<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No.__)
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as permitted
by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
HYTEK MICROSYSTEMS, INC.
(Name of Registrant as Specified in its Charter)
__________________________
(Name of Person Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
_______________________________
(2) Aggregate number of securities to which transaction applies:
________________________________
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
________________________________
(4) Proposed maximum aggregate value of transaction:
_________________________________
(5) Total fee paid:
_________________________________
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the
offsetting fee was paid previously. Identify the previous filing by
registration statement number, or the Form or Schedule and the date
of its filing.
(1) Amount Previously Paid:________________
(2) Form, Schedule or Registration Statement No.:________________
(3) Filing Party:________________
(4) Date Filed:_________________
<PAGE>
HYTEK MICROSYSTEMS, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
MAY 16, 1997
TO THE SHAREHOLDERS:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of Hytek
Microsystems, Inc. (the "Company"), a California corporation, will be held on
Friday, May 16, 1997 at 10:00 a.m., local time, in room Vintage 8 of the
Airport Hilton Hotel, located at San Francisco International Airport, San
Francisco, California (telephone number (415) 589-0770), for the following
purposes:
1. To elect five (5) directors to serve for the ensuing year and
until their successors are elected.
2. To approve an amendment to the Company's 1991 Stock Option Plan
for the purpose of increasing the number of shares reserved for issuance under
the plan by 100,000 shares to a total of 376,175 shares.
3. To ratify the appointment of Ernst & Young, LLP as independent
auditors of the Company for the fiscal year ending January 3, 1998.
4. To transact such other business as may properly come before the
meeting or any adjournment thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice.
Only shareholders of record at the close of business on March 17, 1997 are
entitled to notice of, and to vote at, the meeting and any adjournment thereof.
All shareholders are cordially invited to attend the meeting in person.
However, to ensure your representation at the meeting, you are urged to vote,
sign, date and return the enclosed Proxy as promptly as possible in the postage-
prepaid envelope enclosed for that purpose. Any shareholder attending the
meeting may vote in person even if he or she returned a Proxy.
By Order of the Board of Directors
/s/ Charles S. Byrne
CHARLES S. BYRNE, Secretary
Carson City, Nevada
April 8, 1997
<PAGE>
HYTEK MICROSYSTEMS, INC.
400 HOT SPRINGS ROAD
CARSON CITY, NEVADA 89706
PROXY STATEMENT
PROCEDURAL MATTERS
ANNUAL MEETING
The enclosed Proxy is solicited on behalf of Hytek Microsystems, Inc.
(the "Company" or "Hytek") for use at the Annual Meeting of Shareholders to
be held Friday, May 16, 1997 at 10:00 a.m., local time, or at any adjournment
thereof, for the purposes set forth herein and in the accompanying Notice of
Annual Meeting of Shareholders. The Annual Meeting will be held in Room
Vintage 8 at the Airport Hilton Hotel, at San Francisco International
Airport, San Francisco, California.
The Company's principal executive offices are located at 400 Hot Springs
Road, Carson City, Nevada 89706. Hytek's telephone number at that address is
(702) 883-0820.
These proxy solicitation materials and the Company's 1996 Annual Report
to Shareholders (consisting of a letter from the President and the Company's
Annual Report on Form 10-KSB for the fiscal year ended December 28, 1996,
without exhibits) were mailed on or about April 8, 1997 to all shareholders
entitled to vote at the meeting.
RECORD DATE; OUTSTANDING SHARES
Shareholders of record at the close of business on March 17, 1997 (the
"Record Date") are entitled to notice of and to vote at the meeting. At the
Record Date, 2,941,424 shares of the Company's Common Stock, no par value,
were issued and outstanding.
REVOCABILITY OF PROXIES
Any proxy given pursuant to this solicitation may be revoked by the
person giving it at any time before its use by delivering to the Company a
written notice of revocation or a duly executed proxy bearing a later date or
by attending the meeting and voting in person.
QUORUM; ABSTENTIONS; BROKER NON-VOTES
The required quorum for the transaction of business at the Annual Meting
is a majority of the shares of Common Stock issued and outstanding on the
Record Date. Shares that are voted "FOR", "AGAINST" or "WITHHELD FROM" a
matter are treated as being present at the meeting for the purposes of
establishing a quorum and are also treated as shares "represented and voting"
at the Annual Meeting (the "Votes Cast") with respect to such matter.
The Company believes that abstentions should be counted for the purpose
of determining the presence or absence of a quorum for the transaction of
business, but should not be counted as Votes Cast with respect to a proposal
as to which the shareholder has expressly abstained from voting.
