OAK TECHNOLOGY INC, DEF 14A, 2000-10-26

OAK TECHNOLOGY INC
DEF 14A, 2000-10-26
SEMICONDUCTORS & RELATED DEVICES

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SCHEDULE 14A INFORMATION

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

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 Rule 14a-11(c) or Rule 14a-12

OAK TECHNOLOGY, INC.
(Name of Registrant as Specified in its Charter)

Payment of Filing Fee (Check the appropriate box):

/X/ No fee required.

/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

(1) Title of each class of securities to which transaction applies:
N/A

(2) Aggregate number of securities to which transaction applies:
N/A

(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): N/A

(4) Proposed maximum aggregate value of transaction: N/A

(5) Total fee paid: N/A

/ / 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: N/A

(2) Form, Schedule or Registration Statement No.: N/A

(3) Filing Party: N/A

(4) Date Filed: N/A

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OAK TECHNOLOGY, INC.
139 KIFER COURT
SUNNYVALE, CALIFORNIA 94086
(408) 737-0888

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON DECEMBER 5, 2000

To Our Stockholders:

We will hold the 2000 annual meeting of stockholders of Oak Technology,
Inc. at 9:00 a.m., local time, on Tuesday, December 5, 2000 at The Westin Santa
Clara, 5101 Great America Parkway, Santa Clara, California, to consider the
following proposals:

1. To elect two Class III directors to hold office for a three-year
term or until their successors are elected and qualified;

2. To approve an amendment to the 1994 Stock Option Plan to increase
the number of shares of common stock authorized for issuance over
the term of the Option Plan by 1,900,000 shares;

3. To approve an amendment to the 1994 Employee Stock Purchase Plan
to increase the number of shares of common stock authorized for
issuance over the term of the Purchase Plan by 700,000 shares;

4. To ratify the appointment of KPMG LLP as Oak's independent public
accountants for the fiscal year ending June 30, 2001; and

5. To transact any other business as may properly come before the
annual meeting or any adjournment or postponement of the annual
meeting.

YOUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE TO APPROVE
THE PROPOSALS BEFORE YOU.

We describe the proposals more fully in the accompanying proxy
statement, which we urge you to read.

Only stockholders of record at the close of business on October 9, 2000
are entitled to notice of, and to vote at, the annual meeting and any
adjournment or postponement.

YOUR VOTE IS IMPORTANT. TO ASSURE THAT YOUR SHARES ARE REPRESENTED AT
THE ANNUAL MEETING, YOU ARE URGED TO COMPLETE, DATE AND SIGN THE ENCLOSED PROXY
CARD AND MAIL IT PROMPTLY IN THE POSTAGE-PAID ENVELOPE PROVIDED, OR CALL THE
TOLL-FREE TELEPHONE NUMBER OR USE THE INTERNET BY FOLLOWING THE INSTRUCTIONS
INCLUDED WITH YOUR PROXY CARD, WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL
MEETING IN PERSON. YOU MAY REVOKE YOUR PROXY IN THE MANNER DESCRIBED IN THE
ACCOMPANYING PROXY STATEMENT AT ANY TIME BEFORE IT HAS BEEN

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VOTED AT THE ANNUAL MEETING. YOU MAY VOTE IN PERSON AT THE ANNUAL MEETING EVEN
IF YOU HAVE RETURNED A PROXY.

By order of the Board of Directors,

/s/ David J. Power

David J. Power
Vice President, General Counsel
& Secretary

Sunnyvale, California
October 26, 2000

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OAK TECHNOLOGY, INC.
139 KIFER COURT
SUNNYVALE, CALIFORNIA 94086
(408) 737-0888

-----------------------------
PROXY STATEMENT
-----------------------------

Introduction

The accompanying proxy is solicited by the board of directors of Oak
Technology, Inc., a Delaware corporation ("we," "us," "Oak" or our "Company"),
for use at the 2000 annual meeting of stockholders to be held on Tuesday,
December 5, 2000 at 9:00 a.m. local time, or any adjournment thereof, for the
purposes set forth in this Proxy Statement and the accompanying Notice of Annual
Meeting. The annual meeting will be held at The Westin Santa Clara, 5101 Great
America Parkway, Santa Clara, California.

These proxy solicitation materials were mailed on or about October 26,
2000 to all stockholders entitled to vote at the annual meeting.

QUESTIONS AND ANSWERS ABOUT
THE PROXY MATERIALS AND THE ANNUAL MEETING

WHY DID YOU SEND ME THIS PROXY STATEMENT?

We sent you this Proxy Statement and the enclosed proxy card because
our board of directors is soliciting your proxy to vote at our annual meeting of
stockholders which will take place on December 5, 2000. This Proxy Statement
summarizes information concerning the proposal. This information will help you
to make an informed vote at the annual meeting.

WHAT PROPOSALS WILL BE VOTED ON AT THE MEETING?

There are four proposals scheduled to be voted on at the meeting:

- The election of two Class III directors,

- The approval of an amendment to the 1994 Stock Option Plan to
increase the number of shares of common stock authorized for
issuance under the plan by 1,900,000 shares,

- The approval of an amendment to the 1994 Employee Stock Purchase
Plan to increase the number of shares of common stock authorized
for issuance under the plan by 700,000 shares, and

- The ratification of independent accountants.

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WHAT IS OUR VOTING RECOMMENDATION?

Our board of directors recommends that you vote your shares "FOR" each
of the nominees to the board and "FOR" each of the other proposals.

WHO IS ENTITLED TO VOTE?

Only stockholders of record of our common stock at the close of
business on October 9, 2000 are entitled to notice of and to vote at the annual
meeting. As of the close of business on the record date, there were 54,205,016
shares of our common stock outstanding and entitled to vote, held of record by
257 stockholders. Each stockholder is entitled to one vote for each share of
common stock held as of the record date.

WHAT IS THE DIFFERENCE BETWEEN HOLDING SHARES AS A STOCKHOLDER OF RECORD AND AS
A BENEFICIAL OWNER?

Most Oak stockholders hold their shares through a stockbroker, bank or
other nominee rather than directly in their own name. As summarized below, there
are some distinctions between shares held of record and those owned
beneficially.

STOCKHOLDER OF RECORD

If your shares are registered directly in your name with our transfer
agent, Boston EquiServe, you are considered, with respect to those shares, the
STOCKHOLDER OF RECORD, and these proxy materials are being sent directly to you
by us. As the STOCKHOLDER OF RECORD, you have the right to grant your voting
proxy directly to us or to vote in person at the meeting. We have enclosed a
proxy card for you to use.

BENEFICIAL OWNER

If your shares are held in a stock brokerage account or by a bank or
other nominee, you are considered the BENEFICIAL OWNER of shares held in STREET
NAME, and these proxy materials are being forwarded to you by your broker or
nominee which is considered, with respect to those shares, the STOCKHOLDER OF
RECORD. As the beneficial owner, you have the right to direct your broker how to
vote and are also invited to attend the meeting. However, since you are not the
STOCKHOLDER OF RECORD, you may not vote these shares in person at the meeting.
Your broker or nominee has enclosed a voting instruction card for you to use in
directing the broker or nominee how to vote your shares.

HOW CAN I VOTE MY SHARES IN PERSON AT THE MEETING?

Shares held directly in your name as the STOCKHOLDER OF RECORD may be
voted in person at the annual meeting. If you choose to do so, please bring the
enclosed proxy card or proof of identification.

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EVEN IF YOU CURRENTLY PLAN TO ATTEND THE ANNUAL MEETING, WE RECOMMEND
THAT YOU ALSO SUBMIT YOUR PROXY AS DESCRIBED BELOW SO THAT YOUR VOTE WILL BE
COUNTED IF YOU LATER DECIDE NOT TO ATTEND THE MEETING. SHARES HELD IN STREET
NAME MAY BE VOTED IN PERSON BY YOU ONLY IF YOU OBTAIN A SIGNED PROXY FROM THE
RECORD HOLDER GIVING YOU THE RIGHT TO VOTE THE SHARES.

HOW CAN I VOTE MY SHARES WITHOUT ATTENDING THE MEETING?

Whether you hold shares directly as the stockholder of record or
beneficially in street name, you may direct your vote without attending the
meeting. You may vote by granting a proxy or, for shares held in street name, by
submitting voting instructions to your broker or nominee. In most instances, you
will be able to do this over the Internet, by telephone or by mail. Please refer
to the summary instructions below and those included on your proxy card or, for
shares held in street name, the voting instruction card included by your broker
or nominee.

BY INTERNET - If you have Internet access, you may submit your proxy
from any location in the world by following the "Vote by Internet"
instructions on the proxy card. You may vote via the Internet at the
following address on the World Wide Web: www.eproxyvote.com/oakt.

BY TELEPHONE - If you live in the United States or Canada, you may
submit your proxy by following the "Vote by Phone" instructions on the
proxy card. Stockholders may vote telephonically by calling Boston
EquiServe toll-free at 1-877-779-8683.

BY MAIL - You may do this by signing your proxy card or, for shares
held in street name, the voting instruction card included by your
broker or nominee and mailing it in the enclosed, postage prepaid and
addressed envelope. If you provide specific voting instructions, your
shares will be voted as you instruct. If you sign but do not provide
instructions, your shares will be voted as described below in "How are
votes counted?".

CAN I CHANGE MY VOTE AFTER I MAIL MY PROXY CARD?

Yes. You can change your vote at any time before we vote your proxy at
your meeting. You can do so in several ways:

- First, you can send a written notice to our Corporate Secretary at
our principal executive offices in Sunnyvale, California stating
that you would like to revoke your proxy.

- Second, you can complete a new proxy card and send it to our
Corporate Secretary, and the new proxy card will automatically
replace any earlier dated proxy card that you returned.

- Third, you can attend the annual meeting and vote in person.

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- Fourth, if you instructed a broker to vote your shares, follow
your broker's directions for changing those instructions.

If you choose to revoke your proxy by attending the annual meeting, you
must vote at the meeting in accordance with the rules for voting at the annual
meeting. Attending the annual meeting will not, by itself, constitute revocation
of a proxy.

HOW ARE VOTES COUNTED?

In the election of directors, you may vote "FOR" all of the nominees or
your vote may be "WITHHELD" with respect to one or more of the nominees. For the
other proposals, you may vote "FOR," "AGAINST" or "ABSTAIN." If you "ABSTAIN,"
it has the same effect as a vote "AGAINST." If you sign your proxy card or
broker voting instruction card with no further instructions, your shares will be
voted in accordance with the recommendations of the board ("FOR" all of our
nominees to the board, "FOR" all other items described in this proxy statement
and in the discretion of the proxy holders on any other matters that properly
come before the meeting).

