisdiction, then (a) such provision or part thereof
    shall, with respect to such circumstances and in such jurisdiction, be
    deemed amended to conform to applicable laws so as to be valid and
    enforceable to the fullest possible extent, (b) the invalidity or
    unenforceability of such provision or part thereof under such circumstances
    and in such jurisdiction shall not affect the validity or enforceability of
    such provision or part thereof under any other circumstances or in any other
    jurisdiction, and (c) the invalidity or unenforceability of such provision
    or part thereof shall not affect the validity or enforceability of the
    remainder of such provision or the validity or enforceability of any other
    provision of this Voting Agreement. Each provision of this Voting Agreement
    is separable from every other provision of this Voting Agreement, and each
    part of each provision of this Voting Agreement is separable from every
    other part of such provision.

        6.5  ENTIRE AGREEMENT.  This Voting Agreement, the Proxy and any other
    documents delivered by the parties in connection herewith constitute the
    entire agreement between the parties with respect to the subject matter
    hereof and thereof and supersede all prior agreements and understandings
    between the parties with respect thereto. No addition to or modification of
    any provision of this Voting Agreement shall be binding upon either party
    unless made in writing and signed by both parties.

        6.6  ASSIGNMENT; BINDING EFFECT.  Except as provided herein, neither
    this Voting Agreement nor any of the interests or obligations hereunder may
    be assigned or delegated by Stockholder and any attempted or purported
    assignment or delegation of any of such interests or obligations shall be
    void. Subject to the preceding sentence, this Voting Agreement shall be
    binding upon Stockholder and his heirs, estate, executors, personal
    representatives, successors and assigns, and shall inure to the benefit of
    the Company and its successors and assigns. Without limiting any of the
    restrictions set forth in Section 2 or elsewhere in this Voting Agreement,
    this Voting Agreement shall be binding upon any Person to whom any Subject
    Securities are transferred.

                                      C-13
<PAGE>
    Nothing in this Voting Agreement is intended to confer on any Person (other
    than the Company and its successors and assigns) any rights or remedies of
    any nature.

        6.7  SPECIFIC PERFORMANCE.  The parties agree that irreparable damage
    would occur in the event that any of the provisions of this Voting Agreement
    or the Proxy was not performed in accordance with its specific terms or was
    otherwise breached. Stockholder agrees that, in the event of any breach or
    threatened breach by Stockholder of any covenant or obligation contained in
    this Voting Agreement or in the Proxy, the Company shall be entitled (in
    addition to any other remedy that may be available to it, including monetary
    damages) to seek and obtain (a) a decree or order of specific performance to
    enforce the observance and performance of such covenant or obligation, and
    (b) an injunction restraining such breach or threatened breach. Stockholder
    further agrees that neither the Company nor any other Person shall be
    required to obtain, furnish or post any bond or similar instrument in
    connection with or as a condition to obtaining any remedy referred to in
    this Section 6.7, and Stockholder irrevocably waives any right he may have
    to require the obtaining, furnishing or posting of any such bond or similar
    instrument.

        6.8  NON-EXCLUSIVITY.  The rights and remedies of the Company under this
    Voting Agreement are not exclusive of or limited by any other rights or
    remedies which it may have, whether at law, in equity, by contract or
    otherwise, all of which shall be cumulative (and not alternative). Without
    limiting the generality of the foregoing, the rights and remedies of the
    Company under this Voting Agreement, and the obligations and liabilities of
    Stockholder under this Voting Agreement, are in addition to their respective
    rights, remedies, obligations and liabilities under common law requirements
    and under all applicable statutes, rules and regulations.

        6.9  GOVERNING LAW; VENUE.

           (A) This Voting Agreement and the Proxy shall be construed in
       accordance with, and governed in all respects by, the laws of the State
       of California (without giving effect to principles of conflicts of laws).

           (B) In any action between any of the parties arising out of or
       relating to this Voting Agreement or any of the transactions contemplated
       by this Voting Agreement: (a) each of the parties irrevocably and
       unconditionally consents and submits to the exclusive jurisdiction and
       venue of the state and federal courts located in the State of California;
       (b) if any such action is commenced in a state court, then, subject to
       applicable law, no party shall object to the removal of such action to
       any federal court located in the Northern District of California;
       (c) each of the parties irrevocably waives the right to trial by jury;
       and (d) each of the parties irrevocably consents to service of process by
       first class certified mail, return receipt requested, postage prepaid, to
       the address at which such party is to receive notice in accordance with
       Section 6.3.

        6.10  COUNTERPARTS.  This Voting Agreement may be executed by the
    parties in separate counterparts, each of which when so executed and
    delivered shall be an original, but all such counterparts shall together
    constitute one and the same instrument.

        6.11  CAPTIONS.  The captions contained in this Voting Agreement are for
    convenience of reference only, shall not be deemed to be a part of this
    Voting Agreement and shall not be referred to in connection with the
    construction or interpretation of this Voting Agreement.

        6.12  ATTORNEYS' FEES.  If any legal action or other legal proceeding
    relating to this Voting Agreement or the enforcement of any provision of
    this Voting Agreement is brought by one party against the other party, the
    prevailing party shall be entitled to recover reasonable attorneys' fees,
    costs and disbursements (in addition to any other relief to which the
    prevailing party may be entitled).

