S-8

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As filed with the Securities and Exchange Commission on November 25, 2002

Registration No. 333-            

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

OAK TECHNOLOGY, INC.
(Exact name of registrant as specified in its charter)

Delaware (State or other jurisdiction of incorporation or organization)	77-0161486 (I.R.S. Employer Identification No.)
1390 Kifer Road Sunnyvale, California 94086 (Address, including zip code, of registrant's principal executive offices)
OAK TECHNOLOGY, INC. 2002 STOCK OPTION PLAN FOR TERALOGIC GROUP (Full title of the plan)
Young K. Sohn President & Chief Executive Officer Oak Technology, Inc. 1390 Kifer Road Sunnyvale, California 94086 (Name and address of agent for service)
(408) 523-6500 (Telephone number, including area code, of agent for service)

CALCULATION OF REGISTRATION FEE

Title of Securities to be registered	Amount to be registered(1)	Proposed maximum offering price per share(2)	Proposed maximum aggregate offering price(2)	Amount of registration fee
Common Stock, $0.001 par value, issuable pursuant to Oak Technology, Inc. 2002 Stock Option Plan for TeraLogic Group	2,300,000 shares	$2.76	$6,348,000	$584

(1)

This Registration Statement shall also cover any additional shares of Common Stock which become issuable under the Oak Technology, Inc. 2002 Stock Option Plan for TeraLogic Group (the "Plan") by reason of any stock dividend, stock split, recapitalization or other similar transaction effected without the Registrant's receipt of consideration which results in an increase in the number of the outstanding shares of Registrant's Common Stock.

(2)

Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(c) and Rule 457(h) under the Securities Act of 1933, as amended, based on the average of the high and low prices of Oak Technology, Inc. common stock as reported on the Nasdaq National Market on November 21, 2002.

PART II

INFORMATION REQUIRED IN THE REGISTRATION STATEMENT

Item 3. Incorporation Of Documents By Reference

        The following documents and information previously filed with the Securities and Exchange Commission (the "Commission") by Oak Technology, Inc. (the "Registrant") are hereby incorporated by reference into this registration statement on Form S-8 (the "Registration Statement"):

(a)

The Registrant's Annual Report on Form 10-K for the fiscal year ended June 30, 2002 filed with the Commission on August 28, 2002, pursuant to Section 13(a) of the Securities Exchange Act of 1934, as amended (the "1934 Act");



(b)

The Registrant's Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2002, filed with the Commission as of November 14, 2002;



(c)

The description of Registrant's Common Stock contained in the Registrant's Registration Statement (No. 000-25298) on Form 8-A filed with the Commission on December 16, 1994, including any amendment or report filed for the purpose of updating such description; and



(d)

The description of Registrant's Preferred Stock Purchase Rights contained in the Registrant's Registration Statement (No. 000-25298) on Form 8-A12G filed with the Commission on August 21, 1997, together with Amendment No. 1 on Form 8-A12B/A filed with the Commission on November 25, 1998, including any amendment or report filed for the purpose of updating such description.

        In addition, all documents subsequently filed with the Commission by the Registrant pursuant to Section 13(a), 13(c), 14 or 15(d) of the 1934 Act on or after the date of this Registration Statement and prior to the filing of a post-effective amendment which indicates that all securities offered hereunder have been sold or which de-registers all securities then remaining unsold under this Registration Statement, shall be deemed to be incorporated by reference into this Registration Statement and to be a part hereof from the date of filing of such documents. Any statement contained herein or in a document incorporated or deemed to be incorporated by reference herein shall be deemed to be modified or superseded for purposes of this Registration Statement to the extent that a statement contained herein or in any subsequently filed document which also is or is deemed to be incorporated by reference herein modifies or supersedes such earlier statement. Any statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this Registration Statement.

Item 4. Description of Securities

        Not Applicable.

Item 5. Interests of Named Experts and Counsel

        Not Applicable.

Item 6. Indemnification of Directors and Officers

        Delaware law authorizes corporations to eliminate the personal liability of directors to corporations and their stockholders for monetary damages for breach of the directors' "duty of care." While the relevant statute does not change directors' duty of care, it enables corporations to limit available relief to equitable remedies such as injunction or rescission. The statute has no effect on directors' duty of loyalty, acts or omissions not in good faith or involving intentional misconduct or knowing violations of law, illegal payment of dividends and approval of any transaction from which a director derives an

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improper personal benefit. The Registrant has adopted provisions in its Restated Certificate of Incorporation which eliminate the personal liability of its directors to the Registrant and its stockholders for monetary damages for breach or alleged breach of their duty of care. The Restated By-Laws of the Registrant provide for indemnification of its directors, officers, employees and agents to the full extent permitted by the General Corporation Law of the State of Delaware, the Registrant's state of incorporation, including those circumstances in which indemnification would otherwise be discretionary under Delaware Law. Section 145 of the General Corporation Law of the State of Delaware provides for indemnification in terms sufficiently broad to indemnify such individuals, under certain circumstances, for liabilities (including reimbursement of expenses incurred) arising under the 1933 Act.

        In addition, the Registrant has entered into indemnification agreements with its directors and certain officers that provide for the maximum indemnification permitted by law.

Item 7. Exemption from Registration Claimed.

        Not Applicable

Item 8. Exhibits

Exhibit No.	Description
4	Instruments Defining the Rights of Stockholders. Reference is made to Registrant's Registration Statement (No. 000-25298) on Form 8-A, together with the exhibits thereto, which are incorporated herein by reference pursuant to Items 3(c) and 3(d).
5	Opinion and consent of Wildman, Harrold, Allen & Dixon.
23.1	Consent of PricewaterhouseCoopers, Independent Accountants.
23.2	Consent of KPMG LLP, Independent Auditors.
23.3	Consent of Wildman, Harrold, Allen & Dixon (included in Exhibit 5)
24	Power of Attorney (included in the signature page of the Registration Statement).
99.1	Oak Technology, Inc. 2002 Stock Option Plan for TeraLogic Group.
99.2	Form of Non-Qualified Stock Option Agreement in connection with the 2002 Stock Option Plan for TeraLogic Group.
99.3	Alternate Form of Non-Qualified Stock Option Agreement in connection with the 2002 Stock Option Plan for TeraLogic Group.

Item 9. Undertakings

        A.    The undersigned Registrant hereby undertakes:

        (1)  To file, during any period in which offers or sales are being made, a post-effective amendment to this Registration Statement:

(i)

To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933,



(ii)

To reflect in the prospectus any facts or events arising after the effective date of this Registration Statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in this Registration Statement; and

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(iii)

To include any material information with respect to the plan of distribution not previously disclosed in this Registration Statement or any material change to such information in this Registration Statement;

Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) shall not apply if the information required to be included in a post-effective amendment by those paragraphs is contained in periodic reports filed by the Registrant pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference into this Registration Statement.

        (2)  That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

        (3)  To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.

        B.    The undersigned Registrant hereby undertakes that, for purposes of determining any liability under the Securities Act of 1933, each filing of the Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 that is incorporated by reference into this Registration Statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

        C.    Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers or controlling persons of the Registrant pursuant to the indemnification provisions summarized in Item 6 or otherwise, the Registrant has been advised that, in the opinion of the Commission, such indemnification is against public policy as expressed in the Securities Act of 1933 and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer, or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the 1933 Act and will be governed by the final adjudication of such issue.

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SIGNATURES

        Pursuant to the requirements of the Securities Act of 1933, as amended, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-8 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Sunnyvale, State of California, on this 25^th day of November, 2002.

OAK TECHNOLOGY, INC.
By	/s/  YOUNG K. SOHN Young K. Sohn President, Chief Executive Officer and Chairman of the Board of Directors

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS:

        That the undersigned officers and directors of Oak Technology, Inc., a Delaware corporation, do hereby constitute and appoint Young K. Sohn, John S. Edmunds, and David J. Power, and each of them, the lawful attorneys-in-fact and agents with full power and authority to do any and all acts and things and to execute any and all instruments which said attorneys and agents, and any one of them, determine may be necessary or advisable or required to enable said corporation to comply with the 1933 Act, and any rules or regulations or requirements of the Securities and Exchange Commission in connection with this Registration Statement. Without limiting the generality of the foregoing power and authority, the powers granted include the power and authority to sign the names of the undersigned officers and directors in the capacities indicated below to this Registration Statement, to any and all amendments, both pre-effective and post-effective, and supplements to this Registration Statement, and to any and all instruments or documents filed as part of or in conjunction with this Registration Statement or amendments or supplements thereof, and each of the undersigned hereby ratifies and confirms that all said attorneys and agents, or any one of them, shall do or cause to be done by virtue hereof. This Power of Attorney may be signed in several counterparts.

        IN WITNESS WHEREOF, each of the undersigned has executed this Power of Attorney as of the date indicated.

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        Pursuant to the requirements of the 1933 Act, this Registration Statement has been signed below by the following persons in the capacities and on the dates indicated.

Signature		Title	Date
By:	/s/  YOUNG K. SOHN Young K. Sohn	President, Chief Executive Officer and Chairman of the Board of Directors	November 25, 2002
By:	/s/  JOHN S. EDMUNDS John S. Edmunds	Senior Vice President of Finance and Chief Financial Officer	November 25, 2002
By:	/s/  RICHARD B. BLACK Richard B. Black	Director	November 25, 2002
By:	/s/  K.C. MURPHY K.C. Murphy	Director	November 25, 2002
By:	/s/  DAVID RYNNE David Rynne	Director	November 25, 2002
By:	/s/  PETER SIMONE Peter Simone	Director	November 25, 2002
By:	/s/  ALBERT Y.C. YU Albert Y.C. Yu	Director	November 25, 2002

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EXHIBIT INDEX

Exhibit No.	Description
4	Instruments Defining the Rights of Stockholders. Reference is made to Registrant's Registration Statement No. 000-25298 on Form 8-A, together with the exhibits thereto, which are incorporated herein by reference pursuant to Items 3(c) and 3(d).
5	Opinion and consent of Wildman, Harrold, Allen & Dixon.
23.1	Consent of PricewaterhouseCoopers, Independent Accountants.
23.2	Consent of KPMG LLP, Independent Auditors.
23.3	Consent of Wildman, Harrold, Allen & Dixon (included in Exhibit 5)
24	Power of Attorney (included in the signature page of the Registration Statement).
99.1	Oak Technology, Inc. 2002 Stock Option Plan for TeraLogic Group.
99.2	Form of Non-Qualified Stock Option Agreement in connection with the 2002 Stock Option Plan for TeraLogic Group.
99.3	Alternate Form of Non-Qualified Stock Option Agreement in connection with the 2002 Stock Option Plan for TeraLogic Group.