WHAT VOTE IS REQUIRED TO APPROVE EACH OF THE PROPOSALS?

With respect to the proposal to elect two Class III directors, the two
nominees receiving the greatest number of votes will be elected, even if they
receive less than a majority of shares present and entitled to vote. Abstentions
are not counted towards the tabulation of votes cast for the election of
directors.

All other proposals require the affirmative "FOR" vote of a majority of
those shares present and entitled to vote.

WHAT DOES IT MEAN IF I RECEIVE MORE THAN ONE PROXY OR VOTING INSTRUCTION CARD?

It means your shares are registered differently or are in more than one
account. Please provide voting instructions for all proxy and voting instruction
cards you receive.

WHERE CAN I FIND THE VOTING RESULTS OF THE MEETING?

We will announce preliminary voting results at the meeting and publish
final results in our quarterly report on Form 10-Q for the second quarter of
fiscal year 2001.

WHAT HAPPENS IF ADDITIONAL PROPOSALS ARE PRESENTED AT THE MEETING?

Other than the four proposals described in this proxy statement, we do
not expect any matters to be presented for a vote at the annual meeting. If you
grant a proxy, the persons named as proxy holders will have the discretion to
vote your shares on any additional matters properly presented for a vote at the
meeting. If for any unforeseen reason any of our nominees is not available as a
candidate for director, the persons named as proxy holders will vote your proxy
for such other candidate or candidates as may be nominated by the board of
directors.

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MUST A MINIMUM NUMBER OF STOCKHOLDERS VOTE OR BE PRESENT AT THE ANNUAL MEETING?

A quorum of stockholders is necessary to hold a valid meeting. Our
bylaws provide that a majority of all of the shares of stock entitled to vote,
whether present in person or represented by proxy, will constitute a quorum for
the transaction of business at the annual meeting. All votes will be tabulated
by the inspector of election appointed for the meeting, who will separately
tabulate affirmative and negative votes, abstentions and broker non-votes.
Shares that are voted "FOR", "AGAINST", "WITHHELD" OR "ABSTAIN" are treated as
being present at the meeting for purposes of establishing a quorum and are also
treated as shares entitled to vote at the annual meeting with respect to such
matter. The inspector of election will also treat broker non-votes as shares
that are present and entitled to vote for purposes of determining a quorum.
Broker non-votes, however, are not counted as shares present and entitled to be
voted with respect to the matter on which the broker has expressly not voted.
Thus, broker non-votes will not affect the outcome of any of the matters being
voted upon at the meeting. Generally, broker non-votes occur when shares held by
a broker for a beneficial owner are not voted with respect to a particular
proposal because (1) the broker has not received voting instructions from the
beneficial owner, and (2) the broker lacks discretionary voting power to vote
such shares.

IS CUMULATIVE VOTING PERMITTED FOR THE ELECTION OF DIRECTORS?

Stockholders may not cumulate votes in the election of directors.

WHO WILL BEAR THE COST OF SOLICITING VOTES FOR THE MEETING?

We will pay the entire cost of preparing, assembling, printing, mailing
and distributing these proxy materials. If you choose to access the proxy
materials and/or vote over the Internet, however, you are responsible for
Internet access charges you may incur. In addition to the mailing of these proxy
materials, the solicitation of proxies or votes may be made in person, by
telephone or by electronic communication by our directors, officers and
employees, who will not receive any additional compensation for such
solicitation activities. We also have hired Corporate Investor Communications,
Inc. ("CIC") to assist us in the distribution of proxy materials and the
solicitation of votes. We will pay CIC a fee of $5,500 plus expenses for these
services. We will also reimburse brokerage houses and other custodians, nominees
and fiduciaries for their reasonable out-of-pocket expenses for forwarding proxy
and solicitation materials to stockholders.

PROPOSAL 1

ELECTION OF DIRECTORS

GENERAL

We have a classified board of directors currently consisting of three
Class I directors (Peter Simone, Young K. Sohn and Timothy Tomlinson), two Class
II directors (Ta-Lin Hsu and Albert Y. C. Yu), and two Class III directors
(Richard B. Black and David D. Tsang), who serve

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for three-year terms or until their respective successors are duly elected and
qualified. At each annual meeting of stockholders, directors are elected for a
full term of three years to succeed those directors whose terms expire on that
annual meeting date. The term for Class I directors expires in 2001, the term
for Class II directors expires in 2002, and the term for Class III directors
expires on the date of the 2000 annual meeting. Vacancies on the Oak board
resulting from death, resignation, retirement, disqualification or other cause
(other than removal from office by vote of the stockholders) may be filled by a
majority vote of the directors then in office, and directors so chosen will hold
office for a term expiring at the annual meeting of stockholders at which the
term of office of the class to which they have been elected expires.

Management's nominees for election by the stockholders as Class III
directors are Richard B. Black and David D. Tsang, the current Class III
directors. If elected, the nominees will serve as directors until our annual
meeting of stockholders held with respect to fiscal year 2003, or until their
successors are elected and qualified. If either of these nominees declines to
serve, proxies may be voted for a substitute nominee as we may designate.

If a quorum is present and voting, the two nominees for Class III
Directors receiving the highest number of votes "FOR" will be elected as the
Class III Directors.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF
MR. BLACK AND MR. TSANG.

DIRECTORS

The following sets forth certain information concerning our current
directors, including the Class III nominees to be elected at this annual
meeting.

NAME AGE POSITIONS WITH THE COMPANY DIRECTOR SINCE
------------------------------- --------------- ------------------------------------ -------------------
<S> <C> <C> <C>
CLASS I DIRECTORS WHOSE TERM EXPIRES AT THE 2001 ANNUAL MEETING:
Peter Simone 53 Director 2000
Young K. Sohn 44 President, Chief Executive Officer 1998
and Director
Timothy Tomlinson 50 Director 1988

CLASS II DIRECTORS WHOSE TERM EXPIRES AT THE 2002 ANNUAL MEETING:
Ta-Lin Hsu 57 Director 1991
Albert Y. C. Yu 59 Director 1999

CLASS III DIRECTOR NOMINEES:
Richard B. Black 67 Vice Chairman of the Board of 1992
Directors
David D. Tsang 58 Chairman of the Board of Directors 1987
</TABLE>

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Mr. Simone has been a director of Oak since January 2000. Since
September 2000, Mr. Simone has served as President and a director of Active
Control Experts, Inc. From February to August 2000, he served as a consultant.
From October 1997 to January 2000, when Xionics Document Technologies was
acquired by Oak, Mr. Simone served as Xionic's Chief Executive Officer and
President. He served as Chief Operating Officer and President of Xionics from
April 1997 until October 1997. Prior to joining Xionics, Mr. Simone served as
Group Vice President of Simplex Time Recorder Company, a manufacturer and
supplier of hardware and software based systems for workforce management,
building life safety, and security from December 1992 until December 1996. Mr.
Simone is a director of Cymer Inc. Mr. Simone holds a B.S.A. in accounting from
Bentley College and a M.B.A. from Babson College.

Mr. Sohn joined Oak as president and chief executive officer in
February 1999. He has also been a director of Oak since January 1998. Prior to
joining Oak, and since January 1993, Mr. Sohn was employed by Quantum
Corporation, most recently as president of its Hard Drive Business. From August
1983 to January 1993, he acted as director of marketing at Intel Corporation.
Mr. Sohn currently serves on the board of directors of Hyundai Electronics and
PLX Corporation. He holds a B.S. in electrical engineering from the University
of Pennsylvania and an M.S. (M.B.A.) from Massachusetts Institute of Technology.

Mr. Tomlinson has been a director of Oak since June 1998. He has been a
partner of Tomlinson Zisko Morosoli & Maser LLP, a law firm, since 1983. Mr.
Tomlinson is also a director of Portola Packaging, Inc., VeriSign, Inc.,
SmartDisk Corporation, as well as several private companies. Mr. Tomlinson holds
a B.A. degree in economics, an M.B.A., and a J.D. from Stanford University.

Dr. Hsu has been a director of Oak since January 1991. He has been
employed by H&Q Asia Pacific, the parent company of H&Q Taiwan Co., Ltd., since
February 1985, most recently as chairman. Dr. Hsu is a director of numerous
companies, including Headway Technologies, ASE Technology Corporation, Macronix
Corporation, GRIC Communications and Hello Asia.com, Inc., as well as many
private and foreign companies. Dr. Hsu holds a B.S. degree in physics from
National Taiwan University, an M.S. degree in electrophysics from Polytechnic
Institute of Brooklyn, and a Ph.D. in electrical engineering from the University
of California, Berkeley.

Dr. Yu has been a director of Oak since August 1999. Since October
2000, he has served as senior vice president, general manager of Optoelectronics
of Intel Corporation. Prior to that he was senior vice president responsible for
Intel Architecture products such as microprocessors, architecture, design
technology and research activities. He has been with Intel for approximately 24
years. Prior to joining Intel, Dr. Yu was the head of device physics at
Fairchild Semiconductor. Dr. Yu received his B.S. in electrical engineering from
Caltech and M.S. and Ph.D. in electrical engineering from Stanford.

Mr. Black has been a director of Oak since November 1992 and was also a
director from December 1989 to January 1991. He also served as president of Oak
from January 1998 to February 1999, as well as acting president of Oak's optical
storage group from August 1998 to February 1999. From August 1983 to the
present, Mr. Black has served as Chairman of ECRM

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Incorporated, a manufacturer of electronic publishing equipment. From April 1987
to December 1998, he was general partner of KBA Partners, LP, a technology
venture capital partnership, and from September 2000 to the present, general
partner of OPNet Partners LP, a technology investment partnership. Mr. Black is
also a director of Gabelli Asset Management Inc., Morgan Group Inc., GSI
Lumonics, Antigen Communications, Inc. as well as several private companies. Mr.
Black holds a B.S. degree in civil engineering from Texas A&M University and an
M.B.A. from Harvard University.

Mr. Tsang has served as chairman of the board of directors of Oak since
January 1991. He was also president and chief executive officer of Oak from July
1987, when he founded the company, until February 1999. He has been a director
of Oak since October 1987. Mr. Tsang has also held the positions of chief
financial officer from July 1987 to March 1993 and secretary of Oak from July
1987 to December 1994. He is also a director of ASE Test, a semiconductor
assembly and testing company. Prior to joining Oak, Mr. Tsang was the founder
and served in various positions including president, chief executive officer and
chairman of Data Technology Corp., a manufacturer of disk controllers and high
density disk drives, from 1979 to 1987, and co-founded Xebec, a manufacturer of
disk controllers, where he was employed from 1974 to 1979. Mr. Tsang holds a
B.S.E.E. degree in electrical engineering from Brigham Young University and an
M.S. degree in electrical engineering from Santa Clara University. On September
1, 1999 David D. Tsang and certain of his relatives entered into a consent
decree with the Securities and Exchange Commission in connection with an insider
trading investigation. Pursuant to the terms of the settlement, Mr. Tsang
neither admits nor denies the allegation that he provided nonpublic information
to certain relatives. He did not profit personally from any transaction in
question.