                                      C-14
<PAGE>
        6.13  WAIVER.  No failure on the part of the Company to exercise any
    power, right, privilege or remedy under this Voting Agreement, and no delay
    on the part of the Company in exercising any power, right, privilege or
    remedy under this Voting Agreement, shall operate as a waiver of such power,
    right, privilege or remedy; and no single or partial exercise of any such
    power, right, privilege or remedy shall preclude any other or further
    exercise thereof or of any other power, right, privilege or remedy. The
    Company shall not be deemed to have waived any claim available to the
    Company arising out of this Voting Agreement, or any power, right, privilege
    or remedy of the Company under this Voting Agreement, unless the waiver of
    such claim, power, right, privilege or remedy is expressly set forth in a
    written instrument duly executed and delivered on behalf of the Company; and
    any such waiver shall not be applicable or have any effect except in the
    specific instance in which it is given.

        6.14  CONSTRUCTION.

           (A) For purposes of this Voting Agreement, whenever the context
       requires: the singular number shall include the plural, and vice versa;
       the masculine gender shall include the feminine and neuter genders; the
       feminine gender shall include the masculine and neuter genders; and the
       neuter gender shall include masculine and feminine genders.

           (B) The parties agree that any rule of construction to the effect
       that ambiguities are to be resolved against the drafting party shall not
       be applied in the construction or interpretation of this Voting
       Agreement.

           (C) As used in this Voting Agreement, the words "include" and
       "including," and variations thereof, shall not be deemed to be terms of
       limitation, but rather shall be deemed to be followed by the words
       "without limitation."

           (D) Except as otherwise indicated, all references in this Voting
       Agreement to "Sections" and "Exhibits" are intended to refer to Sections
       of this Voting Agreement and Exhibits to this Voting Agreement.

                                      C-15
<PAGE>
    IN WITNESS WHEREOF, the Company and Stockholder have caused this Voting
Agreement to be executed as of the date first written above.

<TABLE>
<S>                                                    <C>  <C>
                                                       INTEGRATED SYSTEMS, INC.

                                                       By:
                                                            -----------------------------------------
                                                                           (SIGNATURE)

                                                        ---------------------------------------------
                                                                        (Print Name)

                                                       STOCKHOLDER

                                                        ---------------------------------------------
                                                                         (SIGNATURE)

                                                        ---------------------------------------------
                                                                        (Print Name)
</TABLE>

<TABLE>
<S>                                                    <C>       <C>
                                                       Address:  -------------------------------------

                                                                 -------------------------------------
</TABLE>

<TABLE>
<S>                                                    <C>         <C>
                                                       Facsimile:  ------------------------------------
</TABLE>

                                      C-16
<PAGE>
                                   EXHIBIT A
                           FORM OF IRREVOCABLE PROXY

    The undersigned Stockholder of Wind River Systems, Inc., a Delaware
corporation ("Parent") hereby irrevocably (to the fullest extent permitted by
law) appoints and constitutes             and Integrated Systems, Inc., a
California corporation (the "Company"), and each of them, the attorneys and
proxies of the undersigned with full power of substitution and resubstitution,
to the full extent of the undersigned's voting rights on the matters referred to
in the third paragraph of this proxy with respect to (i) the outstanding shares
of capital stock of Parent owned of record by the undersigned as of the date of
this proxy, which shares are specified on the final page of this proxy, and
(ii) any and all other shares of capital stock of Parent which the undersigned
may acquire record ownership of on or after the date hereof. (The shares of the
capital stock of Parent referred to in clauses "(i)" and "(ii)" of the
immediately preceding sentence are collectively referred to as the "Shares.")
Upon the execution hereof, all prior proxies given by the undersigned with
respect to any of the Shares are hereby revoked, and the undersigned agrees that
no subsequent proxies will be given with respect to any of the Shares.

    This proxy is irrevocable, is coupled with an interest and is granted in
connection with the Voting Agreement, dated as of the date hereof, between the
Company and the undersigned (the "Voting Agreement"), and is granted in
consideration of the Company entering into the Agreement and Plan of Merger and
Reorganization, dated as of the date hereof, among Parent, Merger Sub and the
Company (the "Reorganization Agreement").

    The attorneys and proxies named above will be empowered, and may exercise
this proxy, to vote the Shares at any time until the earlier to occur of the
valid termination of the Reorganization Agreement or the effective time of the
merger contemplated thereby (the "Merger") at any meeting of the stockholders of
Parent, however called, or in connection with any solicitation of written
consents from stockholders of Parent, in favor of the approval of the issuance
of shares of Parent Common Stock in the Merger, and in favor of each of the
other actions contemplated by the Reorganization Agreement.

    The undersigned may vote the Shares on all other matters.

    This proxy shall be binding upon the heirs, estate, executors, personal
representatives, successors and assigns of the undersigned (including any
transferee of any of the Shares).

