<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q/A
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the Transition Period from to
---------- ------------
---------- ------------
COMMISSION FILE NO. 0-25298
OAK TECHNOLOGY, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 77-0161486
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
139 KIFER COURT
SUNNYVALE, CALIFORNIA 94086
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES, INCLUDING ZIP CODE)
(408) 737-0888
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days. YES X NO .
--- ---
As of September 30, 1996, there were outstanding 40,357,343 shares of the
Registrant's Common Stock, par value $0.001 per share.
<PAGE>
FORM 10-Q/A
Amendment No. 1
In accordance with the Securities and Exchange Commission's order dated
March 6, 1997 granting Oak Technology's Application for confidential
treatment, the undersigned Registrant hereby amends Exhibit 10.13 filed
pursuant to Item 6 of Form 10-Q and files such amended exhibit herewith.
2
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) The following exhibits are filed herewith or incorporated by reference
herein.
Exhibit
Number Exhibit Title
------- -------------
3.01 The Company's Restated Certificate of Incorporation,
amended (1)
3.02 The Company's Restated Bylaws (2)
4.01 Form of Specimen Certificate for the Company's Common
Stock (3)
4.02 Amended and Restated Registration Rights Agreement
dated as of Oct. 15, 1993 among the Company and
various investors (3)
4.03 The Company's Restated Certificate of Incorporation, as
amended (See Exhibit 3.01)
4.04 The Company's Restated Bylaws (See Exhibit 3.02)
10.01 1988 Stock Option Plan, as amended and related
documents (3)*
10.02 1994 Stock Option Plan and related documents (3), and
amendment thereto dated February 1, 1996 (4)*
10.03 1994 Outside Directors' Stock Option Plan and related
documents (3)*
10.04 1994 Employee Stock Purchase Plan (3)*
10.05 401(k) Plan and related documents (3) and Amendment Number
One and Supplemental Participation Agreement thereto (5)*
10.06 Lease Agreement dated August 3, 1988 between John Arrillaga,
Trustee, or his Successor Trustee, UTA dated 7/20/77 (John
Arrillaga Separate Property Trust) as amended and Richard T.
Peery, Trustee, or his Successor Trustee, UTA dated 7/20/77
(Richard T. Peery Separate Property Trust) as amended, and
Justin Jacobs, Jr., dba Siri-Kifer Investments, a joint
venture, and the Company, as amended June 1, 1990, and
Consent to Alterations dated March 26, 1991 (lease agreement
for 139 Kifer Court, Sunnyvale, California) (3), and
amendments thereto dated June 15, 1995 and July 19, 1995 (5)
3
<PAGE>
10.07 Lease Agreement dated August 22, 1994 between John Arrillaga,
Trustee, or his Successor Trustee, UTA dated 7/20/77 (John
Arrillaga Separate Property Trust) as amended and Richard T.
Peery, Trustee, or his Successor Trustee, UTA dated 7/20/77
(Richard T. Peery Separate Property Trust) as amended, and
Justin Jacobs, Jr., dba Siri-Kifer Investments, a joint
venture, and the Company (lease agreement for 140 Kifer
Court, Sunnyvale, California) (3), and amendment thereto
dated June 15, 1995 (5)
10.08 Form of Indemnification Agreement, between the Company and
each of its Directors and executive officers (14)
10.09 VCEP Agreement dated July 30, 1990 between the Company
and Advanced Micro Devices, Inc. (3)
10.10 Product License Agreement dated April 13, 1993 between
the Company and Media Chips, Inc., as amended September 16,
1993 (3)
10.11 Resolutions of the Board of Directors of the Company dated
July 27, 1994 setting forth the provisions of the Executive
Bonus Plan (3)(12)*
10.12 Employee Incentive Plan effective January 1, 1995 (3)*
10.13 Option Agreement between Oak Technology, Inc., and Taiwan
Semiconductor Manufacturing Co., Ltd. dated as of August 8,
1996(12)
10.14 Foundry Venture Agreement between the Company and
United Microelectronics Corporation dated as of October 2,
1995 (6)(12)
10.15 Fab Ven Foundry Capacity Agreement among the Company, Fab
Ven and United Microelectronics Corporation dated as of
October 2, 1995 (7)(12)
10.16 Written Assurances Re: Foundry Venture Agreement among
the Company, United Microelectronics Corporation and Fab Ven
dated as of October 2, 1995 (8)(12)
4
<PAGE>
10.17 Lease Agreement dated June 15, 1995 between John Arrillaga,
Trustee, or his Successor Trustee, UTA dated 7/20/77 (John
Arrillaga Separate Property Trust) as amended and Richard T.