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Broker non-votes will be counted for the purpose of determining the
presence or absence of a quorum for the transaction of business, but will not be
counted for the purpose of determining the number of Votes Cast with respect to
the proposal on which the broker has expressly not voted. Thus, abstentions and
broker non-votes will not affect the outcome of the voting on a proposal that
requires a majority of the Votes Cast.
VOTING AND SOLICITATION
Every shareholder voting in the election of directors may cumulate such
shareholder's votes and give one candidate a number of votes equal to the number
of directors to be elected (5) multiplied by the number of votes to which the
shareholder's shares are entitled, or distribute such shareholder's votes on the
same principle among as many candidates as the shareholder may select, provided
that votes cannot be cast for more than the number of directors to be elected.
However, no shareholder shall be entitled to cumulate votes for a candidate
unless such candidate's name has been properly placed in nomination prior to the
voting and in accordance with the procedures set forth in the bylaws.
Furthermore, no shareholder shall be entitled to cumulate votes unless the
shareholder, or any other shareholder, has given notice at the meeting prior to
the voting of the intention to cumulate the shareholder's votes.
On all other matters, each share has one vote.
Under the bylaws of the Company, nominations for the election of directors
may be made by any shareholder entitled to vote in the election of directors,
but only if written notice of such shareholder's intent to make such nominations
has been received by the Company at its principal executive office not less than
20 days nor more than 60 days prior to the meeting at which directors are to be
elected; provided, however, that in the event that less than 30 days notice or
prior public disclosure of the date of the meeting is given or made to
shareholders, notice by the shareholder to be timely must be so received not
later than the close of business on the tenth day following the day on which
such notice of the date of the meeting was mailed or such public disclosure was
made. Such shareholder's notice shall set forth: (a) with respect to each
proposed nominee, the name, age, business and residence address, principal
occupation or employment, class and number of shares of stock of the Company
owned and any other information that is required to be disclosed in
solicitations of proxies for election of directors pursuant to Regulation 14A of
the Securities Exchange Act of 1934; and (b) with respect to the shareholder
giving the notice, the name, address and class and number of shares of the
Company that are beneficially owned by such shareholder. The presiding officer
of the meeting may refuse to acknowledge the nomination of any person not made
in compliance with the foregoing procedure.
The cost of soliciting proxies will be borne by the Company. The Company
will, in accordance with applicable regulations, reimburse brokerage firms and
other persons representing beneficial owners of shares for their expenses in
forwarding solicitation material to such beneficial owners. Proxies may also be
solicited by certain of the Company's directors, officers and regular employees,
without additional compensation, personally or by telephone or telegram.
SHAREHOLDER PROPOSALS
Proposals of shareholders intended to be presented at next year's Annual
Meeting of Shareholders of the Company must be received at the principal
executive offices of the Company no later than December 9, 1997, in order to be
considered for possible inclusion in the proxy statement and form of proxy
relating to that meeting.
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PROPOSAL 1
ELECTION OF DIRECTORS
NOMINEES FOR DIRECTOR
A Board of five directors is to be elected at the meeting. Unless
otherwise instructed, the proxy holders will vote the proxies received by them
for the Company's five nominees named below, all of whom are currently directors
of the Company. In the event that any Company nominee is unable or declines to
serve as a director at the time of the meeting, the proxies will be voted for
any nominee who shall be designated by the current Board of Directors to fill
the vacancy. In the event that additional persons are nominated for election as
directors, the proxy holders intend to vote all proxies received by them in such
a manner, in accordance with cumulative voting, as will ensure the election of
as many of the nominees listed below as possible. In such event, the specific
nominees for whom such votes will be cumulated will be determined by the proxy
holders. It is not expected that any nominee will be unable or will decline to
serve as a director.
The following table sets forth certain information as of the Record Date
with respect to each director:
Name Director Since Age
- ---- -------------- ---
Shou-Chen Yih.............. 1976 62
Charles S. Byrne........... 1994 52
Robert Boschert............ 1990 60
Edward W. Moose............ 1988 67
Edward Y. Tang............. 1990 57
Mr. Yih, who was elected Chairman of the Board of Directors of the
Company in October 1990, has been self-employed as a real estate investor for
more than the last five years.
Mr. Byrne has served as Chief Financial Officer and Secretary of the
Company since October 1990. He was elected President and Chief Executive
Officer and a Director of the Company effective September 1, 1994. Mr. Byrne
served as Director of Finance for the Company between January 1988 and
October 1990. Between July 1987 and January 1988, he was acting Controller
of Topaz Semiconductor, Inc., a wholly-owned subsidiary of the Company during
that period. Prior to that, Mr. Byrne had 20 years experience as a chief
financial officer, division controller and cost accountant in the aerospace,
electronics and scientific instrument industries.