BOARD MEETINGS AND COMMITTEES

During the fiscal year ended June 30, 2000, our board held four formal
meetings. During fiscal 2000, each of the directors attended at least 75% of the
total number of board meetings held (during the period in which he was a
director) and 75% of the total number of committee meetings on which he served
that were held (during the period in which he was a member of such committee).

The audit committee's function is to assist the board in fulfilling its
financial oversight responsibilities and to review our financial reporting
process, systems of internal control, audit process and process for monitoring
compliance with laws and regulations. The audit committee has the ultimate
authority and responsibility to select the independent auditors, subject to
ratification by the stockholders, and review, evaluate and, where appropriate,
replace the outside auditors. The audit committee is responsible for reviewing
with management and the outside auditors the financial reporting process in
general as well as the audited financial statements to be included in our annual
report and the interim financial statements to be included in our published
quarterly or other interim results. The audit committee reviews and discusses
with the outside auditors various matters, such as those relating to the scope
of the audit plan, complex and unusual transactions, changes in accounting
policies and the quality of our accounting measurements and disclosures. The
audit committee also discusses with management and the outside auditors the
quality and adequacy of our internal controls. The audit committee was

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comprised of Richard Black and Timothy Tomlinson until Peter Simone became a
director of Oak in January 2000. The audit committee is currently comprised of
Messrs. Black, Tomlinson and Simone. The audit committee held 10 formal meetings
during the fiscal year ended June 30, 2000.

The compensation committee is comprised of two independent,
non-employee directors of Oak, neither of whom are former employees of Oak. The
members of the compensation committee are Ta-Lin Hsu and Albert Yu. The
compensation committee's primary function is to provide guidance and leadership
to the chief executive officer, the chief financial officer and the VP, Human
Resources to enable them to design an executive compensation program which
attracts and retains executive management. The primary role of the compensation
committee is to review and approve the salary, bonus, stock options and other
benefits, direct or indirect, of our officer group. The compensation committee
held eight formal meetings during the fiscal year ended June 30, 2000.

The venture fund committee has been established to oversee the
management of the Oak venture fund, and to ensure that our investment in early
stage projects and private entities is both consistent and synergistic with our
technology and commercial market channels. The goal of the venture fund
management is to identify investment opportunities that would create an early
window to new technologies relevant to our future, and realize a return on
investment comparable to other venture capital firms. The investment committee
was formed in April 2000 and is comprised of Messrs. Black, Tsang, Yu, and
Tomlinson. The committee held one formal meetings during the fiscal year ended
June 30, 2000.

DIRECTOR COMPENSATION

Each non-employee director receives an annual retainer of $20,000 and a
quarterly meeting fee of $2,500. In addition, all non-employee directors of Oak
receive up to an additional $2,500 per fiscal quarter if they serve as a
chairman of a committee of our board or up to an additional $1,500 per fiscal
quarter if they serve as a member (other than chairman) of a committee of our
board. Mr. Tsang has waived his director compensation in lieu of his retainer as
a consultant to Mr. Sohn. (See Certain Relationships and Related Transactions).

In December 1994, the board adopted, and in January 1995 our
stockholders approved, the 1994 Directors' Option Plan, which provides for the
automatic grant of options to purchase shares of common stock to our
non-employee directors. The maximum number of shares of common stock that may be
issued pursuant to options granted under the 1994 Directors' Option Plan is
500,000. The maximum number of shares of common stock that may be issued to any
one non-employee director under the 1994 Directors' Option Plan is 80,000.
Pursuant to the terms of the 1994 Directors' Option Plan, each non-employee
director who on or after December 13, 1994 becomes a member of the board will
automatically be granted an option for 20,000 shares of common stock on the date
the non-employee director first joins the Oak board (the "Initial Grant"). Each
year following the date on which our board adopted the 1994 Directors' Option
Plan, on the date of our annual meeting of stockholders, each non-employee
director will automatically be granted an additional option for 6,000 shares of
common stock (a "Succeeding Grant"). Each Initial Grant and each Succeeding
Grant will vest as to 24% of the shares on the

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one-year anniversary of the date of grant and as to 2% of the shares per month
thereafter, so long as the non-employee director remains a member of our board.
Notwithstanding anything to the contrary, in the event a non-employee director
has not yet vested as to 24% of an Initial Grant or a Succeeding Grant and such
non-employee director is not re-elected at the annual stockholders' meeting
immediately following such grant, 24% of such grant will accelerate and become
immediately exercisable. The 1994 Directors' Option Plan will terminate in
December 2004, unless sooner terminated by the board. Under this plan, on
January 11, 2000, Mr. Simone received an Initial Grant of 20,000 shares at an
exercise price of $11.4375 per share and each of Messrs. Tomlinson, Hsu, and
Black received a Succeeding Grant of 6,000 shares at an exercise price of
$11.4375 per share.

Under the 1994 Directors' Option Plan, in the event of a change in
control (whether through merger, sale of assets, a tender offer or proxy
contest), the vesting of all options will accelerate, and the options will
become immediately exercisable in full prior to the consummation of the change
in control upon conditions as the board determines.

On August 2, 1999, in lieu of an Initial Grant under the 1994
Directors' Option Plan, Dr. Yu received an option under the 1994 Stock Option
Plan for 50,000 shares at an exercise price of $3.75 per share. Fifty percent of
this option vested on August 1, 2000, and the remainder vests in twenty-five
successive equal monthly installments until fully-vested. In addition, as of
January 11, 2000, each of Messrs. Tomlinson, Hsu, Yu and Black received an
option grant for 14,000 shares at an exercise price of $13.00 per share.

PROPOSAL 2

APPROVAL OF AMENDMENT TO 1994 STOCK OPTION PLAN

Our stockholders are being asked to approve an amendment to the 1994
Stock Option Plan (the "Option Plan") to increase the number of shares of common
stock available for issuance by 1,900,000 shares;

All share and per share amounts included in this Proposal reflect the
two-for-one (2-for-1) stock split effected on March 28, 1996.

The Option Plan became effective on December 13, 1994. Under the Option
Plan, 6,000,000 shares of Common Stock were originally reserved for issuance.
The Option Plan was further amended on July 30, 1998 to (i) increase the share
reserve by an additional 6,000,000 shares, (ii) render non-employee board
members eligible to receive option grants under the Option Plan, and (iii)
eliminate the restriction that the individuals who serve on the compensation
committee may not receive option grants under the Option Plan. This amendment
was subsequently approved by the stockholders. The amendments to the Option Plan
which are the subject of this Proposal were adopted by the board of directors on
October 11, 2000, subject to approval by the stockholders at the annual meeting.

<PAGE>

The proposed share increase will assure that a sufficient reserve of
common stock is available under the Option Plan to attract and retain the
services of employees, which is essential to our long-term growth and success.

The following is a summary of the principal features of the Option Plan
as amended. The summary, however, does not purport to be a complete description
of all the provisions of the Option Plan. You may obtain a copy of the actual
plan document by sending a written request to our Corporate Secretary at our
principal executive offices in Sunnyvale, California.

PLAN ADMINISTRATION

The compensation committee of the board and the board have separate but
concurrent authority to administer the Option Plan. The Plan Administrator
(which as used in this summary will mean either the compensation committee or
the board to the extent each such entity is administering the Option Plan) will
have complete discretion, subject to the provisions of the Option Plan, to
authorize option grants under the Option Plan.

SHARE RESERVE

The maximum number of shares of our common stock available for issuance
over the term of the Option Plan may not exceed 13,900,000 shares, including the
1,900,000 share increase for which stockholder approval is sought under this
Proposal. As of August 31, 2000, 1,261,308 shares were available for future
option grants. Assuming stockholder approval of this Proposal, the number of
shares available for future option grants will be increased to 3,161,308. In no
event may any one participant in the Option Plan receive options for more than
1,600,000 shares in the aggregate over the term of the Option Plan.

The shares of common stock issuable under the Option Plan may be drawn
from shares of our authorized but unissued common stock or from shares of common
stock reacquired by us, including shares repurchased on the open market.

Should an option expire or terminate prior to exercise in full, the
shares subject to the portion of the option not so exercised will be available
for subsequent issuance under the Option Plan. Unvested shares issued under the
Option Plan and subsequently repurchased by us at the original exercise price
paid per share will be added back to the share reserve and will accordingly be
available for subsequent issuance under the Option Plan.

<PAGE>

ELIGIBILITY

Officers and other employees of Oak and its parent or subsidiaries
(whether now existing or subsequently established), non-employee members of the
board and the board of directors of its parent or subsidiaries and consultants
and independent advisors of Oak and its parent and subsidiaries are eligible to
participate in the Option Plan.

Non-employee board members are also eligible to receive automatic
initial and annual option grants under the 1994 Directors Option Plan.

As of August 31, 2000, approximately 499 employees, including 5
executive officers, and 6 non-employee board members were eligible to
participate in the Option Plan.

VALUATION

The fair market value per share of common stock on any relevant date
under the Option Plan will be the closing selling price per share on the day
preceding that date on the Nasdaq National Market. On August 31, 2000, the
closing selling price per share was $29.125.

OPTION GRANTS

Two types of options may be granted under the Option Plan: incentive
stock options and non-qualified options. Incentive stock options may be granted
at an exercise price per share not less than one hundred percent (100%) of the
fair market value of the common stock on the option grant date and non-qualified
options may be granted under the Option Plan at an exercise price per share not
less than eighty five percent (85%) of the fair market value per share of common
stock on the option grant date. No granted option will have a term in excess of
ten years.

Upon cessation of service, the optionee will have a limited period of
time in which to exercise any outstanding option to the extent such option is
exercisable for vested shares.

The Plan Administrator will have the authority to effect the
cancellation of outstanding options under the Option Plan which have exercise
prices in excess of the then current market price of common stock and to issue
replacement options with an exercise price based on the market price of common
stock at the time of the new grant.

GENERAL PROVISIONS

CHANGE OF CONTROL

In the event that we are acquired by merger, asset sale or a sale of
shares by the stockholder or in the event of our liquidation or dissolution,
each outstanding option under the Option Plan which is not to be assumed by the
successor corporation or replaced with a comparable option to purchase shares of
the capital stock of the successor corporation will terminate and cease to be
outstanding effective as of the date of such transaction.