    If any provision of this proxy or any part of any such provision is held
under any circumstances to be invalid or unenforceable in any jurisdiction, then
(a) such provision or part thereof shall, with respect to such circumstances and
in such jurisdiction, be deemed amended to conform to applicable laws so as to
be valid and enforceable to the fullest possible extent, (b) the invalidity or
unenforceability of such provision or part thereof under such circumstances and
in such jurisdiction shall not affect the validity or enforceability of such
provision or part thereof under any other circumstances or in any other
jurisdiction, and (c) the invalidity or unenforceability of such provision or
part thereof shall not affect the validity or enforceability of the remainder of
such provision or the validity or enforceability of any other provision of this
proxy. Each provision of this proxy is separable from every other provision of
this proxy, and each part of each provision of this proxy is separable from
every other part of such provision.

                                      C-17
<PAGE>
    This proxy shall terminate upon the earlier of the valid termination of the
Reorganization Agreement or the effective time of the Merger.

<TABLE>
Dated: October   , 1999.                               ---------------------------------------------
                                                                        (SIGNATURE)

<S>                                                    <C>
                                                       ---------------------------------------------
                                                                        (Print Name)

                                                       NUMBER OF SHARES OF COMMON STOCK OF PARENT
                                                       OWNED OF RECORD AS OF THE DATE OF THIS PROXY:

                                                       ---------------------------------------------
</TABLE>

                                      C-18
<PAGE>
                                                                         ANNEX D

                    [CREDIT SUISSE FIRST BOSTON LETTERHEAD]

October 21, 1999

Board of Directors
Wind River Systems, Inc.
500 Wind River Way
Alameda, CA 94501

Dear Sirs:

    You have asked us to advise you with respect to the fairness to Wind River
Systems, Inc. (the "Acquiror") from a financial point of view of the Exchange
Ratio (as defined below) as provided by the Agreement and Plan of Merger and
Reorganization, dated as of October 21, 1999 (the "Merger Agreement"), among the
Acquiror, Integrated Systems, Inc. (the "Company"), and University Acquisition
Corp. (the "Merger Sub"). The Merger Agreement provides for the merger (the
"Merger") of the Company with the Merger Sub pursuant to which the Company will
become a wholly-owned subsidiary of the Acquiror and each outstanding share of
common stock, no par value (the "Company Common Stock"), of the Company (other
than such shares held by the Company, the Acquiror, the Merger Sub or their
respective subsidiaries) will be converted into 0.920 (the "Exchange Ratio") of
a share of common stock, par value $0.001 per share (the "Acquiror Common
Stock"), of the Acquiror.

    In arriving at our opinion, we have reviewed certain publicly available
business and financial information relating to the Company and the Acquiror, as
well as the Merger Agreement. We have also reviewed certain other information,
including financial forecasts, provided to us by the Company and the Acquiror,
and have met with the Company's and the Acquiror's management to discuss the
business and prospects of the Company and the Acquiror. We have also relied upon
the views of the Acquiror's and the Company's management concerning the
business, operational and strategic benefits and implications of the Merger,
including financial information provided to us by the Company and the Acquiror
relating to the synergistic values and operating cost savings expected to be
achieved through the combination of the operations of the Acquiror and the
Company. We have also considered certain financial and stock market data of the
Company and the Acquiror, and we have compared that data with similar data for
other publicly held companies in businesses we deemed to be similar to those of
the Company and the Acquiror. We have also considered the financial terms, to
the extent publicly available, of certain other business combinations and other
transactions which have recently been effected. We also considered such other
information, financial studies, analyses and investigations and financial,
economic and market criteria which we deemed relevant.

    In connection with our review, we have not assumed any responsibility for
independent verification of any of the foregoing information and have relied on
its being complete and accurate in all material respects. With respect to the
financial forecasts, we have assumed that they have been reasonably prepared on
bases reflecting the best currently available estimates and judgments of the
Company's and the Acquiror's management as to the future financial performance
of the Company and the Acquiror, respectively, and as to the cost savings and
other potential synergies (including the amount, timing and achievability
thereof) anticipated to result from the Merger. You also have informed us, and
we have assumed, that the Merger will be treated as a tax-free reorganization
for federal income tax purposes and accounted for as a pooling-of-interests in
accordance with generally accepted accounting principles. In addition, we have
assumed, with your consent, that in the course of obtaining necessary regulatory
approvals in connection with the Merger, no delay or restriction will be imposed
that will have a material adverse effect on the expected benefits of the Merger.
In addition, we have not made an independent evaluation or appraisal of the
assets or liabilities (contingent or otherwise) of the Company or the Acquiror,
nor have we been furnished with any such evaluations or appraisals. Our

                                      D-1
<PAGE>
opinion is necessarily based upon financial, economic, market and other
conditions as they exist and can be evaluated on the date hereof. We are not
expressing any opinion as to what the value of the Acquiror Common Stock
actually will be when issued to the Company's stockholders pursuant to the
Merger or the prices at which such Acquiror Common Stock will trade subsequent
to Merger.

    We have acted as financial advisor to the Acquiror in connection with the
Merger and will receive a fee for our services, a portion of which is contingent
upon the consummation of the Merger. We will also receive a fee for rendering
this opinion.

    In the ordinary course of our business, we and our affiliates may actively
trade the debt and equity securities of both the Company and the Acquiror for
their own accounts and for the accounts of customers and, accordingly, may at
any time hold a long or short position in such securities.

