<PAGE> 1
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
PACER TECHNOLOGY
--------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
N/A
--------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] $125 per Exchange Act Rules 0-11(c)(1)(ii), or 14a-6(i)(1), or 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(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):
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[ ] 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.
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<PAGE> 2
PACER TECHNOLOGY
9420 SANTA ANITA AVENUE,
RANCHO CUCAMONGA, CA 91730
(909) 987-0550
FAX (909) 987-5298
October 23, 2000
Dear Shareholder:
The Board of Directors joins us in extending to you a cordial invitation to
attend the Annual Meeting of Shareholders of Pacer Technology, which will be
held on Tuesday, November 21, 2000, at 9:00 A.M. Pacific Time, at the Hilton
Hotel -- Ontario Airport, 700 North Haven Avenue, Ontario, California.
The attached Notice of Annual Meeting and Proxy Statement describes in
detail the matters to be acted on at the Annual Meeting. We also will be making
a presentation about the developments that are taking place at Pacer, which we
believe will result in improved financial performance beginning in the current
fiscal year. Your participation in Company activities is important, and we hope
you will attend.
Whether or not you plan to attend the meeting, please be sure to complete,
sign, date and return the enclosed proxy card in the accompanying postage-paid
reply envelope so that your shares may be voted in accordance with your wishes.
Returning the enclosed proxy will not prevent you from voting in person if you
choose to attend the Annual Meeting.
Sincerely,
E. T. Gravette, Jr.
Chairman of the Board
W. T. Nightingale, III
President and Chief Executive Officer
<PAGE> 3
PACER TECHNOLOGY
9420 SANTA ANITA AVENUE
RANCHO CUCAMONGA, CALIFORNIA 91730
(909) 987-0550
------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD NOVEMBER 21, 2000
To the Shareholders of Pacer Technology:
The Annual Meeting of Shareholders of Pacer Technology (the "Company") will
be held at the Hilton Hotel, Ontario Airport, 700 North Haven Avenue, Ontario,
California, at 9:00 A.M. Pacific Time, on Tuesday, November 21, 2000, for the
following purposes:
1. To elect the following nominees to serve as directors of the
Company for a term of one year or until their successors are elected and
qualify: Ellis T. Gravette Jr., Carl E. Hathaway, John G. Hockin II, W. T.
Nightingale, III, and Larry K. Reynolds.
2. To approve an Amendment of the Articles of Incorporation to
effectuate one of the following alternative reverse stock splits of Pacer's
outstanding shares: (i) a 1-for-3 reverse stock split; (ii) a 1-for-4
reverse stock split; or (iii) a 1-for-5 reverse stock split, with the Board
of Directors having the authority to determine which of these reverse stock
splits to effectuate.
3. To consider and act upon such other matters as may properly come
before the meeting or at any adjournments or postponements thereof.
Details relating to these matters are set forth in the attached Proxy
Statement. All shareholders of record of as of the close of business on
September 25, 2000 will be entitled to notice of and to vote at the Annual
Meeting and at any and all adjournments or postponements thereof.
If you will not be attending the Annual Meeting, there are two ways to vote
your Proxy: BY THE INTERNET OR BY MAIL. Instructions for voting over the
Internet are contained in the accompanying Proxy Statement and on the Proxy
Card. To be counted, votes submitted over the Internet must be received by no
later than 12:00 Noon Central Time, on Monday, November 20, 2000.
YOUR VOTE IS IMPORTANT. Whether or not you plan to attend the Annual
Meeting, please vote, either over the Internet or by signing the enclosed Proxy
Card and returning it promptly in the enclosed envelope. It requires no stamp if
mailed in the United States.
RETURNING THE ENCLOSED PROXY OR VOTING OVER THE INTERNET WILL NOT PREVENT
YOU FROM VOTING IN PERSON IF YOU CHOOSE TO ATTEND THE ANNUAL MEETING, BUT WILL
INSURE THAT YOUR VOTE IS COUNTED IF YOU ARE NOT ABLE TO ATTEND.
By Order of the Board of Directors:
W. T. Nightingale, III
President & Chief Executive Officer
Rancho Cucamonga, California
October 23, 2000
<PAGE> 4
PACER TECHNOLOGY
9420 SANTA ANITA AVENUE
RANCHO CUCAMONGA, CALIFORNIA 91730
(909) 987-0550
------------------------
PROXY STATEMENT
------------------------
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD NOVEMBER 21, 2000
------------------------
INTRODUCTION
This Proxy Statement is furnished to you in connection with the
solicitation of proxies by the Board of Directors of Pacer Technology, a
California corporation (the "Company" or "Pacer"), for use at its 2000 Annual
Meeting of Shareholders to be held on Tuesday, November 21, 2000, at 9:00 A.M.,
at the Hilton Hotel -- Ontario Airport, 700 North Haven Avenue, Ontario,
California, and at any adjournment or postponement thereof (the "Annual
Meeting"). This Proxy Statement and the accompanying proxy card are first being
mailed to shareholders on or about October 23, 2000.
VOTING YOUR SHARES
You may vote your shares in any of the following ways:
- BY MAIL. If you choose to vote by mail, please complete, sign and return
your proxy card in the enclosed pre-addressed postage prepaid envelope in
sufficient time to arrive by November 20, 2000.
- OVER THE INTERNET. You may vote your shares at any time, 7 days a week,
24 hours per day, over the Internet. The Internet Web site address for
voting is: www.eproxy.com/ptch. Have your proxy card in hand when you
access this Web site because you will be prompted and will need to enter
a 3-digit Company Number and your 7-digit Control Number, both of which
are located on your proxy card, in order to create and register your vote
on an electronic ballot. TO BE COUNTED, YOU MUST TRANSMIT YOUR VOTE OVER
THE INTERNET BY NO LATER THAN 12 NOON CENTRAL TIME (2:00 P.M. PACIFIC
TIME) ON MONDAY, NOVEMBER 20, 2000. There may be costs associated with
voting via the Internet, such as Internet access charges from Internet
service providers and telephone companies.
- ATTEND THE MEETING AND VOTE IN PERSON. You may attend the Annual Meeting
and vote in person, even if you have previously voted by mailing your
proxy card or voting over the Internet. If you attend and vote at the
Annual Meeting, that vote will supersede any earlier vote that you may
have submitted.
Any shareholder who executes and returns a proxy or votes his or her shares
over the Internet retains the right to revoke that vote at any time before the
Annual Meeting is held. You may revoke or supersede your proxy by (i) signing
and returning a proxy with a later date, or by giving written notice of
revocation, to the Secretary of the Company, 9420 Santa Anita Avenue, Rancho
Cucamonga, California 91730, prior to or at the Meeting, (ii) re-voting your
shares via the Internet, prior to the Meeting, or (iii) attending the Annual
Meeting and voting in person. A proxy, when returned by mail or transmitted over
the Internet, and not later revoked, will be voted in accordance with the
instructions given in the proxy. If you do not specify a choice in the proxy,
your proxy will be voted "FOR" the nominees for election of directors named in
this Proxy Statement and "For" the Reverse Stock Split Proposal (Proposal Two).