12
<PAGE>

FINANCIAL ASSISTANCE

The Plan Administrator may permit one or more participants to pay the
exercise price of outstanding options under the Option Plan by delivering a
promissory note payable in installments. The Plan Administrator will determine
the terms of any such promissory note.

SPECIAL TAX ELECTION

The Plan Administrator may provide one or more holders of options with
the right to have us withhold a portion of the shares otherwise issuable to such
individuals in satisfaction of the tax liability incurred by such individuals in
connection with the exercise of those options. Alternatively, the Plan
Administrator may allow such individuals to deliver previously acquired shares
of common stock in payment of such tax liability.

AMENDMENT AND TERMINATION

The board may amend or modify the Option Plan in any or all respects
whatsoever subject to any required stockholder approval. The board may terminate
the Option Plan at any time, and the Option Plan will in all events terminate on
December 10, 2004.

STOCK AWARDS

The table below shows, as to each of our executive officers named in
the Summary Compensation Table and the various indicated individuals and groups,
the number of shares of common stock subject to options granted between July 1,
1999 and August 31, 2000 under the Option Plan together with the weighted
average exercise price payable per share.

OPTION TRANSACTIONS

NUMBER OF WEIGHTED AVERAGE
NAME OPTION SHARES (1) EXERCISE PRICE
---- ----------------- ----------------
<S> <C> <C>
Young K. Sohn 100,000 $13.37500
Shawn M. Soderberg (1) 30,000 13.37500
Robert O. Hersh (2) - -
Simon P. Dolan 230,000 7.75000
William L. Housley 50,000 13.37500
Peter D. Besen 15,000 13.37000
All current executive officers as a group (5 persons) 425,000 12.14280
All non-employee directors as a group (6 persons) 164,000 10.24195
All current employees, including current officers, who 4,183,612 11.17340
are not executive officers as a group (499 persons)
</TABLE>

(1) Ms. Soderberg resigned as Vice President, General Counsel and Secretary
of Oak in August 2000.

(2) Mr. Hersh resigned from Oak in May 2000.

<PAGE>

FEDERAL INCOME TAX CONSEQUENCES

OPTION GRANTS

Options granted under the Option Plan may be either incentive stock
options which satisfy the requirements of Section 422 of the Internal Revenue
Code or non-statutory options which are not intended to meet such requirements.
The Federal income tax treatment for the two types of options differs as
follows:

INCENTIVE STOCK OPTIONS. No taxable income is recognized by the
optionee at the time of the option grant, and no taxable income is generally
recognized at the time the option is exercised. The optionee will, however,
recognize taxable income in the year in which the purchased shares are sold or
otherwise disposed of. For Federal tax purposes, dispositions are divided into
two categories: (i) qualifying and (ii) disqualifying. A qualifying disposition
occurs if the sale or other disposition is made after the optionee has held the
shares for more than two years after the option grant date and more than one
year after the exercise date. If either of these two holding periods is not
satisfied, then a disqualifying disposition will result.

If the optionee makes a disqualifying disposition of the purchased
shares, then we will be entitled to an income tax deduction, for the taxable
year in which such disposition occurs, equal to the excess of (i) the fair
market value of such shares on the option exercise date over (ii) the exercise
price paid for the shares. In no other instance will we be allowed a deduction
with respect to the optionee's disposition of the purchased shares.

NON-STATUTORY OPTIONS. No taxable income is recognized by an optionee
upon the grant of a non-statutory option. The optionee will in general recognize
ordinary income, in the year in which the option is exercised, equal to the
excess of the fair market value of the purchased shares on the exercise date
over the exercise price paid for the shares, and the optionee will be required
to satisfy the tax withholding requirements applicable to such income.

If the shares acquired upon exercise of the non-statutory option are
unvested and subject to repurchase by us in the event of the optionee's
termination of service prior to vesting in those shares, then the optionee will
not recognize any taxable income at the time of exercise but will have to report
as ordinary income, as and when vested, an amount equal to the excess of (i) the
fair market value of the shares on the date that vesting occurs over (ii) the
exercise price paid for the shares. The optionee may, however, elect under
Section 83(b) of the Internal Revenue Code of 1986, as amended, to include as
ordinary income in the year of exercise of the option an amount equal to the
excess of (i) the fair market value of the purchased shares on the exercise date
over (ii) the exercise price paid for such shares. If the Section 83(b) election
is made, the optionee will not recognize any additional income as and when the
repurchase right lapses.

We will be entitled to an income tax deduction equal to the amount of
ordinary income recognized by the optionee with respect to the exercised
non-statutory option. The deduction will in general be allowed for the taxable
year of Oak in which such ordinary income is recognized by the optionee.

<PAGE>

DEDUCTIBILITY OF EXECUTIVE COMPENSATION

We anticipate that any compensation deemed paid by Oak in connection
with disqualifying dispositions of incentive stock option shares or exercises of
non-statutory options granted with exercise prices equal to the fair market
value of the option shares on the grant date will qualify as performance-based
compensation for purposes of Code Section 162(m) and will not have to be taken
into account for purposes of the $1 million limitation per covered individual on
the deductibility of the compensation paid to certain of our executive officers.
Accordingly, all compensation deemed paid with respect to those options is
expected to remain deductible by us without limitation under Code Section
162(m). Compensation deemed paid with respect to options that do not constitute
performance - based compensation generally must be taken into account for
purposes of the $1 million limitation per covered individual and we would not be
entitled to a deduction to the extent that the total consideration paid to an
individual exceeded $1 million.

ACCOUNTING TREATMENT

Option grants with exercise prices less than the fair market value of
the shares on the grant date will result in a compensation expense to our
earnings equal to the difference between the exercise price and the fair market
value of the shares on the grant date. Such expense will be accruable by us over
the period that the option shares are to vest. Option grants with an exercise
price equal to the fair market value of the shares on the grant date will not
result in any charge to our earnings. However, we must disclose in footnotes and
pro-forma statements to our financial statements, the impact those options would
have upon our reported earnings were the value of those options at the time of
grant treated as a compensation expense. Whether or not granted at a discount,
the number of outstanding options may be a factor in determining our earnings
per share on a fully-diluted basis.

NEW PLAN BENEFITS

As of August 31, 2000, no option grants have been made under the Option
Plan on the basis of the 1,900,000 share increase for which stockholder approval
is sought as part of this Proposal.

STOCKHOLDER APPROVAL

The affirmative vote of a majority of our outstanding voting shares
present or represented and entitled to vote at the 2000 annual meeting is
required for approval of the amendment to the Option Plan. Should such
stockholder approval not be obtained, then the share reserve will not be
increased. The Option Plan will, however, continue to remain in effect, and
option grants may continue to be made pursuant to the provisions of the Option
Plan prior to its amendment until the available reserve of common stock under
such plan is issued.

THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE
APPROVAL OF THE AMENDMENT TO THE OPTION PLAN. THE BOARD BELIEVES THAT IT IS IN
THE BEST INTERESTS OF OUR COMPANY TO ASSURE THAT A SUFFICIENT RESERVE OF COMMON
STOCK IS AVAILABLE TO CONTINUE TO

<PAGE>

IMPLEMENT A COMPREHENSIVE EQUITY INCENTIVE PROGRAM FOR OUR COMPANY. THIS WILL
PROVIDE A MEANINGFUL OPPORTUNITY FOR OUR OFFICERS, EMPLOYEES AND NON-EMPLOYEE
BOARD MEMBERS AND OTHER SUCH PARTIES TO ACQUIRE A SUBSTANTIAL PROPRIETARY
INTEREST IN THE ENTERPRISE AND THEREBY ENCOURAGE SUCH INDIVIDUALS TO REMAIN IN
OUR SERVICE AND MORE CLOSELY ALIGN THEIR INTERESTS WITH THOSE OF THE
STOCKHOLDERS.

PROPOSAL 3

APPROVAL OF AMENDMENT TO 1994 EMPLOYEE STOCK PURCHASE PLAN

Our stockholders are also being asked to approve an amendment to our
1994 Employee Stock Purchase Plan (the "Purchase Plan") which will (i) increase
the number of shares of common stock issuable under the Purchase Plan by 700,000
shares. The board of directors believes that it is in the best interests of our
stockholders to approve the amendment to the Purchase Plan to assure that such
plan will continue to serve as a meaningful incentive for the employees of Oak
and its affiliates to continue in our service by giving them an opportunity to
acquire an equity interest in Oak and thereby further align their interests with
those of the stockholders.

All share and per share amounts included in this Proposal reflect the
two-for-one (2-for-1) stock split effected on March 28, 1996.

On December 13, 1994, the board of directors adopted the Purchase Plan,
under which 600,000 shares of common stock were reserved for issuance. The
Purchase Plan was subsequently approved by the stockholders on February 7, 1995.
The Purchase Plan was amended on July 30, 1998 to (i) increase the share reserve
by 1,000,000 shares, (ii) extend the term of the Purchase Plan to February 6,
2005, and (iii) render employees of our affiliates eligible to participate in
the Purchase Plan. This amendment was subsequently approved by the stockholders.
The amendments to the Purchase Plan which are the subject of this Proposal were
adopted by the board of directors on October 11, 2000, subject to approval by
the stockholders at the annual meeting.

The terms and provisions of the Purchase Plan, as amended, are
summarized below. The summary, however, does not purport to be a complete
description of all the provisions of the Purchase Plan. You may obtain a copy of
the actual plan document by sending a written request to our Corporate Secretary
at our principal executive offices in Sunnyvale, California.

PURPOSE

The purpose of the Purchase Plan is to provide eligible employees of
Oak and its participating affiliates with the opportunity to acquire a
proprietary interest in us through participation in a payroll-deduction based
employee stock purchase plan designed to operate in compliance with Section 423
of the Internal Revenue Code. Participating affiliates may include any of our
parent or subsidiary corporations, whether now existing or hereafter
established, which elect to extend the benefits of the Purchase Plan to their
eligible employees.

<PAGE>

SHARE RESERVE

Upon approval of the 700,000 share increase, the maximum number of
shares which may be issued over the ten (10) year term of the Purchase Plan,
will be increased to 2,300,000 shares . As of August 31, 2000, 321,573 shares
were available for issuance under the Purchase Plan; assuming stockholder
approval of this Proposal, the number of shares available for future issuances
under the Purchase Plan will be increased to 1,021,573.

In the event any change is made to the outstanding shares of common
stock by reason of any recapitalization, stock dividend, stock split,
combination of shares, exchange of shares or other change in corporate structure
effected without our receipt of consideration, appropriate adjustments will be
made to (i) the maximum number and class of securities issuable under the
Purchase Plan, (ii) the maximum aggregate number and class of securities
purchasable by all participants on any one purchase date and (iii) the class and
maximum number of securities subject to each outstanding participation election
and the purchase price payable per share thereunder.

