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SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
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(as permitted by Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
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[X] Soliciting Material Pursuant to sec. 240.14a-11(c) or sec. 240.14a-12
Pacer Technology
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(Name of Registrant as Specified In Its Charter)
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PACER TECHNOLOGY
9420 Santa Anita Avenue,
Rancho Cucamonga, CA 91730
(909)987-0550
Preliminary Copy
October , 1999
Dear Fellow Shareholder:
As you know, the Annual Meeting of Shareholders of Pacer Technology is
scheduled to be held at 9:00 a.m. on Tuesday, November 16, 1999 at the
DoubleTree Hotel, 222 North Vineyard Avenue, Ontario California. At the Annual
Meeting the shareholders will elect six persons to serve as directors of Pacer
Technology for the ensuing year. The nominees are the four of us, Tom
Nightingale, Carl Hathaway, John Hockin and Larry Reynolds, and Geoffrey Tirman
and John Merriman. This year, in addition to the election of directors, we will
be sharing exciting news about the recent improvements in our operating
performance and steps we are taking to enhance shareholder value. As always, you
are cordially invited to attend the Annual Meeting and we hope to see you there.
Earlier this year we made some difficult decisions, including changes in
our senior management. With our new management team in place and having
implemented a number of corrective actions to overcome problems left by the
prior management team, we are starting to see improved results. On October 15,
1999 we announced the highest quarterly earnings and revenues in our
history -- $1.0 million of net income, equal to $0.06 per share, and total
revenues of $14.3 million -- in the first quarter of fiscal 2000, which ended
September 30, 1999. We are pleased to start off the new fiscal year in such a
strong fashion and we believe we are again on the right track.
Unfortunately, two of your directors who we recently added to our board,
Messrs. Tirman and Merriman, apparently believe that now is a good time to bring
back the old management team of James Munn, Howard Bloom and Robert Cavazos and
try to break up and sell your Company. YES, THE SAME MANAGEMENT TEAM WHICH
FAILED TO DELIVER ANY RETURN ON SHAREHOLDER'S EQUITY FOR OVER 10 YEARS. To
accomplish their ends, Tirman and Merriman intentionally mislead us into
believing that they would be supporting the re-election of all of the incumbent
directors. Then, only after we mailed our Proxy Statement to you, they launched
a sneak attack to:
(1) Oust us from the Board of Directors and elect individuals to the Board
that include Munn and Bloom and two other individuals, Allen D. Barnes and
Claude M. Ballard, who own NO shares of and have NO financial stake in our
Company and therefore have nothing in common with the shareholders.
(2) Replace members of our new management team, possibly with members of
the failed management team that we fired earlier this year, despite the fact the
our new management team, in a matter of a few short months, has led the Company
to the highest quarterly revenues and earnings in its history.
In his effort to achieve these purposes, Tirman and his Committee has sent
a letter to the shareholders and filed proxy materials that distort and
misrepresent our record as directors of your Company. Therefore, we want to set
the record straight.
- TIRMAN'S CLAIMS THAT YOUR BOARD OF DIRECTORS SUMMARILY REJECTED A $1.95
CASH OFFER FOR THE COMPANY ARE FALSE AND MISLEADING. Here is what Tirman
has failed to tell you:
- At the direction of the Board of Directors, management began
negotiations with the prospective buyer in June 1998 and in September
1998 the buyer agreed to pay our shareholders $2.15 per share in cash
for the Company. AFTER HAVING OBTAINED AN OPINION FROM AN INDEPENDENT
VALUATION FIRM THAT THE PRICE OF $2.15 WAS FAIR, FROM A FINANCIAL
STANDPOINT, TO THE SHAREHOLDERS, YOUR BOARD OF DIRECTORS APPROVED THE
SALE AT THAT PRICE. However, before a definitive acquisition agreement
could be finalized, the buyer unilaterally reneged and told us that it
would proceed with the transaction only if we would accept a price of
$1.80. The Board carefully considered the reduced price and the
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comments of the independent valuation firm that a price below $2.00 per
share was probably less than our liquidation value; that is, the cash we
could expect to net if we were to liquidate and sell off the assets of
the Company piecemeal. As a result, all six Board members, including
Munn, voted unanimously to reject the reduced price. After our
rejection, the buyer reluctantly proposed to increase the price to
$1.95, which was still no higher than the liquidation value of your
shares.