Mr. Boschert, who was the founder of Boschert, Inc., a developer and
manufacturer of low-cost volume usage switch mode power supplies, retired from
the Board of Directors of that company in 1984 and has traveled extensively
since then. From June 1986 until June 1988, Mr. Boschert served as an
independent consultant to Unison Technology, a manufacturer of uninterrupted
power supplies.
Mr. Moose has been President of E. M. Moose, Inc., a restaurant operating
firm, since May 1992. From April 1991 through April 1992, Mr. Moose served as a
private consultant in the restaurant industry. From September 1973 through
March 1991, Mr. Moose served as President and Chief Executive Officer of
Washington Square Park Corporation, a restaurant operating firm.
Mr. Tang is a founder of Answer Software Company, a developer of database
products and applications for computers that was founded in 1982, and has served
as President, Chief Executive Officer and a director of such company since its
formation.
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All directors will hold office until the next annual meeting of
shareholders of the Company (or until the effectiveness of their resignation or
removal from the Board of Directors) and until their successors have been
elected and qualified. There are no family relationships among the directors
and officers of the Company.
VOTE REQUIRED
The five nominees receiving the highest number of affirmative votes of the
shares entitled to be voted for them shall be elected as directors. Votes
withheld from any director are counted for purposes of determining the presence
or absence of a quorum, but have no other legal effect under California law.
RECOMMENDATION
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR" THE
PROPOSED SLATE OF DIRECTORS.
SECURITY OWNERSHIP
The following table sets forth certain information, as of the Record Date,
with respect to ownership of the Company's Common Stock by each director, by all
current directors and officers of the Company as a group, and by each person
known to the Company to be the beneficial owner of more than five percent (5%)
of the Company's outstanding Common Stock:
Shares of Common Stock
Beneficially Owned (1)
----------------------
Name and Address of Beneficial Owner Number of Shares Percent of Total
- ------------------------------------ ---------------- ----------------
Allen & Company Incorporated ("ACI")
and affiliates . . . . . . . . . . . . . 796,302(2) 27.1%
711 Fifth Avenue
New York, New York 10022
Norman J. Mercer. . . . . . . . . . . . . 260,000(3) 8.8%
PO Box 959
East Hampton, New York 11937
Shou-Chen Yih . . . . . . . . . . . . . . 221,400(4) 7.5%
930 Cumberland Court
Foster City, California 94404
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Charles S. Byrne. . . . . . . . . . . . . 65,000(5) 2.2%
Robert Boschert . . . . . . . . . . . . . 20,000(6) *
Edward W. Moose . . . . . . . . . . . . . 15,500 *
Edward Y. Tang. . . . . . . . . . . . . . 15,000(7) *
All current officers and Directors 393,900(4)(5) 12.9%
as a group (6 persons) (6)(7)
(8)
- -------------------------
* Less than one percent
(1) The persons named in the table have sole voting and investment power with
respect to all shares of Common Stock shown as beneficially owned by them
(subject to community property law, where applicable), except as otherwise
noted in the footnotes to this table.
(2) Represents (a) the number of shares reported in Amendment No. 5 to Schedule
13D dated June 16, 1989 filed by ACI and its affiliates and (b) 10,000
shares acquired by Paul A. Gould, an affiliate of ACI, subsequent to the
filing of Amendment No. 5, the acquisition of which was orally confirmed by
Paul A. Gould on March 17, 1992, but which shares have not been included in
a subsequent amendment to Schedule 13D. Includes shares beneficially owned
by the following persons, each of whom has sole voting and investment power
with respect to the shares beneficially owned by such person: (i) ACI,
which holds 589,365 shares (20.0%) (all of such shares are indirectly owned
by Allen Holding Inc. ("Holding")); (ii) Paul A. Gould, who is a Managing
Director and an officer of ACI and Holding and who holds 189,455 shares
(6.4%); (iii) Thalia V. Crooks, who is a director and an officer of ACI and
Holding; (iv) John M. Simon, who is a Managing Director and officer of ACI
and Holding; (v) Denise Calvo, who is a director and an officer of ACI and
Holding; (vi) Susan Kathleen Wilson; and (vii) the estate of a deceased
former officer of ACI and Holding.
(3) As reported in Amendment No. 2 to Schedule 13D dated April 8, 1992 filed by
Norman J. Mercer.
(4) As reported in Amendment No. 8 to Schedule 13G dated January 20, 1994 filed
by Shou-Chen Yih. Includes 15,000 shares issuable upon exercise of options
held by Mr. Yih, which options are exercisable within 60 days of the Record
Date.
