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:
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[x]
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Preliminary
Proxy Statement
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[
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Confidential,
for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
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[
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Definitive
Proxy Statement
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[
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Definitive
Additional Materials
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[
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Soliciting
Material Pursuant to
Rule 14a-12
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Alliance Fiber Optic
Products, Inc
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(Name of
Registrant as Specified In Its Charter)
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(Name of
Person(s) Filing Proxy Statement, if other than the
Registrant)
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Payment
of Filing Fee (Check the appropriate box):
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[
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Fee
computed on table below per Exchange Act Rules 14a-6(i)(1) and
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(1)
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Title
of each class of securities to which transaction
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(2)
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Aggregate
number of securities to which transaction
applies:
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(3)
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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
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(4)
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Proposed
maximum aggregate value of
transaction:
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Fee
paid previously with preliminary
materials:
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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
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(1)
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Amount
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[LOGO]
ALLIANCE
FIBER OPTIC PRODUCTS, INC.
275
GIBRALTAR DRIVE
SUNNYVALE,
CALIFORNIA 94089
(408)
736-6900
July 16,
2010
Dear
Stockholder:
You are
cordially invited to attend the Special Meeting of Stockholders of Alliance
Fiber Optic Products, Inc. that will be held on Friday, August 20, 2010, at 2:00
p.m., Pacific Daylight Time, at the Company's principal executive office at 275
Gibraltar Drive, Sunnyvale, California 94089.
The
formal notice of the Special Meeting and the Proxy Statement has been made a
part of this invitation.
After
reading the Proxy Statement, please mark, date, sign and return, at your
earliest convenience, the enclosed proxy in the enclosed prepaid envelope, to
ensure that your shares will be represented. YOUR SHARES CANNOT BE VOTED UNLESS
YOU SIGN, DATE AND RETURN THE ENCLOSED PROXY OR ATTEND THE SPECIAL MEETING IN
PERSON. Your vote is important, so please return your proxy
promptly.
We look
forward to seeing you at the meeting.
Sincerely
yours,
/s/Peter
C. Chang
Peter C.
Chang
Chairman,
President and
Chief
Executive Officer
ALLIANCE
FIBER OPTIC PRODUCTS, INC.
__________________________
NOTICE
OF SPECIAL MEETING OF STOCKHOLDERS
To
Be Held August 20, 2010
_________________________
To the
Stockholders of Alliance Fiber Optic Products, Inc.:
The
Special Meeting of Stockholders of Alliance Fiber Optic Products, Inc., a
Delaware corporation (the "Company"), will be held at the Company's principal
executive office at 275 Gibraltar Drive, Sunnyvale, California 94089, on Friday,
August 20, 2010, at 2:00 p.m., Pacific Daylight Time, for the following
purposes:
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1.
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To
consider and vote upon a proposal to amend the Company's Amended and
Restated Certificate of Incorporation to effect, alternatively, as
determined by the Board of Directors in its discretion, a 1-for-5 reverse
split of the issued and outstanding shares of the Company's Common
Stock;
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2.
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To
consider and vote upon a proposal to amend the Company's Amended and
Restated Certificate of Incorporation to effect, alternatively, as
determined by the Board of Directors in its discretion, a 1-for-8 reverse
split of the issued and outstanding shares of the Company's Common
Stock;
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3.
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To
consider and vote upon a proposal to amend the Company's Amended and
Restated Certificate of Incorporation to effect, alternatively, as
determined by the Board of Directors in its discretion, a 1-for-10 reverse
split of the issued and outstanding shares of the Company's Common Stock;
and
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4.
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To
transact such other business as may properly come before the Special
Meeting and any adjournment or postponement of the Special
Meeting.
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Stockholders
of record as of the close of business on July 6, 2010 are entitled to
notice of and to vote at the Special Meeting and any adjournment or postponement
thereof. A complete list of stockholders entitled to vote at the Special Meeting
will be available at the Secretary's office, 275 Gibraltar Drive, Sunnyvale,
California 94089, for ten days before the meeting.
Important
Notice Regarding the Availability of Proxy Materials for the Special Meeting of
Stockholders to be held on August 20, 2010.
The
Proxy Statement is available at http://www.afop.com/investors
It
is important that your shares are represented at the meeting. Even if you plan
to attend the meeting, we hope that you will promptly vote.
By Order
of the Board of Directors
/s/Peter
C. Chang
Peter C.
Chang
Secretary
July 16,
2010
ALLIANCE
FIBER OPTIC PRODUCTS, INC.
275
Gibraltar Drive
Sunnyvale,
California 94089
(408)
736-6900
________________
PROXY
STATEMENT
________________
This
Proxy Statement is furnished in connection with the solicitation by the Board of
Directors of Alliance Fiber Optic Products, Inc., a Delaware corporation (the
"Company"), of proxies in the accompanying form to be used at the Special
Meeting of Stockholders of the Company to be held at the Company's principal
executive office at 275 Gibraltar Drive, Sunnyvale, California, 94089, on
Friday, August 20, 2010, at 2:00 p.m., Pacific Daylight Time, and any
postponement or adjournment thereof (the "Special Meeting").