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PART II INFORMATION REQUIRED IN THE REGISTRATION STATEMENT

Item 3. Incorporation Of Documents By Reference
Item 4. Description of Securities
Item 5. Interests of Named Experts and Counsel
Item 6. Indemnification of Directors and Officers
Item 7. Exemption from Registration Claimed.
Item 8. Exhibits
Item 9. Undertakings

SIGNATURES

EXHIBIT INDEX

EX-5

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EXHIBIT 5

[Letterhead of Wildman, Harrold, Allen & Dixon]

November 25, 2002

Oak Technology, Inc.
1390 Kifer Road
Sunnyvale, California 94086

        Re:        Registration Statement on Form S-8

Ladies and Gentlemen:

        We have acted as counsel to Oak Technology, Inc., a Delaware corporation (the "Company"), in connection with the filing with the Securities and Exchange Commission (the "Commission") of a registration statement on Form S-8 (the "Registration Statement") under the Securities Act of 1933, as amended (the "Act"), relating to 2,300,000 shares of the Company's common stock, par value $.001 per share (the "Shares"), which may be issued and sold pursuant to the Oak Technology, Inc. 2002 Stock Option Plan for TeraLogic Group (the "Plan").

        In connection with this opinion, we have examined originals or copies, certified or otherwise identified to our satisfaction, of (i) the Plan; (ii) the Registration Statement; (iii) the Restated Certificate of Incorporation, as amended, of the Company; (iv) the By-laws of the Company; and (v) such other documents as we have deemed necessary and appropriate as a basis for the opinion set forth below. In rendering our opinion set forth below, we have assumed the authenticity of all documents submitted to us as originals, the genuineness of all signatures and the conformity to authentic originals of all documents submitted to us as copies. We have also assumed the legal capacity for all purposes relevant hereto of all natural persons and, with respect to all parties to agreements or instruments relevant hereto other than the Company, that such parties had the requisite power and authority (corporate or otherwise) to execute, deliver and perform such agreements or instruments, that such agreements or instruments have been duly authorized by all requisite action (corporate or otherwise), executed and delivered by such parties and that such agreements or instruments are the valid, binding and enforceable obligations of such parties. As to questions of fact material to our opinions, we have relied upon certificates of officers of the Company and of public officials.

        Based upon and subject to the foregoing, we are of the opinion that, when issued and sold in the manner described in the Plan and pursuant to the agreements which accompany each grant under the Plan, the Shares will be legally and validly issued, fully-paid and non-assessable.

        We hereby consent to the filing of this opinion as Exhibit 5 to the Registration Statement. In giving such consent, we do not thereby admit that we are within the category of persons whose consent is required under Section 7 of the Act or the rules and regulations of the Commission.

        Members of our firm are admitted to the bar of the State of Illinois and we do not express any opinion as to the laws of any jurisdiction other than the Delaware General Corporation Law.

        This opinion letter is rendered as of the date first written above and we disclaim any obligation to advise you of facts, circumstances, events or developments which hereafter may be brought to our attention and which may alter, affect or modify the opinion expressed herein. Our opinion is expressly limited to the matters set forth above and we render no opinion, whether by implication or otherwise, as to any other matters relating to the Company, the Plan or the Shares.

Very truly yours,

/s/ Wildman, Harrold, Allen & Dixon

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EXHIBIT 5

EX-23.1

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EXHIBIT 23.1

Consent of Independent Accountants

        We hereby consent to the incorporation by reference in this Registration Statement on Form S-8 of our report dated July 23, 2002 relating to the financial statements and financial statement schedule, which appears in Oak Technology, Inc.'s Annual Report on Form 10-K for the year ended June 30, 2002.

/s/ PricewaterhouseCoopers LLP

PricewaterhouseCoopers LLP
San Jose, California
November 25, 2002

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Consent of Independent Accountants

EX-23.2

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EXHIBIT 23.2

Consent of Independent Auditors

The Board of Directors
Oak Technology, Inc.:

        We consent to incorporation by reference in the registration statement filed on or about November 25, 2002 on Form S-8 of Oak Technology, Inc. of our report dated July 24, 2000, with respect to the consolidated statements of operations, stockholders' equity, and cash flows of Oak Technology, Inc. and subsidiaries for the year ended June 30, 2000, and the related financial statement schedule, which report appears in the June 30, 2002, annual report on Form 10-K of Oak Technology, Inc.

/s/ KPMG LLP

Mountain View, California
November 25, 2002

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Consent of Independent Auditors

EX-99.1

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EXHIBIT 99.1

OAK TECHNOLOGY, INC.
2002 STOCK OPTION PLAN FOR TERALOGIC GROUP

1. Purpose. This Plan is intended to provide incentives to the employees of TeraLogic Inc. ("eligible persons") who, as a result of the acquisition of TeraLogic Inc. by Oak, have become Oak ("Company") employees, and is further intended to attract, retain and motivate eligible persons whose present and potential contributions are important to the success of the Company and any Parent or Subsidiary of the Company by offering them an opportunity to participate in the Company's future performance through awards of Options, and to provide such eligible persons with a proprietary interest in the Company. Capitalized terms not defined in the text of the Plan are defined in Section 15.

Options shall be granted under this Plan only to persons not previously an employee or director of the Company, as an inducement essential and material to the individual's entering into employment with the Company.

2. Stock Subject to the Plan The capital stock subject to the Plan shall be shares of the Company's authorized but unissued Common Stock or treasury shares of Common Stock. The maximum aggregate number of shares of Common Stock which may be issued under the Plan is 2,300,000 subject to adjustments pursuant to Section 8 hereof. In the event that any outstanding Option under the Plan shall expire by its terms or is otherwise terminated for any reason (or if shares of Common Stock of the Company that are issued upon exercise of an Option are subsequently reacquired by the Company pursuant to contractual rights of the Company under the particular Option Agreement), the shares of Common Stock allocated to the unexercised portion of such Option (or the shares so reacquired by the Company pursuant to the terms of the Option Agreement) shall again become available to be made subject to Options granted under the Plan.

3. Administration.

3.1 Power and Authority. The Plan shall be administered by the Board and/or the Committee. Subsequent references herein to the Board shall also mean the Committee if such Committee has been appointed, and, unless the powers of the Committee have been specifically limited, the Committee shall have all of the powers of the Board granted herein. Subject to the general purposes, terms and conditions of the Plan, the Board shall have full power and authority to implement and carry out the Plan. More specifically, the Board shall have the following powers and authority (which listing is provided by way of example and is not intended to be comprehensive or limiting to the extent of powers not included):

3.1.1 Selection of Participants. To determine the employees or prospective employees of the Company to whom, and the time or times at which, Options to purchase Common Stock of the Company shall be granted.

3.1.2 Number of Option Shares. To determine the number of shares of Common Stock to be subject to Options granted to each Participant.

3.1.3 Exercise Price. To determine the price to be paid for the shares of Common Stock upon the exercise of each Option.

3.1.4 Term, Vesting and Exercise Schedule. To determine the term, vesting and exercise schedule of each Option, including the effect of a Participant's termination of employment.

3.1.5 Other Terms of Options. To determine the terms and conditions of each Option Agreement (which need not be identical) entered into between the Company and any Participant.

3.1.6 Interpretation of Plan. To construe and interpret the Plan, any Option Agreement and any other agreement or document executed pursuant to the Plan and to prescribe, amend and rescind rules and regulations relating to the Plan.

3.1.7 Waivers; Correction of Defects. To grant waivers of Plan or Option Agreement conditions and to correct any defect, supply any omission or reconcile any inconsistency in the Plan or any Option Agreement..

3.1.8 Delegation. To delegate to one or more officers or employees of the Company the authority to execute and deliver such instruments and documents, to do all such acts and things, and to take all such other steps deemed necessary, advisable or convenient for the effective administration of the Plan in accordance with its terms and purpose; provided, however, that the Committee shall exercise, and may not delegate any discretionary authority with respect to, all substantive decisions and functions regarding the Plan and Options granted under the Plan as those relate to Insiders of the Company.

3.1.9 General Authority. To take such actions and make such determinations as the Board deems necessary or advisable for the administration of the Plan, subject to complying with the Plan and with applicable legal requirements.

3.2 Board Discretion. The interpretation and construction by the Board of any provision of this Plan, or any Option granted pursuant hereto (including the applicable Option Agreement), shall be final, binding and conclusive upon all parties in interest. In the event of any conflict between any Option Agreement and the Plan, the terms of the Plan shall govern. No member of the Board shall be liable to the Company, any Parent or Subsidiary of the Company, or the holder of any Option granted under the Plan for any action, inaction, determination or interpretation made in good faith with respect to the Plan or any transaction under the Plan.

3.3 Intent to Comply with SEC Rule 16b-3. With respect to Insiders, transactions under this Plan are intended to comply with all applicable conditions of SEC Rule 16b-3 or its successors under the Exchange Act. To the extent any provision of the Plan or any action by the Board fails to so comply, it shall be deemed null and void, to the extent permitted by law and deemed advisable by the Board. Moreover, in the event the Plan does not include a provision required by Rule 16b-3 to be stated therein, such provision (other than one relating to eligibility requirements, or the price and amounts of awards) shall be deemed automatically to be incorporated by reference into the Plan insofar as Insider Participants are concerned.

4. Eligibility and Award of Options. The Board shall have full and final authority, in its discretion and at any time and from time to time during the term of this Plan, to grant or authorize the granting of Options to such employees (including officers and directors) of the Company or any Parent or Subsidiary of the Company as it may select. Any individual who is eligible to receive an Option under this Plan shall be eligible to hold more than one Option at any given time, in the discretion of the Board. All Options granted under this Plan shall be stock options that do not qualify as incentive stock options within the meaning of Section 422 of the Code. Persons selected by the Board who are prospective employees to be employed by, the Company or any Parent or Subsidiary of the Company shall be eligible to receive Options; provided, however, that in the case of such prospective employment, the exercisability of such Options shall be subject in each case to such person in fact becoming an employee of the Company or any Parent or Subsidiary of the Company.

5. Terms and Provisions of Option Agreements. Each Option granted under the Plan shall be evidenced by an Option Agreement between the Participant and the Company. Each such Option Agreement shall set forth the number of shares of Common Stock subject to the Option and shall be

subject to the following terms and conditions, and to such other terms and conditions not inconsistent herewith as the Board may deem appropriate in each case:

5.1 Exercise Price. The price to be paid for each share of Common Stock upon the exercise of an Option shall be determined by the Board at the time the Option is granted.

5.2 Term of Options. The period or periods within which an Option may be exercised shall be determined by the Board at the time the Option is granted, but no exercise period shall exceed ten (10) years from the date the Option is granted.