(5) Includes 50,000 shares issuable upon exercise of options held by Mr. Byrne,
all of which are exercisable within 60 days of the Record Date.
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<PAGE>
(6) Includes 15,000 shares issuable upon exercise of options held by Mr.
Boschert, which options are exercisable within 60 days of the Record Date.
(7) Represents shares issuable upon exercise of options held by Mr. Tang, which
options are exercisable within 60 days of the Record Date.
(8) Includes 25,000 shares issuable upon exercise of options held by one non-
director executive officer of the Company, all of which are exercisable
within 60 days of the Record Date.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16 (a) of the Securities Exchange Act of 1934 requires the
Company's officers and directors, and persons who own more than 10% of the
Company's Common Stock, to file initial reports of ownership of the Company's
securities on Form 3 and changes in ownership on Form 4 or 5 with the
Securities and Exchange Commission (the "SEC"). Such officers, directors and
10% shareholders are also required by SEC rules to furnish the Company with
copies of all Section 16 (a) forms that they file. Based solely on its review
of the copies of such forms received by it, or written representations from
certain reporting persons, the Company believes that during the last fiscal
year, all Section 16(a) filing requirements applicable to its officers,
directors and 10% shareholders were complied with, except that Director
Edward Moose filed one Form 5 late reporting the exercise of an option.
BOARD MEETINGS AND COMMITTEES
The Board of Directors of the Company held a total of four meetings during
the fiscal year ended December 28, 1996 (the "Last Fiscal Year"). The Board of
Directors has an Audit Committee and a Compensation Committee. There is no
nominating committee or committee performing the functions of a nominating
committee.
The Audit Committee recommends engagement of the Company's independent
public accountants, reviews the scope of the audit, considers comments made by
the independent public accountants with respect to accounting procedures and
internal controls and the consideration given thereto by the Company, reviews
internal accounting procedures and controls with the Company's financial and
accounting staff and reviews non-audit services provided by the Company's
independent public accountants. This Committee, currently consisting of Messrs.
Yih and Tang, held one meeting during the Last Fiscal Year.
The Compensation Committee reviews and approves the Company's executive
compensation and administers the Company's 1981 Incentive Stock Option Plan and
1991 Stock Option Plan with respect to the Company's officers and directors.
This Committee, currently consisting of Messrs. Boschert and Moose, held two
meetings during the Last Fiscal Year.
During the Last Fiscal Year, each director attended at least 75% of the
aggregate of all meetings of the Board of Directors and the committees, if any,
upon which such director served.
EXECUTIVE OFFICERS OF THE COMPANY
The executive officers of the Company are as follows:
Name Position Age
- ---- -------- ---
Charles S. Byrne President, Chief Executive Officer, 52
Chief Financial Officer and Secretary
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Jon B. Presnell Vice-President and General Manager, 46
Custom Products
Mr. Presnell was promoted to the position of Vice-President and General
Manager of Custom Products in October 1993. He has been an employee of the
Company since 1980. During that time he has served as General Manager of the
Carson City facility from May 1987 through December 1988 and as Director of
Sales and Marketing for the Company from January 1989 until October 1993. Prior
to joining Hytek, Mr. Presnell was employed as an Electrical Engineer for
Texas Instruments, Inc.
EXECUTIVE COMPENSATION
The following tables set forth certain information for the Last Fiscal Year
as to the only executive officer of the Company whose compensation is reportable
under current requirements of the S E C ( the "Named Executive Officer"):
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Long-Term Compensation
Compensation Awards
------------ ------
Name and Securities Underlying
Principal Position Year Salary ($) Bonus ($) Options (#)
- -------------------------------------- ---------------------- ---------------------
<S> <C> <C> <C>
Charles S. Byrne
President, Chief Executive
Officer, Chief Financial
Officer and Secretary 1996 $82,161 $15,000 25,000 (1)
1995 $69,719 0 50,000 (2)
1994 $66,555 0 0
</TABLE>
(1) In May 1996, the Compensation Committe awarded Charles S. Byrne an
option to purchase 25,000 shares of Common Stock at an exercise price of
$3.07 per share. This option becomes exercisable over a four-year period and
expires in May 2001.
(2) In February 1995, the Compensation Committee amended the outstanding
options held by Charles S. Byrne and Jonathan B. Presnell, executive officers of
the Company, each to purchase 50,000 shares of Common Stock at an exercise price
of $0.375 per share, in order to extend the term of such five-year options to
ten years. Accordingly, such options, as amended, shall now expire in October
2000 instead of October 1995. Neither of such options were in-the-money on the
date of the extension.