ADMINISTRATION

The Purchase Plan is administered by the compensation committee of the
board of directors. Such committee, as Plan Administrator, has full authority to
adopt such rules and procedures as it may deem necessary for proper plan
administration and to interpret the provisions of the Purchase Plan. All costs
and expenses incurred in plan administration are paid by us without charge to
participants.

PURCHASE PERIODS

Under the Purchase Plan, shares are issued through a series of
successive six (6)-month purchase periods. Purchase periods currently run from
the first business day of February to the last business day of July each year,
and from the first business day in August to the last business day in January of
the following year until the Purchase Plan terminates. Each participant is
granted an option to purchase shares of common stock for each purchase period in
which he or she participates. The option will be granted on the first business
day of each purchase period and will be automatically exercised on the last
business day of each purchase period. Each option entitles the participant to
purchase the whole number of shares of common stock obtained by dividing the
participant's payroll deductions for the purchase period by the purchase price
in effect for such period.

ELIGIBILITY

Any individual who customarily works for more than twenty (20) hours
per week for more than five (5) months per calendar year in the employ of Oak or
any participating affiliate is eligible to participate in the Purchase Plan. An
individual who is an eligible employee at the start of any purchase period may
join that purchase period at that time. An individual who first becomes an
eligible employee after such start date may join the Purchase Plan on the start
date of any subsequent purchase period on which he or she is an eligible
employee.

<PAGE>

As of August 31, 2000, approximately 499 employees, including 5
executive officers, were eligible to participate in the Purchase Plan.

PAYROLL DEDUCTIONS

Each participant may authorize payroll deductions in any multiple of 1%
of his or her base compensation, up to a maximum of ten percent (10%).

PURCHASE PRICE

The purchase price per share at which common stock will be purchased on
the participant's behalf on each purchase date will be equal to eighty-five
percent (85%) of the LOWER of (i) the fair market value per share of common
stock on the start date of the purchase period or (ii) the fair market value per
share of common stock on that purchase date.

PURCHASE PROVISIONS

On the last business day of each purchase period, the accumulated
payroll deductions of each participant will automatically be applied to the
purchase of whole shares of common stock at the purchase price in effect for the
participant for that purchase period. The number of shares purchased during any
purchase period by a participant may not exceed 125% of the number of shares
which may be purchased at a price equal to 85% of the fair market value of
common stock on the first day of such purchase period.

VALUATION

The fair market value per share of common stock on any relevant date
will be the closing selling price per share on such date on the Nasdaq National
Market. On August 31, 2000, the closing selling price per share of common stock
was $29.125 per share.

SPECIAL LIMITATIONS

The Purchase Plan imposes certain limitations upon a participant's
rights to acquire common stock, including the following limitations:

(i) No option may be granted to any individual who owns stock
(including stock purchasable under any outstanding participation elections)
possessing 5% or more of the total combined voting power or value of all classes
of stock of Oak or any of its affiliates.

(ii) No option granted to a participant may permit such individual to
purchase common stock at a rate greater than $25,000 worth of such common stock
(valued at the time such option is granted) for each calendar year the option
remains outstanding at any time.

(iii) No participant may purchase during any one purchase period more
than the number of shares of common stock which exceeds 125% of the number of
shares of common

<PAGE>

stock which may be purchased at a price equal to 85% of the fair market value of
the common stock on the first day of the purchase period.

TERMINATION OF OPTIONS

The option will immediately terminate upon the participant's loss of
eligible employee status or upon his or her affirmative withdrawal from the
purchase period. The payroll deductions collected for the purchase period in
which the option terminates will be immediately refunded.

STOCKHOLDER RIGHTS

No participant will have any stockholder rights with respect to the
shares of common stock covered by his or her option until the shares are
actually purchased on the participant's behalf. No adjustment will be made for
dividends, distributions or other rights for which the record date is prior to
the date of such purchase.

ASSIGNABILITY

No option will be assignable or transferable other than in connection
with the participant's death and will be exercisable only by the participant
during his or her lifetime.

ACQUISITION

In the event we are acquired by merger or asset sale during a purchase
period, we will have the power to make the following binding arrangements: (i)
purchase the shares subject to outstanding participation elections for the
purchase period occurring at such time at a purchase price equal to 85% of the
LOWER of (A) the fair market value per share of common stock on the start date
of the purchase period during which the acquisition occurs or (B) the fair
market value per share of common stock immediately prior to such acquisition;
(ii) cause the acquiring corporation to assume all outstanding purchase
elections or (iii) cancel all of the outstanding participation elections and
options to purchase shares in return for payment by us of an amount not less
than the amount credited to the participant's stock purchase account.

AMENDMENT AND TERMINATION

The Purchase Plan will terminate upon the earliest to occur of (i)
February 6, 2005, (ii) the date on which all available shares are issued or
(iii) the date on which all outstanding participation elections are exercised in
connection with an acquisition of us.

The board of directors may at any time alter, suspend or discontinue
the Purchase Plan. However, the board of directors may not, without stockholder
approval, (i) materially increase the number of shares issuable under the
Purchase Plan except in connection with certain changes in our capital
structure, (ii) alter the purchase price formula so as to reduce the purchase
price, (iii) materially increase the benefits accruing to participants or (iv)
materially modify the requirements for eligibility to participate in the
Purchase Plan.

<PAGE>

STOCK ISSUANCES

The table below shows, as to each of the executive officers named in
the Summary Compensation Table and the various indicated groups, the following
information with respect to Purchase Plan transactions effected during the
period from July 1, 1999 to August 31, 2000: (i) the number of shares of common
stock purchased under the Purchase Plan during that period and (ii) the weighted
average purchase price paid per share of common stock in connection with the
purchases.

PURCHASE PLAN TRANSACTIONS

NAME NUMBER OF SHARES WEIGHTED AVERAGE
PURCHASE PRICE
<S> <C> <C>
Young K. Sohn - -
Shawn M. Soderberg (1) 3,230 3.0347
Robert O. Hersh (2) - -
Simon P. Dolan - -
William L. Housley 556 3.4000
Peter D. Besen 6,515 3.7210
All current executive officers as a group (5 persons) 10,301 3.3852
All non-employee directors as a group (6 persons) - -
All current employees, including current officers who 434,211 3.0480
are not executive officers as a group (499 persons)
</TABLE>

(1) Ms. Soderberg resigned as Vice President, General Counsel and Secretary
of Oak in August 2000.

(2) Mr. Hersh resigned from Oak in May 2000.

NEW PLAN BENEFITS

As of August 31, 2000, no option grants have been made under the
Purchase Plan on the basis of the 700,000 share increase which is the subject of
this Proposal 3.

FEDERAL TAX CONSEQUENCES

The Purchase Plan is intended to be an "employee stock purchase plan"
within the meaning of Section 423 of the Internal Revenue Code. Under a plan
which so qualifies, no taxable income will be recognized by a participant, and
no deductions will be allowable to us, in connection with the grant or the
exercise of an outstanding option. Taxable income will not be recognized until
there is a sale or other disposition of the shares acquired under the Purchase
Plan or in the event the participant should die while still owning the purchased
shares.

If the participant sells or otherwise disposes of the purchased shares
within two (2) years after the start date of the purchase period in which such
shares were acquired or within one (1) one year after the actual purchase date
of those shares, then the participant will recognize ordinary income in the year
of sale or disposition equal to the amount by which the fair market

<PAGE>

value of the shares on the purchase date exceeded the purchase price paid for
those shares, and we will be entitled to an income tax deduction, for the
taxable year in which such sale or disposition occurs, equal in amount to such
excess.

If the participant sells or disposes of the purchased shares more than
two (2) years after the start date of the purchase period in which such shares
were acquired and more than one (1) one year after the actual purchase date of
those shares, then the participant will recognize ordinary income in the year of
sale or disposition equal to the lesser of (i) the amount by which the fair
market value of the shares at the time the option was granted exceeded the
purchase price paid for those shares or (ii) the amount by which the fair market
value of the stock at the time of disposition of the stock exceeded the purchase
price paid for those shares. Any additional gain upon the disposition will be
taxed as a long-term capital gain. We will not be entitled to any income tax
deduction with respect to such sale or disposition.

If the participant still owns the purchased shares at the time of
death, the lesser of (i) the amount by which the fair market value of the shares
on the date of the option grant exceeded the purchase price or (ii) the amount
by which the fair market value of the shares at the time of the individual's
death exceeded the purchase price will constitute ordinary income in the year of
death. We will not be entitled to any income tax deduction even though the
employee will recognize income.

ACCOUNTING TREATMENT

Under current accounting rules, the issuance of common stock under the
Purchase Plan will not result in a compensation expense chargeable against our
reported earnings.

STOCKHOLDER APPROVAL

The affirmative vote of a majority of our outstanding voting shares
present or represented and entitled to vote at the annual meeting is required
for approval of the amendment to the Purchase Plan. Should such stockholder
approval not be obtained, then, the share reserve will not be increased. The
Purchase Plan will, however, continue to remain in effect, and stock grants may
continue to be made pursuant to the provisions of the Purchase Plan prior to its
amendment until the available reserve of common stock under such plan is issued.

THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE
AMENDMENT TO THE PURCHASE PLAN. THE BOARD BELIEVES THAT IT IS IN OUR COMPANY'S
BEST INTERESTS TO MAINTAIN A PROGRAM OF STOCK OWNERSHIP FOR OUR EMPLOYEES IN
ORDER TO PROVIDE THEM WITH A MEANINGFUL OPPORTUNITY TO ACQUIRE A PROPRIETARY
INTEREST IN US AND THEREBY ENCOURAGE SUCH INDIVIDUALS TO REMAIN IN OUR SERVICE
AND MORE CLOSELY ALIGN THEIR INTERESTS WITH THOSE OF THE STOCKHOLDERS.

<PAGE>

PROPOSAL 4

RATIFICATION OF APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS

Our board of directors has selected KPMG LLP as independent public
accountants to audit our financial statements for the fiscal year ending June
30, 2001. A representative of KPMG LLP is expected to be present at the annual
meeting with the opportunity to make a statement if the representative desires
to do so, and is expected to be available to respond to appropriate questions.