<PAGE> 5
VOTING SECURITIES
The shares of common stock constitute the only outstanding class of voting
securities of the Company. Only the shareholders of the Company of record as of
the close of business on September 25, 2000 (the "Record Date") are entitled to
notice of and to vote at the Annual Meeting or any adjournment or postponement
thereof. As of September 25, 2000, there were 16,515,025 shares of common stock
outstanding and entitled to vote. A majority of the outstanding shares will
constitute a quorum at the Annual Meeting. Shareholders who withhold authority
to vote on the election of directors or abstain on any proposal, and broker
non-votes, will be counted in determining the presence of a quorum. You are
entitled to one vote for each share held as of the Record Date, except that in
the election of directors you may cumulate your votes and give any one nominee a
number of votes equal to the number of directors to be elected (which is five)
multiplied by the number of shares which you are entitled to vote at the
meeting, or to distribute the votes on the same principle among as many
candidates as you choose, if (i) the name of the candidate for whom such votes
are cast has been properly placed in nomination prior to the voting, and (ii)
any shareholder has given notice at the Annual Meeting prior to voting of such
shareholder's intention to cumulate votes in the election of directors.
SOLICITATION
We will pay the costs of soliciting proxies from our shareholders, and plan
on soliciting proxies by mail. In order to ensure adequate representation at the
Annual Meeting, Pacer's directors, officers and employees (who will not receive
any additional compensation therefor) may communicate with shareholders,
brokerage houses and others by telephone, telegraph or in person, to request
that proxies be furnished. We will reimburse banks, brokerage houses,
custodians, nominees and fiduciaries for their reasonable expenses in forwarding
proxy materials to the beneficial owners of the Company's shares.
2
<PAGE> 6
PRINCIPAL SHAREHOLDERS AND OWNERSHIP OF SHARES BY MANAGEMENT
Set forth below is certain information as of September 25, 2000 regarding
the number of shares of the Company's common stock owned by (i) each person who
we know owns more than 5% of Pacer's outstanding shares, (ii) each nominee for
election to the Board, (iii) each of Pacer's executive officers named in the
Summary Compensation Table below (the "Named Officers"), and (iv) all of Pacer's
directors and executive officers as a group.
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF
NAME AND ADDRESS(1) BENEFICIAL OWNERSHIP(2) PERCENT OF CLASS
------------------- ----------------------- ----------------
<S> <C> <C>
John G. Hockin II.............................. 1,906,041(3)(4) 10.7%
W. T. Nightingale III.......................... 571,000(3) 3.4%
Carl E. Hathaway............................... 200,000(3) 1.2%
Larry K. Reynolds.............................. 146,713(3)(5) *
E. T. Gravette, Jr. ........................... 481,500(3) 2.9%
Roger R. Vanderlaan............................ 55,000(3) *
Laurence R. Huff............................... 35,000(3) *
James F. Gallagher............................. 250,000(3) 1.5%
All Directors and Executive Officers of the
Company as a group (8 in number)............. 3,645,254(6) 19.4%
</TABLE>
---------------
* Less than 1%
(1) The address of each of the individuals named in this table is the Company's
address.
(2) Unless otherwise indicated, each person has sole voting and investment power
with respect to the shares of Common Stock shown.
(3) Includes shares subject to outstanding stock options exercisable during the
60-day period ending November 24, 2000, as follows: Dr. Hockin -- 1,300,000
shares; Mr. Nightingale -- 400,000 shares; Mr. Hathaway -- 100,000 shares;
Mr. Reynolds -- 100,000 shares; Mr. Gravette -- 100,000 shares; Mr.
Vanderlaan -- 50,000 shares; Mr. Huff -- 10,000 shares; and James F.
Gallagher -- 250,000 shares.
(4) Includes 606,041 shares held in an employee benefit trust of which Dr.
Hockin is the sole trustee. Dr. Hockin disclaims beneficial ownership of
these shares.
(5) Includes 46,713 shares held in an employee benefit trust of which Mr.
Reynolds is a co-trustee and as to which he shares voting power.
(6) Includes a total of 2,310,000 shares subject to outstanding options
exercisable during the 60-day period ending November 24, 2000.
3
<PAGE> 7
PROPOSAL NO. 1
ELECTION OF DIRECTORS
At the Annual Meeting, shareholders will vote on the election of five
directors to serve on the Board of Directors for a term of one year ending on
the date of the 2001 Annual Meeting of Shareholders. The Board of Directors will
vote all proxies received by them "FOR" the election of all five nominees named
below, unless a contrary instruction is given in the proxy. All of the nominees
named below are incumbent directors of the Company that were elected by the
shareholders, except for Ellis T. Gravette, Jr., who was appointed to the Board
by unanimous vote of the other Directors in February 2000. All of the nominees
have consented to serve, if elected.
Under California law, the five nominees receiving the highest number of
votes will be elected as directors at the Annual Meeting. As a result, proxies
voted to "Withhold Authority," which will be counted, and broker non-votes,
which will not be counted, will have no practical effect. The Board of Directors
is soliciting discretionary authority to cumulate votes represented by proxies
in the event nominations are made in opposition to the nominees of the Board of
Directors. In such event, the proxy holders intend to cumulate votes represented
by proxies and to cast such votes among the nominees named below in such
proportions as the Board of Directors deems appropriate in order to assure the
election of as many of the nominees named below as possible.
If any nominee becomes unavailable to serve on the Board of Directors of
the Company for any reason before the election, then the enclosed proxy will be
voted for the election of such substitute nominee or nominees, if any, as shall
be designated by the Board of Directors. The Board of Directors has no reason to
believe that any of the nominees will be unavailable to serve.
The names and certain information concerning the nominees are set forth
below. YOUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" THE ELECTION OF
EACH OF THOSE NOMINEES.
DIRECTORS AND NOMINEES
<TABLE>
<CAPTION>
NAME AND AGE DIRECTOR SINCE POSITIONS WITH PACER
------------ -------------- --------------------
<S> <C> <C>
Ellis T. Gravette, Jr., 74........... 2000 Chairman of the Board and Director
Carl E. Hathaway, 66................. 1985 Director
John G. Hockin II, 56................ 1984 Director
W. T. Nightingale, III, 46........... 1999 President, Chief Executive Officer and a Director
Larry K. Reynolds, 56................ 1995 Director
</TABLE>
Ellis T. Gravette, Jr. Mr. Gravette became a member of the Board of
Directors on February 1, 2000 and was elected Chairman of the Board on March 24,
2000. Mr. Gravette is currently a private investor. Mr. Gravette served as the
Chairman and Chief Executive Officer of the Turner Corporation, a New York Stock
Exchange listed company and one of the largest construction contractors in the
United States, from 1996 to 1999, when that company as acquired by another
corporation. From 1986 to 1996, Mr. Gravette was President of Ardath Associates,
Inc., and from 1981 to 1986 he served as Chairman of the Board and Chief
Executive Officer of The Bowery Savings Bank. Mr. Gravette is currently a
Director of MidFirst Bank, SSB.
Carl E. Hathaway. Mr. Hathaway has been president of Hathaway & Associates,
Ltd., a financial consulting firm, since 1981.
John G. Hockin II. Dr. Hockin is a dentist who specializes in, and for more
than the past five years has been engaged in the private practice of,
endodontics. Dr. Hockin served as Chairman of the Board of Directors of Pacer
from 1984 to 2000.