The following table sets forth information regarding options granted to the
Named Executive Officer during the Last Fiscal Year:
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OPTION/SAR GRANTS IN LAST FISCAL YEAR
(INDIVIDUAL GRANTS)
<TABLE>
<CAPTION>
Number of Percent of
securities total options/
underlying SARs granted Exercise or
options/SARs to employees base price Expiration
Name granted (#) in fiscal year ($/share) date
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Charles S. Byrne 25,000 (1) 27.8% $3.07 5/17/01
</TABLE>
(1) See footnote (1) to the Summary Compensation Table.
The following table sets forth the value of all unexercised stock options held
by the Named Executive Officer at the end of the Last Fiscal Year:
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION VALUES
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options
Options at FY-End(#) at FY-End ($)
-------------------- --------------------
Shares Acquired Value Exercisable/ Exercisable/
Name on Exercise (#) Realized ($) Unexercisable Unexercisable
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Charles S. Byrne 25,000 $69,500 50,000 / 25,000 (1) $118,750 / 0
</TABLE>
(1) Includes (i) an Employee Incentive Stock Option to purchase 50,000 shares of
Common Stock at the exercise price of $0.375 per share (fair market value at the
date of grant) that is fully exercisable and that expires October 24, 2000, and
(ii) an Employee Incentive Stock Option to purchase 25,000 shares of Common
Stock at the exercise price of $3.07 per share (fair market value at the date of
grant) that is not exercisable at fiscal year end. The average of the last
available bid and ask prices on December 28, 1996 was $2.75 per share.
DIRECTORS' COMPENSATION
Each director of the Company who is not an employee (currently four
persons) receives a fee of $1,000 per calendar quarter for service on the
Board of Directors and attendance at all board meetings. In addition, the
non-employee directors participate in the 1991 Directors' Stock Option Plan
and received option grants thereunder in February 1991.
DIRECTORS' OPTION PLAN
The Company's 1991 Directors' Stock Option Plan (the "Directors' Plan")
was adopted by the Board of Directors in February 1991 and approved by the
shareholders in May 1991. A total of 100,000 shares of Common Stock are
reserved for issuance thereunder.
Options granted under the Directors' Plan are nonstatutory options. Only
directors of the Company who are not employees of the Company ("Outside
Directors") are eligible to be granted options under the Directors' Plan.
The exercise price of options granted under the Directors' Plan is 100% of
the fair market value of the Common Stock on the date of grant. Options
granted under the Directors' Plan have a term of ten years from the date of
grant.
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Each Outside Director who was serving as such on the date of adoption by
the Board of Directors of the Directors' Plan received an automatic grant on
such date of an option to purchase 15,000 shares of Common Stock. Each
person who becomes an Outside Director subsequent to the date of adoption of
the Directors' Plan will also receive an automatic grant of an option to
purchase 15,000 shares of Common Stock on the date of his or her appointment
or election to the Board. Options granted under the Directors' Plan become
exercisable cumulatively with respect to 5,000 shares on the first, second
and third anniversaries of the date of grant.
An option to purchase 15,000 shares at an exercise price of $0.1875 per
share was automatically granted under the Directors' Plan to each of
directors Yih, Boschert, Moose and Tang during fiscal 1991. Such options
expire in February 2001. At December 28, 1996, options to purchase 15,000
shares had been exercised, options to purchase 45,000 shares were outstanding
and 40,000 shares remained available for future grant under the Directors'
Plan.
PROPOSAL 2
APPROVAL OF AMENDMENT TO
1991 STOCK OPTION PLAN
The Company's Board of Directors and shareholders have previously
adopted and approved the Company's 1991 Stock Option Plan (the "Plan") and
have reserved an aggregate of 276,175 shares of the Common Stock of the
Company for issuance thereunder. Subject to shareholder approval at the
Annual Meeting, the Board of Directors has approved an amendment to the Plan
(the "Amendment") in order to increase the number of shares reserved for
issuance thereunder by 100,000 shares to a total of 376,175 shares. The
Board of Directors believes that the increase in the number of shares
reserved for issuance under the Plan is necessary due to the fact that only
26,175 shares remain available for future grant under the Plan as of December
28, 1996 and the Board contemplates granting additional options in the
future in order to attract and retain employees and consultants.
At the Annual Meeting, the shareholders are being asked to ratify and
approve the Amendment to the Plan.
The closing average of bid and ask prices of the Company's Common Stock as
quoted in the non-Nasdaq over-the-counter market on March 17, 1997 was $1.77 per
share.
A description of the principal features of the Plan, as amended, is set
forth below.