Revocation
of Proxies
The
shares represented by the proxies received in response to this solicitation and
not properly revoked will be voted at the Special Meeting in accordance with the
instructions therein. A stockholder who has given a proxy may revoke it at any
time before it is exercised by filing with the Secretary of the Company a
written revocation, by submitting a duly executed proxy bearing a later date, or
by voting in person at the Special Meeting. If your shares are held by a broker,
bank or other stockholder of record, in nominee name or otherwise, exercising
fiduciary powers (typically referred to as being held in "street name"), and you
wish to vote at the Special Meeting, you must obtain and bring to the Special
Meeting a proxy card issued in your name from the broker, bank or other
nominee. On the matters coming before the Special Meeting for which a
choice has been specified by a stockholder, the shares will be voted
accordingly. If no choice is specified, the shares will be voted
"FOR"
each of the proposals to
effect a reverse split of the Company's Common Stock.
Who
Can Vote
Stockholders
of record at the close of business on July 6, 2010 (the "Record Date"), are
entitled to vote at the Special Meeting. As of the Record Date, there were
42,805,188 shares of common stock, $0.001 par value (the "Common Stock"),
outstanding. The presence in person or by proxy of the holders of a majority of
the outstanding Common Stock constitutes a quorum for the transaction of
business at the Special Meeting. Each holder of Common Stock is entitled to one
vote for each share held as of the Record Date.
Required
Vote
The
proposals submitted for stockholder approval at the Special Meeting will be
decided by the affirmative vote of the majority of the shares present in person
or represented by proxy at the Special Meeting and entitled to vote on such
proposals. Abstentions with respect to any proposal are treated as shares
present or represented and entitled to vote on that proposal and thus have the
same effect as negative votes. If a broker which is the record holder of shares
indicates on a proxy that it does not have discretionary authority to vote on a
particular proposal as to such shares, or if shares are not voted in other
circumstances in which proxy authority is defective or has been withheld with
respect to a particular proposal, these non-voted shares will be counted for
quorum purposes, but are not deemed to be present or represented for purposes of
determining whether stockholder approval of that proposal has been
obtained.
How
to Vote
If you
are a stockholder with shares registered in your name, you may vote by one of
the following methods:
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Vote
via the Internet
.
Go to the web address
www.Proxyvote.com
.
and follow
the instructions for Internet voting shown on the proxy card mailed to
you. If you vote via the Internet, you should be aware that
there
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o
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may
be incidental costs associated with electronic access, such as your usage
charges from your Internet access providers and telephone companies, for
which you will be responsible.
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Vote
by proxy card mailed to you
.
If you do not wish to
vote by the Internet, please complete, sign, date and mail the proxy in
the envelope provided. If you vote via the Internet, please do not mail
your proxy.
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If your
shares are held in street name, you may receive a separate voting instruction
form with this Proxy Statement, or you may need to contact your broker, bank or
other stockholder of record to determine whether you will be able to vote
electronically via the Internet or by telephone.
This
Proxy Statement and the accompanying form of proxy are being mailed to
stockholders on or about July 16, 2010.
IMPORTANT
Please
mark, sign and date the enclosed proxy and return it at your earliest
convenience in the enclosed postage-prepaid return envelope so that, whether you
intend to be present at the Special Meeting or not, your shares can be
voted.
PROPOSALS
1, 2 AND 3
APPROVAL
OF AN AMENDMENT TO THE COMPANY'S AMENDED AND RESTATED CERTIFICATE OF
INCORPORATION TO EFFECT, ALTERNATIVELY, AS DETERMINED BY THE BOARD OF DIRECTORS
IN ITS SOLE DISCRETION, A ONE-FOR-FIVE, ONE-FOR-EIGHT OR ONE-FOR-TEN REVERSE
SPLIT OF THE COMPANY'S OUTSTANDING COMMON STOCK
General
Our
stockholders are being asked to act upon a proposal to approve an amendment to
the Company's Amended and Restated Certificate of Incorporation (the "Restated
Certificate"), to effect a reverse stock split of all of the outstanding shares
of Common Stock of the Company, at a ratio of one-for-five, one-for-eight or
one-for-ten, with the Board of Directors having the discretion and authority to
determine at which ratio to effect the reverse stock split, if at all (each, the
"Reverse Stock Split"). At the 2003 and 2006 Annual Meeting of Stockholders, the
stockholders approved proposals to authorize the Board of Directors in its
discretion to amend the Restated Certificate to effect a reverse stock
split. However, the Board of Directors did not exercise its discretion and
no reverse stock splits were effected. On June 24, 2010, the Board of
Directors approved an amendment to the Restated Certificate, subject to
obtaining new stockholder approval, to effect the Reverse Stock
Split. The Board of Directors has directed that these proposals to
approve an amendment to the Company's Restated Certificate be submitted to the
stockholders for consideration and action.
Except
for adjustments that may result from the treatment of fractional shares as
described below, each stockholder will hold the same percentage of Common Stock
outstanding immediately following the Reverse Stock Split as such stockholder
held immediately prior to the Reverse Stock Split.