W. T. Nightingale, III. Mr. Nightingale has served as President and Chief
Executive Officer of Pacer since June 1999. For more than the prior 20 years,
Mr. Nightingale held various officer level and management positions with Pacer,
including Vice President of Marketing and Vice President of Manufacturing. He
holds an MBA and a Bachelors degree in Economics.
4
<PAGE> 8
Larry K. Reynolds. Mr. Reynolds is and for more than the past five years
has been engaged in the private practice of law, as a senior partner of the law
firm of Reynolds & Jensen LLP, in Riverside, California, which provided legal
services to the Company in fiscal 2000 and is expected to provide similar
services to the Company in the current fiscal year.
There are no family relationships among any of the directors or executive
officers of the Company.
MEETINGS OF THE BOARD OF DIRECTORS
The Board of Directors of the Company held 13 meetings during the year
ended June 30, 2000. Each incumbent Director attended at least 75% of the
aggregate of the number of meetings of the Board and the number of meetings held
by all committees of the Board on which he served during his term of office in
that fiscal year.
COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors of the Company has established an Audit Committee
that is comprised of three directors selected by the Board of Directors. The
current members of the Audit Committee are Ellis T. Gravette, Jr., Carl E.
Hathaway and John G. Hockin, II. The Audit Committee is authorized to deal with
all matters which it deems appropriate regarding the review and audit of Pacer's
financial statements and Pacer's accounting and internal controls systems,
including the scope of the annual audit and the accounting methods and systems
utilized by Pacer, in consultation with Pacer's independent public accountants
who report directly to the Audit Committee with respect to such matters. The
Audit Committee also makes recommendations to the Board of Directors with
respect to the selection of the independent accountants for the Company. The
Audit Committee held one meeting during the year ended June 30, 2000.
The Board of Directors, as a whole, serves as and performs the functions of
the Compensation Committee. It adopts executive remuneration policies of the
Company and makes determinations with respect to the compensation to be paid to
Pacer's officers and with respect to the establishment of employee benefit
programs for Pacer's employees. The Board held one meeting during the year ended
June 30, 2000 which focused solely on compensation issues. However, the Board
periodically considers and makes decisions with respect to increases in or
adjustments to the compensation of officers and other key management employees
at regular Board meetings. Mr. Nightingale, who is both the President and a
director of the Company, does not participate in the deliberations of or in
voting by the Board with respect to his compensation and benefits.
The Board of Directors, as a whole, also serves as and performs the
function of the Nominating Committee, which identifies and screens candidates
for membership on the Board of Directors of the Company. Shareholders desiring
the Board to consider candidates for election to the Board should send
information, in writing, addressed to the Secretary of the Company at its
offices, 9420 Santa Anita Avenue, Rancho Cucamonga, California 91730, regarding
the identities of those candidates, their ages, their occupational history and,
if known, their ownership of the Company.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based upon information made available to the Company, the Company believes
that all filing requirements under Section 16(a) of the Securities Exchange Act
of 1934 applicable to its directors, officers and any persons holding 10 percent
or more of the Company's common stock were satisfied with respect to the
Company's fiscal year ended June 30, 2000.
5
<PAGE> 9
COMPENSATION OF EXECUTIVE OFFICERS
The following table sets forth compensation received for the three fiscal
years ended June 30, 2000 by the Company's executive officers whose cash
compensation exceeded $100,000 (the "Named Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
AWARDS
ANNUAL COMPENSATION -------------
------------------------------- STOCK OPTIONS ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($)(1) (SHARES)(#) COMPENSATION(2)
--------------------------- ---- --------- ----------- ------------- ---------------
<S> <C> <C> <C> <C> <C>
W. T. Nightingale III............... 2000 $161,929(2) $ 0 0 $4,280
President and 1999 134,695(2) 0 0 3,630
Chief Executive Officer(3) 1998 130,630(2) 0 0 2,724
Roger R. Vanderlaan................. 2000 $127,000 0 0 $1,155
Vice President of Operations(4) 1999 37,500 0 50,000 385
Laurence R. Huff.................... 2000 $ 82,788 0 35,000 $ 770
Vice President and
Chief Financial Officer(5)
James F. Gallagher.................. 2000 $169,482 0 0 $4,305
Vice President(6) 1999 147,517 0 0 4,018
1998 129,064 0 0 3,787
</TABLE>
---------------
(1) For each of the periods presented, the Board of Directors established annual
incentive compensation programs for management employees of the Company,
including the Company's executive officers, which provided for payment of
bonuses based on the extent to which the Company achieved or exceeded
certain performance goals. As indicated, no bonuses were awarded under these
programs to the Named Officers.
(2) All Other Compensation, in the case of Messrs. Nightingale and Gallagher,
consisted of contributions by the Company to their respective Qualified
Tax-Deferred Savings Plan accounts and group life insurance premiums paid by
Pacer and, in the case of Messrs. Vanderlaan and Huff, consisted of group
life insurance premiums paid by Pacer.
(3) Mr. Nightingale was appointed President and Chief Executive Officer in June
1999. Prior to that appointment, he served as a Vice President of the
Company.
(4) Mr. Vanderlaan joined Pacer in March 1999 and became the Chief Operations
Officer in June 1999.
(5) Mr. Huff joined the Company as Vice President and Chief Financial Officer in
September 1999, at an annual salary of $105,000 per year.
(6) Mr. Gallagher's employment with Pacer terminated in October 2000.
6
<PAGE> 10
STOCK OPTIONS
Mr. Huff was the only Named Officer to whom options were granted in the
fiscal year ended June 30, 2000. The following table provides information
regarding those stock options.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE VALUE OF
OPTIONS AT ASSUMED
PERCENT OF ANNUAL RATES
NUMBER OF TOTAL OPTIONS OF STOCK PRICE
SECURITIES GRANTED TO APPRECIATION FOR
UNDERLYING ALL EMPLOYEES EXERCISE OPTION TERM(3)
OPTIONS IN FISCAL PRICE EXPIRATION --------------------
NAME GRANTED 2000(1) ($/SHARE) DATES(2) 5% 10%
---- ---------- ------------- --------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Laurence R. Huff............... 35,000 29.5% $0.98 2009 $55,872 $88,865
</TABLE>
---------------
(1) Inclusive of the options granted to Mr. Huff, options to purchase an
aggregate of 135,000 shares were granted in fiscal 2000.
(2) Shares become exercisable in three annual installments of 10,000 shares on
September 13, 2000 and 2001, respectively, and 15,000 shares on September
13, 2002.
(3) There is no assurance that the values that may be realized by Mr. Huff on
exercise of his options will be at or near the value estimated in the table,
which utilizes compounded rates of growth of Pacer's stock price, mandated
by Securities and Exchange Commission, of 5% and 10% per year.