ADMINISTRATION
The Plan provides that it shall be administered by the Company's Board of
Directors or by a committee or committees of the Board. Administration of the
Plan with respect to officers and directors of the Company must be done in a
manner permitted by the requirements of Rule 16b-3 promulgated under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), or any
successor rule thereto ("Rule 16b-3"). The Board or its committee is
responsible for interpreting all provisions of the Plan and of the option
agreements issued thereunder. Any such determination is final and binding on
the optionee. The Plan is currently being administered by the Compensation
Committee of the Board.
ELIGIBILITY
The Plan provides that incentive stock options, as defined under Section
422 of the Internal Revenue Code of 1986, as amended (the "Code"), may be
granted to employees only and that nonstatutory options may be granted to
employees and consultants. The Board of Directors or its
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committee selects the participants and determines the number of shares to be
subject to each option. As of March 17, 1997, approximately 70 employees and
no consultants were eligible to participate in the Plan. The Plan, as
amended, provides that no employee of the Company may be granted in any
fiscal year options to purchase more than 50,000 shares of Common Stock;
provided, however, that the Company may grant an employee an option to
purchase up to an additional 50,000 shares in connection with his or her
initial employment. Such provision is intended to preserve the Company's
ability to deduct from its taxable income compensation to executive officers
under the Plan.
TERMS OF OPTIONS
The terms and conditions of options granted under the Plan, including the
exercise price, exercisability and term thereof, are determined bu the Board or
its committee. However, the exercise price may not be less than 100% of the
fair market value of the Common Stock on the date the option is granted (110% of
the fair market value on the date of grant in the case of any incentive stock
option granted to a holder of 10% or more of the Company's outstanding
securities).
If the optionee's employment or service as a consultant terminates due to
death, disability or any other reason, options under the Plan may be exercised
within six months after such termination (or such shorter period as is set forth
in the option agreement).
All options under the Plan are non-transferable and expire no later than
ten years from the date of grant.
PAYMENT UPON EXERCISE OF OPTIONS
The Plan allows for payment by an optionee upon exercise of an option by
cash, check, promissory note, other shares of Common Stock of the Company with
aggregate fair market value equal to the aggregate exercise price, delivery of a
properly executed exercise notice together with irrevocable instructions to a
broker to promptly deliver to the Company the amount of sale or loan proceeds
required to pay the exercise price (a "cashless exercise"), any combination
thereof or any other legal form of consideration, all as determined by the Board
or its committee. While the Plan authorizes all of these forms of
consideration, the option agreement may limit the acceptable forms of payment,
as determined by the Committee in its discretion.
CAPITALIZATION CHANGES; DISSOLUTION; MERGER; CHANGE IN CONTROL
In the event any change, such as a stock split or dividend, is made in the
Company's capitalization that results in an increase or decrease in the number
of shares of the Company's Common Stock outstanding without receipt of
consideration, appropriate adjustment will be made in the exercise price of, and
the number of shares subject to, all outstanding options, and appropriate
adjustment will be made in the total number of shares reserved for issuance
under the Plan.
The Plan provides that, in the event of the proposed dissolution or
liquidation of the Company, all outstanding options will terminate immediately
prior to the consummation of such proposed action.
In the event of a merger of the Company with or into another corporation
or the sale of all or substantially all of the assets of the Company, all
outstanding options shall be assumed or equivalent options shall be
substituted by such successor corporation or a parent or subsidiary thereof.
However the Committee may, in lieu of such assumption or substitution,
accelerate the exercisability of all outstanding options in full and permit
their exercise for a specified period of time, after which they shall
terminate.
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In the event of a change in control of the Company (as defined) each
outstanding option will become vested and exercisable in full. For purposes of
the Plan, a "change in control" is deemed to have occurred upon (i) acquisition
by a person or group of 50% or more of the voting power of the Company's
securities, (ii) approval by the shareholders of a merger or consolidation of
the Company with another corporation, after which the Company's shareholders
will own less than 50% of the voting power of the surviving entity, (iii)
approval by the shareholders of the sale of all or substantially all of the
assets of the Company, or (iv) a change in the composition of the Board such
that fewer than a majority of the directors in office are incumbent directors.
STOCK WITHHOLDING
An optionee may elect, at the discretion of the Board or its committee, to
have a portion of his or her shares withheld by the Company to satisfy income
tax withholding requirements under the Code should the exercise of such option
create an income tax withholding requirement.
AMENDMENT AND TERMINATION
The Board of Directors or its committee may amend or terminate the Plan at
any time without shareholder approval; provided, however, that shareholder
approval of amendments shall be obtained to the extent necessary and desirable
to comply with any applicable law, including Section 422 of the Code and Rule
16b-3. No amendment to the Plan may unilaterally alter or impair any option
previously granted without the consent of the optionee. The Plan will terminate
by its terms in May 2001.