The text
of the proposed amendment to the Company's Restated Certificate to effect the
Reverse Stock Split as described in these proposals is set forth in Annex A
attached to this Proxy Statement and is incorporated by reference into this
Proxy Statement.
If the
amendment to the Restated Certificate is approved by the stockholders, the Board
of Directors will have the discretion to implement a Reverse Stock Split based
on one of the three approved ratios on or before the
second anniversary of this Special Meeting, or effect no Reverse
Stock Split at all. If the Board of Directors decides to implement a Reverse
Stock Split, the Company will file a Certificate of Amendment of the Restated
Certificate with the Delaware Secretary of State reflecting the decrease in the
issued and outstanding shares of Common Stock. The amendment will
become effective on the date the Certificate of Amendment is accepted for filing
by the Delaware Secretary of State (the "Effective Date").
2
Reasons
For Reverse Stock Split
The
primary reason for the Reverse Stock Split is to increase the per share market
price of the Company's Common Stock. The Board of Directors believes that the
current low per share market price of the Common Stock, which it believes is due
in part to the overall weakness in the market for telecommunications
industry-related stocks, has had a negative effect on the marketability of the
existing shares, the amount and percentage of transaction costs paid by
individual stockholders and the potential ability of the Company to raise
capital by issuing additional shares of its Common Stock. The Board believes
that one of the reasons for these effects is that many institutional investors
have internal policies preventing the purchase of low-priced stocks. Moreover, a
variety of policies and practices of broker-dealers discourage individual
brokers within those firms from dealing in low-priced stocks. Second, because
the brokers' commissions on low-priced stocks generally represent a higher
percentage of the stock price than commissions on higher priced stocks, the
current share price of the Common Stock can result in stockholders paying
transaction costs (commissions, markups or markdowns) which are a higher
percentage of their total share value than would be the case if the Common Stock
share price were substantially higher.
The Board
believes that the decrease in the number of issued and outstanding shares of
Common Stock as a consequence of the Reverse Stock Split, and the resultant
increase in the price of the Common Stock, could encourage interest in the
Common Stock and possibly promote greater liquidity for the Company's
stockholders, although such liquidity could be adversely affected by the reduced
number of shares outstanding after the Reverse Stock Split. In addition,
although any increase in the market price of the Common Stock resulting from the
Reverse Stock Split may be proportionately less than the decrease in the number
of outstanding shares, the Reverse Stock Split could result in a market price
for the shares that will be high enough to overcome the reluctance, policies and
practices of brokers and investors referred to above and to diminish the adverse
impact of trading commissions on the market for the shares.
There can
be no assurances, however, that the foregoing events will occur, or that the
market price of the Common Stock immediately after the Reverse Stock Split will
be maintained for any period of time. Moreover, there can be no assurance that
the market price of the Common Stock after the proposed Reverse Stock Split will
adjust to reflect the conversion ratio (e.g., if the market price is $2.00
before the Reverse Stock Split and the ratio is one (1) new share for every
ten (10) shares outstanding, there can be no assurance that the market
price immediately after the Reverse Stock Split will be $20.00 (10 x $2.00)), or
that the market price following the Reverse Stock Split will either exceed or
remain in excess of the current market price.
If the
Reverse Stock Split is authorized by the stockholders, the Board of Directors
will have the discretion to implement a Reverse Stock Split based on either a
1-for-5, 1-for-8 or 1-for-10 ratio on or before the second anniversary of the
Special Meeting, or to effect no Reverse Stock Split at all. No
further action on the part of the stockholders will be required to either effect
or abandon the Reverse Stock Split. If no Reverse Stock Split is effected by the
second anniversary of the Special Meeting, the authority of the Board of
Directors to effect the Reverse Stock Split will terminate and stockholder
approval again would be required prior to implementing any reverse stock
split. If the trading price of the Common Stock increases without a
Reverse Stock Split, the Reverse Stock Split may not be necessary.
Effects
of Reverse Stock Split on the Common Stock
If the
proposed Reverse Stock Split is approved at the Special Meeting, at the
Effective Date each outstanding share of Common Stock will immediately and
automatically be changed into a fraction of a share of Common Stock based on the
Reverse Stock Split ratio approved by the stockholders and as finally determined
by the Board of Directors. Thus, in a 1-for-10 Reverse Stock Split
for example, if a stockholder currently owns 100,000 shares of Common Stock,
following the Reverse Stock Split, the stockholder will own 10,000 shares of
Common Stock - each share of Common Stock will have immediately and
automatically have been changed into one-tenth of a share of Common
Stock. Based on the 42,805,188 shares of Common Stock outstanding as
of the Record Date, the following table reflects the approximate number of
shares of Common Stock that would be outstanding following the Reverse Stock
Split:
3
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Proposed
Reverse
Stock
Split
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Shares
Outstanding
Following
Reverse Stock Split
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1-for-5
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8,561,038
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1-for-8
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5,350,649
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1-for-10
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4,280,519
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No
fractional shares of the Common Stock will be issued in connection with the
proposed Reverse Stock Split. Holders of Common Stock who would otherwise
receive a fractional share of Common Stock pursuant to the Reverse Stock Split
will receive cash in lieu of the fractional share as explained more fully
below.