OPTION EXERCISES AND FISCAL YEAR-END VALUES
The following table sets forth, as of June 30, 2000, the number of
exercisable and unexercisable options held by each of the Named Officers, none
of whom exercised any options during the fiscal year ended June 30, 2000.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED
OPTIONS AT YEAR END 1999(#)
----------------------------
NAME EXERCISABLE UNEXERCISABLE
---- ----------- -------------
<S> <C> <C>
W. T. Nightingale, III.............................. 450,000 0
Roger R. Vanderlaan................................. 50,000 0
Laurence R. Huff.................................... 10,000 25,000
James F. Gallagher.................................. 250,000 0
</TABLE>
As of June 30, 2000, 350,000 of the options shown in the table were
"in-the-money" options, all of which were held by Mr. Nightingale. As of that
date, those options had an aggregate value of $54,250, which was calculated
using the closing per share price of the Company's shares on the NASDAQ SmallCap
Market on June 30, 2000, which was $0.875, and the exercise price of those
options.
DIRECTORS' FEES
During fiscal 2000, the Company paid each non-employee Director $500 per
month in directors' fees for services and attendance at Board and committee
meetings.
CERTAIN TRANSACTIONS
During the fiscal year ended June 30, 2000, the Company paid fees totaling
$151,000 to Reynolds & Jensen LLP, for legal services rendered by that firm to
the Company. Mr. Reynolds, a director and secretary of the Company, is a partner
of that law firm. The terms of the Company's engagement of Reynolds & Jensen
LLP, including the fees payable for its legal services, were approved by the
disinterested members of the Board of Directors, which concluded that such terms
were at least as fair to the Company as could have been obtained from
unaffiliated law firms.
7
<PAGE> 11
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Board of Directors, as a whole, serves as and performs the functions of
a Compensation Committee. Mr. Nightingale, a member of the Board of Directors,
also is Pacer's President and Chief Executive Officer. The Board believes that
Mr. Nightingale's participation in management compensation decisions is
important, because he is most knowledgeable with respect to the performance of
members of management. However, Mr. Nightingale does not participate in the
deliberations of the Board with respect to his compensation and benefits. Mr.
Reynolds, a director of the Company, is a partner in the law firm of Reynolds &
Jensen, LLP, which has performed legal services in the past and is expected to
perform legal services in the future for the Company. He also serves as
Secretary of the Company, a position for which he receives no compensation.
COMPENSATION COMMITTEE REPORT
INTRODUCTION
The Board of Directors, in performing the functions of a Compensation
Committee, reviews and determines the cash and equity compensation for the
Company's Chief Executive Officer and other senior executives. Cash compensation
is comprised of salary and bonus, and equity compensation has been comprised of
stock options. The Board of Directors generally holds a meeting early in the
fiscal year devoted exclusively to compensation matters. However, as a general
matter, the performance of each executive is reviewed, and a decision regarding
an adjustment to the executive's salary is made annually, at the Board meeting
held closest to the anniversary of his or her hiring date or the date he or she
was appointed to his or her current position.
COMPENSATION PHILOSOPHY
The level of compensation that is paid to executives of the Company is
based on both Company and individual performance. Company performance is judged
based upon both the results for the immediately preceding fiscal year and, very
importantly, on the Company's performance over the longer term. Individual
performance is measured based on an evaluation of the executive officer's
particular responsibilities, his performance in relation to specific goals
established in the prior year or years, and his or her general management
skills.
COMPENSATION PROGRAM
Pacer has a comprehensive compensation program which consists of task
compensation, both fixed and variable, and, if the situation warrants, equity
based compensation. The principal elements of this program, which are intended
to attract, retain, motivate and reward executives who are expected to manage
both the short-term and long-term successes of the Company, are the following:
Salary. The base salary component of an executive's compensation is
intended to reward the executive for normal levels of performance, as opposed to
the bonus component which is intended to compensate for performance exceeding
expected levels. When reviewing base salaries, the Board considers the following
factors: (i) individual performance, (ii) Company performance and the extent to
which the executive contributed to that performance, and (iii) the executive's
level of responsibility and prior experience. Also considered in the evaluation
is the potential that a competitor of the Company may attempt to hire away a key
executive employee from the Company. As a result, the Board also reviews
published information regarding the compensation of executives at companies
comparable to that of the Company to ascertain whether or not Company's
compensation rates are both competitive and reasonable. Lastly, the CEO's
evaluation of the performance and his recommendation regarding the compensation
of other key executives is also considered.
Bonus Compensation. Based on the quality of the Company's financial
performance over time and over the immediately preceding year, as well as the
qualitative performance of each individual executive, the Board determines
whether a cash bonus should be awarded to an executive and, if so, also the
amount of the bonus to
8
<PAGE> 12
be award. The recommendation of the CEO is also considered in determining the
amount of any recommended bonus.
Stock Options. In order to align the financial interests of senior
executives with those of the shareholders, the Board of Directors grants stock
options to its executives on a periodic basis. Options are granted with an
exercise price equal to the market value of the Company's shares on the date of
grant. Since the financial reward provided by stock options will be dependent on
appreciation in the market value of the Company's shares, stock options
effectively reward executives only for performance that results in improved
market performance of the Company's stock, which directly benefits all
shareholders. Generally, the number of shares included in each stock option
grant is determined based on an evaluation of the executive's importance to the
future performance of the Company, as well as his or her past performance. As a
result, as a general rule, the more senior the executive, the greater the number
of option shares that are awarded. In most instances options are granted on
terms that provide that they will become exercisable (or "vest") in annual or
other periodic installments (such as, for example, 20% per year over five
years), so that if an executive's employment is terminated prior to the full
vesting of the options, whether by the Company or by the executive, the unvested
portion terminates automatically, thereby creating an incentive for the
executive to remain in the Company's employ for at least the vesting period.
Compensation Paid to the Chief Executive. The Board of Directors met,
without Mr. Nightingale participating, to determine his compensation as the
Company's CEO compensation for the fiscal year ended June 30, 2000. That
determination was made on the basis of the policies and principles described
above. Mr. Nightingale's salary was increased late in fiscal 1999 in conjunction
with his promotion to President and Chief Executive Officer. The increase in the
dollar amount of the salary paid to him in fiscal 2000 reflects a full year of
that salary increase.
E. T. Gravette, Jr.
Carl Hathaway
John G. Hockin, II
Larry K. Reynolds
W. T. Nightingale, III
Notwithstanding anything to the contrary set forth in the Company's
previous filings under the Securities Act of 1933, as amended, or the Securities
Exchange Act of 1934, as amended, that might incorporate future filings,
including this Proxy Statement, in whole or in part, the foregoing Report and
the Performance Graph on the following page shall not be incorporated by
reference into any such filings.
9
<PAGE> 13
COMPANY PERFORMANCE
The following graph sets forth a five year comparison of cumulative total
returns on investment for the Company, the S&P 500 Index, the Russell 2000
Index, the S&P Chemicals Index and the S&P Chemicals (Specialty) Index. The
total cumulative return on investment, as shown in the graph, is the change in
the period-end stock price (plus reinvested dividends) for each of the periods
for the Company and each of those Indexes for each of the years that began July
1, 1995 and ended June 30, 2000. The total shareholder return assumes $100
invested at the beginning of the period in the Company's common stock, the S&P
500, the Russell 2000 Index; the S&P Chemicals Index and the S&P Chemicals
(Specialty) Index.