5.3 Exercisability. Options granted under this Plan shall be exercisable at such future time or times (or may be fully exercisable upon grant), whether or not in installments, as shall be determined by the Board and provided in the form of Option Agreement. Notwithstanding any other provisions of this Plan, no Option may be exercised after the expiration of ten (10) years from the date of grant.

5.4 Method of Payment for Common Stock Upon Exercise. Except as otherwise provided in the applicable Option Agreement (subject to the limitations of this Plan), the exercise price for each share of Common Stock purchased under an Option shall be paid in full in cash at the time of purchase (or by check acceptable to the Board). At the discretion of the Board, the Option Agreement may provide for (or the Board may permit) the exercise price to be paid by one or more of the following additional alternative methods: (1) the surrender of shares of the Company's Common Stock, in proper form for transfer, owned by the Participant exercising the Option and having a Fair Market Value on the date of exercise equal to the exercise price, provided that such shares (a) have been owned by the Participant for more than six (6) months and have been paid for within the meaning of Rule 144 under the Securities Act (and, if such shares were purchased from the Company by use of a promissory note, such note has been fully paid with respect to such shares) or (b) were obtained by the Participant in the public market, (2) to the extent permitted under the applicable provisions of the Delaware General Corporation Law and the federal securities laws, the delivery by the Participant exercising the Option of a full recourse promissory note in a form approved by the Company and executed by such Participant, bearing interest at a per annum rate which is not less than the "test rate," as set by the regulations promulgated under Sections 483 or 1274, as applicable, of the Code and as in effect on the date of exercise, (3) consummation of an immediate sale proceeds transaction ("Immediate Sale Proceeds"), which transaction may be executed (a) through a "same day sale" commitment from the Participant, subject to any legislation prohibiting loans to Insiders, and a broker-dealer that is a member of the National Association of Securities Dealers (a "NASD Dealer") whereby the Participant irrevocably elects to exercise the Option and to sell a portion of the shares of Common Stock so purchased under the Option to pay for the aggregate exercise price, and whereby the NASD Dealer irrevocably commits upon receipt of such shares to forward the aggregate exercise price directly to the Company or (b) through a "margin" commitment from the Participant and a NASD Dealer whereby the Participant irrevocably elects to exercise the Option and to pledge the shares of Common Stock so purchased to the NASD Dealer in a margin account as security for a loan from the NASD Dealer in the amount of the aggregate exercise price, and whereby the NASD Dealer irrevocably commits upon receipt of such shares to forward the aggregate exercise price directly to the Company, or (4) any combination of the foregoing, so long as the sum of the cash so paid, plus the Fair Market Value of the shares of Common Stock so surrendered, the principal amounts of the promissory notes so delivered, and the Immediate Sale Proceeds so executed, is equal to the aggregate exercise price. No share of Common Stock shall be issued under any Option until full payment therefor has been made in accordance with the terms of the Option Agreement (and in compliance with the Plan). Notwithstanding the foregoing, an Option may not be exercised by surrender to the Company of shares of the Company's Common Stock to the extent such surrender of stock would constitute a violation of the provisions of any law, regulation and/or agreement restricting the redemption of the Company's Common Stock. Unless otherwise provided by the Board, in the event the Company at any time is subject to the regulations promulgated by the Board of Governors of the Federal Reserve System or any other governmental entity affecting

the extension of credit in connection with the Company's securities, any promissory note shall comply with such applicable regulations, and the Optionee shall pay the unpaid principal and accrued interest, if any, to the extent necessary to comply with such applicable regulations. The Company reserves, at any and all times, the right, in the Company's sole and absolute discretion, to establish, decline to approve and/or terminate any program and/or procedure for the exercise of Options by means of an execution of Immediate Sale Proceeds.

5.5 Non-Assignability. No Option granted under the Plan shall be assignable or transferable by a Participant except by will or the laws of descent and distribution and each Option granted under the Plan shall be exercisable only by the Participant during his or her lifetime.

5.6 All Options Subject to Terms of this Plan. In addition to the provisions contained in any Option Agreement granted under this Plan, each Option Agreement shall provide that it is subject to the terms and conditions of this Plan and each Participant shall be given a copy of this Plan. Further, any terms or conditions contained in any Option Agreement which are inconsistent in any respect with the provisions of this Plan shall be disregarded and void, or shall be deemed amended to the extent necessary to comply with the provisions of this Plan and the intent of the Board.

5.7 Other Provisions. Option Agreements under the Plan shall contain such other provisions, including, without limitation: (1) restrictions and conditions upon the exercise of the Option, (2) rights of first refusal in favor of the Company (or its assignees) applicable to shares of Common Stock acquired upon exercise of an Option which are subsequently proposed to be transferred by the Participant, (3) lock-up agreements (applicable in the event of the public offering of the Common Stock of the Company) restricting a Participant from any sales or other transfers of Common Stock received upon exercise of the Option for a designated period of time following the effective date of a registration statement under the Securities Act, (4) other restrictions on the transferability or right to retain shares of the Common Stock received upon the exercise of the Option, including repurchase rights at original cost based on a vesting schedule, (5) commitments to pay cash bonuses, make loans or transfer other property to a Participant upon exercise of any Option, and (6) restrictions required by applicable federal, state and foreign securities laws, as the Board shall deem necessary or advisable; provided that no such additional provision shall be inconsistent with any other term or condition of this Plan. Without limiting the generality of the foregoing, the Board may provide in the form of Option Agreement that, in lieu of an exercise schedule, the Option may immediately be exercisable in full and provide a "vesting schedule" with respect to the Common Stock so purchased, giving the Company (or its assignees) the right to repurchase the shares of Common Stock at cost (or some other specified amount) to the extent such shares have not become vested upon any termination of the Participant's employment or other engagement with the Company, which vesting may depend upon or be related to the attainment of performance goals or other conditions (such as the passage of stated time periods) pursuant to which the obligation to resell such shares to the Company shall lapse.

6. Securities Law Requirements. No shares of Common Stock shall be issued upon the exercise of any Option unless and until: (1) the Company and the Participant have satisfied all applicable requirements under the Securities Act and the Exchange Act, (2) any applicable listing requirement of any stock exchange on which the Company's Common Stock is listed has been satisfied, and (3) all other applicable provisions of state, federal and foreign law have been satisfied. The Board shall cause such legends to be placed on certificates evidencing shares of Common Stock issued upon exercise of an Option as, in the opinion of the Company's counsel, may be required by applicable federal, state and foreign securities laws.

7. Withholding Taxes. The exercise of any Option granted under this Plan shall be conditioned upon the Participant's payment to the Company of all amounts (in addition to the exercise price) required to meet federal, state, local or foreign taxes of any kind required by law to be withheld with respect to shares of Common Stock to be issued upon the exercise of such Option. The Company shall have the right to deduct from payments of any kind otherwise due to a Participant (whether regular salary, commissions, or otherwise) any federal, state, local or foreign taxes of any kind required by law to be

withheld with respect to any shares of Common Stock issued upon exercise of Options granted under the Plan. The Board, in its discretion, may permit or require satisfaction of any such withholding obligations by withholding from the shares of Common Stock to be issued on exercise of an Option that number of shares of Common Stock having a Fair Market Value equal to the minimum amount required to be withheld, determined on the date that the amount of tax to be withheld is to be determined. In addition, the Board, in its discretion, may declare cash bonuses to a Participant to satisfy any such withholding requirements or may incorporate provisions in the applicable Option Agreement allowing (or after grant of the Option may permit, in its discretion) a Participant to satisfy any such withholding obligations, in whole or in part, by delivery of shares of the Company's Common Stock already owned by such Participant and which are not subject to repurchase, forfeiture, vesting or other similar requirements or restrictions. The Fair Market Value of any such shares used to satisfy such withholding obligations shall be determined as of the date the amount of tax to be withheld is to be determined.

8. Adjustments Upon Changes in Capitalization or Change of Control.

8.1 Stock Splits and Similar Events. Appropriate adjustments shall be made in the number and class of shares of capital stock subject to the Plan as described in Section 2 and to any outstanding Options and in the exercise price of any outstanding Options in the event of a stock dividend, stock split, reverse stock split, recapitalization, combination, reclassification, or like change in the capital structure of the Company. In the event a majority of the shares which are of the same class as the shares that are subject to outstanding Options are exchanged for, converted into, or otherwise become shares of another corporation (the "New Shares"), the Company may unilaterally amend such Options to provide that each Option is exercisable for New Shares. In the event of any such amendment, the number of shares subject to and the exercise price of each Option shall be adjusted in a fair and equitable manner.

8.2 Change of Control. In the event of a Change of Control (as defined below), the surviving, continuing, successor, or purchasing corporation or parent corporation thereof, as the case may be (the "Acquiring Corporation"), shall either assume the Company's rights and obligations under outstanding Options or substitute options for the Acquiring Corporation's stock for such outstanding Options. Any Options which are neither assumed or substituted for by the Acquiring Corporation in connection with the Change of Control nor exercised as of the date of the Change of Control shall terminate and cease to be outstanding effective as of the date of the Change of Control. A "Change of Control" shall be deemed to have occurred in the event any of the following occurs with respect to the Company:

8.2.1 the direct or indirect sale or exchange by the stockholders of the Company of all or substantially all of the stock of the Company where the stockholders of the Company before such sale or exchange do not retain, directly or indirectly, at least a majority of the beneficial interest in the voting stock of the Company after such sale or exchange.

8.2.2 a merger or consolidation in which the Company is not the surviving corporation, other than a merger or consolidation with a wholly-owned Subsidiary, a reincorporation of the Company in a different jurisdiction, or other transaction in which there is no substantial change in the Stockholders of the Company and the Options are assumed or substituted by the Acquiring Corporation, which assumption or substitution shall be binding on all Participants.

8.2.3 a merger or consolidation in which the Company is the surviving corporation where the stockholders of the Company before such merger or consolidation do not retain, directly or indirectly, at least a majority of the beneficial interest in the voting stock of the Company after such merger or consolidation.

8.2.4 the sale, exchange, or transfer of all or substantially all of the assets of the Company other than a sale, exchange, or transfer to one (1) or more Subsidiaries of the Company.

8.2.5 a liquidation or dissolution of the Company.

8.2.6 any other transaction which qualifies as a "corporate transaction" under Section 424 of the Code wherein the stockholders of the Company give up all of their equity interest in the Company (except for the acquisition, sale or transfer of all or substantially all of the outstanding shares of the Company).

8.3 Board's Determination Final and Binding Upon Participants. The foregoing determinations and adjustments in this Section 8 relating to stock or securities of the Company shall be made by the Board, whose determination in that respect shall be final, binding and conclusive. The Company shall give notice of any such adjustment or action to each Optionee; provided, however, that any such adjustment or action shall be effective and binding for all purposes, whether or not such notice is given or received.