- The buyer was structuring the transaction so as to permit Munn, Bloom
and Cavazos, and other management employees, to retain shares in the
Company, thereby giving them the opportunity to share in any future
profits of the Company. By contrast, none of the other shareholders of
the Company were to be permitted to retain any of their shares and, as a
result, would be denied any participation in its future profits. After
giving the matter serious attention, the Board members (with the
exception of Munn who abstained) unanimously voted to reject the new
offer because in their opinion (i) a price that did not exceed
liquidation value was still inadequate, (ii) as structured, the sale
would unfairly benefit management, and (iii) there was no assurance that
the buyer would not later seek to lower the price once again.
- Upon learning of the unilateral price reduction by the buyer, Tirman
contacted the buyer. He then urged the Board to reject the lower offer,
claiming that with his knowledge and contacts, he could get the price of
our shares above $2.00. Since Tirman represented one of our largest
shareholders, his recommendation was given considerable weight in the
Board's decision.
- TIRMAN'S ASSERTIONS ABOUT THE GRANT OF WARRANTS TO DIRECTORS MISLEADING.
What Tirman fails to tell you is that:
- Warrants were granted to three directors, in 1985 and 1986, nearly 15
years ago, at a time when the Company was near bankruptcy. IN ORDER TO
OBTAIN A BANK CREDIT LINE, WHICH THE COMPANY NEEDED IN ORDER TO STAY IN
BUSINESS, THESE THREE DIRECTORS VOLUNTARILY PUT THEIR PERSONAL ASSETS AT
RISK, FOR THE BENEFIT OF THE COMPANY AND ALL OF THE SHAREHOLDERS, BY
AGREEING TO PERSONALLY GUARANTEE THE COMPANY'S BORROWINGS FROM THE BANK.
Moreover, they did this not just once, but two more times, as the bank
required extensions of their personal guarantees before it would grant
extensions of the line of credit that the Company needed. By contrast,
Munn, who is one of Tirman's nominees, refused to guarantee the
Company's debt. By unanimous vote (including Munn's), the Warrants were
awarded to these three directors in return for their having personally
guaranteed the Company's debt and saving it from bankruptcy. Also, the
Board publicly disclosed all of this information to the shareholders in
our proxy statements in 1985 and 1986.
- The Warrants did no more than entitle these directors to purchase
additional Company shares for a price equal to the market value of the
shares when the warrants were issued.
- No options or warrants have been granted to any non-management directors
in the past three years.
We believe that, before casting any votes for Tirman and his group, you
should consider whether you want to trust your investment to individuals who
have so little regard for the Shareholders that they are willing to withhold the
whole truth from you just to further their own personal agendas.
WHAT YOU SHOULD KNOW ABOUT THE TIRMAN GROUP NOMINEES. Tirman is claiming
that his nominees will place the interests of Pacer's shareholders first, and
that they have the skills needed to improve the Company's stock price. We urge
you, our shareholders, to consider the following facts when determining whether
these claims are genuine and whether to place the future of your investment in
the hands of Tirman and his hand-picked nominees:
- TIRMAN GREENMAIL PROPOSAL. Although Tirman claims that he will place the
interests of the Shareholders first, HE RECENTLY INFORMED US THAT HE IS
PREPARED TO ABANDON THE PROXY CONTEST IF THE COMPANY WILL PURCHASE HIS
STOCK FOR A PRICE THAT IS TWICE THE CURRENT MARKET PRICE OF THE COMPANY'S
SHARES. IN SHORT, TIRMAN IS PREPARED TO SELL YOU OUT "IF THE PRICE IS
RIGHT" FOR HIM PERSONALLY. We unequivocally rejected his proposal. Also,
we believe that Tirman has initiated the proxy contest to rid himself of
his Pacer shares for personal profit, even if it means abandoning the
shareholders whose interests he claims to be championing.