The affirmative vote of a majority of the shares represented and voting
at the annual meeting is required for approval of this proposal. In the event
the stockholders fail to ratify the appointment, the board of directors will
reconsider its selection. Even if the selection is ratified, the board of
directors in its discretion may direct the appointment of a different
independent accounting firm at any time during the year if the board of
directors believes that such a change would be in the best interest of Oak and
its stockholders.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE APPOINTMENT OF KPMG
LLP AS OUR INDEPENDENT PUBLIC ACCOUNTANTS FOR THE FISCAL YEAR ENDING JUNE 30,
2001.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT

The following table sets forth certain information with respect to the
beneficial ownership of our common stock by (i) all persons known by us to be
the beneficial owners of more than 5% of our outstanding common stock, (ii) each
director and nominee for director, (iii) the Chief Executive Officer and the
other executive officers named in the Summary Compensation Table below and (iv)
all current executive officers and directors as a group. The information in the
following table is as of August 31, 2000, except that relating to the security
ownership of Dimensional Fund Advisors Inc., which is as of the most recent
practicable date for such information.

Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and includes voting and investment power with
respect to the securities. Unless otherwise indicated below, the persons and
entities named in the table have sole voting and sole investment power with
respect to all shares beneficially owned, subject to community property laws
where applicable. The table assumes that all options granted under our Option
Plan and Directors' Option Plan become exercisable in accordance with their
respective vesting terms. The percentage ownership is based on 53,865,218 shares
of common stock outstanding on August 31, 2000. Shares of common stock subject
to stock options which are currently exercisable or will become exercisable
within 60 days after August 31, 2000 are deemed outstanding for computing the
percentage of the person or group holding such options, but are not deemed
outstanding for computing the percentage of any other person or group.

<PAGE>

SHARES OWNED
---------------------------------------------
NAME OF BENEFICIAL OWNERS NUMBER OF PERCENTAGE
SHARES OF CLASS
-------------------- -------------------
<S> <C> <C>
Young K. Sohn 2,202,800 3.9%
Shawn M. Soderberg 73,462 *
Robert O. Hersh - -
Simon P. Dolan 500 *
William L. Housley 12,800 *
Peter D. Besen 6,515 *
Richard B. Black 434,112 *
Ta-Lin Hsu 123,220 *
Peter Simone 221,802 *
Timothy Tomlinson 55,462 *
David D. Tsang 4,469,749 8.3
Albert Y. C. Yu 41,520 *
Dimensional Fund Advisors Inc. 2,771,900 5.1
Executive officers and directors as a group (12 persons) 7,641,942 13.5%
</TABLE>

* Less than 1%

ADDITIONAL INFORMATION. Additional information regarding the beneficial
ownership of shares held by these persons is indicated below. The address of
Messrs. Sohn, Dolan and Housley and Ms. Soderberg is c/o Oak Technology, Inc.,
139 Kifer Court, Sunnyvale, CA 94086. The address of Mr. Hersh is 3035 Bersano
Court, Pleasanton, CA 94566. The address of Mr. Black is 10655 N. Upper Meadow
Road, Moose, WY 83012. The address of Dr. Hsu is 20539 Sevilla Lane, Saratoga,
CA 95070. The address of Mr. Simone is 61 Lehigh Road, Wellesley, MA 02482. The
address of Mr. Tsang is 21677 Rainbow Drive, Cupertino, CA 95014. The address of
Mr. Tomlinson is c/o Tomlinson Zisko Morosoli & Maser LLP, 200 Page Mill Road,
2nd Floor, Palo Alto, CA 94306. The address of Mr. Yu is 13416 Middle Fork Lane,
Los Altos Hills, CA 94022. The address of Dimensional Fund Advisors Inc. is 1299
Ocean Avenue, 11th Floor, Santa Monica, CA 90401.

Mr. Sohn: 2,000,000 of these shares are subject to options granted
pursuant to the Executive Stock Option Plan, which options are immediately
exercisable subject to Oak's right of repurchase lapsing over time; and 33,800
of these shares are subject to options exercisable within 60 days of August 31,
2000. Mr. Sohn is President and Chief Executive Officer of Oak.

Ms. Soderberg: 72,000 of these shares are subject to options
exercisable within 60 days of August 31, 2000. Ms. Soderberg resigned as Vice
President, General Counsel and Secretary of Oak in August 2000.

Mr. Hersh: Mr. Hersh served as Vice President and Chief Financial
Officer of Oak from November 1998 to May 2000.

<PAGE>

Mr. Dolan: Mr. Dolan is Vice President and General Manager, Imaging
Group, of Oak.

Mr. Housley: 12,800 of these shares are subject to options exercisable
within 60 days of August 31, 2000. Mr. Housley is Vice President and General
Manager, Optical Group, of Oak.

Mr. Besen: Mr. Besen is Chief Technology Officer of Oak.

Mr. Black: 134,120 of these shares are subject to options exercisable
within 60 days of August 31, 2000. Mr. Black is Vice-Chairman of the Oak Board.

Dr. Hsu: 39,720 of these shares are subject to options exercisable
within 60 days of August 31, 2000. Dr. Hsu is a director of Oak.

Mr. Simone: 79,691 of these shares are subject to options exercisable
within 60 days of August 31, 2000. Mr. Simone is a director of Oak.

Mr. Tomlinson: 34,720 of these shares are subject to options
exercisable within 60 days of August 31, 2000. Mr. Tomlinson is a director of
Oak.

Mr. Tsang: 3,362,949 of these shares are held of record by Mr. Tsang;
an aggregate of 990,000 of these shares are held of record by trusts for Mr.
Tsang's children of which Mr. Tsang's brother and brother-in-law are trustees;
and 116,800 of these shares are subject to options exercisable within 60 days of
August 31, 2000. Mr. Tsang is Chairman of the Oak Board.

Dr. Yu: 41,520 of these shares are subject to options exercisable
within 60 days of August 31, 2000. Dr. Yu is a director of Oak.

Dimensional Fund Advisors Inc.: The number of shares beneficially owned
by Dimensional Fund Advisors Inc. was reported in a Schedule 13G filed with the
Securities and Exchange Commission as of February 3, 2000.

Executive officers and directors as a group: 2,565,171 of these shares
are subject to options exercisable within 60 days of August 31, 2000.

EXECUTIVE COMPENSATION AND OTHER MATTERS

SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION

The following table sets forth information for the fiscal years ended
June 30, 2000, June 30, 1999 and June 30, 1998 concerning compensation paid or
accrued by us to (i) the Chief Executive Officer, (ii) the four most highly
compensated executive officers whose total annual salary and bonus for fiscal
year 2000 exceeded $100,000 and who were serving as executive officers as of
June 30, 2000, and (iii) one additional individual for whom disclosure would
have been provided but for the fact that the individual was not serving as an
executive officer as of June 30, 2000.

24
<PAGE>

SUMMARY COMPENSATION TABLE

LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
----------------------------------------------- ---------------
NAME AND PRINCIPAL YEAR SALARY ($) BONUS($) OTHER ANNUAL SECURITIES ALL OTHER
POSITION (1) COMPENSATION UNDERLYING COMPENSATION
OPTIONS
------------------------- ------- ------------ ------------ -------------- --------------- ---------------

<S> <C> <C> <C> <C> <C> <C>
Young K. Sohn(2) 2000 $ 450,000 $ -- $ -- 100,000 $ 1,852
President and Chief 1999 151,731 -- 2,000,000 2,040,000 56,245
Executive Officer 1998 N/A N/A N/A 20,000 N/A

Shawn M. Soderberg(3) 2000 190,000 26,549 -- 30,000 1,677
Vice President, General 1999 203,681 76,000 -- 140,000 2,429
Counsel and Secretary 1998 166,290 61,281 -- 15,000 --

Robert O. Hersh(4) 2000 173,923 1,549 -- -- 1,424
Vice President and Chief 1999 122,207 48,000 -- 170,000 700
Financial Officer 1998 N/A N/A N/A N/A N/A

Simon P. Dolan (5) 2000 134,584 25,000 -- 190,000 188,440
Vice President and 1999 N/A N/A N/A N/A N/A
General Manager, 1998 N/A N/A N/A N/A N/A
Imaging Group

William L. Housley(6) 2000 190,000 1,549 -- 50,000 1,585
Vice President and 1999 147,500 76,549 100,000 -- --
General Manager, 1998 N/A N/A N/A N/A N/A
Optical Group

Peter D. Besen (7) 2000 189,166 -- -- 15,000 1,606
Chief Technology Officer 1999 188,810 41,200 250,000 297,500 2,208
1998 139,441 47,819 -- 30,000 2,670
</TABLE>
---------------------------------

(1) The award of any performance bonus is subject to the discretion of the
compensation committee of the Board and if awarded, will be based upon
achievement of targets established for financial performance and
attainment of other annual goals as determined by the compensation
committee. No bonus will be paid for achievement of any of the designated
levels of operating results unless a specified minimum level of income
before income taxes is achieved by Oak. Additionally represents bonus
monies paid as part of hire on package.

(2) All other compensation for fiscal 2000 includes 401(k) matching
contribution of $1,417 and group term life insurance premium of $435 paid
by Oak. In fiscal year 1999, Mr. Sohn was awarded a $2,000,000 loan, for
which the payment of principal and interest are to be forgiven in three
equal annual installments over a three-year period measured from the
first anniversary of the loan.

(3) Ms. Soderberg resigned as Vice President, General Counsel and Secretary
of Oak in August 2000. All other compensation for fiscal 2000 includes
401(k) matching contribution of $1,301 and group term life insurance
premium of $376 paid by Oak.

(4) Mr. Hersh joined Oak in November 1998 and resigned from Oak in May 2000.
All other compensation for fiscal 2000 includes 401(k) matching
contribution of $876 and group term life insurance premium of $548 paid
by Oak.

(5) Mr. Dolan joined Oak in October 1999. All other compensation for fiscal
2000 includes 401(k) matching contribution of $1,221, relocation expenses
of $187,000 and group term life insurance premium of $219 paid by Oak.

<PAGE>

(6) Mr. Housley joined Oak in March 1999. All other compensation for fiscal
2000 includes 401(k) matching contribution of $1,196 and group term life
insurance premium of $389 paid by Oak. In fiscal year 1999, Mr. Housley
was awarded a $100,000 loan, for which the payment of principal and
interest are to be forgiven in three equal annual installments over a
four-year period commencing on the second anniversary of the loan.

(7) All other compensation for fiscal 2000 includes 401(k) matching
contribution of $1,129 and group term life insurance premium of $477 paid
by Oak. In fiscal year 1999, Mr. Besen was awarded a $250,000 loan, for
which the payment of principal and interest are to be forgiven in three
equal annual installments over a four-year period commencing on the
second anniversary of the loan.

OPTION GRANTS IN LAST FISCAL YEAR

The following table contains information concerning the stock options
granted to the persons named in the Summary Compensation Table during the fiscal
year ended June 30, 2000. No stock appreciation rights were granted in fiscal
2000.