8.4 No Fractions of Shares. Fractions of shares shall not be issued by the Company. Instead, such fractions of shares shall either be paid in cash at Fair Market Value or shall be rounded up or down to the nearest share, as determined by the Board.

8.5 No Rights Except as Expressly Stated. Except as expressly provided in this Section 8, no additional rights shall accrue to any Participant by reason of any subdivision or combination of shares of the capital stock of any class or the payment of any stock dividend or any other increase or decrease in the number of shares of any class or by reason of any dissolution, liquidation, merger, consolidation or spin-off of assets or stock of another corporation, and any issuance by the Company of shares of stock of any class or of securities convertible into shares of stock of any class shall not affect, and no adjustment by reason thereof shall be made with respect to, the number or exercise price of shares of Common Stock subject to Options granted hereunder.

8.6 No Limitations on Company's Discretion. The grant of Options under this Plan shall not affect in any way the right or power of the Company to make adjustments, reclassifications, reorganizations or changes of its capital or business structure or to merge or consolidate or to dissolve, liquidate, sell or transfer all or any part of its business or assets.

9. No Additional Employment Related Rights or Benefits.

9.1 No Special Employment Rights. Nothing contained in this Plan or in any Option Agreement shall confer upon any Participant any right with respect to the continuation of his or her employment or other engagement by the Company or any Parent or Subsidiary of the Company or interfere in any way with the right of the Company, subject to the terms of any separate employment agreement to the contrary, at any time to terminate such employment or to increase or decrease the compensation of any Participant. Whether an authorized leave of absence, or absence in military or government service, shall constitute termination of a Participant's employment or other engagement shall be determined by the Board.

9.2 Other Employee Benefits. The amount of any compensation deemed to be received by any Participant as a result of the exercise of an Option or the sale of shares received upon such exercise will not constitute compensation with respect to which any other employment (or other engagement) related benefits of such Participant are determined, including, without limitation, benefits under any bonus, pension, profit-sharing, life insurance or salary continuation plan, except as otherwise specifically determined by the Board or as expressly provided for in the Option Agreement. The granting of an Option shall impose no obligation upon the Participant to exercise such Option.

10. Rights as a Stockholder and Access to Information. No Participant and no person claiming under or through any such Participant shall be, or have any of the rights or privileges of, a stockholder of the Company in respect of any of the shares of capital stock issuable upon the exercise of any Option granted under this Plan, unless and until the Option is properly and lawfully exercised and a certificate representing the shares so purchased is duly issued to the Participant or to his or her estate. No adjustment shall be made for dividends or any other rights if the record date relating to such dividend or other right predates the date the Participant became a stockholder. Participants shall be provided annual financial statements of the Company.

11. Use of Proceeds. The proceeds received from the sale of shares of the Common Stock upon exercise of Options granted under the Plan shall be used for general corporate purposes.

12. Reservation of Shares. The Company, during the term of this Plan, shall at all times reserve and keep available such number of shares of its Common Stock as shall be sufficient to satisfy the requirements of the Plan and all Options issued hereunder.

13. Term of Plan.

13.1 Effective Date. The Plan became effective when adopted by the Board on October 16, 2002. Options may be granted under the Plan at any time after the effective date and before the date fixed for termination of the Plan.

13.2 Termination. Unless sooner terminated in accordance with Section 14, the Plan shall terminate upon the earlier of: (1) the close of business on the last business day preceding the tenth (10th) anniversary of the date the Plan is adopted by the Board, or (2) the date on which all shares available for issuance under the Plan shall have been issued pursuant to Options granted under the Plan and none of such shares shall remain subject to contractual repurchase rights of the Company pursuant to "vesting" or other similar provisions. If the date of termination is determined under clause (1) above, then any Options outstanding on such date shall continue to have force and effect in accordance with the provisions of the Option Agreements evidencing such Options.

14. Early Termination and Amendment of the Plan. The Board may from time to time suspend or terminate the Plan or revise or amend it.

15. Definitions. As used in the Plan, the following terms shall have the following meanings:

15.1 "Board" means the Board of Directors of the Company as it may be comprised from time to time.

15.2 "Code" means the Internal Revenue Code of 1986, as amended, and applicable regulations.

15.3 "Committee" means the Compensation Committee of the Board comprised of at least two (2) directors; provided, however, that each member of any such Committee must be a Disinterested Person, and provided, further, that if two (2) or more directors are non-employee directors, the Committee shall be comprised of members of the Board, all of whom are independent non-employee directors and Disinterested Persons as provided in IRC Section 162(m).

15.4 "Company" means Oak Technology, Inc., a corporation organized under the laws of the State of Delaware, or any successor corporation.

15.5 "Disability" means a disability, whether temporary or permanent, partial or total, as determined by the Board.

15.6 "Disinterested Person" shall have the meaning set forth in Rule 16b-3(c)(2)(i), as promulgated by the SEC under Section 16(b) of the Exchange Act, as such rule is amended from time to time and as interpreted by the SEC.

15.7 "Exchange Act" means the Securities Exchange Act of 1934, as amended.

15.8 "Fair Market Value" means, as of any date, the value of a share of the Company's Common Stock determined as follows:

15.8.1 if such Common Stock is then quoted on the Nasdaq National Market System, its last reported sale price on the Nasdaq National Market System on the trading day next preceding that date or, if no such reported sale takes place on the trading day next preceding such date, the average of its closing bid and asked prices on the Nasdaq National Market System on the trading day next preceding such date;

15.8.2 if such Common Stock is publicly traded and is then listed on a national securities exchange, its last reported sale price on the national securities exchange on which the Common Stock is then listed on the trading day next preceding that date or, if no such reported sale takes place on the trading day next preceding such date, the average of its closing bid and asked prices on the national securities exchange on which the Common Stock is then listed on the trading day next preceding such date;

15.8.3 if such Common Stock is publicly traded but is not quoted on the Nasdaq National Market System nor listed or admitted to trading on a national securities exchange, the average of its closing bid and asked prices on the trading day next preceding such date, as reported by The Wall Street Journal, for the over-the-counter market; or

15.8.4 if none of the foregoing is applicable, by the Board in good faith, with such determination being based upon past arms'-length sales by the Company of its equity securities and other factors considered relevant in determining the Company's fair value.

Notwithstanding anything to the contrary in this Section 15.8, any Option Agreement may provide for alternative means of valuation for the purpose of repurchase at fair market value of shares acquired.

15.9 "Insider" means an officer or director of the Company or any other person whose transactions in the Company's Common Stock are subject to Section 16 of the Exchange Act.

15.10 "Option" means an option to purchase shares of Common Stock pursuant to the Plan.

15.11 "Option Agreement" means an agreement described in Section 5 entered into by the Company and a Participant, setting forth the terms, conditions and limitations applicable to the Option granted to the Participant.

15.12 "Parent" means any corporation (other than the Company) in an unbroken chain of corporations ending with the Company if, at the time of granting of an Option, each of such corporations other than the Company owns stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in such chain.

15.13 "Participant" means a person who is granted one or more Options under the Plan.

15.14 "Plan" means this Oak Technology, Inc. 2002 Stock Option Plan for TeraLogic Group, as amended from time to time.

15.15 "SEC" means the Securities and Exchange Commission.

15.16 "Securities Act" means the Securities Act of 1933, as amended.

15.17 "Subsidiary" means any corporation (other than the Company) in an unbroken chain of corporations beginning with the Company if, at the time of granting of an Option, each of the corporations other than the last corporation in the unbroken chain owns stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in such chain.

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Oak Technology, Inc. 2002 Stock Option Plan For Teralogic Group

EX-99.2

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EXHIBIT 99.2

Grant «NUMBER»

OAK TECHNOLOGY, INC.
EMPLOYEE NON-QUALIFIED STOCK OPTION AGREEMENT UNDER TERALOGIC GROUP PLAN

THIS EMPLOYEE NON-QUALIFIED STOCK OPTION AGREEMENT (this "Agreement") by and between Oak Technology, Inc., a Delaware corporation (the "Company"), and «FIRST_NAME» «LAST_NAME» (the "Employee"), is made as of the «OPTION_DATE» (such date being sometimes referred to herein as the "Date of Grant").

R E C I T A L S

A.    The Company has adopted and implemented its 2002 Stock Option Plan for TeraLogic Group (the "Plan") permitting the grant of stock options to employees of the Company or any Parent or Subsidiary (each as defined in the Plan) of the Company, all of which are intended to be non-qualified stock options in that they do not qualify as incentive stock options within the meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"), to purchase shares of the authorized but unissued Common Stock or treasury shares of the Company, $0.001 par value ("Common Stock").

B.    The Board of Directors of the Company (the "Board") or the Committee (as defined in the Plan) (subsequent references herein to the Board shall also mean the Committee, if such Committee has been appointed) has authorized the granting of a non-qualified stock option to Employee, thereby allowing Employee to acquire an ownership interest (or increase his or her existing ownership interest) in the Company. Unless otherwise defined in this Agreement or the context otherwise requires, all capitalized terms used in this Agreement shall have the respective meanings assigned to those terms in the Plan.

C.    The grant of the Options pursuant to this Agreement is an inducement essential and material to Employee's entering into employment with the Company.

A G R E E M E N T

NOW, THEREFORE, in reliance on the foregoing Recitals and in consideration of the mutual covenants hereinafter set forth, the parties hereby agree as follows:

1. Grant of Stock Option. The Company hereby grants to the Employee a non-transferable and non-assignable option to purchase an aggregate of up to «SHARES_GRANTED» shares of the Company's Common Stock at the exercise price of $«OPTION_PRICE» per share, upon the terms and conditions set forth herein (such purchase right being sometimes referred to herein as "the Option" or "this Option").

2. Term and Type of Option. Unless earlier terminated in accordance with Sections 4 or 5.2 hereof, this Option and all rights of the Employee to purchase Common Stock hereunder shall expire with respect to all of the shares then subject to this Agreement at 5:00 p.m. Pacific time on «EXPIRATION_DATE_PERIOD_1». This Option is a non-qualified stock option in that it is not intended to qualify as an incentive stock option within the meaning of Section 422 of the Code. Accordingly, the Employee understands that under current law he or she will recognize ordinary income for federal income tax purposes upon exercise of this Option in an amount equal to the excess

(if any) of the Fair Market Value (as defined in the Plan) of the shares of Common Stock so purchased over the exercise price paid for such shares.

3. Exercise Schedule. Subject to the remaining provisions of this Agreement, this Option shall be exercisable as follows:

3.1 First Installment (24%). Commencing upon the date occurring twelve (12) months after the Date of Grant, the Employee may exercise this Option for up to twenty-four percent (24%) of the shares covered hereby (rounded up to the nearest whole number of shares).

