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))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-12

CANNONDALE CORPORATION
--------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)

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(Name of Person(s) Filing Proxy Statement, if other than Registrant)

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pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
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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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2

CANNONDALE CORPORATION
16 TROWBRIDGE DRIVE
BETHEL, CONNECTICUT 06801
(203) 749-7000

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

TO BE HELD ON NOVEMBER 14, 2001

To the Stockholders of Cannondale Corporation:

PLEASE TAKE NOTICE that the Annual Meeting of Stockholders of Cannondale
Corporation (the "Company") will be held on Wednesday, November 14, 2001, at
10:00 a.m., Eastern Standard Time, at the Company's corporate headquarters, 16
Trowbridge Drive, Bethel, Connecticut, for the following purposes:

1. To elect two (2) Class I directors of the Company for a three-year term;

2. To consider and act upon a proposal to ratify the selection of Ernst &
Young LLP as independent accountants of the Company for the 2002 fiscal
year; and

3. To transact such other business as may properly come before the meeting
or any adjournments thereof.

Accompanying this Notice is a Proxy, a Proxy Statement and a copy of the
Company's Annual Report to Stockholders for fiscal year 2001.

WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE ANNUAL MEETING, PLEASE SIGN
AND DATE THE PROXY AND RETURN IT IN THE ENCLOSED ENVELOPE PROVIDED FOR THAT
PURPOSE. The Proxy may be revoked at any time prior to the time that it is
voted. Only stockholders of record as of the close of business on October 8,
2001 will be entitled to vote at the meeting.

By Order of the Board of Directors

JOHN T. CAPETTA
Secretary

Bethel, Connecticut
October 12, 2001
3

CANNONDALE CORPORATION
16 TROWBRIDGE DRIVE
BETHEL, CONNECTICUT 06801

------------------------

PROXY STATEMENT
------------------------

This Proxy Statement is furnished in connection with the solicitation by
the Board of Directors and management of Cannondale Corporation, a Delaware
corporation (the "Company"), of proxies for use at the Annual Meeting of
Stockholders of the Company (the "Annual Meeting") to be held at Cannondale
Corporation headquarters, 16 Trowbridge Drive, Bethel, Connecticut on Wednesday,
November 14, 2001, at 10:00 a.m., Eastern Standard Time, and at any and all
postponements or adjournments thereof, for the purposes set forth in the
accompanying Notice of Annual Meeting.

This Proxy Statement, Notice of Annual Meeting and accompanying proxy card
are first being mailed to stockholders on or about October 12, 2001.

GENERAL

Only stockholders of record at the close of business on October 8, 2001 are
entitled to notice of and to vote the shares of common stock, par value $0.01
per share, of the Company (the "Common Stock") held by them on that date at the
Annual Meeting or any postponements or adjournments thereof. A list of
stockholders entitled to vote at the meeting will be available for inspection at
the meeting.

If the accompanying proxy card is properly signed and returned to the
Company and not revoked, it will be voted in accordance with the instructions
contained therein. Unless contrary instructions are given, the persons
designated as proxy holders in the proxy card will vote (i) FOR the slate of
nominees proposed by the Board of Directors, (ii) FOR ratification of the
appointment of Ernst & Young LLP as the Company's independent accountants for
the fiscal year ending June 29, 2002 ("fiscal 2002"), and (iii) with regard to
all other matters which may be brought before the Annual Meeting, in accordance
with the judgment of the person or persons voting the proxies. Each stockholder
may revoke a previously granted proxy at any time before it is exercised by
filing with the Company a revoking instrument or a duly executed proxy bearing a
later date. The powers of the proxy holders will be suspended if the person
executing the proxy attends the Annual Meeting in person and so requests.
Attendance at the Annual Meeting will not, in itself, constitute a revocation of
a previously granted proxy.

The presence at the Annual Meeting, in person or by proxy, of the holders
of a majority of the shares of Common Stock outstanding on October 8, 2001, will
constitute a quorum. As of October 8, 2001, 7,543,364 shares of Common Stock
were outstanding. Each outstanding share entitles its holder to cast one vote on
each matter to be voted upon at the Annual Meeting.