OPTION GRANTS IN LAST FISCAL YEAR

POTENTIAL REALIZABLE VALUE
($) AT ASSUMED ANNUAL RATES
INDIVIDUAL GRANTS OF STOCK PRICE APPRECIATION
FOR OPTION TERM (1)
------------------------------------------------ -------------------------------
NAME NUMBER OF PERCENT OF
SECURITIES TOTAL OPTIONS
UNDERLYING GRANTED TO EXERCISE OR
OPTIONS EMPLOYEES IN BASE PRICE EXPIRATION
GRANTED (2) FISCAL YEAR ($/SH)(3) DATE 5% 10%
--------------------- ------------ --------------- ------------- ----------- ------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Young K. Sohn 100,000(4) .0223575190 $ 13.375 05/26/10 $ 2,071,059 $ 3,939,882

Shawn M. Soderberg 30,000 .0067007255 13.375 05/26/10 621,318 1,181,965

Robert O. Hersh - - - - - -

Simon P. Dolan 40,000 .0536580470 13.375 05/26/10 828,424 1,575,953
150,000 4.750 11/01/09 4,500,690 7,508,632

William L. Housley 50,000 .0111787590 13.375 05/26/10 1,035,529 1,969,941

Peter D. Besen 15,000 .0033503620 13.375 05/26/10 310,659 590,982
</TABLE>
-----------------------------------------

(1) Potential realizable value is based on an assumption that the stock price
of the common stock appreciates at the annual rate shown (compounded
annually) from the date of grant until the end of the 10-year option
term. These numbers are calculated based on the requirements promulgated
by the Securities and Exchange Commission and do not reflect our estimate
of future stock price growth.

(2) All options except those noted, become vested for (i) 24% of the
underlying shares on the first anniversary of the grant date and (ii) for
the balance of the shares in a series of successive equal monthly
installments of 2% of the remaining option shares measured from the first
anniversary of the vesting commencement date. Each option, unless noted
was granted with a term of ten (10) years.

(3) The exercise price may be paid in (i) cash, (ii) shares of common stock
held for the requisite period to avoid a charge to our earnings for
financial reporting purposes, (iii) through a same-day sale program or
(iv) subject to the discretion of the Plan Administrator, by delivery of
a full-recourse, secured promissory note payable to Oak.

<PAGE>

(4) The options all accelerate in full upon a change of control of Oak.

OPTION EXERCISES AND FISCAL 2000 YEAR-END VALUES

The following table provides certain information concerning exercises
of options to purchase our common stock in the fiscal year ended June 30, 2000
by the persons named in the Summary Compensation Table and sets forth certain
information concerning the number of shares covered by both exercisable and
unexercisable stock options as of June 30, 2000. Also reported are values of
"in-the-money" options that represent the positive spread between the respective
exercise prices of outstanding stock options and the fair market value of our
common stock as of June 30, 2000. We have not issued any stock appreciation
rights.

AGGREGATE OPTION EXERCISES AND FISCAL 2000 YEAR-END VALUES

NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
OPTIONS AT FISCAL YEAR-END AT FISCAL YEAR-END (1)
------------------------------- -------------------------------------
SHARES
ACQUIRED
ON VALUE
EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---------- --------- ------------ -------------- ----------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Young K. Sohn 50,000 684,715 1,780,000 130,000 $ 32,996,940.00 $ 1,340,890.00

Shawn M. Soderberg (2) - - 80,800 119,200 1,386,090.40 1,890,259.60

Robert O. Hersh (3) 35,000 523,750 19,000 - 349,822.00 -

Simon P. Dolan - - - 230,000 - 3,176,990.00

William L. Housley 35,000 473,438 24,400 208,100 452,630.95 3,337,797.80

Peter D. Besen - - 108,400 204,100 1,993,221.20 3,585,808.30
</TABLE>
--------------------------------------------

(1) Calculated by determining the difference between the fair market value of
the securities underlying the options at June 30, 2000 (based on the
closing price of $21.563 for our common stock on the Nasdaq National
Stock Market on June 30, 2000) and the exercise price of the options.

(2) Ms. Soderberg resigned as Vice President, General Counsel and Secretary
of Oak in August 2000.

(3) Mr. Hersh resigned from Oak in May 2000.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

The compensation committee during fiscal 2000 was comprised of two
independent, non-employee directors of Oak, Ta-Lin Hsu and Albert Yu. For a
description of transactions between us and members of the compensation committee
and entities affiliated with such members, see "Certain Relationships and
Related Transactions."

No executive officer of Oak served on the compensation committee of
another entity or on any other committee of the board of directors of another
entity performing similar functions, during the last fiscal year.

<PAGE>

EMPLOYMENT AND CHANGE OF CONTROL ARRANGEMENTS

On February 22, 1999, we entered into an employment agreement with Mr.
Sohn in connection with his employment as our President and Chief Executive
Officer. Pursuant to this agreement, Mr. Sohn will be paid an annual base salary
of $450,000 and will be eligible to receive a performance bonus of 60% to 120%
of his base salary for each fiscal year beginning with fiscal 2000 based on the
achievement of certain fiscal and performance based objectives as agreed to with
the board. Mr. Sohn also executed a promissory note on February 22, 1999 for
$2,000,000 with interest payable at a rate of 4.62% per annum, compounded
annually. Oak will forgive the repayment of principal and accrued interest on
the note in three equal annual installments beginning February 25, 2000 provided
Mr. Sohn is continuously employed with Oak during each year in the three-year
note term.

Mr. Sohn was granted an option to purchase 2,000,000 shares of the
company's common stock with an exercise price of $3.00 per share. The option
shares vest in 48 equal monthly installments over his 4-year period of service.
In addition, all shares will vest upon a change in control of Oak (whether by
merger, asset sale or sale of stock by the stockholders) or a dissolution of
Oak. If Mr. Sohn's employment is terminated without cause, then the number of
shares in which he will be vested will be increased to the number of shares in
which he is otherwise vested plus 12.5% of the option shares. Mr. Sohn exercised
the option on February 22, 1999, subject to Oak's right to repurchase any shares
in which he is not vested upon his termination of employment.

If Mr. Sohn's employment is terminated without cause, Mr. Sohn will
receive his base salary for 6 months and 50% of his target performance bonus. In
the event that Mr. Sohn's employment is terminated without cause or if he
resigns for good reason (including as a result of a decrease in his salary or
performance bonus or a change in his title, authority or responsibilities)
within 12 months of a change in control of Oak, he will receive (i) his base
salary for a period of 12 months and (ii) his target performance bonus.

REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION

The compensation committee is comprised of two independent,
non-employee directors of Oak, neither of whom is a former employee of Oak. The
compensation committee is comprised of Ta-Lin Hsu and Albert Yu. The
compensation committee's primary function is to provide guidance and leadership
to the Chief Executive Officer, the Chief Financial Officer and the VP, Human
Resources to enable them to design an executive compensation program which
attracts and retains executive management. The primary role of the committee is
to review and approve the salary, bonus, stock options and other benefits,
direct or indirect, of our officer group.

We have considered the potential impact of Section 162(m) of the
Internal Revenue Code ("Section 162(m)") adopted under the federal Revenue
Reconciliation Act of 1993. Section 162(m) of the Internal Revenue Code
disallows a Federal income tax deduction to publicly held companies for
compensation paid to certain of their executive officers, to the extent that
compensation exceeds $1 million per covered officer in any fiscal year. This
limitation applies

<PAGE>

only to compensation which is not considered to be performance based. Oak's 1994
Option Plan has been structured so that any compensation deemed paid in
connection with the exercise of option grants made under the plan will qualify
as performance-based compensation and will not be subject to the $1 million
limitation. Our policy is to qualify to the extent reasonable our executive
officers' compensation for deductibility under applicable tax laws.

Our compensation program and policies are designed to enhance
stockholder value by aligning the financial interests of our executive officers
with those of our stockholders. Our compensation program utilizes base salary,
performance based cash bonuses and stock options to motivate executive officers
to achieve our business objectives and to recognize the value achieved by the
executive team for our stockholders.

SALARY

During the fiscal year, the committee reviews with the Chief Executive
Officer, and approves, with modifications it deems appropriate, an annual salary
plan for our executive officers. In making individual base salary decisions, the
committee reviews each officer's duties and the contributions the officer has
made to our overall performance. The committee also compares the salary of each
officer with other officers' salaries, taking into consideration the number of
years employed by us, the possibility of future promotions and the extent and
frequency of prior salary adjustments.

INCENTIVE COMPENSATION

We have continued an executive bonus plan, which is based upon
achievement of targets established for financial performance and attainment of
other annual goals as determined by the committee. For the purposes of the bonus
calculation under the bonus plan, performance is measured according to
achievement of approved targets in specified categories. If the targeted levels
are met, generally, each participant in the bonus plan may earn a bonus of up to
40% of such executives officer's base salary, with the exception of the Chief
Executive Officer who is eligible to earn a bonus from 60--120% of base salary.
Payment of this performance bonus is based upon the achievement or fiscal and
performance-based objectives as agreed to by the board. If the targeted levels
are exceeded, additional bonuses are earned. The maximum bonus, which can be
earned in any year by an executive under the plan, is 150% of the targeted
bonus. No bonus will be paid for achievement of any of the designated levels of
operating results unless we achieve a specified minimum level of income before
income taxes. In addition, regardless of whether targeted performance levels are
met, any award is subject to the discretion of the compensation committee of our
board.

<PAGE>

STOCK OPTIONS

The committee believes that equity ownership provides significant
additional motivation to executive officers to maximize value for our
stockholders. Generally the committee grants stock options at the commencement
of an executive officer's employment and, depending upon that officer's
performance and the appropriateness of additional awards to retain key
employees, periodically thereafter. In making its determination as to grant
levels, the committee takes into consideration prior grants to such executive,
the number of years such officer has been employed by us, grants made in the
broad high tech industry to similarly situated executives, and, in the case of
an initial grant, the sufficiency of such grant to attract the executive to
accept employment with us.

CEO COMPENSATION

The committee independently determines the base salary for the Chief
Executive Officer based on the assessment of our performance against our present
goals, our performance within the semiconductor industry, the overall
performance of the Chief Executive Officer, and the compensation levels of
similarly situated chief executive officers.