COMPARISON OF CUMULATIVE TOTAL RETURN
[PERFORMANCE GRAPH]
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
6/30/95 6/30/96 6/30/97 6/30/98 6/30/99 6/30/00
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Pacer Technology 100.00 123.53 114.70 132.35 105.88 82.35
S&P 500 100.00 126.00 169.73 220.92 271.19 290.85
Russell 2000 100.00 123.89 144.12 167.90 170.42 175.62
S&P Chemicals 100.00 124.71 177.75 204.75 209.75 152.69
S&P Chemicals
(Specialty) 100.00 112.63 121.21 121.57 151.58 108.96
--------------------------------------------------------------------------------
</TABLE>
Source: Research Data Group, Inc.
The above graph compares the performance of the Company with (i) two
broad-based market indexes, the S&P 500 Composite Index and the Russell 2000
Index; and (ii) two market indexes each comprised of publicly traded companies
engaged in businesses similar to that of the Company: the S&P Chemicals Index
and the S&P Chemicals (Specialty) Index. It is the Company's intention, in
future years, to substitute the Russell 2000 Index for the S&P 500 Composite
Index and the S&P Chemicals (Specialty) Index for the S&P Chemicals Index
because the capitalization of the Company is not at all comparable to the
capitalization of most of the companies in the S&P 500 Composite Index and the
companies in the S&P Chemical Index include many manufacturers the business of
which differ markedly from that of the Company's. By contrast, the Russell 2000
Index includes primarily so-called "small cap" companies the capitalization of
many of which is more comparable to that of the Company's capitalization. And,
the S&P Chemicals (Specialty) Index includes companies that, like the Company,
manufacture products that utilize specialized chemicals and does not include the
many larger companies found in the S&P Chemicals Index that manufacture more
diverse chemical-based products.
10
<PAGE> 14
PROPOSAL NO. 2
REVERSE STOCK SPLIT
INTRODUCTION AND BOARD RECOMMENDATION
The Board of Directors has determined that it would be advisable to obtain
the approval of the shareholders for a reverse stock split of the Company's
outstanding shares that would reduce the number of outstanding shares in order
to increase the trading price of Pacer's shares on the NASDAQ SmallCap Stock
Market. This action was taken by the Board because the trading prices of Pacer's
shares has recently declined below $1.00, and a failure to increase the trading
price above $1.00 will result in the delisting of Pacer's shares from the NASDAQ
SmallCap Market; a result that would harm Pacer's shareholders by reducing the
marketability and the liquidity of their shares. If a reverse stock split were
to be implemented the number of Pacer shares owned by each shareholder would be
reduced in the same proportion as the reduction in the total number of shares
outstanding, so that percentage of the outstanding shares owned by each
shareholder would remain unchanged.
By obtaining shareholder approval of a reverse stock split at the Annual
Meeting, the Board will be able to determine the most appropriate time to
effectuate the reverse stock split, based on such factors as prevailing market
conditions, prevailing trading prices of Pacer's shares and the amount of time
NASDAQ is prepared to give Pacer to achieve compliance with the trading price
requirements of its listing regulations. The Board also believes that, because
it is not possible to predict market conditions at the time the reverse stock
split is to be effectuated, it would be in the best interests of Pacer's
shareholders if the Board were to be able to determine, within specified limits,
approved in advance by the shareholders, the appropriate reverse stock split
ratio.
Accordingly, the Board is asking that shareholders approve three
alternative reverse stock splits: a 1-for-3 reverse stock split, a 1-for-4
reverse stock split and a 1-for-5 reverse stock split, with the Board of
Directors authorized to determine which one of those reverse stock splits to
implement, based on market and other relevant conditions at time the Board
decides that the reverse stock split needs to be implemented. A vote in favor of
Proposal No. 2 (the "Reverse Stock Split Proposal") will be a vote for approval
of each of those reverse split ratios and for the granting of authority to the
Board to effectuate one of those three reverse stock splits as it deems
advisable at the time the reverse stock split is to be effectuated.
Under applicable California law, the Board of Directors also will have the
discretion to abandon the Reverse Stock Split, if the trading price of Pacer's
shares increases above NASDAQ's minimum trading price requirements prior to its
implementation or market or other conditions make implementation of the Reverse
Stock Split inadvisable
The vote required for approval of the Reverse Stock Split Proposal is a
majority of the outstanding shares of Common Stock of the Company.
THE BOARD OF DIRECTORS HAS DETERMINED THAT THE REVERSE STOCK SPLIT PROPOSAL
IS ADVISABLE AND IN THE BEST INTERESTS OF THE SHAREHOLDERS AND RECOMMENDS THAT
THE SHAREHOLDERS VOTE "FOR" APPROVAL OF THE REVERSE STOCK SPLIT PROPOSAL.
REASONS FOR THE REVERSE STOCK SPLIT
The primary purpose of the Reverse Stock Split is to combine Pacer's
outstanding shares into a smaller number of shares so that Pacer's shares will
trade at a significantly higher price per share than its recent trading prices.
During the period from April 1, 2000 to September 30, 2000, the closing bid
price of Pacer's shares on the Nasdaq SmallCap Market ranged from a high of
$1.00 to a low of $0.766 per share and on October 19, 2000, the reported closing
bid price was $0.8125 per share. We believe that such a low quoted market price
per share is discouraging potential new investors and decreasing the liquidity
of Pacer's Common Stock. Most importantly, pursuant to Nasdaq SmallCap Market
listing requirements, the minimum bid price of Pacer's shares must be at least
$1.00 per share for continued inclusion on the Nasdaq SmallCap Market. We
believe,
11
<PAGE> 15
although we cannot assure, that the Reverse Stock Split will enable the Common
Stock to trade above that $1.00 minimum bid price and enable Pacer's shares to
continue to trade on the NASDAQ SmallCap Market.
We believe that maintaining the listing of Pacer's Common Stock on the
Nasdaq SmallCap Market is in the best interests of Pacer and its shareholders.
Inclusion in the Nasdaq SmallCap Market increases liquidity and may minimize the
spread between the "bid" and "asked" prices quoted by market makers. Further,
the continued Nasdaq SmallCap Market listing may enhance the Company's access to
capital and increase its flexibility in responding to anticipated capital
requirements. We also believe that that prospective investors will view an
investment in Pacer more favorably if our shares qualify for listing on the
Nasdaq SmallCap Market.
For the above reasons, we believe that having the ability to effectuate the
Reverse Stock Split in order to be able to ensure compliance with the Nasdaq
SmallCap Market listing requirements is in the best interests of Pacer and its
shareholders. However, there can be no assurances that the Reverse Stock Split,
if effected, will have the desired effects. We anticipate that, following the
consummation of the Reverse Stock Split, Pacer's Common Stock will trade at a
price per share that is significantly higher than current market prices.
However, there can be no assurance that, following the Reverse Stock Split, the
Common Stock will trade at three times (in the case of a 1-for-3 reverse split),
four times (in the cash of a 1-for-4 reverse split) or five times (in the case
of a 1-for-5 reverse split) the market price of Pacer's Common Stock immediately
prior to the Reverse Stock Split.
If the Reverse Stock Split Proposal is approved by the shareholders at the
Annual Meeting, we expect to implement it only if it becomes necessary to ensure
Pacer's continued compliance with the listing requirements of the Nasdaq
SmallCap Market. Accordingly, notwithstanding approval of the Reverse Stock
Split Proposal by the shareholders, the Board of Directors may elect to delay,
or even abandon entirely the Reverse Stock Split.