Because
the Reverse Stock Split will apply to all issued and outstanding shares of the
Common Stock and outstanding rights to purchase Common Stock, the proposed
Reverse Stock Split will not alter the relative rights and preferences of
existing stockholders. The amendment to the Restated Certificate
will, however, effectively increase the number of shares of the Common Stock
available for future issuance by the Board of Directors. The Board
has no current plans to issue additional shares of Common Stock.
If the
Reverse Stock Split is approved at the Special Meeting and the Board of
Directors determines to effect the Reverse Stock Split, some stockholders may
consequently own less than one hundred shares of Common Stock. A purchase or
sale of less than one hundred shares, known as an "odd lot" transaction, may
result in incrementally higher trading costs through certain brokers,
particularly "full service" brokers. Therefore, those stockholders who own less
than one hundred shares following the Reverse Stock Split may be required to pay
higher transaction costs should they then determine to sell their shares of
Common Stock.
Stockholders
have no right under Delaware law or the Company's Restated Certificate or
Amended and Restated Bylaws, or Bylaws, to dissent from the Reverse Stock Split
or to dissent from the payment of cash in lieu of issuing fractional
shares.
Effects
on Reverse Stock Split on Options
The number of shares of Common Stock
subject to outstanding options issued by the Company, and the number of shares
reserved for future issuances under the Company's stock incentive plans and
employee stock purchase plan, will be reduced by the same ratio as the reduction
in the outstanding shares of Common Stock resulting from the Reverse Stock
Split. For example, in a 1-for-10 Reverse Stock Split, the number of
shares of underlying stock options, and the number of shares reserved for future
issuance under the Company's stock incentive plans and employee stock purchase
plan, will be reduced by a factor of 10. As of the record date for
the Special Meeting, there were stock options outstanding to purchase an
aggregate of 4,691,283 shares of Common Stock with exercise prices ranging from
$0.40 to $6.38 per share. Under the terms of the stock options,
and assuming, for example, a 1-for-10 Reverse Stock Split, the number of shares
covered by each outstanding option will be reduced to one-tenth the number
currently covered and the exercise price will be increased by ten times the
current exercise price.
Effects
of Reverse Stock Split on Company's Rights Agreement
The number of "Rights" per share of
Common Stock will automatically be adjusted as a result of the Reverse Stock
Split proportionately with the ratio of the Reverse Stock Split. For
example, in a 1-for-10 Reverse Stock Split, each share of Common Stock will have
ten Rights attached to it, and the exercise price will remain the
same.
Effectiveness
of the Reverse Stock Split
The
Reverse Stock Split, if approved by the Company's stockholders and implemented
by the Board of Directors, will become effective upon the filing with the
Delaware Secretary of State a Certificate of Amendment of the Restated
Certificate in substantially the form attached to this Proxy Statement as Annex
A (the "Certificate of Amendment"). It is expected that this filing
will occur shortly after the Special Meeting, assuming that the stockholders
approve the Reverse Stock Split and the Board of Directors decides to implement
it. However, the exact timing of the filing of such Certificate of
Amendment and the ratio of the Reverse Stock Split will be determined by the
Board of Directors based upon its evaluation as to when such action will be most
advantageous to the Company and its stockholders, and the Board of Directors
reserves the right, notwithstanding stockholder approval and without further
action by the stockholders, to elect not to proceed with the Reverse Stock Split
if, at any time prior to filing such Certificate of Amendment, the Board of
Directors, in its sole discretion, determines that it is no longer in the best
interests of the Company and its stockholders.
4
Effect
on Legal Ability to Pay Dividends
Other than pursuant to the Company's
Rights Agreement, the Board of Directors has not declared, nor does it have any
plans to declare in the foreseeable future, any distributions of cash, dividends
or other property, and the Company is not in arrears on any
dividends. Therefore, the Company does not believe that the Reverse
Stock Split will have any effect with respect to future distributions, if any,
to the Company's stockholders.
Payment
for Fractional Shares; Exchange of Stock Certificates
The
Company will not issue fractional shares in connection with the Reverse Stock
Split. Instead the Company will pay each holder of a fractional share an amount
in cash equal to the market value of such fractional share as of the Effective
Date.
The
Company plans to appoint American Stock Transfer and Trust Company to act as
exchange agent for the Common Stock in connection with the Reverse Stock
Split. The Company will deposit with the exchange agent, as soon as
practicable after the Effective Date of the Reverse Stock Split, cash in an
amount equal to the value of the estimated aggregate number of fractional shares
that will result from the Reverse Stock Split. The funds required to purchase
the fractional share interests are available and will be paid from the Company's
current cash reserves. The Company's stockholder list shows that some of the
outstanding Common Stock is registered in the names of clearing agencies and
broker nominees. Because the Company does not know the numbers of shares held by
each beneficial owner for whom the clearing agencies and broker nominees are
record holders, the Company cannot predict with certainty the number of
fractional shares that will result from the Reverse Stock Split or the total
amount it will be required to pay for fractional share interests. However, the
Company does not expect that amount will be material. As of the Record Date, the
Company had approximately 66 stockholders of record. The Company does not expect
the Reverse Stock Split and the payment of cash in lieu of fractional shares to
result in a significant reduction in the number of record holders. The Company
presently does not intend to seek any change in its status as a reporting
company for federal securities law purposes, either before or after the Reverse
Stock Split. On or after the Effective Date of the Reverse Stock Split, the
exchange agent will mail a letter of transmittal to each stockholder. Each
stockholder will be able to obtain a certificate evidencing its
post-reverse-stock-split shares and, if applicable, cash in lieu of a fractional
share, only by sending the exchange agent his or her old stock certificate(s),
together with the properly executed and completed letter of transmittal and such
evidence of ownership of the shares as the Company may require. Stockholders
will not receive certificates for post-reverse-stock-split shares unless and
until their old certificates are surrendered.