Peery, Trustee, or his successor Trustee, UTA dated 7/20/77
(Richard T. Perry Separate Property Trust) as amended, and the
Company (lease agreement for 130 Kifer Court, Sunnyvale,
California) (9), and amendments thereto dated June 15, 1995
and August 18, 1995 (10)
10.18 Deposit Agreement dated November 8, 1995 between Chartered
Semiconductor Manufacturing Ltd. and the Company (11), and
Amendment Agreement (No. 1) thereto dated September 25, 1996
(13)**
11.01 Statement regarding computation of net income (loss) per
share (14)
27.01 Financial Data Schedule (14)
_________________________
(1) Incorporated herein by reference to exhibit 3.01 of the Company's Quarterly
Report on Form 10-Q for the quarter ended March 31, 1996.
(2) Incorporated herein by reference to exhibit 3.05 filed with the Company's
Registration Statement on Form S-1 (File No. 33-87518) declared
effective by the Securities and Exchange Commission on February 13, 1995
(the "February 1995 Form S-1").
(3) Incorporated herein by reference to the exhibit with the same number filed
with the February 1995 Form S-1.
(4) Incorporated herein by reference to Exhibit 10.1 filed with the Company's
Registration Statement on Form S-8 (File No. 333-4334) on May 2, 1996.
(5) Incorporated herein by reference to the exhibit with the same number filed
with the Company's Annual Report on Form 10-K for the year ended June 30,
1996.
(6) Incorporated herein by reference to Exhibit 2.1 filed with the Company's
Form 8-K dated October 2, 1995 (the "October 1995 form 8-K").
(7) Incorporated herein by reference to Exhibit 2.2 filed with the October 1995
Form 8-K.
(8) Incorporated herein by reference to Exhibit 2.3 filed with the October 1995
Form 8-K.
(9) Incorporated herein by reference to Exhibit 10.08 filed with the Company's
Annual Report on Form 10-K for the year ended June 30, 1995.
(10) Incorporated herein by reference to Exhibit 10.08 filed with the Company's
Annual Report on Form 10-K for the year ended June 30, 1996.
(11) Incorporated herein by reference to Exhibit 10.04 filed with the Company's
Quarterly Report on Form 10-Q for the quarter ended December 31, 1995.
(12) Confidential treatment has been granted with respect to portions of this
exhibit.
(13) Incorporated herein by reference to Exhibit 10.17 filed with the Company's
Annual Report on Form 10-K for the year ended June 30, 1996.
(14) Incorporated herein by reference to the exhibit with the same number
filed with the Company's quarterly report on Form 10-Q for the quarter
ended September 30, 1996.
* Indicates Management incentive plan.
** Confidential treatment requested as to portions of the exhibit.
(b) The Company did not file any reports on Form 8-K during the three
months ended September 30, 1996.
5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
OAK TECHNOLOGY, INC.
(Registrant)
Date: March 24, 1997
/S/ SIDNEY S. FAULKNER
----------------------
Sidney S. Faulkner
Vice President, Finance,
Chief Financial Officer and Secretary
(Principal Financial and Accounting Officer
and Duly Authorized Officer)
6
<PAGE>
EXHIBIT INDEX
Exhibit
Number Exhibit Title
------- -------------
10.13 Option Agreement between Oak Technology, Inc., and Taiwan
Semiconductor Manufacturing Co., Ltd. dated as of August 8,
1996**
______________________
** Confidential treatment granted as to portions of the exhibit.
7
<PAGE>
EXHIBIT 10.13
OPTION AGREEMENT
BETWEEN
OAK TECHNOLOGY, INC.
AND
TAIWAN SEMICONDUCTOR MANUFACTURING CO., LTD.
AUGUST 8, 1996
<PAGE>
OPTION AGREEMENT
THIS AGREEMENT is made and becomes effective as of AUGUST 8, 1996 (the
"Effective Date") by Taiwan Semiconductor Co., Ltd. ("TSMC"), a company
organized under the laws of the Republic of China with its registered address
at No. 121, Park Ave. 3, Science-Based Industrial Park, Hsinchu, Taiwan, and
OAK Technology, Inc., a company organized under the laws of the R.O.C., with
its registered address at Rm. B, 7F, No. 370, Sec. 1, Fu-Hsing S. Rd. Taipei,
Taiwan, R.O.C. ("Customer").