    It is understood that this letter is for the information of the Board of
Directors of the Acquiror in connection with its consideration of the Merger and
is not to be quoted or referred to, in whole or in part, in any registration
statement, prospectus or proxy statement, or in any other document used in
connection with the offering or sale of securities, nor shall this letter be
used for any other purposes, without our prior written consent.

    Based upon and subject to the foregoing, it is our opinion that, as of the
date hereof, the Exchange Ratio is fair to the Acquiror from a financial point
of view.

Very truly yours,
CREDIT SUISSE FIRST BOSTON CORPORATION

By: /s/ GEORGE BOUTROS
   ------------------------------------------
   George Boutros
   MANAGING DIRECTOR

                                      D-2
<PAGE>
                                                                         ANNEX E

                       [HAMBRECHT & QUIST LLC LETTERHEAD]

October 21, 1999

Confidential
- ----------

The Board of Directors
Integrated Systems, Inc.
201 Moffett Park Drive
Sunnyvale, CA 94089-1322

Ladies and Gentlemen:

    You have requested our opinion as to the fairness from a financial point of
view to the holders of the outstanding shares of common stock (the "Common
Stock") of Integrated Systems, Inc. ("Integrated Systems" or the "Company") of
the consideration to be received by such shareholders in connection with the
proposed merger of University Acquisition Corp ("Merger Sub"), a wholly owned
subsidiary of Wind River Systems, Inc. ("Wind" or "Acquirer"), with and into
Integrated Systems (the "Proposed Transaction") pursuant to the Agreement and
Plan of Merger to be dated as of October 21, 1999, among Wind, Merger Sub, and
the Company (the "Agreement").

    We understand that the terms of the Agreement provide, among other things,
that each issued and outstanding share of Common Stock shall be converted into
the right to receive 0.92 shares of common stock of Wind, as more fully set
forth in the Agreement. For purposes of this opinion, we have assumed that the
Proposed Transaction will qualify as a tax-free reorganization under the United
States Internal Revenue Code for the shareholders of the Company and that the
Proposed Transaction will be accounted for as a pooling of interests.

    Hambrecht & Quist LLC ("Hambrecht & Quist"), as part of its investment
banking services, is regularly engaged in the valuation of businesses and their
securities in connection with mergers and acquisitions, strategic transactions,
corporate restructurings, negotiated underwritings, secondary distributions of
listed and unlisted securities, private placements and valuations for corporate
and other purposes. We have acted as a financial advisor to the Board of
Directors of the Company in connection with the Proposed Transaction, and we
will receive a fee for our services, which include the rendering of this
opinion.

    In the past, we have provided investment banking and other financial
advisory services to the Company and Wind, and have received fees for rendering
these services. H&Q lead-managed the Company's 1996 equity follow-on offering
and co-managed Wind's 1996 equity follow-on offering. In the ordinary course of
business, Hambrecht & Quist acts as a market maker and broker in the publicly
traded securities of the Company and Wind, and receives customary compensation
in connection therewith, and also provides research coverage for the Company and
Wind. In the ordinary course of business, Hambrecht & Quist actively trades in
the equity and derivative securities of the Company and Wind for its own account
and for the accounts of its customers and, accordingly, may at any time hold a
long or short position in such securities. Hambrecht & Quist may in the future
provide additional investment banking or other financial advisory services to
the Company and Wind.

                                     [LOGO]

                                      E-1
<PAGE>
    In connection with our review of the Proposed Transaction, and in arriving
at our opinion, we have, among other things:

    (i) reviewed the publicly available consolidated financial statements of
        Wind for recent years, interim periods to date including certain
        projections, and certain other relevant financial and operating data of
        Wind (including its capital structure) made available to us from
        published sources;

    (ii) discussed the business, financial condition and prospects of Wind with
         certain members of senior management;

   (iii) reviewed the publicly available consolidated financial statements of
         the Company for recent years, interim periods to date including certain
         projections, and certain other relevant financial and operating data of
         the Company made available to us from published sources;

    (iv) discussed the business, financial condition and prospects of the
         Company with certain members of senior management;

    (v) reviewed the recent reported prices and trading activity for the common
        stocks of Wind and the Company and compared such information and certain
        financial information for Wind the Company with similar information for
        certain other companies engaged in businesses we consider comparable;

    (vi) reviewed the financial terms, to the extent publicly available, of
         certain comparable merger and acquisition transactions;

   (vii) reviewed a draft of the Agreement dated October 13, 1999; and

  (viii) performed such other analyses and examinations and considered such
         other information, financial studies, analyses and investigations and
         financial, economic and market data as we deemed relevant.