In determining the presence of a quorum at the Annual Meeting, abstentions
and broker non-votes (votes withheld by brokers in the absence of instructions
from the street-name holders) will be counted. Directors will be elected by a
plurality of votes cast at the Annual Meeting. Abstentions are not counted
toward a nominee's number of total votes cast. All other matters which properly
come before the Annual Meeting must be approved by a majority of the votes
present at the Annual Meeting. Abstentions will have the practical effect of
voting against such matter, since an abstention is one less vote for approval.
Broker non-votes on any matter will have no impact on such matter since they are
not considered "shares present" for voting purposes.
4

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table reflects shares of Common Stock beneficially owned (or
deemed to be beneficially owned pursuant to the rules of the Securities and
Exchange Commission) as of September 28, 2001, by (i) each person known to the
Company to own more than 5% of the outstanding Common Stock as of September 28,
2001; (ii) each director and nominee to be a director of the Company; (iii) each
of the executive officers named in the Summary Compensation Table included
elsewhere herein; and (iv) the current directors and executive officers of the
Company as a group. Unless otherwise indicated in the footnotes below, the
persons named in the table have sole voting and investment power with respect to
all shares shown as beneficially owned.

<Table>
<Caption>
PERCENT OF
BENEFICIAL OWNER NUMBER OF SHARES(1) COMMON STOCK
---------------- ------------------- ------------

Joseph S. Montgomery(2)(3).......................... 1,906,494 23.5%
James Scott Montgomery(4)........................... 456,772 6.0
William A. Luca..................................... 275,654 3.5
Daniel C. Alloway................................... 214,630 2.8
Leonard J. Konecny.................................. 42,582 *
Michael T. Dower.................................... 9,765 *
John Sanders........................................ 6,000 *
Sally G. Palmer..................................... 6,000 *
Michael J. Stimola(5)............................... 16,200 *
Gregory Griffin..................................... 7,880 *
Dimensional Fund Advisors Inc.(6)................... 624,100 8.3
Arthur E. Hall(7)................................... 567,500 7.5
Kayne Anderson Capital Advisors, L.P. and Richard A.
Kayne(8).......................................... 546,086 7.2
James R. Pyne(9).................................... 533,333 6.6
Royce & Associates, Inc. and Charles M. Royce(10)... 505,400 6.7
All current directors and executive officers as a
group
(12 persons)...................................... 3,009,864 34.4%
</Table>

---------------
* Represents less than 1% of the Company's outstanding Common Stock.

(1) The number of shares of Common Stock deemed beneficially owned includes
shares issuable pursuant to stock options which may be exercised within 60
days of September 28, 2001, for the following persons: Mr. Joseph
Montgomery -- 128,750 shares, Mr. James Scott Montgomery -- 71,000, Mr.
Luca -- 245,694, Mr. Alloway -- 185,549, Mr. Konecny -- 42,582, Mr.
Sanders -- 6,000, Ms. Palmer -- 6,000, Mr. Stimola -- 6,000, and Mr.
Griffin -- 6,000.

(2) Mr. Joseph S. Montgomery has a business address c/o Cannondale
Corporation, 16 Trowbridge Drive, Bethel, Connecticut 06801.

(3) Includes 444,444 shares issuable upon conversion of a convertible
debenture held by Mr. Montgomery.

(4) Includes 4,935 shares held in trust for Mr. James Scott Montgomery's minor
children.

(5) Includes 5,000 shares held in Mr. Stimola's spouse's Individual Retirement
Account.

(6) Based on information contained in a Schedule 13G filed by Dimensional Fund
Advisors Inc. ("Dimensional") on February 2, 2001. Dimensional is a
registered investment advisor that furnishes investment advice to four
registered investment companies and serves as an investment manager to
certain other investment vehicles. Dimensional disclaims beneficial
ownership of the shares reported. Dimensional has an address at 1299 Ocean
Avenue, 11th Floor, Santa Monica, California 90401.