3.2 Second Installment (76%). Upon the date occurring thirteen (13) months after the Date of Grant, and continuing thereafter on each subsequent month following the Date of Grant, the Employee may exercise this Option for up to an additional two percent (2%) of the shares covered hereby (rounded up to the nearest whole number of shares) until the date occurring fifty (50) months after the Date of Grant. In no event shall the Option be exercisable for more shares than the number of shares set forth in Section 1.

3.3 Cumulative Nature of Exercise Schedule. The exercise dates specified above refer to the earliest dates on which this Option may be exercised with respect to the stated percentages of the Common Stock covered by this Option, and this Option may be exercised with respect to all or any part of any such percentage of the total shares at any time on or after such dates (until the expiration date specified in Section 2 above or any earlier termination of this Option pursuant to Section 4 or 5.2 of this Agreement). Except as permitted in Section 4, the Employee must be and remain in the employ of the Company, or of any Parent or Subsidiary of the Company, during the entire period commencing with the date of grant of this Option and ending with each of the periods appearing in the above schedule in order to exercise this Option with respect to the shares applicable to any such period. Any references in this Agreement to the Employee's employment with the Company shall be deemed to refer also to the Employee's employment with any Parent or Subsidiary of the Company, as applicable.

3.4 Overriding Limitation on Time For Exercise. Notwithstanding any other provisions of this Agreement, the Option may not be exercised after the expiration of ten (10) years from the Date of Grant.

4. Rights on Termination of Employment. Upon the termination of the Employee's employment with the Company (or with any Parent or Subsidiary of the Company), the Employee's right to exercise this Option shall be limited in the manner set forth in this Section 4 (and this Option shall terminate in the event not so exercised), and subject to the limitation provided in Section 3.4, provided there is no separate agreement with the company that would amend the foregoing.

4.1 Death. If the Employee's employment is terminated by death, the Employee's estate may, for a period of twelve (12) months following the date of such termination, exercise the Option to the extent it was exercisable by the Employee on the date of such termination. The Employee's estate shall mean the Employee's legal representative upon death or any person who acquires the right to exercise the Option by reason of such death in accordance with Section 6.2.

4.2 Retirement. If the Employee's employment is terminated by voluntary retirement at or after reaching sixty-five (65) years of age, the Employee may, within three (3) months following the date of such termination, exercise the Option to the extent it was exercisable by the Employee on the date of such termination unless the Employee dies prior thereto, in which event the Employee shall be treated as though the Employee had died on the date of retirement and the provisions of Section 4.1 above shall apply.

4.3 Disability. If the Employee's employment is terminated because of a Disability, the Employee may, within twelve (12) months following the date of such termination, exercise the Option to the extent it was exercisable by the Employee on the date of such termination unless the Employee dies prior to the expiration of such period, in which event the Employee shall be treated

as though the Employee's death occurred on the date of termination because of Disability and the provisions of Section 4.1 above shall apply.

4.4 Other Termination. If the Employee's employment is terminated for any reason other than provided in Sections 4.1, 4.2 and 4.3 above, the Employee or the Employee's estate may, within three (3) months after the date of the Employee's termination, exercise the Option to the extent it was exercisable by the Employee on the date of such termination.

4.5 Transfer of Employment to Related Corporation. In the event the Employee leaves the employ of the Company to become an employee of any Parent or Subsidiary of the Company or if the Employee leaves the employ of any such Parent or Subsidiary to become an employee of the Company or of another Parent or Subsidiary, the Employee shall be deemed to continue as an employee of the Company for all purposes of this Agreement for so long as employment with a Parent or Subsidiary continues.

5. Adjustments upon Changes in Capitalization or Change of Control.

5.1 Stock Splits and Similar Events. Appropriate adjustments shall be made in the number and class of shares of capital stock subject to the Plan as described in Section 2 of the Plan and to any outstanding Options and in the exercise price of any outstanding Options in the event of a stock dividend, stock split, reverse stock split, recapitalization, combination, reclassification, or like change in the capital structure of the Company. In the event a majority of the shares which are of the same class as the shares that are subject to outstanding Options are exchanged for, converted into, or otherwise become shares of another corporation (the "New Shares"), the Company may unilaterally amend such Options to provide that each Option is exercisable for New Shares. In the event of any such amendment, the number of shares subject to and the exercise price of each Option shall be adjusted in a fair and equitable manner.

5.2 Change of Control. In the event of a Change of Control (as defined below), the surviving, continuing, successor, or purchasing corporation or parent corporation thereof, as the case may be (the "Acquiring Corporation"), shall either assume the Company's rights and obligations under outstanding Options or substitute options for the Acquiring Corporation's stock for such outstanding Options. Any Options which are neither assumed or substituted for by the Acquiring Corporation in connection with the Change of Control nor exercised as of the date of the Change of Control shall terminate and cease to be outstanding effective as of the date of the Change of Control. A "Change of Control" shall be deemed to have occurred in the event any of the following occurs with respect to the Company:

5.2.1 the direct or indirect sale or exchange by the stockholders of the Company of all or substantially all of the stock of the Company where the stockholders of the Company before such sale or exchange do not retain, directly or indirectly, at least a majority of the beneficial interest in the voting stock of the Company after such sale or exchange.

5.2.2 a merger or consolidation in which the Company is not the surviving corporation, other than a merger or consolidation with a wholly-owned Subsidiary, a reincorporation of the Company in a different jurisdiction, or other transaction in which there is no substantial change in the Stockholders of the Company and the Options are assumed or substituted by the Acquiring Corporation, which assumption or substitution shall be binding on the Employee.

5.2.3 a merger or consolidation in which the Company is the surviving corporation where the stockholders of the Company before such merger or consolidation do not retain, directly or indirectly, at least a majority of the beneficial interest in the voting stock of the Company after such merger or consolidation.

5.2.4 the sale, exchange, or transfer of all or substantially all of the assets of the Company other than a sale, exchange, or transfer to one (1) or more Subsidiaries of the Company.

5.2.5 a liquidation or dissolution of the Company.

5.2.6 any other transaction which qualifies as a "corporate transaction" under Section 424 of the Code wherein the stockholders of the Company give up all of their equity interest in the Company (except for the acquisition, sale or transfer of all or substantially all of the outstanding shares of the Company).

5.3 Board's Determination Final and Binding Upon Employee. To the extent that the foregoing adjustments in this Section 5 relate to stock or securities of the Company, such adjustments shall be made by the Board, whose determination in that respect shall be final, binding and conclusive. The Company agrees to give notice of any such adjustment to the Employee; provided, however, that any such adjustment shall be effective and binding for all purposes hereof whether or not such notice is given or received.

5.4 No Rights Except as Expressly Stated. Except as hereinabove expressly provided in this Section 5, no additional rights shall accrue to the Employee by reason of any subdivision or combination of shares of the capital stock of any class or the payment of any stock dividend or any other increase or decrease in the number of shares of any class or by reason of any dissolution, liquidation, merger or consolidation or spin-off of assets or of stock of another corporation, and any issue by the Company of shares of stock of any class or of securities convertible into shares of stock of any class shall not affect, and no adjustment by reason thereof shall be made with respect to, the number or exercise price of shares subject to the Option. Neither the Employee nor any person claiming under or through the Employee shall be, or have any of the rights or privileges of, a stockholder of the Company in respect of any of the shares issuable upon the exercise of this Option, unless and until this Option is properly and lawfully exercised and a certificate representing the shares so purchased is duly issued and delivered to the Employee or to his or her estate.

5.5 No Limitations on Company's Discretion. The grant of the Option hereby shall not affect in any way the right or power of the Company to make adjustments, reclassifications, reorganizations or changes of its capital or business structure or to merge or consolidate or to dissolve, liquidate, sell or transfer all or any part of its business or assets.

6. Manner of Exercise.

6.1 General Instructions for Exercise. The Option shall be exercised by the Employee by either contacting E*Trade OptionsLink at www.optionslink.com or OptionsLink Customer Services at (800) 838-0908 to process the transaction; or by completing, executing and delivering to the Company a Notice of Exercise (the "Notice of Exercise"), in substantially the form attached hereto as Exhibit A, which Notice of Exercise shall specify the number of shares of Common Stock which the Employee elects to purchase. The Company's obligation to deliver shares upon the exercise of this Option shall be subject to the Employee's satisfaction of all applicable federal, state, local and foreign income and employment tax withholding requirements, if any. Upon receipt of such Notice of Exercise and of payment of the purchase price (and payment of applicable taxes as provided above), the Company shall, as soon as reasonably possible and subject to all other provisions hereof, deliver certificates for the shares of Common Stock so purchased, registered in the Employee's name or in the name of his or her legal representative (if applicable). Payment of the purchase price upon any exercise of the Option shall be made by check acceptable to the Company or in cash; provided, however, that the Committee may, in its sole and absolute discretion, accept any other legal consideration to the extent permitted under applicable laws and the Plan including, without limitation, consummation of an immediate sale proceeds transaction ("Immediate Sale Proceeds"), which transaction may be executed (a) through a "same day sale" commitment from the Employee and a broker-dealer that is a member of the National Association of Securities Dealers (a "NASD Dealer") whereby the Employee irrevocably elects to exercise the Option and to sell a portion of the shares of Common Stock so purchased under the Option to pay for the aggregate exercise price, and whereby the NASD Dealer irrevocably commits upon receipt of such shares to forward the aggregate exercise price directly to the Company or (b) through a "margin" commitment from the Employee and a NASD Dealer whereby the Employee irrevocably elects to

exercise the Option and to pledge the shares of Common Stock so purchased to the NASD Dealer in a margin account as security for a loan from the NASD Dealer in the amount of the aggregate exercise price, and whereby the NASD Dealer irrevocably commits upon receipt of such shares to forward the aggregate exercise price directly to the Company.

6.2 Exercise Procedure After Death. To the extent exercisable after the Employee's death, this Option shall be exercised only by the Employee's executor(s) or administrator(s) or the person or persons to whom this Option is transferred under the Employee's will or, if the Employee shall fail to make testamentary disposition of this Option, under the applicable laws of descent and distribution. Any such transferee exercising this Option must furnish the Company with (1) written Notice of Exercise and relevant information as to his, her or its status, (2) evidence satisfactory to the Company to establish the validity of the transfer of this Option and compliance with any laws or regulations pertaining to said transfer, and (3) written acceptance of the terms and conditions of this Option as contained in this Agreement.

7. Non-Transferable. The Option shall, during the lifetime of the Employee, be exercisable only by the Employee and shall not be transferable or assignable by the Employee in whole or in part other than by will or the laws of descent and distribution. If the Employee shall make any such purported transfer or assignment of the Option, such assignment shall be null and void and of no force or effect whatsoever.