    In rendering our opinion, we have assumed and relied upon the accuracy and
completeness of all of the information concerning Wind or the Company considered
in connection with our review of the Proposed Transaction, and we have not
assumed any responsibility for independent verification of such information. We
have not prepared any independent valuation or appraisal of any of the assets or
liabilities of Wind or the Company, nor have we conducted a physical inspection
of the properties and facilities of either company. With respect to the
financial forecasts and projections made available to us and used in our
analysis, we have assumed that they reflect the best currently available
estimates and judgments of the expected future financial performance of Wind and
the Company. For purposes of this opinion, we have assumed that neither Wind nor
the Company is a party to any pending transactions, including external
financings, recapitalizations or material merger discussions, other than the
Proposed Transaction and those activities undertaken in the ordinary course of
conducting their respective businesses. Our opinion is necessarily based upon
market, economic, financial and other conditions as they exist and can be
evaluated as of the date of this letter and any change in such conditions would
require a reevaluation of this opinion. We express no opinion as to the price at
which Wind common stock will trade subsequent to the Effective Time (as defined
in the Agreement). In rendering this opinion, we have assumed that the proposed
merger will be consummated substantially on the terms discussed in the
Agreement, without any waiver of any material terms or conditions by any party
thereto. We were not requested to, and did not, solicit indications of interest
from any other parties in connection with a possible acquisition of, or business
combination with, the Company.

    It is understood that this letter is for the information of the Board of
Directors and may not be used for any other purpose without our prior written
consent; provided, however, that this letter may

                                      E-2
<PAGE>
be reproduced in full in the Proxy Statement/Prospectus. This letter does not
constitute a recommendation to any stockholder as to how such stockholder should
vote on the Proposed Transaction. Based upon and subject to the foregoing and
after considering such other matters as we deem relevant, we are of the opinion
that as of the date hereof the consideration to be received by the holders of
the Common Stock in the Proposed Transaction is fair from a financial point of
view. We express no opinion, however, as to the adequacy of any consideration
received in the Proposed Transaction by Wind or any of its affiliates.

Very truly yours,
HAMBRECHT & QUIST LLC

By /s/ PAUL B. CLEVELAND
   -----------------------------------------
   Paul B. Cleveland
   MANAGING DIRECTOR

                                      E-3
<PAGE>
                                                                         ANNEX F

                                   CHAPTER 13
                               DISSENTERS' RIGHTS

RIGHT TO REQUIRE PURCHASE--"DISSENTING SHARES" AND "DISSENTING SHAREHOLDER"
DEFINED. SECTION1300.
DEMAND FOR PURCHASE. SECTION1301.
ENDORSEMENT OF SHARES. SECTION1302.
AGREED PRICE--TIME FOR PAYMENT. SECTION1303
DISSENTER'S ACTION TO ENFORCE PAYMENT. SECTION1304.
APPRAISERS' REPORT--PAYMENT--COSTS. SECTION1305.
DISSENTING SHAREHOLDER'S STATUS AS CREDITOR. SECTION1306.
DIVIDENDS PAID AS CREDIT AGAINST PAYMENT. SECTION1307.
CONTINUING RIGHTS AND PRIVILEGES OF DISSENTING SHAREHOLDERS. SECTION1308.
TERMINATION OF DISSENTING SHAREHOLDER STATUS. SECTION1309.
SUSPENSION OF PROCEEDINGS FOR PAYMENT PENDING LITIGATION. SECTION1310.
EXEMPT SHARES. SECTION1311.
ATTACKING VALIDITY OF REORGANIZATION OR MERGER. SECTION1312.

SECTION 1300. RIGHT TO REQUIRE PURCHASE--"DISSENTING SHARES" AND "DISSENTING
SHAREHOLDER" DEFINED.

    (a) If the approval of the outstanding shares (Section 152) of a corporation
is required for a reorganization under subdivisions (a) and (b) or subdivision
(e) or (f) of Section 1201, each shareholder of the corporation entitled to vote
on the transaction and each shareholder of a subsidiary corporation in a
short-form merger may, by complying with this chapter, require the corporation
in which the shareholder holds shares to purchase for cash at their fair market
value the shares owned by the shareholder which are dissenting shares as defined
in subdivision (b). The fair market value shall be determined as of the day
before the first announcement of the terms of the proposed reorganization or
short-form merger, excluding any appreciation or depreciation in consequence of
the proposed action, but adjusted for any stock split, reverse stock split or
share dividend which becomes effective thereafter.

    (b) As used in this chapter, "dissenting shares" means shares which come
within all of the following descriptions:

        (1)  Which were not immediately prior to the reorganization or
    short-form merger either (A) listed on any national securities exchange
    certified by the Commissioner of Corporations under subdivision (o) of
    Section 25100 or (B) listed on the list of OTC margin stocks issued by the
    Board of Governors of the Federal Reserve System, and the notice of meeting
    of shareholders to act upon the reorganization summarizes this section and
    Sections 1301, 1302, 1303 and 1304; provided, however, that this provision
    does not apply to any shares with respect to which there exists any
    restriction on transfer imposed by the corporation or by any law or
    regulation; and provided, further, that this provision does not apply to any
    class of shares described in subparagraph (A) or (B) if demands for payment
    are filed with respect to 5 percent or more of the outstanding shares of
    that class.

        (2)  Which were outstanding on the date for the determination of
    shareholders entitled to vote on the reorganization and (A) were not voted
    in favor of the reorganization or, (B) if described in subparagraph (A) or
    (B) of paragraph (1) (without regard to the provisos in that paragraph),
    were voted against the reorganization, or which were held of record on the
    effective date of a short-form merger; provided, however, that subparagraph
    (A) rather than subparagraph (B) of this paragraph applies in any case where
    the approval required by Section 1201 is sought by written consent rather
    than at a meeting.