Stockholders should not forward their
certificates to the exchange agent until they receive the letter of transmittal,
and they should only send in their certificates with the letter of
transmittal.
The exchange agent will send each stockholder's new stock
certificate and payment in lieu of any fractional share after receipt of that
stockholder's properly completed letter of transmittal and old stock
certificate(s). Stockholders will not have to pay any service charges in
connection with the exchange of their certificates or the payment of cash in
lieu of fractional shares.
Non-registered
stockholders who hold their Common Stock through a bank, broker or other nominee
should note that such banks, brokers or other nominees may have different
procedures for processing the Reverse Stock Split than those that the Company
will put in place for registered stockholders. If you hold your shares
with such a bank, broker or other nominee and if you have questions in this
regard, you should contact your nominee.
5
Certain
Federal Income Tax Consequences
The
following discussion of the material federal income tax consequences of the
Reverse Stock Split is based upon the Internal Revenue Code of 1986, as amended
(the "Code"), Treasury regulations promulgated thereunder, judicial decisions,
and current administrative rulings and practices, all as in effect on the date
hereof, and any or all of which could be repealed, overruled or modified at any
time, possibly with retroactive effect. No ruling from the Internal Revenue
Service (the "IRS") with respect to the matters discussed herein has been
requested, and there is no assurance that the IRS would agree with the
conclusions set forth in this discussion.
This
discussion may not address certain federal income tax consequences that may be
relevant to particular stockholders in light of their personal circumstances
(such as holders who do not hold their shares of Common Stock as capital assets
within the meaning of Section 1221 of the Code, who are subject to the
alternative minimum tax provisions of the Code, who hold their shares as a hedge
or as part of a hedging, straddle, conversion or other risk reduction
transaction, who are dealers in securities, banks, insurance companies, foreign
individuals and entities, financial institutions or tax-exempt organizations, or
who acquired their shares in connection with stock option or stock purchase
plans or in other compensatory transactions). This discussion also does not
address any tax consequences under state, local or foreign laws.
Stockholders
are urged to consult their tax advisors as to the particular federal, state,
local, or foreign tax consequences to them of the Reverse Stock
Split.
Except as
discussed below, a stockholder generally will not recognize a gain or loss by
reason of such stockholder's receipt of new shares of Common Stock pursuant to
the Reverse Stock Split solely in exchange for shares of Common Stock held by
such stockholder immediately prior to the Reverse Stock Split. A stockholder's
aggregate tax basis in the shares of Common Stock received pursuant to the
Reverse Stock Split (including any fractional interest) will equal the
stockholder's aggregate basis in the Common Stock exchanged therefore and will
be allocated among the shares of Common Stock received in the Reverse Stock
Split on a pro-rata basis. Stockholders who have used the specific
identification method to identify their basis in the shares of Common Stock held
immediately prior to the Reverse Stock Split should consult their own tax
advisers to determine their basis in the shares of Common Stock received in
exchange therefore in the Reverse Stock Split. A stockholder's holding period in
the shares of Common Stock received pursuant to the Reverse Stock Split will
include the stockholder's holding period in the shares of Common Stock
surrendered in exchange therefore, provided the shares of Common Stock
surrendered are held as capital assets at the time of the Reverse Stock Split. A
stockholder will recognize a gain or loss on the receipt of cash in lieu of a
fractional share of Common Stock issued pursuant to the Reverse Stock Split,
measured by the difference between the amount of cash received and such
stockholder's adjusted tax basis in the fractional share interest deemed
surrendered in exchange therefore. Any such gain or loss will be a capital gain
or loss, provided the shares of Common Stock surrendered are held as capital
assets by the stockholder at the time of the Reverse Stock Split, and will be a
long-term capital gain or loss if the stockholder's holding period in the shares
of Common Stock surrendered is more than one year.
Provisions
with Potential Anti-Takeover Effects
Although
this proposed amendment to the Company's Restated Certificate is not intended
for anti-takeover purposes, the rules of the Securities and Exchange Commission
require disclosure of the provisions of the Company's Restated Certificate and
Bylaws, as well as the Company's stockholder rights plan, that could have an
anti-takeover effect. The laws of the State of Delaware contain additional
provisions that also may have the effect of delaying, deterring or preventing a
change in control of the Company. These provisions are described
below.