FEDERAL TAX INFORMATION
An optionee who is granted an incentive stock option as defined in Section
422 of the Code will not recognize taxable income either at the time the option
is granted or upon its exercise, although the exercise may subject the optionee
to the alternative minimum tax. Upon sale or exchange of the shares at least
two years after the grant of the option and one year after exercising the
option, any gain or loss will be treated as long-term capital gain or loss. If
these holding periods are not satisfied, the optionee will recognize ordinary
income at the time of the sale or exchange equal to the difference between the
exercise price and the lower of (i) the fair market value of the shares at the
date of the option exercise or (ii) the sale price of the shares.
A different rule for measuring ordinary income upon such premature
disposition may apply if the optionee is also an officer, director or 10%
shareholder of the Company. The Company will be entitled to a deduction in the
same amount as the ordinary income recognized by the optionee. Any gain or loss
recognized on such a premature disposition of shares in excess of the amount
treated as ordinary income will be characterized as long-term or short-term
capital gain or loss, depending on the holding period.
All options that do not qualify as incentive stock options are referred to
as nonstautory options. An optionee will not recognize any taxable income at
the time he or she is granted a nonstatutory option. However, upon its
exercise, the optionee will recognize taxable income generally measured as the
excess of the then fair market value of the shares purchased over the purchase
price. Any taxable income recognized in connection with an option exercise by
an optionee who is also an employee of the Company will be subject to tax
withholding by the Company. Upon resale of such shares by the optionee, any
difference between the sales price and the optionee's purchase price, to the
extent not recognized as taxable income as described above, will be treated as
long-term or short-term capital gain or loss, depending on the holding period.
Th Company will be entitled to a tax deduction in the same amount as the
ordinary income recognized by the optionee with respect to shares acquired upon
exercise of a nonstatutory option.
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The foregoing is only a summary of the effect of federal income taxation
upon the optionee and the Company with respect to the grant and exercise of
options under the Plan, does not purport to be complete, and does not discuss
the tax consequences of the optionee's death or the income tax laws of any
municipality, state or foreign country in which an optionee may reside.
PARTICIPATION IN THE PLAN
The grant of options under the Plan to employees, including the Named
Executive Officer, is subject to the discretion of the Board or its committee.
As of the date of this proxy statement, there has been no determination by the
Board or its committee with respect to future awards under the Plan.
Accordingly, future awards are not determinable. Non-employee directors are not
eligible to participate in the Plan.
The following table sets forth information with respect to the grant of
options to the Named Executive Officer, to all current executive officers as a
group and to all other employees as a group during the last fiscal year:
AMENDED PLAN BENEFITS
1991 STOCK OPTION PLAN
<TABLE>
<CAPTION>
Name of Individual Number of Securities Weighted Average Exercise
or Identity of Group Underlying Options Price Per Share
and Position Granted (# of shares) ($ per share)
- -------------------- --------------------- --------------------------
<S> <C> <C>
Charles S. Byrne
President, Chief Executive Officer,
Chief Financial Officer and
Secretary 25,000 $3.07
All current executive officers
as a group 40,000 $3.07
All other employees
as a group 50,000 $2.38
</TABLE>
VOTE REQUIRED
The affirmative vote of a majority of the Votes Cast will be required to
approve the Amendment to the Plan.
RECOMMENDATION
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR" THE
AMENDMENT TO THE PLAN.
PROPOSAL 3
RATIFICATION OF APPOINTMENT OF
INDEPENDENT AUDITORS
The Board of Directors has appointed Ernst & Young, LLP as independent
auditors to examine the financial statements of the Company for the year
ending January 3, 1998. If the shareholders, by the affirmative vote of a
majority of the Votes Cast at the Annual Meeting, do not
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<PAGE>
vote to retain Ernst & Young, the selection of independent auditors will be
reconsidered by the directors.
Ernst & Young (or its predecessor, Arthur Young & Company) has examined
the financial statements of the Company for 1979 and subsequent years. It is
anticipated that a representative of Ernst & Young will be present at the
Annual Meeting with the opportunity to make a statement and to respond to
appropriate questions.
RECOMMENDATION
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR" THE
RATIFICATION OF ERNST & YOUNG.
OTHER MATTERS
The Company knows of no other matters to be submitted to the meeting. If
any other matters properly come before the meeting, it is the intention of the
persons named in the enclosed proxy card to vote the shares they represent as
the Board of Directors may recommend.