RECITALS
WHEREAS, TSMC currently supplies Customer with wafers and Customer
wishes to increase the purchase volume of wafers from TSMC;
WHEREAS, in order to increase its output, TSMC must accelerate its ramp
up in Fab 3 and advance the start of Fab 4;
WHEREAS, as a condition to TSMC's acceleration of these facilities, TSMC
has asked Customer to make a capacity commitment and certain advance payment
under three option agreements;
WHEREAS, both parties intend to terminate the three option agreements
and enter into a new option agreement for the purposes set herein.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual covenants and conditions
contained herein, the parties agree as follows:
1. TERMINATION OF THE OPTION AGREEMENTS
Both parties agree to terminate the Option I Agreement dated June 7,
1995, the Option II Agreement dated June 7, 1995, and the Option III
Agreement dated August 17, 1995 between the parties upon the Effective Date
hereof. Any rights
<PAGE>
and obligations accrued prior to the termination of those three agreements,
excluding the option fees due thereunder, shall remain effective.
2. DEFINITIONS
(a) "Base Capacity" used in this Agreement shall mean the capacity that
TSMC agrees to provide, and of which Customer agrees to purchase 90%,
in addition to the Option Capacity, pursuant to this Agreement.
(b) "Customer Committed Capacity" used in this Agreement shall mean the
total capacity that Customer agrees to purchase from TSMC pursuant to
this Agreement, and is set forth in Exhibit B.
(c) "Option Capacity" used in this Agreement shall mean the firm
capacity commitment made by Customer pursuant to this Agreement, for
which capacity Customer agrees to pay TSMC liquidated damages at a
rate [* ] for any such unused capacity
pursuant to Section 6(a) below.
(d) "Option Fee" used in this Agreement shall mean Customer's deposit
balance, USD41,132,000, at TSMC upon the execution hereof as
partial prepayment of the Option Capacity to be purchased by Customer,
and for liquidated damages upon Customer's failure to purchase the
Option Capacity. Except for the return of the corresponding Option
Fee under assignment pursuant to Section 6(a), the Option Fee is not
refundable.
(e) "TSMC Committed Capacity" used in this Agreement shall mean the
total capacity that TSMC agrees to provide to Customer pursuant to this
Agreement, and is set forth in Exhibit B.
(f) "Wafer Equivalent" used in this Agreement shall mean the number of
6" or 8" wafers based on the equivalency factor for 1995 Base Capacity.
For details of the equivalency factor, please refer to Exhibit A. Any
and all the capacity commitments referred to in this Agreement shall be
measured in Wafer Equivalent.
[*] Confidential Treatment Granted
<PAGE>
3. VOLUME COMMITMENT
(a) Customer agrees to purchase from TSMC the Customer Committed
Capacity, and TSMC agrees to provide to Customer the TSMC Committed
Capacity, as set forth in Exhibit B. In any calendar year, the orders
placed by Customer shall first apply to fulfill 90% of the Base
Capacity portion, and then the Option Capacity.
(b) Each month, Customer agrees to provide to TSMC a six-month rolling
forecast of the number of wafers that Customer will purchase, with the
volume for the first twelve weeks being frozen (i.e. Customer must
purchase all of the quantity forecast for the delivery in the first
twelve weeks of all forecast). The forecast must be based on wafers out
or deliveries expected to be made by TSMC.
(c) TSMC will use its reasonable effort to cause its fabs to be capable
of producing wafers of more advanced specifications, as set forth in
the TSMC Technology Road Map attached in Exhibit C.
4. WAFER PRICE
(a)[*
] Customer has the right to conduct price audit once
a year on wafer price for the preceding twelve months through an
internationally renown accounting firm, with a one-month prior written
notice to TSMC. In the event that the wafer prices for the Option
Capacity do not comply with this paragraph, TSMC will credit Customer
any difference between the actual wafer prices paid and the Average
Wafer Prices determined during the audits. TSMC will credit against
Customer [* ] Wafer Equivalent for the Option Capacity
purchased in the year 1996 and [* ] Wafer Equivalent for the
Option Capacity in the years 1997, 1998 and 1999.
(b) The parties shall negotiate in good faith each month the wafer prices
for the Option Capacity ordered for the following month, and of no
agreement may
[*] Confidential Treatment Granted
<PAGE>
be reached by the parties before the end of each month, the parties
agree to apply the wafer price used in that month to any orders placed
by Customer in the subsequent month, and submit the dispute to the
binding arbitration pursuant to Section 12 below to decide the wafer
price within two months upon submission. Under such circumstances,
neither party shall have the right to terminate this Agreement under
Section 7 below.
5. OTHER PURCHASE TERMS AND CONDITIONS
The Customer/TSMC Indemnity Agreement dated October 26, 1996 will apply
to all purchases of wafers by Customer from TSMC, except that the provisions
of this Agreement will supersede the above Agreement with respect to the
subject matter hereof. Within ninety (90) days upon execution hereof, both
parties agree to use their best efforts to negotiate and enter into a wafer
production agreement for the purchase of wafers hereunder.