IMPLEMENTATION AND EFFECTS OF THE REVERSE STOCK SPLIT
If the shareholders approve the Reverse Stock Split Proposal and the Board
of Directors determines it is necessary to effectuate a Reverse Stock Split, the
Board would:
- determine which of the three reverse stock splits specified above is
advisable (1-for-3, 1-for-4, or 1-for-5), based on market and other
relevant conditions and the trading prices of Pacer's shares at that
time; and
- direct management to file an Amendment of the Articles of Incorporation
with the California Secretary of State (the "Reverse Split Amendment")
that would specify that, on the filing of the Amendment, each of Pacer's
outstanding shares would automatically be combined and converted into (i)
one-third of a share, if the Board had determined to proceed with a
1-for-3 reverse stock split, or (ii) one-fourth of a share if it had
determined to proceed with a 1-for-4 reverse stock split, or (iii) one-
fifth of a share if it had determined to proceed with a 1-or-5 reverse
stock split.
As a result of the filing of that Amendment, each shareholder's shares
would be automatically converted into (i) one-third ( 1/3), one-fourth ( 1/4) or
one-fifth ( 1/5) of the number of shares that he or she had owned immediately
prior to such filing, depending on whether the Board had determined to proceed
with a 1-for-3, 1-for-4 or 1-for-five reverse stock split, respectively.
We estimate that, following the Reverse Stock Split, Pacer would have
approximately the same number of shareholders and, except for effect of the
payment of cash for fractional shares as described below, the completion of the
Reverse Stock Split would not affect any shareholder's proportionate equity
interest in Pacer. Therefore, by way of example, a shareholder who owns a number
of shares that, prior to the Reverse Stock Split, represented one-half of a
percent of Pacer's outstanding shares, would continue to own one-half of a
percent of its outstanding shares after the Reverse Stock Split.
The Reverse Stock Split also will not affect the number of shares of Common
Stock that the Board is authorized to issue by Pacer's Articles of
Incorporation, which will remain unchanged at 50 million shares.
12
<PAGE> 16
However, it will have the effect of increasing the number of shares available
for future issuance, because of the reduction in the number of shares that will
be outstanding after giving effect to the Reverse Stock Split.
The following table sets forth the effects of the Reverse Stock Split on
the authorized and outstanding number of Pacer's shares and the number of shares
that will be available for issuance after the Reserves Stock Split:
<TABLE>
<CAPTION>
AFTER REVERSE STOCK SPLIT
PRIOR TO -----------------------------------------------
REVERSE STOCK 1-FOR-3 1-FOR-4 1-FOR-5
SPLIT REVERSE SPLIT REVERSE SPLIT REVERSE SPLIT
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Authorized Shares................ 50,000,000 50,000,000 50,000,000 50,000,000
Outstanding Shares............... 16,515,025 5,505,008 4,128,756 3,303,005
---------- ---------- ---------- ----------
Shares Available for Issuance.... 33,484,975 44,494,992 45,871,244 46,696,995
</TABLE>
Cash to be Paid for Fractional Shares. Whichever reverse stock split ratio
is selected, implementation of a reverse stock split will result in some
shareholders owning a fractional share of Common Stock. For example, if a
1-for-3 reverse stock split were to be implemented, the shares owned by a
shareholder with 1,000 shares would be converted into 333.3 shares. To avoid
such a result, shareholders that would otherwise be entitled to receive a
fractional share of Common Stock as a consequence of the Reverse Stock Split
will, instead, receive from the Company a cash payment in U.S. dollars equal the
value of that fractional share, determined on the basis of the average bid
prices of Pacer's Common Stock on the Nasdaq SmallCap Market for the five
trading days immediately preceding the effective date of the reverse stock split
(as adjusted for that Reverse Stock Split).
If any shareholder owns, in total, fewer than three shares (in the case of
the 1-for-3 reverse stock split), fewer than four shares (in the case of the
1-for-4 reverse stock split), or fewer than five shares (in the case of the
1-for-5 reverse stock split), that shareholder's shares would be converted into
a fractional share of stock and, therefore, that shareholder would receive only
cash in place of the fractional share as a result of the implementation of the
Reverse Stock Split. See "Determination of Amount of Cash Payable for Fractional
Shares" below. The interest of such shareholder in the Company would, therefore,
be terminated, and such shareholder would have no right to share in the assets
or future growth of the Company. Accordingly, each shareholder that owns five
shares or more of Pacer Common Stock prior to the Reverse Stock Split will
continue to own shares of Common Stock after the Reverse Stock Split and will
continue to share in the assets and future growth of the Company as a
shareholder. Therefore, any shareholder that owns less than five shares can
assure his or her continued ownership of shares of stock of Pacer after the
Reverse Split by purchasing a number of shares sufficient to increase the total
number of shares that he or she owns to five or more.
The Reverse Stock Split also will result in some shareholders owning "odd
lots" of less than 100 shares of Common Stock as a result of the Reverse Stock
Split. Brokerage commissions and other costs of transactions in odd lot shares
may be higher, particularly on a per-share basis, than the cost of transactions
in even multiples of 100 shares.
Effect of Reverse Stock Split on Options. The number of shares subject to
outstanding Pacer stock options also will automatically be reduced in the same
ratio as the reduction in the outstanding shares. Correspondingly, the per share
exercise price of those options will be increased in direct proportion to the
reverse stock split ratio, so that the aggregate dollar amount payable for the
purchase of the shares subject to the options will remain unchanged. For
example, assume that a 1-for-4 reverse stock split is implemented and that an
optionee holds options to purchase 10,000 shares at an exercise price of $1.00
per share. On the effectiveness of the 1-for-4 reverse stock split, the number
of shares subject to that option would be reduced to 2,500 shares and the
exercise price would be proportionately increased to $4.00 per share.
EXCHANGE OF STOCK CERTIFICATES AND PAYMENT FOR FRACTIONAL SHARES
The combination of and reduction in the number of Pacer's outstanding
shares as a result of the Reverse Stock Split will occur automatically on the
date that the Reverse Stock Split Amendment is filed with the California
Secretary of State (the "Effective Date"), without any action on the part of
shareholders of the
13
<PAGE> 17
Company and without regard to the date stock certificates representing the
shares prior to the Reverse Stock Split are physically surrendered for new stock
certificates.
Exchange of Stock Certificates. As soon as practicable after the Effective
Date, transmittal forms will be mailed to each holder of record of certificates
for shares of Common Stock to be used in forwarding such certificates for
surrender and exchange for certificates representing the number of shares of
Common Stock such shareholder is entitled to receive as a result of the Reverse
Stock Split. The transmittal forms will be accompanied by instructions
specifying other details of the exchange. Upon receipt of such transmittal form,
each shareholder should surrender the certificates representing shares of Common
Stock prior to the Reverse Stock Split, in accordance with the applicable
instructions. Each holder who surrenders certificates will receive new
certificates representing the whole number of shares of Common Stock that he or
she holds as a result of the Reverse Stock Split and any cash payable in lieu of
a fractional share. SHAREHOLDERS SHOULD NOT SEND THEIR STOCK CERTIFICATES UNTIL
THEY RECEIVE A TRANSMITTAL FORM.