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- ALLIANCE WITH FAILED MANAGEMENT TEAM. Tirman's nominees include Munn and
Bloom and one of his supporters is Roberto Cavazos, the members of the
failed management team. Tirman is claiming that they have the skills to
increase shareholder value. However, at a Board Meeting in February 1999,
Munn advised the Board that he was at a loss as to what actions
management might take that could lead to an improvement in the Company's
stock price. In addition, in early 1999 Tirman, who is now extolling the
record of this failed management team, strongly urged the Board to fire
Munn. As a result, we think that before casting any vote for Tirman or
his other nominees, you should insist that he explain why he now believes
Munn and Bloom have the skills to improve the price of our shares,
particularly since they had failed to do so during their multi-year
tenure as the senior officers of the Company and, just earlier this year,
Tirman had urged the Board to fire Munn.
- LONG-DISTANCE DIRECTORS. Two other of Tirman's nominees, Ballard and
Barnes, own NO shares of stock of Pacer and reside and work more than
2,000 miles from our offices. It is difficult to understand how they can
contribute to the Company's performance when they lack any financial
stake in our Company, know little if anything about our business and are
likely to participate in Board proceedings by telephone, more than 2,000
miles away from where the real decisions need to be made.
- THE TIRMAN AND MERRIMAN PERFORMANCE RECORD. Tirman and Merriman first
became directors of Pacer in April 1999. We believe that their record as
directors brings into question their commitment your Company and you, the
shareholders and their ability to achieve an improvement in our stock
price:
- Since becoming directors, neither Tirman nor Merriman has proposed a
single concrete initiative that might lead to improved profitability or
increases in our share price and despite Tirman's claims in December
1998 that he could help to get our stock price up, to our knowledge he
has taken no actions whatsoever to do so.
- Contrary to his statements to the Board, Tirman has not found a buyer
for the Company at a price exceeding $2.00 per share.
- Neither Tirman nor Merriman has thought it important enough to
personally attend any of the Board meetings or to meet personally with
the new management team during the period they have served as directors.
Instead their participation in Board meetings has been solely via the
telephone.
- Of the 4 Board meetings held since he became a director, Merriman has
attended only 2 meetings, all via the telephone; and in 1 of those 2
meetings he hung up the phone shortly after the meeting was convened.
Additionally, we have had to postpone scheduled Board meetings to enable
Tirman to participate because apparently he had more important matters
to attend to on the originally scheduled meeting dates. If Tirman's
nominees are elected to the Board, four of your six directors will
reside at substantial distances from the Company's headquarters. We
wonder whether these nominees will follow the example of Tirman and
Merriman and be absentee or long-distance directors. Maybe they think
they are smart enough to, as the saying goes, "just call it in."
- Tirman has admitted to us that he lied to us to hide the fact that he
was planing to initiate a proxy contest in connection with the Annual
Meeting and, as indicated above, he has withheld from you what we
believe is crucial information, all to further his own interests.
- TIRMAN'S THREAT TO FIRE PACER'S NEW MANAGEMENT TEAM. We have assembled a
knowledgeable and energetic management team comprised of Tom Nightingale,
Roger Vanderlaan, Laurence Huff, Amanda Searcy and James Gallagher. They
assumed management of our Company after the third quarter of fiscal 1999
when the Company had recorded a net loss of nearly $400,000 under the
leadership of Munn, Bloom and Cavazos. Our new management team
immediately went to work, implementing corrective actions to improve our
profitability. As a result of their efforts, in the first quarter of
fiscal 2000 we recorded the highest quarterly profits in our history. The
new management team has accomplished, in a period of six months, what the
failed management team of Munn, Bloom and Cavazos was unable to do over a
period of nearly ten years.
HOWEVER, TIRMAN AND HIS GROUP HAVE STATED THAT, IF ELECTED, THEY WILL FIRE
AT LEAST SOME MEMBERS OF THE NEW MANAGEMENT TEAM. TIRMAN HAS NOT SAID WHO
HE HAS IN MIND TO REPLACE THEM AND, FOR ALL WE KNOW,
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HE MIGHT SELECT MUNN, BLOOM AND CAVAZOS. TIRMAN ALSO APPEARS TO BE
INDIFFERENT TO THE FACT THAT THREATS SUCH AS THESE ONLY SERVE TO UNDERMINE
MORALE AND CREATE UNCERTAINTIES WITHIN OUR COMPANY, WHICH COULD IMPERIL
OUR FUTURE SUCCESS. HIS ACTIONS, THEREFORE, ARE HARDLY CONSISTENT WITH HIS
CLAIMS THAT HE INTENDS TO PUT THE SHAREHOLDERS FIRST. RATHER, IT APPEARS
TO US THAT HIS THREATENED ACTIONS ARE INTENDED TO "REPAY" MUNN, BLOOM AND
CAVAZOS FOR THEIR SUPPORT AND TO PUT PRESSURE ON MANAGEMENT TO ACCEPT HIS
GREENMAIL PROPOSAL.