6. FAILURE TO PURCHASE THE CUSTOMER COMMITTED CAPACITY; FIRST RIGHT OF REFUSAL
(a) Provided for the year 1996, if in any calendar year, for any reason,
Customer is not able to use or purchase all or a portion of the Customer
Committed Capacity of that year, or any other year(s) during the term
of this Agreement, Customer shall promptly notify TSMC of such in
writing and first offer TSMC such Capacity for sales to any third
parties. In addition to its right to terminate this Agreement under
Section 7(b) below, TSMC may, at its option, accept such offer, in whole
or in part, within thirty (30) days following Customer's notification.
In the event that TSMC decides not to accept such offer, Customer may
assign such unused Customer Committed Capacity for that calendar year or
this Agreement (including the right to purchase the Customer Committed
Capacity for the remaining term of this Agreement) to any third parties
acceptable to TSMC, within two months upon TSMC's written notice that it
will not accept such offer, and if Customer fails to do so, TSMC has the
right to deduct from the Option Fee [* ]
times the unused Option Capacity for the applicable year as liquidated
damages, and TSMC is entitled to sell or use any unused capacity
thereafter. Any unused
[*] Confidential Treatment Granted
<PAGE>
Customer Committed Capacity for 1996 shall be carried forward to the
year 1997 and counted as additional Option Capacity for 1997.
(b) If any portion of this Agreement or the whole Agreement is assigned
to any third parties acceptable to TSMC pursuant to this Section 6(a)
above, Customer shall cause such third parties to abide by the terms
and conditions of this Agreement, and TSMC will return to Customer the
portion of the Option Fee corresponding to the assigned Option Capacity
at the same rates as set forth in Section 4(a).
7. TERM AND TERMINATION
(a) The term of this Agreement shall commence from the Effective Date,
and continue until December 31, 1999, or the date of total consumption
of the Option Fee pursuant to this Agreement, whichever is earlier.
(b) TERMINATION FOR OTHER BREACH OR FOR BANKRUPTCY
Either party may terminate this Agreement if the other party breaches
any material provisions of this Agreement and does not cure or remedy
such breach within ninety (90) days of receiving written notice of such
breach, or becomes the subject of a voluntary or involuntary petition in
bankruptcy or any proceeding relating to insolvency, receivership or
liquidation, if such petition or proceeding is not dismissed with
prejudice within sixty (60) days after filing.
(c) EFFECT OF TERMINATION
Both parties shall remain liable to the other party for any outstanding
and matured rights and obligations at the time of termination.
8. LIMITATION OF LIABILITY
In no event shall either party be liable for any indirect, special,
incidental or consequential damages (including loss of profits and loss of
use) resulting from, arising out of or in connection with the performance or
failure to perform under this Agreement, or resulting from, arising out of
or in connection with TSMC's
<PAGE>
producing, supplying, and/or sale of the wafers, whether due to a breach
of contract, breach of warranty, tort, or negligence of TSMC, or otherwise.
9. NOTICE
All notices required or permitted to be sent by either party to the other
party under this Agreement shall be sent by registered mail postage prepaid,
or by personal delivery, or by fax. Any notice given by fax shall be
followed by a confirmation copy within ten (10) days. Unless changed by
written notice given by either party to the other, the addresses and fax
numbers of the respective parties shall be as follows:
To TSMC:
TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY, LTD.
No. 121, Park Avenue 3
Science-Based Industrial Park
Hsinchu, Taiwan
Republic of China
To Customer:
OAK Technology, Inc.
Rm. B, 7F, No. 370
Sec. 1, Fu-Hsing S. Rd.
Taipei, Taiwan
Republic of China
10. ENTIRE AGREEMENT
This Agreement, including Exhibits A-C, constitutes the entire agreement
between the parties with respect to the subject matter hereof, and
supersedes and replaces all prior or contemporaneous understanding,
agreements, dealings and negotiations, oral or written, regarding the
subject matter hereof. No modification, alteration or amendment of this
Agreement shall be effective unless in writing and signed by both parties.
No waiver of any breach or failure by either party to enforce any provision
of this Agreement shall be deemed a waiver
<PAGE>
of any other or subsequent breach, or a waiver of future enforcement of
that or any other provision.
11. GOVERNING LAW
This Agreement will be governed by and interpreted in accordance with the
laws of the Republic of China.