Effect of Failure to Exchange Stock Certificates. After the Effective Date,
each certificate representing shares of Common Stock outstanding prior to the
Effective Date (an "old certificate") will, until surrendered and exchanged as
described above, be deemed, for all corporate purposes, to evidence ownership of
the whole number of shares of Common Stock, and the right to receive from the
Company the amount of cash for any fractional shares, into which the shares of
Common Stock evidenced by such certificate have been converted by the Reverse
Stock Split. The holder of any unexchanged old certificates will not be entitled
to receive any dividends or other distributions payable by the Company after the
Effective Date, until the old certificates have been surrendered. Such dividends
and distributions, if any, will be accumulated, and at the time of surrender of
the old certificates, all such unpaid dividends or distributions, if any, will
be paid without interest.
Determination of Amount of Cash Payable for Fractional Shares. If the
number of shares of Common Stock to which a holder is entitled as a result of
the Reverse Stock Split would otherwise include a fraction, the Company will pay
to that shareholder, in lieu of issuing fractional shares of stock, cash in an
amount equal to the same fraction multiplied by the average closing price of
Pacer's shares on the Nasdaq SmallCap Market for the five days immediately
preceding the Effective Date (as adjusted for the Reverse Stock Split). For
example, if the Board determined to implement a 1-for-4 Reverse Stock Split, the
shares of a shareholder that owned 10,530 shares prior to the Reverse Stock
Split would be converted into 2,632.5 shares as a result of the Reverse Stock
Split. If the average of the pre-split closing bid prices of Pacer's shares for
that five day period was $0.90 per share, that shareholder would receive, in
exchange for his or her stock certificates evidencing those 10,530 shares, a
stock certificate for 2,632 whole shares and a check in the amount of $1.80 for
the 0.5 fractional share ($0.90 x 4 = $3.60 / 0.5 = $1.80).
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
The following discussion describes certain material federal income tax
considerations relating to the Reverse Stock Split that are generally applicable
to the Company and its shareholders. This discussion is based upon the Internal
Revenue Code of 1986 (the "Code"), existing and proposed regulations thereunder,
legislative history, judicial decisions, and current administrative rulings and
practices, all as amended and in effect on the date of this Proxy Statement. Any
of these authorities could be repealed, overruled, or modified at any time,
either prospectively or retroactively, and, accordingly, could cause the tax
consequences to vary substantially from the consequences described herein. 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. All shareholders
should consult with their own tax advisors.
This discussion does not address all of the federal income tax consequences
that may be relevant to particular shareholders in light of their personal
circumstances (such as persons subject to the alternative minimum tax) or to
certain types of shareholders (such as dealers in securities, insurance
companies, foreign individuals and entities, financial institutions, tax-exempt
entities and persons that do not hold Pacer's shares as a capital asset) who may
be subject to special treatment under the federal income tax laws. This
discussion
14
<PAGE> 18
also does not address any tax consequences under state, local, or foreign laws
or the tax consequences to holders of options or other rights to acquire Pacer
shares.
SHAREHOLDERS ARE URGED TO CONSULT THEIR TAX ADVISERS AS TO THE PARTICULAR
TAX CONSEQUENCES TO THEM OF THE REVERSE STOCK SPLIT, INCLUDING THE APPLICABILITY
OF ANY STATE, LOCAL, OR FOREIGN TAX LAWS, CHANGES IN APPLICABLE TAX LAWS, AND
ANY PENDING OR PROPOSED LEGISLATION.
1. Tax Consequences to Pacer. Pacer should not recognize any gain or loss
as a result of the Reverse Stock Split.
2. Tax Consequences for Shareholders Generally. No gain or loss should be
recognized by a shareholder who receives only Common Stock as a result of the
Reverse Stock Split. A shareholder who receives cash in lieu of a fractional
share of Common Stock will be treated as if the fractional share had been issued
in the Reverse Stock Split and then redeemed by Pacer. A shareholder receiving
cash in lieu of a fractional share that otherwise would be held as a capital
asset generally should recognize capital gain or loss on an amount equal to the
difference between the cash received and the shareholder's basis in such
fractional share of Common Stock. For this purpose, a shareholder's basis in
such fractional share of Common Stock will be determined as if the shareholder
actually received such fractional share.
3. A Shareholder's Tax Basis in Shares Received upon the Reverse Stock
Split. Except as provided above with respect to fractional shares, the aggregate
tax basis of the shares of Common Stock held by a shareholder following the
Reverse Stock Split will equal the shareholder's aggregate basis in the shares
of Common Stock held immediately prior to the Reverse Stock Split and generally
will be allocated among the shares of Common Stock held following the Reverse
Stock Split on a pro-rata basis. Shareholders who have used the specific
identification method to identify their basis in shares of Common Stock combined
in the Reverse Stock Split should consult their own tax advisors to determine
their basis in the post-Reverse Stock Split shares that they will receive in
exchange therefor.
REQUIRED VOTE
The affirmative vote of the holders of a majority of the Common Stock
present or represented at the Special Meeting is required to approve Proposal
No. 2.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS
VOTE "FOR" PROPOSAL NO. 2
INDEPENDENT PUBLIC ACCOUNTANTS
Ernst & Young LLP, who were the Company's independent accountants for the
fiscal year ended June 30, 2000, have been selected by the Board of Directors as
the Company's independent accountants for the fiscal year ending June 30, 2001.
A representative of Ernst & Young LLP will attend the Annual Meeting, will have
an opportunity to make a statement and will be available to respond to
appropriate questions.
SHAREHOLDER PROPOSALS
Any shareholder desiring to submit a proposal for action at the 2001 annual
meeting of shareholders and presentation in the Company's proxy statement for
that meeting should arrange for such proposal to be delivered to the Company at
its principal place of business no later than June 23, 2001. Matters pertaining
to such proposals, including the number and length thereof, eligibility of
persons entitled to have such proposals included and other aspects are regulated
by the Securities Exchange Act of 1934, Rules and Regulations of the Securities
and Exchange Commission and other laws and regulations to which interested
persons should refer.
15
<PAGE> 19
OTHER MATTERS
Management is not aware of any other matters to come before the Annual
Meeting. If any other matter not mentioned in this Proxy Statement is brought
before the Meeting, the proxy holders named in the enclosed Proxy will have
discretionary authority to vote all proxies with respect thereto in accordance
with their judgment.
By Order of the Board of Directors
W. T. Nightingale III,
President and Chief Executive Officer
October 23, 2000
The Annual Report to Shareholders of the Company for the fiscal year ended
June 30, 2000 is being mailed concurrently with this Proxy Statement to all
shareholders of record as of September 25, 2000. The Annual Report is not to be
regarded as proxy soliciting material or as a communication by means of which
any solicitation is to be made.
COPIES OF THE COMPANY'S ANNUAL REPORT TO THE SECURITIES AND EXCHANGE
COMMISSION ON FORM 10-K (WITHOUT EXHIBITS) FOR THE FISCAL YEAR ENDED JUNE 30,
2000 WILL BE PROVIDED TO SHAREHOLDERS WITHOUT CHARGE UPON WRITTEN REQUEST TO THE
SECRETARY, PACER TECHNOLOGY, 9420 SANTA ANITA AVENUE, RANCHO CUCAMONGA,
CALIFORNIA 91730.