8. Compliance with Securities and Other Laws. The Option may not be exercised and the Company shall not be obligated to deliver any certificates evidencing shares of Common Stock hereunder if the issuance of shares upon such exercise would constitute a violation of any applicable requirements of: (i) the Securities Act of 1933, as amended, (ii) the Securities Exchange Act of 1934, as amended (the "Exchange Act"), (iii) applicable state or foreign securities laws, (iv) any applicable listing requirement of any stock exchange on which the Company's Common Stock is then listed, and (v) any other law or regulation applicable to the issuance of such shares. Nothing herein shall be construed to require the Company to register or qualify any securities under applicable federal, state or foreign securities laws, or take any action to secure an exemption from such registration and qualification for the issuance of any securities upon the exercise of the Option. To the extent deemed necessary by the Company's counsel, shares of Common Stock issued upon exercise of this Option shall include such legends as in the opinion of the Company's counsel may be required by applicable federal, state and foreign securities laws.

9. No Right to Continued Employment. Nothing contained in this Agreement shall: (i) confer upon the Employee any right with respect to the continuance of employment by the Company, or by any Parent or Subsidiary of the Company, or (ii) limit in any way the right of the Company, or of any Parent or Subsidiary, to terminate the Employee's employment at any time. Except to the extent the Company and Employee shall have otherwise agreed in writing, Employee's employment shall be terminable by the Company (or by a Parent or Subsidiary, if applicable) at will. The Board in its sole discretion shall determine whether any leave of absence or interruption in service (including an interruption during military service) shall be deemed a termination of employment for the purposes of this Agreement.

10. Option Subject to Terms of Plan. In addition to the provisions hereof, this Agreement and the Option are governed by, and subject to the terms and conditions of, the Plan. The Employee acknowledges receipt of a copy of the Plan (a copy of which is attached hereto as Exhibit B). The Employee represents that he or she is familiar with the terms and conditions of the Plan, and hereby accepts the Option subject to all of the terms and conditions thereof, which terms and conditions shall control to the extent inconsistent in any respect with the provisions of this Agreement. The Employee hereby agrees to accept as binding, conclusive and final all decisions and interpretations of the Board as to any questions arising under the Plan or under this Agreement.

11. Intent to Comply with SEC Rule 16b-3. With respect to Insiders, transactions under this Agreement are intended to comply with all applicable conditions of SEC Rule 16b-3 or its successors under the Exchange Act. To the extent any provision of this Agreement or any action by the Board fails

to so comply, it shall be deemed null and void, to the extent permitted by law and deemed advisable by the Board. Moreover, in the event this Agreement does not include a provision required by Rule 16b-3 to be stated herein, such provision shall be deemed automatically to be incorporated by reference into this Agreement insofar as Insiders are concerned.

12. Notices. All notices and other communications of any kind which either party to this Agreement may be required or may desire to serve on the other party hereto in connection with this Agreement shall be in writing and may be delivered by personal service or by registered or certified mail, return receipt requested, deposited in the United States mail with postage thereon fully prepaid, addressed to the other party at the addresses indicated on the signature page hereof or as otherwise provided below. Service of any such notice or other communication so made by mail shall be deemed complete on the date of actual delivery as shown by the addressee's registry or certification receipt or at the expiration of the third (3rd) business day after the date of mailing, whichever is earlier in time. Either party may from time to time, by notice in writing served upon the other as aforesaid, designate a different mailing address or a different person to which such notices or other communications are thereafter to be addressed or delivered.

13. Further Assurances. The Employee shall, upon request of the Company, take all actions and execute all documents requested by the Company which the Company deems to be reasonably necessary to effectuate the terms and intent of this Agreement and, when required or permitted by any provision of this Agreement to transfer all or any portion of the Common Stock purchased hereunder to the Company (and its assignees), the Employee shall deliver such Common Stock endorsed in blank or accompanied by Stock Assignments Separate from Certificate endorsed in blank, so that title thereto will pass by delivery alone. Any sale or transfer by the Employee of the Common Stock to the Company (and its assignees) shall be made free of any and all claims, encumbrances, liens and restrictions of every kind, other than those imposed by this Agreement.

14. Successors. Except to the extent the same is specifically limited by the terms and provisions of this Agreement, this Agreement is binding upon the Employee and the Employee's successors, heirs and personal representatives, and upon the Company, its successors and assigns.

15. Termination or Amendment. Subject to the terms and conditions of the Plan, the Board may terminate or amend the Plan at any time; provided, however, that no such termination or amendment may adversely affect the Option or any unexercised portion hereof without the consent of the Employee.

16. Integrated Agreement. This Agreement and the Plan constitute the entire understanding and agreement of the Employee and the Company with respect to the subject matter contained herein, and there are no agreements, understandings, restrictions, representations, or warranties between the Employee and the Company other than those set forth or provided for herein. To the extent contemplated herein, the provisions of this Agreement shall survive any exercise of the Option and shall remain in full force and effect.

17. Other Miscellaneous Terms. Titles and captions contained in this Agreement are inserted only as a matter of convenience and for reference, and in no way define, limit, extend or describe the scope of this Agreement or the intent of any provision hereof. This Agreement shall be governed by and construed in accordance with the laws of the State of California, irrespective of its choice of law principles.

18. Independent Tax Advice. The Employee agrees that he or she has obtained or will obtain the advice of independent tax counsel (or has determined not to obtain such advice, having had adequate opportunity to do so) regarding the federal, state and/or foreign income tax consequences of the receipt and exercise of the Option and of the disposition of Common Stock acquired upon exercise hereof. The Employee acknowledges that he or she has not relied and will not rely upon any advice or representation by the Company or by its employees or representatives with respect to the tax treatment of the Option.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written.

COMPANY:		EMPLOYEE:
OAK TECHNOLOGY, INC. a Delaware Corporation
Signature		Signature
By:	John S. Edmunds	Name Printed:
Its:	Senior Vice President and CFO
		Address:
Address:	1390 Kifer Road Sunnyvale, CA 94086 U.S.A.

SCHEDULE OF EXHIBITS

Exhibit A:	Oak Technology Exercise Agreement For Employee Stock Option Agreement
Exhibit B:	2002 Stock Option Plan for TeraLogic Group

EXHIBIT A

OAK TECHNOLOGY EXERCISE AGREEMENT

Optionee Name:	Social Security #:
Home Address:	Daytime Phone Number:

Option(s) Exercised:

Plan	Grant Number	Grant Date	(1) x Grant Price Per Share	(2) = Number of Shares To be exercised	(3) Total Exercise Option Price
			$		$
			$		$
			$		$
					$
				Total Taxes Due:	$
				Total:

Payment and Issuance Instructions:

Attached is my check #                        in the amount of $                        to pay for the exercise of my stock option as listed above.

Issue the certificate in my name and send it to:

o    My home address listed above OR o    My broker as designated below:

Broker Name:

Company Name:

Address:

Account #:

Phone:

Representations:

Initial	I do NOT have access to, nor am I aware of, any inside information regarding Oak Technology, which could or has influenced my decision to purchase and/or sell this stock.
Initial	I hereby agree to notify Oak Technology upon the transfer/sale of my shares acquired under any ISO exercise and agree to hold harmless Oak Technology regarding the reporting of income subject to the transfer/sale of these shares. I am not relying on Oak Technology or E*TRADE Business Solutions Group for any tax advice.

OFFICERS AND DIRECTORS ONLY

        I AM an officer and/or director of Oak Technology and I (initial for each response):

have reviewed my transactions relative to Section 16.

have held this option 6 months from date of grant.

wish/wish not to file an 83 (b) Election.

am required to sell pursuant to Rule 144 & have filed the necessary documentation.

understand a Form 4 will be required to be filed within two (2) days because of this transaction.

The undersigned holder of the stock option(s) described above irrevocably exercises such option(s) as set forth and herewith makes payment therefore, all at the price and on the terms and conditions specified in the stock option agreement(s) pertaining to the option(s) exercised.

INSTRUCTIONS: Fax a copy of the completed form and the check to E*TRADE Business Solutions Group, Attn: Equity Resource Division at fax (916) 463-2926. Mail this completed exercise form and check, made payable to:

Oak Technology at 1390 Kifer Road, Sunnyvale, CA 94086, Attn: Karen Pereira

Optionee Signature Date

For E*TRADE Business Solutions Group Use Only:

Insider List Verified: Stock Administrator: Date:

EXHIBIT B

2002 STOCK OPTION PLAN FOR TERALOGIC GROUP

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Form of Non-Qualified Stock Option Agreement in Connection with the 2002 Stock Option Plan for TeraLogic Group

EX-99.3

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EXHIBIT 99.3

Grant «NUMBER»

OAK TECHNOLOGY, INC.
EMPLOYEE NON-QUALIFIED STOCK OPTION AGREEMENT UNDER TERALOGIC GROUP PLAN

THIS EMPLOYEE NON-QUALIFIED STOCK OPTION AGREEMENT (this "Agreement") by and between Oak Technology, Inc., a Delaware corporation (the Company"), and «FIRST_NAME» «LAST_NAME» (the "Employee"), is made as of the «OPTION_DATE» (such date being sometimes referred to herein as the "Date of Grant").

R E C I T A L S

A.    The Company has adopted and implemented its 2002 Stock Option Plan for TeraLogic Group (the "Plan") permitting the grant of stock options to employees of the Company or any Parent or Subsidiary (each as defined in the Plan) of the Company, all of which are intended to be non-qualified stock options in that they do not qualify as incentive stock options within the meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"), to purchase shares of the authorized but unissued Common Stock or treasury shares of the Company, $0.001 par value ("Common Stock").

B.    The Board of Directors of the Company (the "Board") or the Committee (as defined in the Plan) (subsequent references herein to the Board shall also mean the Committee, if such Committee has been appointed) has authorized the granting of a non-qualified stock option to Employee, thereby allowing Employee to acquire an ownership interest (or increase his or her existing ownership interest) in the Company. Unless otherwise defined in this Agreement or the context otherwise requires, all capitalized terms used in this Agreement shall have the respective meanings assigned to those terms in the Plan.

C.    The grant of the Options pursuant to this Agreement is an inducement essential and material to Employee's entering into employment with the Company.

A G R E E M E N T

NOW, THEREFORE, in reliance on the foregoing Recitals and in consideration of the mutual covenants hereinafter set forth, the parties hereby agree as follows:

1. Grant of Stock Option. The Company hereby grants to the Employee a non-transferable and non-assignable option to purchase an aggregate of up to «SHARES_GRANTED» shares of the Company's Common Stock at the exercise price of $«OPTION_PRICE» per share, upon the terms and conditions set forth herein (such purchase right being sometimes referred to herein as "the Option" or "this Option").