Mr. Sohn's compensation was negotiated by the Oak board in light of the
objectives and assessment mentioned above. Pursuant to his employment agreement
dated February 22, 1999, Mr. Sohn's annual base salary is $450,000. Mr. Sohn did
not receive a performance bonus during fiscal 2000. In fiscal year 1999, Mr.
Sohn received a special bonus of $2,000,000 (adjusted for inflation), structured
as a loan forgiven in three equal annual installments upon completion of each
year of service measured from February 26, 1999. The first installment of this
loan was forgiven as of February 26, 2000. Mr. Sohn was also granted an option
to purchase 2,000,000 shares of common stock at an exercise price of $3.00 per
share. Additionally, pursuant to his employment agreement dated February 22,
1999, this agreement provided an accelerated vesting of 50% of the unvested
shares at such time as Oak's common stock has an average closing price of $20.00
or more for 30 consecutive calendar days. This acceleration clause was triggered
on August 1, 2000. The option shares vest monthly over a four-year period, and
the vesting will accelerate upon a change of control of Oak or certain
terminations of Mr. Sohn's employment.

Mr. Sohn was granted an option to purchase 100,000 shares of common
stock at an exercise price of $13.375. This grant vests 12 months following the
full and complete vesting of his new hire grant. Mr. Sohn's remaining option
shares will continue to vest 24% annually.

Compensation Committee

Ta-Lin Hsu
Albert Yu

<PAGE>

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

In connection with his employment arrangement, Mr. Sohn also executed a
promissory note on February 22, 1999 for $2,000,000 with interest payable at a
rate of 4.62% per annum, compounded annually. Oak will forgive the repayment of
principal and accrued interest on the note in three equal annual installments
beginning February 25, 2000 provided Mr. Sohn is continuously employed with Oak
during each year in the three-year note term. Upon Mr. Sohn's termination of
service with Oak, any remaining unforgiven note principal and accrued interest
becomes due and payable. As of September 30, 2000, the balance owed on this note
was $1,370,630, representing $1,333,333 principal and $37,297 accrued interest.

We loaned Mr. Besen the principal sum of $250,000 during fiscal 1999.
Under the terms of this loan arrangement, Oak will forgive repayment of the
principal (together with accrued interest at the rate of 5.82% per annum) in
three equal annual installments, with the first such installment occurring in
July 2001. Upon Mr. Besen's termination of service with Oak, any remaining
unforgiven note principal and interest becomes immediately due and payable. As
of September 30, 2000, the balance owed on this note was $267,181, representing
$250,000 principal and $17,181 accrued interest.

Oak has a similar arrangement with William Housley, its general manager
of its Optical Storage Group. Mr. Housley's loan was for the principal sum of
$100,000 paid during fiscal 1999, and the first of his three equal annual
installments for loan forgiveness (together with accrued interest at the rate of
5.82% per annum) occurs in July 2001. Upon Mr. Housley's termination of service
with Oak, any remaining unforgiven note principal and interest becomes
immediately due and payable. As of September 30, 2000, the balance owed on this
note was $106,870, representing $100,000 principal and $6,870 accrued interest.

Mr. Tomlinson is a general partner of Tomlinson Zisko Morosoli & Maser
LLP, a law firm that provides legal services to Oak.

Mr. Tsang has a consulting arrangement with Oak in which he assists Mr.
Sohn in strategic technology initiatives and vendor/customer relationships. For
his services during fiscal 2000 Mr. Tsang was paid a fee of $325,000. Mr. Tsang
is expected to reduce his involvement as a consultant for Oak during fiscal
2001.

COMPLIANCE WITH SECTION 16(a) OF
THE SECURITIES EXCHANGE ACT OF 1934

Section 16(a) of the Securities Exchange Act of 1934 requires our
executive officers, directors and persons who beneficially own more than 10% of
our common stock to file initial reports of ownership and reports of changes in
ownership with the Securities and Exchange Commission ("SEC"). Such persons are
required by SEC regulations to furnish us with copies of all Section 16(a) forms
filed by such persons.

<PAGE>

Based solely on our review of such forms furnished to us and written
representations from certain reporting persons, we believe that all executive
officers, directors and more than 10% stockholders complied with all filing
requirements applicable to them with respect to transactions during fiscal year
2000.

COMPARISON OF STOCKHOLDER RETURN

Set forth below is a line graph comparing the annual percentage change
in the cumulative total return on our common stock with the cumulative total
return of the H&Q Semiconductor Sector Index and the Nasdaq Stock Market
Index-U.S. for the period commencing on June 30, 1995 and ending on June 30,
2000.

COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*
AMONG OAK TECHNOLOGY, INC.
THE NASDAQ STOCK MARKET (U.S.) INDEX,
AND THE CHASE H & Q SEMICONDUCTORS INDEX

Cumulative Total Return
--------------------------------------------------
6/95 6/96 6/97 6/98 6/99 6/00
<S> <C> <C> <C> <C> <C> <C>
OAK TECHNOLOGY, INC. 100.0 51.02 53.06 24.83 19.73 117.35
NASDAQ STOCK MARKET (U.S.) 100.0 128.39 156.15 205.58 296.02 437.30
CHASE H & Q SEMICONDUCTORS 100.0 74.33 134.79 110.48 234.20 602.94
</TABLE>

* $100 INVESTED ON 6/30/95 IN STOCK OR INDEX-
INCLUDING REINVESTMENT OF DIVIDENDS
FISCAL YEAR ENDING JUNE 30.

(1) Oak effected a 2-for-1 split of its common stock on March 28, 1996.

(2) June 30, 2000 was the last day of trading for the our fiscal year ended
June 30, 2000.

<PAGE>

TRANSACTION OF OTHER BUSINESS

At the date of this Proxy Statement, the only business that the board
of directors intends to present or knows that others will present at the meeting
is as set forth above. If any other matter or matters are properly brought
before the meeting, or any adjournment thereof, it is the intention of the
persons named in the accompanying form of proxy to vote the shares they
represent as the board of directors may recommend. Discretionary authority with
respect to such other matters is granted by the execution of the accompanying
proxy.

STOCKHOLDER PROPOSALS TO BE PRESENTED AT 2001 ANNUAL MEETING

Proposals of stockholders intended to be presented at the 2001 annual
meeting of the stockholders must be received by the Corporate Secretary of Oak
at its offices at 139 Kifer Court, Sunnyvale, California 94086, no later than
June 19, 2001, and must satisfy the conditions established by the Securities and
Exchange Commission for stockholder proposals to be included in our proxy
statement for that meeting.

In addition, the proxy solicited by the board of directors for the 2001
annual meeting of the stockholders will confer discretionary authority to vote
on any stockholder proposal presented at that meeting, unless we are provided
with notice of such proposal no later than September 1, 2001.

By order of the Board of Directors

/s/ David J. Power

David J. Power
Vice President, General Counsel
& Secretary

Sunnyvale, California
October 26, 2000

33
G<PAGE>

DETACH HERE

PROXY

OAK TECHNOLOGY, INC.

2000 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON DECEMBER 5, 2000

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY

The undersigned hereby appoints David J. Power and Young K. Sohn, and each of
them as proxies, each with the power of substitution, and hereby authorizes
them to vote all shares of Common Stock which the undersigned is entitled to
vote at the 2000 Annual Meeting of the Company, to be held at The Westin
Santa Clara, 5101 Great America Parkway, Santa Clara, California on December
5, 2000 at 9:00 a.m. local time, and at any adjournments or postponements
thereof (1) as hereinafter specified upon the proposals listed on the reverse
side and as more particularly described in the Company's Proxy Statement and
(2) in their discretion upon such other matters as may properly come before
the meeting.

WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING IN PERSON, YOU ARE URGED TO
SIGN AND PROMPTLY MAIL THIS PROXY IN THE RETURN ENVELOPE OR VOTE BY TELEPHONE
OR INTERNET SO THAT YOUR STOCK MAY BE REPRESENTED AT THE MEETING.

SEE REVERSE CONTINUED AND TO BE SIGNED ON REVERSE SIDE SEE REVERSE
SIDE SIDE

<PAGE>

VOTE BY TELEPHONE VOTE BY INTERNET
<S> <C>

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Call Toll-Free on a Touch-Tone Phone immediately confirmed and posted.
1-877-PRX-VOTE (1-877-779-8683).

Follow these four easy steps: Follow these four easy steps:

1. Read the accompanying Proxy 1. Read the accompanying Proxy
Statement/Prospectus and Proxy Card. Statement/Prospectus and Proxy Card.

2. Call the toll-free number 2. Go to the Website
1-877-PRX-VOTE (1-877-779-8683). http://www.eproxyvote.com/oakt

3. Enter your 14 digit Voter Control Number 3. Enter your 14 digit Voter Control Number
located on your Proxy Card above your name. located on your Proxy Card above your name.

4. Follow the recorded instructions. 4. Follow the instructions provided.

YOUR VOTE IS IMPORTANT! YOUR VOTE IS IMPORTANT!
CALL 1-877-PRX-VOTE ANYTIME! Go to http://www.eproxyvote.com/oakt anytime!
</TABLE>

DO NOT RETURN YOUR PROXY CARD IF YOU ARE VOTING BY TELEPHONE OR INTERNET

DETACH HERE

Please mark
/X/ votes as in
this example.

YOUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE TO APPROVE
PROPOSALS 1,2,3 AND 4.

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<S> <C> <C> <C> <C>
1. To elect two Class III directors to FDR AGAINST ABSTAIN
hold office for a three-year term or 2. To approve an amendment to / / / / / /
until their successors are elected the 1994 Stock Option Plan
and qualified. to increase the number of
NOMINEES: (01) Richard B. Black and shares of common stock authorized
(02) David D. Tsang for issuance over the term of the
FOR WITHHELD Option Plan by 1,900,000 shares.
/ / / / MARK HERE
IF YOU PLAN / /
TO ATTEND
THE MEETING
FDR AGAINST ABSTAIN
/ /____________________________ MARK HERE / / / / / /
For all nominees except as FOR ADDRESS / / 3. To approve an amendment to the
noted above CHANGE AND 1994 Employee Stock Purchase Plan
NOTE BELOW to increase the number of shares
of common stock authorized for
issuance over the term of the
Purchase Plan by 700,000 shares.

FDR AGAINST ABSTAIN
4. To ratify the appointment of KPMG LLP / / / / / /
as the Company's independent public
accountants for the fiscal year ending
June 30, 2001.

5. To transact any other business as may properly come before the annual
meeting or any adjournment or postponement of the annual meeting.

Sign exactly as your name(s) appear(s) on your stock certificate. If shares
of stock stand of record in the names of two or more persons or in the name
of husband and wife, whether as joint tenants or otherwise, both or all of
such persons should sign the above Proxy. If shares of stock are held of
record by a corporation, the Proxy should be executed by the President or
Vice President and the Secretary or Assistant Secretary, and the corporate
seal should be affixed thereto. Executors or administrators or other
fiduciaries who execute the above Proxy for a deceased stockholder should
give their full title. Please date the Proxy.

Signature:___________________________________Date:_____________Signature:___________________________________Date:_____________
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