(7) Based on information contained in Schedule 13D filed jointly by Arthur E.
Hall and certain related parties on February 8, 1998. Mr. Hall has sole
voting and dispositive power for 525,000 shares and shared voting and
dispositive power for 42,500 shares. Mr. Hall has an address at 1726
Cedarwood Drive, Minden, Nevada 89423.

(8) Based on information contained in Schedule 13G filed jointly by Kayne
Anderson Capital Advisors, L.P. ("Kayne Anderson") and Richard A. Kayne on
October 26, 2000. Kayne Anderson and Mr. Kayne have shared voting and
dispositive power for 544,801 shares held by investment funds and managed
accounts. Mr. Kayne has sole voting and dispositive power for 1,285 shares
held by him directly. Kayne Anderson and Mr. Kayne have an address at 1800
Avenue of the Stars, Second Floor, Los Angeles, California 90067.

(9) Consists of shares issuable upon conversion of a convertible debenture
held by Mr. Pyne.

(10) Based on information contained in Schedule 13G filed jointly by Royce &
Associates, Inc. and Charles M. Royce on February 7, 2001. Mr. Royce may
be deemed to be a controlling person of Royce & Associates and as such,
may be deemed to beneficially own the shares of Common Stock beneficially
owned by Royce & Associates. Mr. Royce disclaims beneficial ownership of
the shares held by Royce & Associates.

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5

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's executive officers, directors and
persons owning more than 10% of the Company's Common Stock ("Reporting Persons")
to file reports of ownership and reports of changes of ownership with the
Securities and Exchange Commission. Reporting Persons are required to furnish
the Company with copies of all Section 16(a) reports that they file. Based
solely upon a review of copies of these filings received, the Company believes
that with respect to the fiscal year ended June 30, 2001, all required filings
during this period were made on a timely basis, except a Form 3 was filed late
by Mark A. Charpentier (Vice President).

ITEM 1 -- ELECTION OF DIRECTORS

The Board of Directors of the Company is divided into three classes, as
nearly equal in number as possible. Each class serves three years, with the
terms of office of the respective classes expiring in successive years. The term
of office of directors in Class I expires at the 2001 Annual Meeting. The Board
of Directors proposes that the nominees described below be elected to Class I
for a new term of three years and until their successors are duly elected and
qualified. The Board of Directors has no reason to believe that either of the
nominees will not serve if elected, but if either of them should become
unavailable to serve as a director, and if the Board designates a substitute
nominee, the persons named as proxies will vote for the substitute nominee
designated by the Board.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE SLATE OF NOMINEES
DESCRIBED BELOW.

CLASS I -- DIRECTORS STANDING FOR ELECTION

JOSEPH S. MONTGOMERY, Director since 1971

Joseph S. Montgomery, 61, founded Cannondale in 1971 and has been its
Chairman, President and Chief Executive Officer and a director since its
formation. Mr. Montgomery is the father of James Scott Montgomery, who is also a
director.

MICHAEL J. STIMOLA, Director since 1995

Michael J. Stimola, 44, founded Sandvick Associates, Inc. in 1986 and has
been its President since its formation. Sandvick is a design and construction
company headquartered in Georgetown, Connecticut. See "Certain Relationships and
Related Transactions." Mr. Stimola is also the founder, Chief Executive Officer
and President of Sandella's Coffee Cafe, Inc., a company formed in 1994, of
which Mr. Joseph Montgomery is a director and principal stockholder. Sandella's
licenses a food system service for upscale gourmet quick-service restaurants.

3
6

CLASS II -- TERM EXPIRES AT THE 2002 ANNUAL MEETING

JOHN SANDERS, Director since 1998

John Sanders, 53, is currently engaged in venture capital investment with
Milstein Brothers Capital Partners. From 1998 to September 2000, he was with the
New York Islanders Hockey Club, L.P., where he served as President (1999 to
2000) and Senior Vice President-Administration and General Counsel (1998 to
1999). Prior to joining the Islanders, Mr. Sanders was a partner with the law
firm of Levett, Rockwood & Sanders since 1981.