Provisions
in the Restated Certificate and Bylaws may have the effect of delaying or
preventing a change of control or changes in the Company's management. These
provisions include the right of the Board of Directors to elect a director to
fill a vacancy created by the expansion of the Board of Directors; the ability
of the Board of Directors to alter the Company's Bylaws without obtaining
stockholder approval; the establishment of a classified Board of Directors; the
ability of the Board of Directors to issue, without stockholder approval, up to
five million shares of preferred stock with terms set by the Board of Directors,
including rights that could be senior to those of Common Stock; and the
elimination of the right of stockholders to call a special meeting of
stockholders and to take action by written consent. Each of these provisions
could discourage potential take over attempts and could lower the market price
of the Common Stock.
6
The
Company has also adopted a stockholder rights plan and declared a dividend
distribution of one right for each outstanding share of Common Stock to
stockholders of record as of June 12, 2001. Each right, when exercisable,
entitles the registered holder to purchase from the Company one one-thousandth
of a share of a new series of preferred stock, designated as Series A
Participating Preferred Stock, at a price of $80.00 per one one-thousandth of a
share, subject to adjustment. The rights will generally separate from the Common
Stock and become exercisable if any person or group acquires or announces a
tender offer to acquire 15% or more of the Company's outstanding Common Stock
without the consent of the Board of Directors. Because the rights may
substantially dilute the stock ownership of a person or group attempting to take
us over without the approval of the Board of Directors, the Company's
stockholder rights plan could make it more difficult for a third party to
acquire the Company (or a significant percentage of the Company's outstanding
capital stock) without first negotiating with the Board of Directors regarding
such acquisition.
In
addition, because the Company is incorporated in Delaware, it is governed by the
provisions of Section 203 of the Delaware General Corporation Law. These
provisions may prohibit large stockholders, in particular those owning 15% or
more of the Company's outstanding voting stock, from merging or combining with
the Company.
Required
Vote
The
affirmative vote of a majority of the Company's outstanding Common Stock is
required to approve an amendment to the Company's Restated Certificate to
effect, in the Board of Director's sole discretion, a 1-for-5, 1-for-8 or
1-for-10 reverse split of the Company's issued and outstanding Common
Stock.
The
Board of Directors recommends a vote "FOR" each of Proposals 1, 2 and 3 to amend
the Company's Restated Certificate to effect, alternatively, as determined by
the Board of Directors in its sole discretion, a 1-for-5, 1-for-8 or 1-for-10
reverse stock split.
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The
following table sets forth certain information as of July 6, 2010, as to shares
of the Common Stock beneficially owned by: (1) each person who is known by
the Company to own beneficially more than 5% of its Common Stock, (2) each
of our directors, (3) each of our executive officers named in the Summary
Compensation Table in the proxy statement for our 2010 annual meeting, and
(4) all of our directors and executive officers as a group. Ownership
information is based upon information furnished by the respective individuals or
entities, as the case may be. Unless otherwise noted below, the
address of each beneficial owner is c/o Alliance Fiber Optic Products, Inc., 275
Gibraltar Drive, Sunnyvale, California 94089. The percentage of common stock
beneficially owned is based on 42,805,188 shares of common stock outstanding as
of July 6, 2010. In addition, shares issuable pursuant to options
which may be exercised within 60 days of July 6, 2010 are deemed to be
issued and outstanding and have been treated as outstanding in calculating the
percentage ownership of those individuals possessing such interest, but not for
any other individuals. Thus, the number of shares considered to be
outstanding for the purposes of this table may vary depending on the
individual's particular circumstances.
7
|
Name and Address of
Beneficial Owner
|
|
Number of Shares
of Common
Stock
Beneficially Owned
|
|
Percentage of
Common
Stock
Beneficially Owned
|
|
Directors and
Named Executive Officer:
|
|
|
|
|
|
Peter C. Chang
(2)
|
|
6,606,600
|
|
14.9%
|
|
Richard Black
(3)
|
|
73,333
|
|
*
|
|
Gwong-Yih Lee
(4)
|
|
128,333
|
|
*
|
|
Ray Sun
(5)
|
|
68,333
|
|
*
|
|
James C. Yeh
(6)
|
|
908,333
|
|
2.1
|
|
David A.
Hubbard (7)
|
|
819,236
|
|
1.9
|
|
Wei-Shin Tsay
(8)
|
|
873,482
|
|
2.0
|
|
5%
Stockholders:
|
|
|
|
|
|
Foxconn Holding
Limited (9)
|
|
8,000,000
|
|
18.7
|
|
Lloyd I.
Miller, III (10)
|
|
2,667,872
|
|
6.2
|
|
All Directors
and Executive Officers as a group (8 persons) (11)
|
|
9,801,732
|
|
21.2
|
|
|
|
|
|
|
* Represents
less than 1%.
|
(1)
|
To
the Company's knowledge, except as otherwise disclosed, 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 laws where applicable and the information contained in
the notes to this table.
|
|
(2)
|
Includes
40,000 shares held in the name of Mr. Chang's minor children and
1,996,600 shares held in the name of the Chang Family LLC, of which Mr.