                                      F-1
<PAGE>
        (3)  Which the dissenting shareholder has demanded that the corporation
    purchase at their fair market value, in accordance with Section 1301.

        (4)  Which the dissenting shareholder has submitted for endorsement, in
    accordance with Section 1302.

    (c) As used in this chapter, "dissenting shareholder" means the recordholder
of dissenting shares and includes a transferee of record.

SECTION 1301. DEMAND FOR PURCHASE.

    (a) If, in the case of a reorganization, any shareholders of a corporation
have a right under Section 1300, subject to compliance with paragraphs (3) and
(4) of subdivision (b) thereof, to require the corporation to purchase their
shares for cash, such corporation shall mail to each such shareholder a notice
of the approval of the reorganization by its outstanding shares (Section 152)
within 10 days after the date of such approval, accompanied by a copy of
Sections 1300, 1302, 1303, 1304 and this section, a statement of the price
determined by the corporation to represent the fair market value of the
dissenting shares, and a brief description of the procedure to be followed if
the shareholder desires to exercise the shareholder's right under such sections.
The statement of price constitutes an offer by the corporation to purchase at
the price stated any dissenting shares as defined in subdivision (b) of
Section 1300, unless they lose their status as dissenting shares under
Section 1309.

    (b) Any shareholder who has a right to require the corporation to purchase
the shareholder's shares for cash under Section 1300, subject to compliance with
paragraphs (3) and (4) of subdivision (b) thereof, and who desires the
corporation to purchase such shares shall make written demand upon the
corporation for the purchase of such shares and payment to the shareholder in
cash of their fair market value. The demand is not effective for any purpose
unless it is received by the corporation or any transfer agent thereof (1) in
the case of shares described in clause (i) or (ii) of paragraph (1) of
subdivision (b) of Section 1300 (without regard to the provisos in that
paragraph), not later than the date of the shareholders' meeting to vote upon
the reorganization, or (2) in any other case within 30 days after the date on
which the notice of the approval by the outstanding shares pursuant to
subdivision (a) or the notice pursuant to subdivision (i) of Section 1110 was
mailed to the shareholder.

    (c) The demand shall state the number and class of the shares held of record
by the shareholder which the shareholder demands that the corporation purchase
and shall contain a statement of what such shareholder claims to be the fair
market value of those shares as of the day before the announcement of the
proposed reorganization or short-form merger. The statement of fair market value
constitutes an offer by the shareholder to sell the shares at such price.

SECTION 1302. ENDORSEMENT OF SHARES.

    Within 30 days after the date on which notice of the approval by the
outstanding shares or the notice pursuant to subdivision (i) of Section 1110 was
mailed to the shareholder, the shareholder shall submit to the corporation at
its principal office or at the office of any transfer agent thereof, (a) if the
shares are certificate securities, the shareholder's certificates representing
any shares which the shareholder demands that the corporation purchase, to be
stamped or endorsed with a statement that the shares are dissenting shares or to
be exchanged for certificates of appropriate denomination so stamped or endorsed
or (b) if the shares are uncertificated securities, written notice of the number
of shares which the shareholder demands that the corporation purchase. Upon
subsequent transfers of the dissenting shares on the books of the corporation,
the new certificates, initial transaction statement, and other written
statements issued therefor shall bear a like statement, together with the name
of the original dissenting holder of the shares.

                                      F-2
<PAGE>
SECTION 1303. AGREED PRICE--TIME FOR PAYMENT.

    (a) If the corporation and the shareholder agree that the shares are
dissenting shares and agree upon the price of the shares, the dissenting
shareholder is entitled to the agreed price with interest thereon at the legal
rate on judgments from the date of the agreement. Any agreements fixing the fair
market value of any dissenting shares as between the corporation and the holders
thereof shall be filed with the secretary of the corporation.

    (b) Subject to the provisions of Section 1306, payment of the fair market
value of dissenting shares shall be made within 30 days after the amount thereof
has been agreed or within 30 days after any statutory or contractual conditions
to the reorganization are satisfied, whichever is later, and in the case of
certificated securities, subject to surrender of the certificates therefor,
unless provided otherwise by agreement. Leg.H. 1975 ch. 682, effective
January 1, 1977, 1980 ch. 501, 1986 ch. 766.

SECTION 1304. DISSENTER'S ACTION TO ENFORCE PAYMENT.

    (a) If the corporation denies that the shares are dissenting shares, or the
corporation and the shareholder fail to agree upon the fair market value of the
shares, then the shareholder demanding purchase of such shares as dissenting
shares or any interested corporation, within six months after the date on which
notice of the approval by the outstanding shares (section 152) or notice
pursuant to subdivision (i) of Section 1110 was mailed to the shareholder, but
not thereafter, may file a complaint in the superior court of the proper county
praying the court to determine whether the shares are dissenting shares or the
fair market value of the dissenting shares or both or may intervene in any
action pending on such a complaint.

    (b) Two or more dissenting shareholders may join as plaintiffs or be joined
as defendants in any such action and two or more such actions may be
consolidated.

    (c) On the trial of the action, the court shall determine the issues. If the
status of the shares as dissenting shares is in issue, the court shall first
determine that issue. If the fair market value of the dissenting shares is in
issue, the court shall determine, or shall appoint one or more impartial
appraisers to determine, the fair market value of the shares.