WE ARE BUILDING VALUE. Like you, we are long time shareholders of Pacer and
we have devoted countless hours of our time to achieve improvements in Pacer's
operating results. As our most recent quarterly results demonstrate, we have
assembled a management team that is capable of producing the kinds of
improvements in profitability that we believe will result in increases in the
price of our shares. WE ARE EXCITED ABOUT THE FUTURE AND BELIEVE THAT, AS A
RESULT OF OUR EFFORTS AND THOSE OF OUR NEW MANAGEMENT TEAM, WE ARE POSITIONED TO
CREATE AND TAKE ADVANTAGE OF OPPORTUNITIES TO BUILD REAL VALUE FOR OUR
SHAREHOLDERS. However, we are concerned that the election of Tirman and his
nominees to the Board will undermine the progress we already have made, imperil
those opportunities and put your investment in Pacer at risk.
HOWEVER, YOU HAVE THE POWER TO PREVENT TIRMAN AND HIS HAND-PICKED NOMINEES
FROM EXPLOITING AND PUTTING YOUR INVESTMENT IN PACER AT RISK. We have enclosed a
new BUFF Proxy Card, and ask that you mark that Card in favor of the election of
Messrs. Nightingale, Hathaway, Hockin and Reynolds and that you sign, date and
return it to us in the postage paid return envelop that is also enclosed, even
if you have already sent us a proxy card, because, under the rules governing
proxy contests, only the latest dated proxy cards are counted.
VOTING OF PROXIES. We intend, at the Annual Meeting, to cumulate the votes
represented by all proxies we have received or may receive and to cast and
allocate all of those votes solely among Messrs. Nightingale, Hathaway, Hockin
and Reynolds, in such proportions as we deem appropriate to obtain the election
of as many of our four candidates as is possible.
If you want to support us and you already have sent us your Proxy Card, you
need not send us back another proxy card. If you want your shares voted in a
different manner, you still have the right to revoke any proxy you may have
previously sent to us, by completing and sending the enclosed Proxy Card back to
us containing your voting instructions. Such a later dated Proxy Card will
supersede your earlier one.
WE ALSO URGE YOU NOT TO RETURN ANY PROXY CARD THAT YOU MAY RECEIVE FROM THE
TIRMAN GROUP, EVEN AS A PROTEST VOTE. DOING SO WILL HAVE THE EFFECT OF
NULLIFYING YOUR EARLIER VOTE IN FAVOR OF THE ELECTION OF OUR CANDIDATES.
If you have any questions or need assistance in completing the WHITE Proxy
Card, please call our solicitor: MacKenzie Partners, Inc., toll free, at
1-800-322-2885.
Thank you for your support.
W. T. Nightingale, III Carl E. Hathaway
John G. Hockin, II Larry K. Reynolds
DISCRETIONARY AUTHORITY. THE BUFF PROXY CARD CONFERS DISCRETIONARY
AUTHORITY ON THE INDIVIDUALS NAMED AS PROXIES THEREON (I) TO CUMULATE VOTES CAST
ON THE ELECTION OF DIRECTORS AND TO ALLOCATE THOSE VOTES AMONG THE BOARD'S
NOMINEES IN SUCH PROPORTIONS AS THOSE INDIVIDUALS DEEM APPROPRIATE, AND (II) TO
VOTE AS THEY DEEM APPROPRIATE ON ANY OTHER MATTERS THAT MAY COME BEFORE THE
ANNUAL MEETING. IF NO VOTING INSTRUCTION IS GIVEN ON A PROXY CARD, IT WILL BE
VOTED IN ACCORDANCE WITH THAT DISCRETIONARY AUTHORITY.