2. Term and Type of Option. Unless earlier terminated in accordance with Sections 4 or 5.2 hereof, this Option and all rights of the Employee to purchase Common Stock hereunder shall expire with respect to all of the shares then subject to this Agreement at 5:00 p.m. Pacific time on «EXPIRATION_DATE_PERIOD_1». This Option is a non-qualified stock option in that it is not intended to qualify as an incentive stock option within the meaning of Section 422 of the Code. Accordingly, the Employee understands that under current law he or she will recognize ordinary income for federal income tax purposes upon exercise of this Option in an amount equal to the excess (if any) of the Fair Market Value (as defined in the Plan) of the shares of Common Stock so purchased over the exercise price paid for such shares.

3. Exercise Schedule. Subject to the remaining provisions of this Agreement, Eighty (80%) percent of this Option shall be exercisable in accordance with Sections 3.1 and 3.2 below ("Fixed Option Vesting"), with the remaining Twenty (20%) exercisable in accordance with Sections 3.3 ("Variable Option Vesting"):

3.1 First Installment of Fixed Option Vesting. Commencing upon the date occurring twelve (12) months after the Date of Grant, the Employee may exercise this Option for up to twenty-four percent (24%) of the shares covered hereby (rounded up to the nearest whole number of shares).

3.2 Second Installment of Fixed Option Vesting. Upon the date occurring thirteen (13) months after the Date of Grant, and continuing thereafter on each subsequent month following of the Date of Grant, the Employee may exercise this Option for up to an additional two percent (2%) of the shares covered hereby (rounded up to the nearest whole number of shares) until the date occurring for fifty (50) months after the Date of Grant.

3.3 Deferred Installment: Variable Option Vesting. Commencing upon the date occurring forty-eight (48) months after the Date of Grant, the Employee may exercise this Option for up to an additional twenty percent (20%) of the shares covered hereby (rounded up to the nearest whole number of shares); provided, however, in the event that the gross revenue of the New Subsidiary (as defined below) exceeds Twelve Million Dollars ($12,000,000) for two consecutive fiscal quarters, the Options vesting pursuant to this Section 3.3 shall become immediately exercisable, effective as of the date of release of the Company's earnings report for the second of the two consecutive quarterly periods.

        As used herein, the "New Subsidiary" shall mean TERALOGIC GROUP, INC., or any resulting division of Oak Technology, Inc. as a result of a statutory merger of TeraLogic Group, Inc. into Oak Technology, Inc.

3.4 Cumulative Nature of Exercise Schedule. The exercise dates specified above refer to the earliest dates on which this Option may be exercised with respect to the stated percentages of the Common Stock covered by this Option, and this Option may be exercised with respect to all or any part of any such percentage of the total shares at any time on or after such dates (until the expiration date specified in Section 2 above or any earlier termination of this Option pursuant to Section 4 or 5.2 of this Agreement). Except as permitted in Section 4, the Employee must be and remain in the employ of the Company, or of any Parent or Subsidiary of the Company, during the entire period commencing with the date of grant of this Option and ending with each of the periods appearing in the above schedule in order to exercise this Option with respect to the shares applicable to any such period. Any references in this Agreement to the Employee's employment with the Company shall be deemed to refer also to the Employee's employment with any Parent or Subsidiary of the Company, as applicable. In no event shall the Option be exercisable for more shares than the number of shares set forth in Section 1.

3.5 Overriding Limitation on Time For Exercise. Notwithstanding any other provisions of this Agreement, the Option may not be exercised after the expiration of ten (10) years from the Date of Grant.

4. Rights on Termination of Employment. Upon the termination of the Employee's employment with the Company (or with any Parent or Subsidiary of the Company), the Employee's right to exercise this Option shall be limited in the manner set forth in this Section 4 (and this Option shall terminate in the event not so exercised), and subject to the limitation provided in Section 3.5, and further subject to any separate agreement the Employee may have with the Company that would amend the foregoing.

4.1 Death. If the Employee's employment is terminated by death, the Employee's estate may, for a period of twelve (12) months following the date of such termination, exercise the Option to the extent it was exercisable by the Employee on the date of such termination. The Employee's estate shall mean the Employee's legal representative upon death or any person who acquires the right to exercise the Option by reason of such death in accordance with Section 6.2.

4.2 Retirement. If the Employee's employment is terminated by voluntary retirement at or after reaching sixty-five (65) years of age, the Employee may, within three (3) months following the date of such termination, exercise the Option to the extent it was exercisable by the Employee on the date of such termination unless the Employee dies prior thereto, in which event the Employee shall be treated as though the Employee had died on the date of retirement and the provisions of Section 4.1 above shall apply.

4.3 Disability. If the Employee's employment is terminated because of a Disability, the Employee may, within twelve (12) months following the date of such termination, exercise the Option to the extent it was exercisable by the Employee on the date of such termination unless the Employee dies prior to the expiration of such period, in which event the Employee shall be treated as though the Employee's death occurred on the date of termination because of Disability and the provisions of Section 4.1 above shall apply.

4.4 Other Termination. If the Employee's employment is terminated for any reason other than provided in Sections 4.1, 4.2 and 4.3 above, the Employee or the Employee's estate may, within three (3) months after the date of the Employee's termination, exercise the Option to the extent it was exercisable by the Employee on the date of such termination.

4.5 Transfer of Employment to Related Corporation. In the event the Employee leaves the employ of the Company to become an employee of any Parent or Subsidiary of the Company or if the Employee leaves the employ of any such Parent or Subsidiary to become an employee of the Company or of another Parent or Subsidiary, the Employee shall be deemed to continue as an employee of the Company for all purposes of this Agreement for so long as employment with a Parent or Subsidiary continues.

5. Adjustments upon Changes in Capitalization or Change of Control.

5.1 Stock Splits and Similar Events. Appropriate adjustments shall be made in the number and class of shares of capital stock subject to the Plan as described in Section 2 of the Plan and to any outstanding Options and in the exercise price of any outstanding Options in the event of a stock dividend, stock split, reverse stock split, recapitalization, combination, reclassification, or like change in the capital structure of the Company. In the event a majority of the shares which are of the same class as the shares that are subject to outstanding Options are exchanged for, converted into, or otherwise become shares of another corporation (the "New Shares"), the Company may unilaterally amend such Options to provide that each Option is exercisable for New Shares. In the event of any such amendment, the number of shares subject to and the exercise price of each Option shall be adjusted in a fair and equitable manner.

5.2 Change of Control. In the event of a Change of Control (as defined below), the surviving, continuing, successor, or purchasing corporation or parent corporation thereof, as the case may be (the "Acquiring Corporation"), shall either assume the Company's rights and obligations under outstanding Options or substitute options for the Acquiring Corporation's stock for such outstanding Options. Any Options which are neither assumed or substituted for by the Acquiring Corporation in connection with the Change of Control nor exercised as of the date of the Change of Control shall terminate and cease to be outstanding effective as of the date of the Change of Control. A "Change of Control" shall be deemed to have occurred in the event any of the following occurs with respect to the Company:

5.2.1 the direct or indirect sale or exchange by the stockholders of the Company of all or substantially all of the stock of the Company where the stockholders of the Company before such sale or exchange do not retain, directly or indirectly, at least a majority of the beneficial interest in the voting stock of the Company after such sale or exchange.

5.2.2 a merger or consolidation in which the Company is not the surviving corporation, other than a merger or consolidation with a wholly-owned Subsidiary, a reincorporation of the Company in a different jurisdiction, or other transaction in which there is no substantial change in the Stockholders of the Company and the Options are assumed or substituted by

the Acquiring Corporation, which assumption or substitution shall be binding on the Employee.

5.2.3 a merger or consolidation in which the Company is the surviving corporation where the stockholders of the Company before such merger or consolidation do not retain, directly or indirectly, at least a majority of the beneficial interest in the voting stock of the Company after such merger or consolidation.

5.2.4 the sale, exchange, or transfer of all or substantially all of the assets of the Company other than a sale, exchange, or transfer to one (1) or more Subsidiaries of the Company.

5.2.5 a liquidation or dissolution of the Company.

5.2.6 any other transaction which qualifies as a "corporate transaction" under Section 424 of the Code wherein the stockholders of the Company give up all of their equity interest in the Company (except for the acquisition, sale or transfer of all or substantially all of the outstanding shares of the Company).

5.3 Board's Determination Final and Binding Upon Employee. To the extent that the foregoing adjustments in this Section 5 relate to stock or securities of the Company, such adjustments shall be made by the Board, whose determination in that respect shall be final, binding and conclusive. The Company agrees to give notice of any such adjustment to the Employee; provided, however, that any such adjustment shall be effective and binding for all purposes hereof whether or not such notice is given or received.

5.4 No Rights Except as Expressly Stated. Except as hereinabove expressly provided in this Section 5, no additional rights shall accrue to the Employee by reason of any subdivision or combination of shares of the capital stock of any class or the payment of any stock dividend or any other increase or decrease in the number of shares of any class or by reason of any dissolution, liquidation, merger or consolidation or spin-off of assets or of stock of another corporation, and any issue by the Company of shares of stock of any class or of securities convertible into shares of stock of any class shall not affect, and no adjustment by reason thereof shall be made with respect to, the number or exercise price of shares subject to the Option. Neither the Employee nor any person claiming under or through the Employee shall be, or have any of the rights or privileges of, a stockholder of the Company in respect of any of the shares issuable upon the exercise of this Option, unless and until this Option is properly and lawfully exercised and a certificate representing the shares so purchased is duly issued and delivered to the Employee or to his or her estate.

5.5 No Limitations on Company's Discretion. The grant of the Option hereby shall not affect in any way the right or power of the Company to make adjustments, reclassifications, reorganizations or changes of its capital or business structure or to merge or consolidate or to dissolve, liquidate, sell or transfer all or any part of its business or assets.