12. ARBITRATION
Each party will make the best efforts to resolve amicably any disputes or
claims under this Agreement among the parties. In the event that a
resolution is not reached among the parties within thirty (30) days after
written notice by any party of the dispute or claim, the dispute or claim
shall be finally settled by binding arbitration in Taipei under the Rules
of the ROC Commercial Arbitration Act by three (3) arbitrators appointed
in accordance with such rules. The arbitration proceeding shall be conducted
in English. Judgment on the award rendered by the arbitrator may be entered
in any court having jurisdiction thereof.
13. ASSIGNMENT
This Agreement shall be binding on and inure to the benefit of each party
and its successors, and except that Customer may assign this Agreement under
Section 6 above, neither party shall assign any of its rights hereunder, nor
delegate its obligations hereunder, to any third party, without the prior
written consent of the other.
14. CONFIDENTIALITY
Both parties shall keep in strict confidence the existence or contents
of this Agreement and take the best precaution possible to prevent any
unauthorized disclosure or use thereof. Both parties agree that no
disclosure of this Agreement or any matter relating thereto may be made
without the disclosing party first providing the proposed disclosure to the
other party two weeks in advance for consent. In the event disclosure is
required by laws or governmental regulations,
<PAGE>
the disclosing party shall provide the other party the opportunity to
protest, participate in preparing disclosure or make reasonable changes
thereto.
15. FOUNDRY SOURCE
Customer shall use TSMC as the primary foundry source to manufacture all of
its products provided that TSMC offers competitive pricing, delivery and
technology.
16. FORCE MAJEURE
Neither party shall be responsible for delays or failure in performance
resulting from acts beyond the reasonable control of such party. Such acts
shall include but not limited to acts of God, war, riot, labor stoppages,
governmental actions, fires, floods, and earthquakes.
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date first stated above.
TAIWAN SEMICONDUCTOR OAK Technology, Inc.
MANUFACTURING CO., LTD.
BY: /s/ KL FOR DON BROOKS BY: /s/ DAVID D. TSANG
--------------------- ------------------
Donald W. Brooks David Tsang
President President
<PAGE>
Exhibit A
Capacity Factor Table
<TABLE>
<CAPTION>
DATE: 11-APR-1995
- ------------------------------------------------------------------------------------
MASKING W-PLUG COMPLEXITY CAPACITY
GENERIC TECHNOLOGY LAYERS(A) LAYERS(B) INDEX(C) FACTOR(D)
(W/O ESD)
- ------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1.5um-SPDM (BICMOS) [*
1.2um-SPDM (LOGIC)
1.0um-SPDM (LOGIC)
1.0um-DPDM (BICMOS)
0.8um-SPDM (LOGIC)
0.8um-SPTM (LOGIC-SALICIDE)
0.8um-DPDM (BICMOS)
0.6um-SPDM (LOGIC)
0.6um-SPTM (LOGIC)
0.6um-DPDM (SRAM)
0.6um-TPSM (DRAM)
0.6um-QPDM (DRAM)
0.5um-SPDM (LOGIC)
0.5um-SPTM (LOGIC-SACVD)
0.5um-SPTM (LOGIC-CMP)
0.5um-DPDM (SRAM)
0.5um-QPDM (DRAM)
0.35um-SPTM (LOGIC-CMP) ]
- ------------------------------------------------------------------------------------
</TABLE>
REMARK: (1) MASKING LAYER OF W/I ESD = MASKING LAYER OF W/O ESD + 1
(2) MASKING LAYER OF MIXED-MODE (DP) = MASKING LAYER OF LOGIC(SP)
DIVIDED BY 1
(3) COMPLEXITY INDEX (C) = (A) + (B)/2
(4) CAPACITY FACTOR (D) = (C)/13, NORMALIZED TO 0.8um-SPDM AS 1
[*] Confidential Treatment Granted
<PAGE>
Exhibit B
CUSTOMER/TSMC COMMITTED CAPACITY
UNIT: 6" WAFER EQUIVALENT
K=1000 WAFER EQUIVALENT
<TABLE>
<CAPTION>
1996 1997 1998 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
BASE CAPACITY [*
OPTION CAPACITY
TSMC COMMITTED CAPACITY
CUSTOMER COMMITTED CAPACITY ]
</TABLE>
*The parties agree to maintain quarterly linear run rate within [* ]
from the preceding quarter throughout any calendar year.
[*] Confidential Treatment Granted
<PAGE>
tsmc
Exhibit C
GENERIC TECHNOLOGY ROADMAP
MIXED [*
MODE
LOGIC
SRAM ]
NOTE: THE FRONT EDGE OF EACH BOX REPRESENTS THE RISK PRODUCTION DATE.
1993 1994 1995 1996 1997 1998
JAN. 24, 1995
[*] Confidential Treatment Granted