JAMES SCOTT MONTGOMERY, Director since 1994

James Scott Montgomery, 40, is a private investor and provides consulting
services to the Company. He was the Vice President of Marketing of the Company
from 1993 to June 1997. His previous positions with the Company include founder
and President of the Sales and Trading Divisions of Cannondale Japan KK (1991 to
1993), co-founder and Managing Director of Cannondale Europe B.V. (1989 to 1991)
and Director of Purchasing. Mr. Montgomery is the son of Joseph S. Montgomery,
the Company's Chairman, President and Chief Executive Officer.

SALLY G. PALMER, Director since 1999

Sally G. Palmer, 46, has served as the Chief Development Officer for the
Credit Suisse First Boston Technology Group since June 2000, where she oversees
the career development of the group's professionals. Previously, she served as
an advisor to the Company while she was a Principal with the investment banking
division of Robertson, Stephens & Company (1990 to 1998).

CLASS III -- TERM EXPIRES AT THE 2003 ANNUAL MEETING

WILLIAM A. LUCA, Director since 1994

William A. Luca, 58, has served as Vice President of Finance, Treasurer and
Chief Financial Officer of the Company since January 1994 and as Chief Operating
Officer since February 2000. Prior to joining the Company, he served as a
management consultant from 1989 to 1993, including consulting for the Company
between August and December 1993. From 1980 to 1989, Mr. Luca was employed by
Dual-Lite, Inc., a manufacturer of emergency lighting systems, as Chief
Financial Officer (1980-1983), President and Chief Operating Officer (1983-1986)
and President and Chief Executive Officer (1986-1989).

DANIEL C. ALLOWAY, Director since 1998

Daniel C. Alloway, 42, has held a number of positions since joining
Cannondale in 1982. He is currently Vice President of Sales (1998 to present).
His previous positions with the Company included Vice President of Sales-United
States and Vice President of European Operations (1994 to 1998), Managing
Director of Cannondale Europe (1992 to 1994), Director of Sales and Marketing
(1990 to 1992) and National Sales Manager (1987 to 1990).

GREGORY GRIFFIN, Director since 1999

Gregory Griffin, 52, is a self-employed attorney and businessman.
Previously, Mr. Griffin was Assistant General Counsel with BTR, Inc., a
multinational conglomerate (1995 to 1999), and a partner with the law firm of
Levett Rockwood & Sanders (1981 to 1995).

4
7

DIRECTORS' REMUNERATION; ATTENDANCE

Directors who are also full-time employees of the Company receive no
additional compensation for serving as a director. During fiscal 2001, each
non-employee director received a quarterly payment of $1,500, plus $1,000 for
each day on which the member attended a meeting of the Board of Directors or a
committee, together with reimbursement of actual expenses incurred in attending
meetings. Upon election to the Board of Directors, non-employee directors are
granted 1,000 options to purchase the Common Stock of the Company, which are
immediately exercisable, at an exercise price per share equal to the fair market
value of a share of Common Stock at the time of grant. From time to time,
non-employee directors may be granted additional options to purchase the Common
Stock of the Company. During fiscal 2001, each non-employee director was granted
10,000 options, which are exercisable over a three-year vesting period,
beginning one year after the date of grant, at an exercise price per share equal
to the fair market value of a share of Common Stock at the date of grant.

The Board of Directors met six times during fiscal 2001. No director
attended fewer than 75% of the total number of meetings of the Board and
committees on which such director served.

COMMITTEES OF THE BOARD

The Board of Directors has standing Compensation and Audit Committees. The
Board of Directors does not have a standing nominating committee.