6. Manner of Exercise.

6.1 General Instructions for Exercise. The Option shall be exercised by the Employee by either contacting E*Trade OptionsLink at www.optionslink.com or OptionsLink Customer Services at (800) 838-0908 to process the transaction; or by completing, executing and delivering to the Company a Notice of Exercise (the "Notice of Exercise"), in substantially the form attached hereto as Exhibit A, which Notice of Exercise shall specify the number of shares of Common Stock which the Employee elects to purchase. The Company's obligation to deliver shares upon the exercise of this Option shall be subject to the Employee's satisfaction of all applicable federal, state, local and foreign income and employment tax withholding requirements, if any. Upon receipt of such Notice of Exercise and of payment of the purchase price (and payment of applicable taxes as provided above), the Company shall, as soon as reasonably possible and subject to all other provisions hereof, deliver certificates for the shares of Common Stock so purchased, registered in the Employee's name or in the name of his or her legal representative (if applicable). Payment of the

purchase price upon any exercise of the Option shall be made by check acceptable to the Company or in cash; provided, however, that the Committee may, in its sole and absolute discretion, accept any other legal consideration to the extent permitted under applicable laws and the Plan including, without limitation, consummation of an immediate sale proceeds transaction ("Immediate Sale Proceeds"), which transaction may be executed (a) through a "same day sale" commitment from the Employee and a broker-dealer that is a member of the National Association of Securities Dealers (a "NASD Dealer"), subject to any legislation which would prohibit such same-day-sale for Insiders, as defined in the Plan, whereby the Employee irrevocably elects to exercise the Option and to sell a portion of the shares of Common Stock so purchased under the Option to pay for the aggregate exercise price, and whereby the NASD Dealer irrevocably commits upon receipt of such shares to forward the aggregate exercise price directly to the Company or (b) through a "margin" commitment from the Employee and a NASD Dealer whereby the Employee irrevocably elects to exercise the Option and to pledge the shares of Common Stock so purchased to the NASD Dealer in a margin account as security for a loan from the NASD Dealer in the amount of the aggregate exercise price, and whereby the NASD Dealer irrevocably commits upon receipt of such shares to forward the aggregate exercise price directly to the Company.

6.2 Exercise Procedure After Death. To the extent exercisable after the Employee's death, this Option shall be exercised only by the Employee's executor(s) or administrator(s) or the person or persons to whom this Option is transferred under the Employee's will or, if the Employee shall fail to make testamentary disposition of this Option, under the applicable laws of descent and distribution. Any such transferee exercising this Option must furnish the Company with (1) written Notice of Exercise and relevant information as to his, her or its status, (2) evidence satisfactory to the Company to establish the validity of the transfer of this Option and compliance with any laws or regulations pertaining to said transfer, and (3) written acceptance of the terms and conditions of this Option as contained in this Agreement.

7. Non-Transferable. The Option shall, during the lifetime of the Employee, be exercisable only by the Employee and shall not be transferable or assignable by the Employee in whole or in part other than by will or the laws of descent and distribution. If the Employee shall make any such purported transfer or assignment of the Option, such assignment shall be null and void and of no force or effect whatsoever.

8. Compliance with Securities and Other Laws. The Option may not be exercised and the Company shall not be obligated to deliver any certificates evidencing shares of Common Stock hereunder if the issuance of shares upon such exercise would constitute a violation of any applicable requirements of: (i) the Securities Act of 1933, as amended, (ii) the Securities Exchange Act of 1934, as amended (the "Exchange Act"), (iii) applicable state or foreign securities laws, (iv) any applicable listing requirement of any stock exchange on which the Company's Common Stock is then listed, and (v) any other law or regulation applicable to the issuance of such shares. Nothing herein shall be construed to require the Company to register or qualify any securities under applicable federal, state or foreign securities laws, or take any action to secure an exemption from such registration and qualification for the issuance of any securities upon the exercise of the Option. To the extent deemed necessary by the Company's counsel, shares of Common Stock issued upon exercise of this Option shall include such legends as in the opinion of the Company's counsel may be required by applicable federal, state and foreign securities laws.

9. No Right to Continued Employment. Nothing contained in this Agreement shall: (i) confer upon the Employee any right with respect to the continuance of employment by the Company, or by any Parent or Subsidiary of the Company, or (ii) limit in any way the right of the Company, or of any Parent or Subsidiary, to terminate the Employee's employment at any time. Except to the extent the Company and Employee shall have otherwise agreed in writing, Employee's employment shall be terminable by the Company (or by a Parent or Subsidiary, if applicable) at will. The Board in its sole discretion shall determine whether any leave of absence or interruption in service (including an interruption during military service) shall be deemed a termination of employment for the purposes of this Agreement.

10. Option Subject to Terms of Plan. In addition to the provisions hereof, this Agreement and the Option are governed by, and subject to the terms and conditions of, the Plan. The Employee acknowledges receipt of a copy of the Plan (a copy of which is attached hereto as Exhibit B). The Employee represents that he or she is familiar with the terms and conditions of the Plan, and hereby accepts the Option subject to all of the terms and conditions thereof, which terms and conditions shall control to the extent inconsistent in any respect with the provisions of this Agreement. The Employee hereby agrees to accept as binding, conclusive and final all decisions and interpretations of the Board as to any questions arising under the Plan or under this Agreement.

11. Intent to Comply with SEC Rule 16b-3. With respect to Insiders, transactions under this Agreement are intended to comply with all applicable conditions of SEC Rule 16b-3 or its successors under the Exchange Act. To the extent any provision of this Agreement or any action by the Board fails to so comply, it shall be deemed null and void, to the extent permitted by law and deemed advisable by the Board. Moreover, in the event this Agreement does not include a provision required by Rule 16b-3 to be stated herein, such provision shall be deemed automatically to be incorporated by reference into this Agreement insofar as Insiders are concerned.

12. Notices. All notices and other communications of any kind which either party to this Agreement may be required or may desire to serve on the other party hereto in connection with this Agreement shall be in writing and may be delivered by personal service or by registered or certified mail, return receipt requested, deposited in the United States mail with postage thereon fully prepaid, addressed to the other party at the addresses indicated on the signature page hereof or as otherwise provided below. Service of any such notice or other communication so made by mail shall be deemed complete on the date of actual delivery as shown by the addressee's registry or certification receipt or at the expiration of the third (3rd) business day after the date of mailing, whichever is earlier in time. Either party may from time to time, by notice in writing served upon the other as aforesaid, designate a different mailing address or a different person to which such notices or other communications are thereafter to be addressed or delivered.

13. Further Assurances. The Employee shall, upon request of the Company, take all actions and execute all documents requested by the Company which the Company deems to be reasonably necessary to effectuate the terms and intent of this Agreement and, when required or permitted by any provision of this Agreement to transfer all or any portion of the Common Stock purchased hereunder to the Company (and its assignees), the Employee shall deliver such Common Stock endorsed in blank or accompanied by Stock Assignments Separate from Certificate endorsed in blank, so that title thereto will pass by delivery alone. Any sale or transfer by the Employee of the Common Stock to the Company (and its assignees) shall be made free of any and all claims, encumbrances, liens and restrictions of every kind, other than those imposed by this Agreement.

14. Successors. Except to the extent the same is specifically limited by the terms and provisions of this Agreement, this Agreement is binding upon the Employee and the Employee's successors, heirs and personal representatives, and upon the Company, its successors and assigns.

15. Termination or Amendment. Subject to the terms and conditions of the Plan, the Board may terminate or amend the Plan at any time; provided, however, that no such termination or amendment may adversely affect the Option or any unexercised portion hereof without the consent of the Employee.

16. Integrated Agreement. This Agreement and the Plan constitute the entire understanding and agreement of the Employee and the Company with respect to the subject matter contained herein, and there are no agreements, understandings, restrictions, representations, or warranties between the Employee and the Company other than those set forth or provided for herein. To the extent contemplated herein, the provisions of this Agreement shall survive any exercise of the Option and shall remain in full force and effect.

17. Other Miscellaneous Terms. Titles and captions contained in this Agreement are inserted only as a matter of convenience and for reference, and in no way define, limit, extend or describe the scope of

this Agreement or the intent of any provision hereof. This Agreement shall be governed by and construed in accordance with the laws of the State of California, irrespective of its choice of law principles.

18. Independent Tax Advice. The Employee agrees that he or she has obtained or will obtain the advice of independent tax counsel (or has determined not to obtain such advice, having had adequate opportunity to do so) regarding the federal, state and/or foreign income tax consequences of the receipt and exercise of the Option and of the disposition of Common Stock acquired upon exercise hereof. The Employee acknowledges that he or she has not relied and will not rely upon any advice or representation by the Company or by its employees or representatives with respect to the tax treatment of the Option.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written.

COMPANY:		EMPLOYEE:
OAK TECHNOLOGY, INC. a Delaware Corporation
Signature		Signature
By:	John S. Edmunds	Name Printed:
Its:	Senior Vice President and CFO
		Address:
Address:	1390 Kifer Road Sunnyvale, CA 94086 U.S.A.

SCHEDULE OF EXHIBITS

Exhibit A:	Oak Technology Exercise Agreement For Employee Stock Option Agreement
Exhibit B:	2002 Stock Option Plan for TeraLogic Group

EXHIBIT A

OAK TECHNOLOGY EXERCISE AGREEMENT

Optionee Name:	Social Security #:
Home Address:	Daytime Phone Number:

Option(s) Exercised:

Plan	Grant Number	Grant Date	(1) x Grant Price Per Share	(2) = Number of Shares To be exercised	(3) Total Exercise Option Price
			$		$
			$		$
			$		$
					$
					$
				Total Taxes Due:	$
				Total:

Payment and Issuance Instructions:

Attached is my check #                        in the amount of $                        to pay for the exercise of my stock option as listed above.

Issue the certificate in my name and send it to:

o    My home address listed above OR o    My broker as designated below:

Broker Name:

Company Name:

Address:

Account #:

Phone:

Representations:

Initial	I do NOT have access to, nor am I aware of, any inside information regarding Oak Technology, which could or has influenced my decision to purchase and/or sell this stock.
Initial	I hereby agree to notify Oak Technology upon the transfer/sale of my shares acquired under any ISO exercise and agree to hold harmless Oak Technology regarding the reporting of income subject to the transfer/sale of these shares. I am not relying on Oak Technology or E*TRADE Business Solutions Group for any tax advice.

OFFICERS AND DIRECTORS ONLY

        I AM an officer and/or director of Oak Technology and I (initial for each response):

have reviewed my transactions relative to Section 16.

have held this option 6 months from date of grant.

wish/wish not to file an 83 (b) Election.

am required to sell pursuant to Rule 144 & have filed the necessary documentation.

understand a Form 4 will be required to be filed within two (2) days because of this transaction.

The undersigned holder of the stock option(s) described above irrevocably exercises such option(s) as set forth and herewith makes payment therefore, all at the price and on the terms and conditions specified in the stock option agreement(s) pertaining to the option(s) exercised.

INSTRUCTIONS: Fax a copy of the completed form and the check to E*TRADE Business Solutions Group, Attn: Equity Resource Division at fax (916) 463-2926. Mail this completed exercise form and check, made payable to:

Oak Technology at 1390 Kifer Road, Sunnyvale, CA 94086, Attn: Karen Pereira

Optionee Signature Date

For E*TRADE Business Solutions Group Use Only:

Insider List Verified: Stock Administrator: Date:

EXHIBIT B

2002 STOCK OPTION PLAN FOR TERALOGIC GROUP

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Alternate Form of Non-Qualified Stock Option Agreement in Connection with the 2002 Stock Option Plan for TeraLogic Group