Chang and his wife, Mary C. Chen, are the Managing
Members. Also includes options to purchase 1,550,000 shares
exercisable within 60 days of July 6,
2010.
|
|
(3)
|
Includes
options to purchase 43,333 shares exercisable within 60 days of July
6, 2010.
|
|
(4)
|
Includes
20,000 shares held in the name of the Lee Trust. Mr. Lee
and his wife, Angela Lee, as trustees, have dispositive and voting power
for the shares held by the Lee Trust. Also includes options to purchase
108,333 shares exercisable within 60 days of July 6,
2010.
|
|
(5)
|
Represents
options exercisable within 60 days of July 6,
2010.
|
|
(6)
|
Includes
800,000 shares held in the name of Matics Computer Systems, Inc., over
which Mr. Yeh has voting power. Also includes options to
purchase 108,333 shares exercisable within 60 days of July 6,
2010.
|
|
(7)
|
Includes
options to purchase 510,000 shares exercisable within 60 days of July
6, 2010.
|
|
(8)
|
Includes
options to purchase 800,000 shares exercisable within 60 days of July
6, 2010.
|
|
(9)
|
According
to a Schedule 13G filed jointly on January 4, 2002 for the year ended
December 31, 2000 by Hon Hai and Foxconn, each entity has shared voting
and dispositive power over the 8,000,000 shares. As of the
Record Date, no amendment to the Schedule 13G has been filed, and the
information concerning the number of shares held and the ownership of the
shares is as disclosed in the Schedule 13G. Foxconn is a
subsidiary of Hon Hai. Hon Hai disclaims beneficial ownership
of these shares. The principal business address for Hon Hai and
Foxconn is 2 Tsu Yu Street, Tu Cheng City, Taipei Hsien, Taiwan,
R.O.C. The board of directors of Foxconn has dispositive power
for the shares and has delegated voting power to Ms. Chiu-Lian
Huang.
|
|
(10)
|
According
to an amended Schedule 13G filed on February 8, 2010, Lloyd I.
Miller, III has sole voting and dispositive power with respect to
1,233,810 shares as the manager of a limited liability company that is the
general partner of a certain limited partnership, the trustee to a certain
grantor retained annuity trust, and an individual. In addition,
Mr. Miller has shared voting and dispositive power with respect to
1,434,062 shares of common stock as an investment advisor to the trustee
of a certain family trust, and as an authorized person with respect to a
custody account held by Mr. Miller's sister. The principal
address for Mr. Miller is 4550 Gordon Drive, Naples, Florida
34102.
|
8
|
(11)
|
Includes
3,469,082 shares subject to options exercisable within 60 days of
July 6, 2010.
|
PAYMENT
OF COSTS
The
expense of printing, mailing proxy materials and solicitation of proxies will be
borne by the Company. In addition to the solicitation of proxies by mail,
solicitation may be made by directors, officers and other employees of the
Company by personal interview, telephone or facsimile. No additional
compensation will be paid to such persons for such solicitation. The
Company will reimburse brokerage firms and others for their reasonable expenses
in forwarding solicitation materials to beneficial owners of the Common
Stock.
STOCKHOLDER
PROPOSALS FOR THE 2011 ANNUAL MEETING
Proposals
of stockholders of the Company that are intended to be presented at the
Company's 2011 Annual Meeting must be received by the Secretary of the Company
no later than December 17, 2010 in order that they may be included in the
Company's proxy statement and form of proxy relating to that
meeting.
A
stockholder proposal not included in the Company's proxy statement for the 2011
Annual Meeting will be ineligible for presentation at the meeting unless the
stockholder gives timely notice of the proposal in writing to the Secretary of
the Company at the principal executive offices of the Company and otherwise
complies with the provisions of the Company's Bylaws. To be timely,
the Bylaws provide that the Company must have received the stockholder's notice
not less than 60 days nor more than 90 days prior to the scheduled
date of the meeting. However, if notice or prior public disclosure of the date
of the annual meeting is given or made to stockholders less than 75 days
prior to the meeting date, the Company must receive the stockholder's notice by
the earlier of (i) the close of business on the 15th day after the
earlier of the day the Company mailed notice of the annual meeting date or
provided public disclosure of the meeting date and (ii) two days prior to
the scheduled date of the annual meeting.
OTHER
MATTERS
The
Company knows of no other business that will be presented at the Special
Meeting, or any adjournment thereof. If any other business is
properly brought before the Special Meeting, it is intended that the proxies
will be voted in accordance with the judgment of the persons voting the
proxies.
Whether
you intend to be present at the Special Meeting or not, we urge you to vote
promptly.
By order
of the Board of Directors
/s/Peter
C. Chang
Peter C.
Chang
Secretary
July 16,
2010
9
Annex A
CERTIFICATE
OF AMENDMENT
OF
THE
AMENDED
AND RESTATED CERTIFICATE OF INCORPORATION
OF
ALLIANCE FIBER OPTIC PRODUCTS, INC.
Alliance Fiber Optic Products, Inc., a
corporation organized and existing under the laws of the State of Delaware,
hereby certifies as follows:
FIRST: The name of the corporation is
Alliance Fiber Optic Products, Inc.