The Compensation Committee is composed of Messrs. Sanders, Griffin, Stimola
and Joseph Montgomery and Ms. Palmer. The Compensation Committee's functions are
to review and set the compensation, including salary, bonuses, stock options (in
conjunction with the Administrative Committee) and other incentive compensation,
of the Company's Chief Executive Officer and certain of its most highly
compensated officers, and to recommend to the Board of Directors incentive
compensation, retirement or other similar plans benefiting directors, officers
and other key employees of the Company. The Compensation Committee met twice
during fiscal 2001.

The Audit Committee is composed of three independent directors, Messrs.
Sanders, Griffin and Ms. Palmer. The Audit Committee's functions are to oversee
the Company's independent accountants and oversee management on matters relating
to accounting, financial reporting and disclosure, internal controls and
compliance with laws, regulations and corporate policies. The Audit Committee
met twice during fiscal 2001.

REPORT OF THE AUDIT COMMITTEE

The Board of Directors has appointed an Audit Committee consisting of three
directors. Each of the members of the Audit Committee is "independent" as
defined under the National Association of Securities Dealers' listing standards.
The Board of Directors has adopted a written charter with respect to the Audit
Committee's roles and responsibilities. A copy of the charter is attached as
Appendix A to this Proxy Statement.

In fulfilling its oversight responsibilities, the Audit Committee reviewed
and discussed the Company's audited financial statements for the fiscal year
ended June 30, 2001 with management and Ernst & Young LLP, the Company's
independent accountants. The Audit Committee also discussed with Ernst & Young
LLP the matters required to be discussed by Statement on Auditing Standards No.
61, Communications with Audit Committees. This included a discussion of Ernst &
Young LLP's judgments as to the quality, not just the acceptability, of the
Company's accounting principles and the other matters that generally accepted
auditing standards require to be discussed with the Audit Committee. The Audit
Committee also received the written disclosures and the letter from Ernst &
Young LLP required by Independent Standards Board Standard No. 1, Independence
Discussion with Audit Committees, and the Audit Committee discussed the
independence of Ernst & Young LLP with that firm.

5
8

Based on the Audit Committee's review and the discussions noted above, the
Audit Committee recommended to the Board of Directors, and the Board approved,
that the audited financial statements be included in the Company's Annual Report
on Form 10-K for the fiscal year ended June 30, 2001 for filing with the
Securities and Exchange Commission.

Members of the Audit Committee

John Sanders
Gregory Griffin
Sally Palmer

EXECUTIVE COMPENSATION

REPORT OF THE COMPENSATION COMMITTEE

The Board of Directors has appointed a Compensation Committee consisting of
four non-employee directors and Joseph Montgomery. The Board of Directors has
also appointed a Stock Option Plan Administrative Committee consisting of the
four non-employee members of the Compensation Committee to administer the
Company's stock option plans.

The Company's compensation program for executive officers and the Company's
management team consists of the following three key elements, in addition to the
benefit plans offered to all employees: base salary; discretionary bonus; and
long-term incentive compensation consisting of stock options. The Compensation
Committee believes that this approach best serves the interests of the Company
and its stockholders by ensuring that executive officers are compensated in a
manner that advances both the short and long-term interests of the Company and
its stockholders.

Components of Executive Compensation

Base Salary. The base salaries paid to executive officers are reviewed
annually by the Chief Executive Officer based upon his assessment of the nature
and responsibilities of the position, and the contribution, experience and
Company tenure of the executive officer. Base salary reflects individual
performance and is designed to be competitive with salary levels in effect at
companies within and outside the industry with which the Company competes for
executive talents. The Chief Executive Officer reviews his salary
recommendations for all executive officers with the Compensation Committee,
which is responsible for approving or disapproving those recommendations. In
February, 2000 base salaries paid to executive officers were adjusted with the
approval of the Compensation Committee. In approving these adjustments, the
Compensation Committee considered data supplied by an independent consulting
firm. These adjustments were deemed appropriate in light of the increased
responsibilities of executive officers as a result of the Company's development
and manufacturing of its motorsports product line, as well as the market rates
of compensation paid to executive officers of comparable companies.