16
<PAGE> 20
APPENDIX A
CERTIFICATE OF AMENDMENT
OF
ARTICLES OF INCORPORATION
OF
PACER TECHNOLOGY
W. T. Nightingale III, and Larry K. Reynolds hereby certify:
1. They are the President and Secretary, respectively, of Pacer Technology,
a California corporation (the "Corporation").
2. Article IV of the Corporation's Articles of Incorporation is amended to
read in its entirety as follows:
This corporation is authorized to issue only one class of shares, and
the total number of shares which it is authorized to issue is 50,000,000
shares. Upon the amendment of this Article to read as herein set forth,
each outstanding share of Common Stock is combined and converted into
[one-third] [one-fourth] [one-fifth] of a share of Common Stock; provided,
however, that fractional shares of Common Stock will not be issued in
connection with such combination, and each holder of a fractional share of
Common Stock shall receive in lieu thereof a cash payment from the
Corporation determined by multiplying such fractional share of Common Stock
by [three] [four] [five] times the arithmetic mean average closing price
per share of Common Stock on the Nasdaq SmallCap Market for the five
trading days immediately preceding the effective date of such
reclassification and conversion, as determined by the Board of Directors,
such payment to be made upon such other terms and conditions as the
officers of the Corporation, in their judgment, determine to be advisable
and in the best interests of the Corporation.
3. The foregoing amendment of the Corporation's Articles of Incorporation
has been duly approved by the Board of Directors.
4. The foregoing amendment of the Corporation's Articles of Incorporation
has been duly approved by the required vote of the shareholders of the
Corporation in accordance with Section 902 of the Corporations Code. The total
number of shares outstanding was 16,515,025. The percentage vote required was
more than 50% and the number of shares voting in favor of the foregoing
amendment of the Articles of Incorporation equaled or exceeded the vote
required.
Each of the undersigned declares under penalty of perjury under the laws of
the State of California that the matters set out in the foregoing certificate
are true and correct of their own knowledge.
Executed on at Rancho Cucamonga, California
--------------------------------------
W. T. Nightingale, III, President
--------------------------------------
Larry K. Reynolds, Secretary
A-1
<PAGE> 21
PACER TECHNOLOGY
PROXY SOLICITED BY THE BOARD OF DIRECTORS
ANNUAL MEETING OF THE SHAREHOLDERS
Tuesday, November 21, 2000 at 9:00 a.m. Pacific Time
at the Hilton Hotel - Ontario Airport
700 North Haven Avenue
Ontario, California 91764
Pacer Technology PROXY
9420 Santa Anita Avenue
Rancho Cucamonga, CA 91730
The undersigned hereby revokes all previously granted proxies, and nominates,
constitutes and appoints E. T. Gravette Jr., Larry K. Reynolds and W. T.
Nightingale III, and each of them individually, the attorney, agent and proxy of
the undersigned, with full power of substitution, to vote all stock of PACER
TECHNOLOGY which the undersigned is entitled to represent and vote at the 2000
Annual Meeting of Shareholders of the Company, and at any and all adjournments
or postponements thereof, as fully as if the undersigned were present and voting
at the meeting, as shown on the reverse side of this Proxy:
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, YOU ARE URGED TO COMPLETE,
SIGN, DATE AND RETURN THIS PROXY, WHICH MAY BE REVOKED AT ANY TIME
PRIOR TO ITS USE.
IMPORTANT - PLEASE SIGN AND DATE ON OTHER SIDE AND RETURN PROMPTLY
See reverse for voting instructions.
<PAGE> 22
COMPANY #
CONTROL #
THERE ARE TWO WAYS TO VOTE YOUR PROXY: VIA THE INTERNET AND BY MAIL
VOTE BY INTERNET - http://www.eproxy.com/ptch/ - QUICK *** EASY *** IMMEDIATE
o Use the Internet to vote your proxy 24 hours a day, 7 days a week until 12
noon (CT) on November 20, 2000.
o You will be prompted to enter your 3-digit Company Number and your 7-digit
Control Number which are located above to obtain your records and create an
electronic ballot.
VOTE BY MAIL
Mark, sign and date your proxy card and return it in the postage-paid envelope
we have provided or return it to PACER TECHNOLOGY, C/O SHAREOWNER SERVICES(SM),
P.O. BOX 64873, ST. PAUL, MN 55164-0873.
IF YOU VOTE BY INTERNET, PLEASE DO NOT MAIL YOUR PROXY CARD
\/ Please detach here \/
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THE DIRECTORS RECOMMEND A VOTE FOR THE ELECTION OF THE DIRECTORS NAMED BELOW AND
FOR THE REVERSE STOCK SPLIT PROPOSAL
1. ELECTION OF DIRECTORS
Election of the following nominees directors for term of one year:
<TABLE>
<S> <C> <C> <C>
01 Ellis T. Gravette Jr. 04 W. T. Nightingale III [ ] FOR ALL [ ] WITHHOLD
02 Carl Hathaway 05 Larry K. Reynolds NOMINEES AUTHORITY
03 John D. Hockin, II LISTED BELOW TO VOTE FOR
(EXCEPT AS ALL NOMINEES
MARKED TO THE LISTED BELOW
CONTRARY BELOW)
(INSTRUCTION: To withhold authority to vote for any nominee, ----------------------------------------
print that nominee's number in the space provided to the right.)
----------------------------------------
</TABLE>
2. REVERSE STOCK SPLIT PROPOSAL
Approval of an amendment of the Articles of Incorporation to effectuate one
of the following alternative reverse stock splits of the outstanding shares,
as determined by the Board of Directors: (i) a 1-for-3 reverse stock split;
(ii) a 1-for-4 reverse stock split; or (iii) a 1-for-5 reverse stock split.
For [ ] Against [ ] Abstain [ ]
3. In their discretion, on such other business as may properly come before the
meeting or any adjournment thereof.
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED BY THE
SHAREHOLDER ON THIS PROXY. WHERE NO DIRECTION IS GIVEN, SUCH SHARES WILL BE
VOTED FOR THE ELECTION OF THE DIRECTORS NAMED ABOVE AND FOR APPROVAL OF THE
REVERSE STOCK SPLIT PROPOSAL. THIS PROXY CONFERS DISCRETIONARY AUTHORITY TO
CUMULATE VOTES FOR ANY AND ALL OF THE NOMINEES FOR ELECTION OF DIRECTORS FOR
WHICH AUTHORITY TO VOTE HAS NOT BEEN WITHHELD AND TO VOTE ON ALL OTHER MATTERS
WHICH MAY COME BEFORE THE ANNUAL MEETING.
I plan to attend the Annual Meeting [ ] Address change? Mark Box [ ]
Indicate changes below:
Date ______________________________, 2000
_________________________________________
_________________________________________
Signature(s)
(Please sign your name exactly as it
appears hereon. Executors, administrators,
guardians, officers of corporations, and
others signing in a fiduciary capacity
should state their full titles as such.)