SECOND: At a meeting of the Board of
Directors of Alliance Fiber Optic Products, Inc., resolutions were duly adopted
declaring the advisability of the amendment to the Amended and Restated
Certificate of Incorporation of the corporation to amend and restate Paragraph A
of Article IV of such Amended and Restated Certificate of Incorporation to read
in its entirety as follows:
"A.
Classes of
Stock.
The total number of shares of all classes of capital stock which
the corporation shall have authority to issue is eighty-five million
(85,000,000), of which eighty million (80,000,000) shares of the par value of
one tenth of one cent ($0.001) each shall be Common Stock (the "Common Stock")
and five million (5,000,000) shares of the par value of one tenth of one cent
($0.001) each shall be Preferred Stock (the "Preferred Stock"). The number of
authorized shares of Common Stock or Preferred Stock may be increased or
decreased (but not below the number of shares thereof then outstanding) by the
affirmative vote of the holders of a majority of the then outstanding shares of
Common Stock, without a vote of the holders of the Preferred Stock, or of any
series thereof, unless a vote of any such Preferred Stock holders is required
pursuant to the provisions established by the Board of Directors of this
corporation (the "Board of Directors") in the resolution or resolutions
providing for the issue of such Preferred Stock, and if such holders of such
Preferred Stock are so entitled to vote thereon, then, except as may otherwise
be set forth in this Restated Certificate of Incorporation, the only stockholder
approval required shall be the affirmative vote of a majority of the combined
voting power of the Common Stock and the Preferred Stock so entitled to
vote."
THIRD: That thereafter, pursuant to
resolution of its Board of Directors, a meeting of the stockholders of said
corporation was duly called and held, upon notice in accordance with Section 222
of the General Corporation Law of the State of Delaware, at which meeting the
necessary number of shares as required by statute were voted in favor of the
amendment.
FOURTH: This Certificate of Amendment
of the Amended and Restated Certificate of Incorporation was duly adopted at
said meeting of the stockholders in accordance with the provisions of Section
242 of the General Corporation Law of the State of Delaware.
10
IN
WITNESS WHEREOF, Alliance Fiber Optic Products, Inc. has caused this Certificate
of Amendment to be signed by its President and Chief Executive Officer as of May
14, 2010.
ALLIANCE FIBER OPTIC PRODUCTS,
INC.
By:
/s/ Peter C. Chang
__________
Peter C.
Chang
President
and Chief Executive Officer
11
ALLIANCE
FIBER OPTIC PRODUCTS, INC.
PROXY
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
For
Special Meeting - August 20, 2010
The undersigned hereby authorizes PETER
C. CHANG or ANITA K. HO, as Proxies with full power in each to act without the
other and with the power of substitution in each, to represent and to vote all
the shares of stock the undersigned is entitled to vote at the Special Meeting
of Stockholders of Alliance Fiber Optic Products, Inc. (the "Company") to be
held at the Company's headquarters at 275 Gibraltar Drive, Sunnyvale,
California, 94089 on August 20, 2010 at 2 p.m., or at any postponement or
adjournment thereof, and instructs said Proxies to vote as follows:
Shares
represented by this proxy will be voted as directed by the
stockholder.
If no
such directions are indicated, the Proxies will have the authority to vote FOR
Proposals 1, 2 and 3 and in accordance with the discretion of the Proxies on any
other matters as may properly come before the Special
Meeting.
|
SEE
REVERSE
SIDE
|
CONTINUED AND TO BE SIGNED ON
REVERSE SIDE
|
SEE REVERSE
SIDE
|
DETACH
HERE
|
x
|
Please
mark
The Board of Directors
recommends a vote FOR Proposals 1, 2 and 3
votes
as
in
this
example.
|
This
proxy when property executed will be voted in the manner directed herein by the
undersigned stockholder. If no direction is given, this proxy will be
voted "FOR" Proposals 1, 2 and 3.
1. To approve the amendment
to
FOR AGAINST ABSTAIN
the
Company's Amended and
Restated
Certificate of Incorporation
to effect
a 1-for-5 reverse split of the
issued
and outstanding shares of
Common
Stock.
2. To approve the amendment
to
FOR AGAINST ABSTAIN
the
Company's Amended and
Restated
Certificate of Incorporation
to effect
a 1-for-8 reverse split of the
issued
and outstanding shares of
Common
Stock.
3. To approve the amendment
to
FOR AGAINST ABSTAIN
the
Company's Amended and
Restated
Certificate of Incorporation
to effect
a 1-for-10 reverse split of the
issued
and outstanding shares of
Common
Stock
In their discretion, the Proxies are
authorized to vote upon such other business as may properly come before the
Special Meeting or any postponement or adjournment thereof
PLEASE MARK, SIGN, DATE AND RETURN
THE PROXY PROMPTLY USING THE ENCLOSED ENVELOPE.
Please
sign where indicated below. When shares are held by joint tenants,
both should sign. When signing as attorney, executor, administrator,
trustee or guardian, please give full title as such. If a
corporation, please sign in full corporate name by an authorized
officer. If a partnership, please sign in full partnership name by an
authorized person.
Signature:
_____________________ Date: __________
_____________________________________________
(Signature
if held jointly)