SECTION 1305. APPRAISERS' REPORT--PAYMENT--COSTS.

    (a) If the court appoints an appraiser or appraisers, they shall proceed
forthwith to determine the fair market value per share. Within the time fixed by
the court, the appraisers, or a majority of them, shall make and file a report
in the office of the clerk of the court. Thereupon, on the motion of any party,
the report shall be submitted to the court and considered on such evidence as
the court considers relevant. If the court finds the report reasonable, the
court may confirm it.

    (b) If a majority of the appraisers appointed fail to make and file a report
within 10 days from the date of their appointment or within such further time as
may be allowed by the court or the report is not confirmed by the court, the
court shall determine the fair market value of the dissenting shares.

    (c) Subject to the provisions of Section 1306, judgment shall be rendered
against the corporation for payment of an amount equal to the fair market value
of each dissenting share multiplied by the number of dissenting shares which any
dissenting shareholder who is a party, or who has intervened, is entitled to
require the corporation to purchase, with interest thereon at the legal rate
from the date on which judgment was entered.

    (d) Any such judgment shall be payable forthwith with respect to
uncertificated securities and, with respect to certificated securities, only
upon the endorsement and delivery to the corporation of the certificates for the
shares described in the judgment. Any party may appeal from the judgment.

                                      F-3
<PAGE>
    (e) The costs of the action, including reasonable compensation to the
appraisers to be fixed by the court, shall be assessed or apportioned as the
court considers equitable, but, if the appraisal exceeds the price offered by
the corporation, the corporation shall pay the costs (including in the
discretion of the court attorneys' fees, fees of expert witnesses and interest
at the legal rate on judgments from the date of compliance with Sections 1300,
1301 and 1302 if the value awarded by the court for the shares is more than
125 percent of the price offered by the corporation under subdivision (a) of
Section 1301).

SECTION 1306. DISSENTING SHAREHOLDER'S STATUS AS CREDITOR.

    To the extent that the provisions of Chapter 5 prevent the payment to any
holders of dissenting shares of their fair market value, they shall become
creditors of the corporation for the amount thereof together with interest at
the legal rate on judgments until the date of payment, but subordinate to all
other creditors in any liquidation proceeding, such debt to be payable when
permissible under the provisions of Chapter 5.

SECTION 1307. DIVIDENDS PAID AS CREDIT AGAINST PAYMENT.

    Cash dividends declared and paid by the corporation upon the dissenting
shares after the date of approval of the reorganization by the outstanding
shares (Section 152) and prior to payment for the shares by the corporation
shall be credited against the total amount to be paid by the corporation
therefor.

SECTION 1308. CONTINUING RIGHTS AND PRIVILEGES OF DISSENTING SHAREHOLDERS.

    Except as expressly limited in this chapter, holders of dissenting shares
continue to have all the rights and privileges incident to their shares, until
the fair market value of their shares is agreed upon or determined. A dissenting
shareholder may not withdraw a demand for payment unless the corporation
consents thereto.

SECTION 1309. TERMINATION OF DISSENTING SHAREHOLDER STATUS.

    Dissenting shares lose their status as dissenting shares and the holders
thereof cease to be dissenting shareholders and cease to be entitled to require
the corporation to purchase their shares upon the happening of any of the
following:

        (a) The corporation abandons the reorganization. Upon abandonment of the
    reorganization, the corporation shall pay on demand to any dissenting
    shareholder who has initiated proceedings in good faith under this chapter
    all necessary expenses incurred in such proceedings and reasonable
    attorneys' fees.

        (b) The shares are transferred prior to their submission for endorsement
    in accordance with Section 1302 or are surrendered for conversion into
    shares of another class in accordance with the articles.

        (c) The dissenting shareholder and the corporation do not agree upon the
    status of the shares as dissenting shares or upon the purchase price of the
    shares, and neither files a complaint or intervenes in a pending action as
    provided in Section 1304, within six months after the date on which notice
    of the approval by the outstanding shares or notice pursuant to subdivision
    (i) of Section 1110 was mailed to the shareholder.

        (d) The dissenting shareholder, with the consent of the corporation,
    withdraws the shareholder's demand for purchase of the dissenting shares.

                                      F-4
<PAGE>
SECTION 1310. SUSPENSION OF PROCEEDINGS FOR PAYMENT PENDING LITIGATION.

    If litigation is instituted to test the sufficiency or regularity of the
votes of the shareholders in authorizing a reorganization, any proceedings under
Section 1304 and 1305 shall be suspended until final determination of such
litigation.

SECTION 1311. EXEMPT SHARES.

    This chapter, except Section 1312, does not apply to classes of shares whose
terms and provisions specifically set forth the amount to be paid in respect to
such shares in the event of a reorganization or merger.

SECTION 1312. ATTACKING VALIDITY OF REORGANIZATION OR MERGER.