As a result of the decision of Tirman and his so-called Shareholder's
Committee to conduct a proxy contest, Pacer now estimates that it will incur
fees in connection with its solicitation of approximately $60,000, which
includes fees of $30,000 to Mackenzie Partners Inc. for assistance in soliciting
proxies for the Annual Meeting. In addition, Pacer will reimburse Mackenzie
Partners for its reasonable expenses.
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Pacer is soliciting proxies for the election of W. T. Nightingale, III,
Carl E. Hathaway, John G. Hockin II, and Larry K. Reynolds at the Annual Meeting
of Shareholders to be held on November 16, 1999 and may solicit revocations of
any proxies delivered to Tirman's Committee. Pacer and the following individuals
may be deemed to be "participants" in this solicitation of proxies: W. T.
Nightingale, III, Carl E. Hathaway, John G. Hockin II, Larry K. Reynolds, James
F. Gallagher, Roger R. Vanderlaan, Laurence Huff and DeVere McGuffin. As of
September 27, 1999, those individuals beneficially owned, in the aggregate,
[2,766,033] shares of Pacer Common Stock (inclusive of options to purchase
shares of Common Stock that were exercisable as of that date or were to become
exercisable within 60 days thereafter).
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THIS PROXY IS SOLICITED ON BEHALF OF
THE BOARD OF DIRECTORS OF PACER TECHNOLOGY
1999 Annual Meeting of Shareholders
The undersigned shareholder of Pacer Technology, a California
corporation (the "Company"), hereby appoints Larry K. Reynolds and John G.
Hockin, II and, and each of them acting singly, as proxies and attorneys-in-fact
with full power of substitution, on behalf and in the name of the undersigned,
to represent the undersigned at the Annual Meeting of Shareholders of the
Company to be held on Tuesday, November 16, 1999, at 9:00 a.m., California time,
at the DoubleTree Hotel, Ontario, 222 North Vineyard Avenue, Ontario,
California, and at any adjournment or adjournments or postponements thereof, and
to vote all Common Shares to which the undersigned would be entitled, if then
and there personally present, on the matters set forth on the reverse side.
SEE REVERSE SIDE
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
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THIS PROXY CONFERS DISCRETIONARY AUTHORITY ENTITLING THE NAMED PROXY HOLDERS TO
CUMULATE VOTES AND ALLOCATE THOSE VOTES AMONG ANY NUMBER OF THE NOMINEES NAMED
BELOW IN SUCH PROPORTIONS AS THE PROXY HOLDER OR HOLDERS DEEMS APPROPRIATE AND
IN THEIR DISCRETION ON ANY OTHER MATTERS THAT MAY PROPERLY COME BEFORE THE
MEETING. UNLESS A CONTRARY INSTRUCTION IS GIVEN, THE PROXY HOLDERS MAY VOTE ALL
PROXIES RECEIVED BY THEM SOLELY FOR THE ELECTION OF ANY OR ALL OF MESSRS.
NIGHTINGALE, HATHAWAY, HOCKIN AND REYNOLDS, EVEN IF THE SHAREHOLDER DOES NOT
WITHHOLD HIS OR HER VOTE FOR MESSRS. TIRMAN AND MERRIMAN.
1. ELECTION OF DIRECTORS
Nominees: Carl E. Hathaway, John G. Hockin, II, W. T. Nightingale, III,
Larry K. Reynolds, and Geoffrey Tirman and D. Jonathan Merriman
FOR WITHHOLD
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To withhold authority for any of the above nominees, please strike
through that nominee's name above or write his name in the space below.
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2. In their discretion, the proxies are authorized to vote upon such
other business as may properly come before the meeting.
(This Proxy should be marked, dated, signed by the shareholders) exactly as his
name appears hereon and returned promptly in the enclosed envelope. Persons
signing in a fiduciary capacity should so indicate. If shares are held
by joint tenants or as community property, both should sign.)
Signature:___________________________________ Date __________ , 1999
Signature:___________________________________ Date __________ , 1999
MARK HERE FOR
ADDRESS CHANGE AND
NOTE AT [ ] LEFT
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