Under the Company's bylaws, in order for a matter to be deemed properly
presented, notice must be delivered to, or mailed and received by, the Company
not less than 60 days nor more than 90 days prior to the Annual Meeting. If,
however, less than 50 days notice or prior public disclosure of the date of the
Annual Meeting has been given, notice by the shareholder must be received by the
Company not later than the close of business on the tenth day following the date
on which notice of the Annual Meeting was mailed or publicly disclosed. The
shareholder's notice must set forth, as to each proposed matter, a brief
description of the matter and reason for conducting such business at the
meeting, the name and address of such shareholder proposing such business as
they appear on the Company's books, the number of shares beneficially owned by
the shareholder, any material interest of the shareholder in such proposal, and
any other information that would have been required pursuant to Regulation 14A
promulgated under the Exchange Act if such shareholder had requested inclusion
of such proposal in the Company's proxy materials.
ANNUAL REPORT ON FORM 10-KSB
Hytek is a "small business issuer" within the meaning of Item 10 (a) (1)
of Regulation S-B. Accordingly, the Company is complying with the executive
compensation disclosure requirements applicable to small business issuers
(adopted by the SEC on October 15, 1992) in this year's proxy statement.
A copy of the Company's Annual Report on Form 10-KSB for the fiscal year
ended December 28, 1996 (the "1996 Form 10-KSB") and the President's Letter to
the Shareholders dated April 8, 1997, which together comprise the Company's 1996
Annual Report to Shareholders, is being delivered herewith. COPIES OF THE 1996
FORM 10-KSB (WITHOUT EXHIBITS) MAY BE OBTAINED AT NO CHARGE UPON REQUEST TO:
CHARLES S. BYRNE, SECRETARY, HYTEK MICROSYSTEMS, INC., 400 HOT SPRINGS ROAD,
CARSON CITY, NEVADA 89706.
April 8, 1997 By Order of the Board of Directors
Carson City, Nevada /s/ Charles S. Byrne
CHARLES S. BYRNE, Secretary
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THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
HYTEK MICROSYSTEMS, INC.
Proxy for Annual Meeting of Shareholders
The undersigned shareholder of Hytek Microsystems, Inc., a California
corporation, hereby acknowledges receipt of the 1996 Annual Report to
Shareholders and the Notice of Annual Meeting of Shareholders and Proxy
Statement for the Annual Meeting of Shareholders of Hytek Microsystems, Inc.
to be held on May 16, 1997, at 10:00 a.m., local time, at the Airport Hilton
Hotel, located at the San Francisco International Airport, San Francisco,
California, and hereby appoints Shou-Chen Yih and Charles S. Byrne, and
either of them, proxies and attorneys-in-fact, with full power to each of
substitution, on behalf and in the name of the undersigned, to represent the
undersigned at such meeting, and at any adjournment or adjournments thereof,
and to vote all the shares of Common Stock which the undersigned would be
entitled to vote if then and there personally present on the matters set
forth below:
1. ELECTION OF DIRECTORS
[ ] FOR all nominees listed [ ] WITHHOLD AUTHORITY
below (except as marked to vote for all nominees
to the contrary below). listed below.
IF YOU WISH TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, STRIKE
A LINE THROUGH THAT NOMINEE'S NAME IN THE LIST BELOW:
Shou-Chen Yih; Charles S. Byrne; Robert Boschert;
Edward W. Moose; Edward Y. Tang
2. APPROVAL OF AMENDMENT TO THE COMPANY'S 1991 STOCK OPTION PLAN TO
INCREASE THE SHARES RESERVED THEREUNDER BY 100,000
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. PROPOSAL TO RATIFY THE APPOINTMENT OF ERNST & YOUNG.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(CONTINUED AND TO BE SIGNED ON OTHER SIDE)
(CONTINUED FROM OTHER SIDE)
Either of such proxies and attorneys-in-fact, or their substitutes, as
shall be present and shall act at said meeting or any adjournment or
adjournments thereof shall have and may exercise all the powers of said
proxies and attorneys-in-fact hereunder.
This proxy when properly executed will be voted in the manner directed
herein by the undersigned shareholder(s).
IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR ALL NOMINEES FOR
DIRECTOR AND FOR PROPOSALS 2 AND 3 AND IN THE DISCRETION OF THE PROXIES AND
ATTORNEYS-IN-FACT UPON SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE
MEETING, AND ANY ADJOURNMENT OR ADJOURNMENTS THEREOF.
Dated:
-----------------------
-----------------------------
(Signature of Shareholder)
-----------------------------
(Signature of Shareholder)
(This proxy should be marked,
dated, signed by the
shareholder(s) exactly as the
names(s) appear on the stock
certificate(s), and returned
promptly in the enclosed
envelope. Persons signing in a
fiduciary capacity should so
indicate.)