    (a) No shareholder of a corporation who has a right under this chapter to
demand payment of cash for the shares held by the shareholder shall have any
right at law or in equity to attack the validity of the reorganization or
short-form merger, or to have the reorganization or short-form merger set aside
or rescinded, except in an action to test whether the number of shares required
to authorize or approve the reorganization have been legally voted in favor
thereof; but any holder of shares of a class whose terms and provisions
specifically set forth the amount to be paid in respect to them in the event of
a reorganization or short-form merger is entitled to payment in accordance with
those terms and provisions or, if the principal terms of the reorganization are
approved pursuant to subdivision (b) of Section 1202, is entitled to payment in
accordance with the terms and provisions of the approved reorganization.

    (b) If one of the parties to a reorganization or short-form merger is
directly or indirectly controlled by, or under common control with, another
party to the reorganization or short-form merger, subdivision (a) shall not
apply to any shareholder of such party who has not demanded payment of cash for
such shareholder's shares pursuant to this chapter; but if the shareholder
institutes any action to attack the validity of the reorganization or short-form
merger or to have the reorganization or short-form merger set aside or
rescinded, the shareholder shall not thereafter have any right to demand payment
of cash for the shareholder's shares pursuant to this chapter. The court in any
action attacking the validity of the reorganization or short-form merger or to
have the reorganization or short-form merger set aside or rescinded shall not
restrain or enjoin the consummation of the transaction except upon 10 days'
prior notice to the corporation and upon a determination by the court that
clearly no other remedy will adequately protect the complaining shareholder or
the class of shareholders of which such shareholder is a member.

    (c) If one of the parties to a reorganization or short-form merger is
directly or indirectly controlled by, or under common control with, another
party to the reorganization or short-form merger, in any action to attack the
validity of the reorganization or short-form merger or to have the
reorganization or short-form merger set aside or rescinded, (1) a party to a
reorganization or short-form merger which controls another party to the
reorganization or short-form merger shall have the burden of proving that the
transaction is just and reasonable as to the shareholders of the controlled
party, and (2) a person who controls two or more parties to a reorganization
shall have the burden of proving that the transaction is just and reasonable as
to the shareholders of any party so controlled.

                                      F-5
<PAGE>



                          WIND RIVER SYSTEMS, INC.
              PROXY SOLICITED BY THE BOARD OF DIRECTORS FOR THE
        SPECIAL MEETING OF STOCKHOLDERS TO BE HELD ON FEBRUARY 15, 2000

     The undersigned hereby appoints RICHARD W. KRABER and MARLA ANN STARK,
and each of them, as attorneys and proxies of the undersigned, with full
power of substitution, to vote all of the shares of stock of Wind River
Systems, Inc., a Delaware corporation, which the undersigned may be entitled
to vote at the Special Meeting of Stockholders of Wind River Systems, Inc. to
be held at 600 Wind River Way, Alameda, California on Tuesday, February 15,
2000 at 11:00 a.m., local time, and at any and all postponements,
continuations and adjournments thereof, with all powers that the undersigned
would possess if personally present, upon and in respect of the following
matters and in accordance with the following instructions, with discretionary
authority as to any and all other matters that may properly come before the
meeting.

     UNLESS A CONTRARY DIRECTION IS INDICATED, THIS PROXY WILL BE VOTED FOR
PROPOSALS 1 AND 2 AS MORE SPECIFICALLY DESCRIBED IN THE JOINT PROXY
STATEMENT/PROSPECTUS. IF SPECIFIC INSTRUCTIONS ARE INDICATED, THIS PROXY WILL
BE VOTED IN ACCORDANCE THEREWITH.

           (CONTINUED, AND TO BE DATED AND SIGNED ON OTHER SIDE)


<PAGE>

 /X/  PLEASE MARK YOUR
      VOTES AS IN THIS
      EXAMPLE USING
      DARK INK ONLY.
<TABLE>

       MANAGEMENT RECOMMENDS A VOTE FOR PROPOSAL 1.                          MANAGEMENT RECOMMENDS A VOTE FOR PROPOSAL 2.
<S>                                                                <C>
PROPOSAL 1: To approve the issuance of     FOR  AGAINST ABSTAIN    PROPOSAL 2: To approve the amendment to the  FOR AGAINST ABSTAIN
shares of Wind River common stock in       / /    / /     / /      Wind River 1998 Equity Incentive Plan to     / /   / /     / /
the merger contemplated by the Agreement                           increase the number of shares of Wind River
and Plan of Merger and Reorganization,                             common stock reserved for option grants
dated as of October 21,1999, among Wind River                      under the 1998 Equity Incentive Plan by
Systems, Inc., University Acquisition Corp.,                       2,600,000 shares.
a Delaware corporation and a wholly owned
subsidiary of Wind River, and Integrated
Systems, Inc.


                                                                   PLEASE VOTE, DATE AND PROMPTLY RETURN THIS PROXY IN THE ENCLOSED
                                                                   RETURN ENVELOPE WHICH IS POSTAGE PREPAID IF MAILED IN THE
                                                                   UNITED STATES.

</TABLE>



____________________________   ________________   Dated __________________
         Signature(s)

Please sign exactly as your name appears hereon. If the stock is registered
in the names of two or more persons, each should sign. Executors,
administrators, trustees, guardians and attorneys-in-fact should add their
titles. If signer is a corporation, please give full corporate name and have
a duly authorized officer sign, stating title. If signer is a partnership,
please sign in partnership name by authorized person.


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