Annual Bonus. The Chief Executive Officer also makes recommendations to
the Compensation Committee as to annual cash bonuses, if any, to be paid to
individual executive officers, based upon his evaluation of each executive
officer's contribution to Company performance. The Chief Executive Officer and
the Compensation Committee determined that no annual cash bonuses were payable
to executive officers in fiscal 2001 based on the financial performance of the
Company during fiscal 2000. In addition, there will be no annual cash bonuses
payable to executive officers in fiscal 2002 based on the financial performance
of the Company during fiscal 2001.

Stock Options. The Company's 1994 Stock Option Plan, 1994 Management Stock
Option Plan, 1995 Stock Option Plan, 1996 Stock Option Plan, 1998 Stock Option
Plan and 2000 Stock Option Plan authorize the Administrative Committee to grant
options to executives, directors, employees, consultants and advisors of the
Company. Option grants are made from time to time to executives whose
contributions are perceived to

6
9

have had or to be likely to have a significant impact on the Company's
performance. In fiscal 2001, executive officers received grants of non-qualified
stock options. These options were granted at the fair market value of the
Company's Common Stock on the date of grant. The options become exercisable over
three or five-year periods and have a ten-year term. In determining the number
of stock options granted to executive officers, the Administrative Committee
took into account position levels, individual performance and the number of
shares available for issuance under the Company's stock plans.

Chief Executive Officer Compensation

Mr. Joseph Montgomery's compensation as Chief Executive Officer is composed
of the same elements and performance measures as the Company's other senior
executives. The Compensation Committee believes that Mr. Montgomery's total
compensation reflects the unique contributions that he makes to the Company's
performance as an innovative leader in the bicycle industry and in leading the
Company's advancement into the motorsports industry. Mr. Montgomery's base
salary was adjusted in February 2000 along with the base salaries of other
executive officers after consideration of a report completed by an independent
consulting firm. The adjustment to Mr. Montgomery's base salary was based on
market rates of compensation paid to chief executive officers of comparable
companies. In addition, Mr. Montgomery's base salary reflects his significant
involvement in the research and development and in the manufacturing process of
the motorsports product line as well as the consolidation of responsibilities in
the motorsports product line. The Compensation Committee did not authorize any
annual cash bonus to Mr. Montgomery for fiscal 2001, given the Company's
financial performance. On February 7, 2001, Mr. Montgomery was granted
non-qualified stock options to purchase 75,000 shares of the Company's Common
Stock at an exercise price of $5.00 per share, which was the fair market value
of the Common Stock on the date of grant. The options become exercisable over a
three-year period and have a ten-year term.

Members of the Compensation Committee

John Sanders
Joseph S. Montgomery
Michael J. Stimola
Sally G. Palmer
Gregory Griffin

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

The Compensation Committee currently consists of John Sanders, Gregory
Griffin, Michael J. Stimola, Sally G. Palmer and Joseph Montgomery. Joseph
Montgomery serves as a director of Sandella's, a company formed in 1994, of
which Mr. Stimola is the founder, President and Chief Executive Officer.
Sandella's licenses a food system service for upscale gourmet quick-service
restaurants.

See "Certain Relationships and Related Transactions" for a discussion of
transactions between certain members of the Compensation Committee and the
Company.

7
10

EXECUTIVE COMPENSATION SUMMARY TABLES

The following table sets forth certain information with respect to the
compensation paid by the Company for services rendered to the Company in all
capacities during fiscal 2001, 2000 and 1999 to its Chief Executive Officer and
the Company's four most highly compensated executive officers whose aggregate
cash and cash equivalent compensation exceed $100,000.

SUMMARY COMPENSATION TABLE

<Table>
<Caption>
LONG TERM
COMPENSATION
------------
AWARDS
ANNUAL ------------
COMPENSATION SECURITIES
------------------------------- UNDERLYING
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS(1) OTHER OPTIONS
--------------------------- ---- -------- -------- ------- ------------

Joseph S. Montgomery................... 2001 $500,000 $ 0 $61,538(2) 75,000
Chairman, President and Chief
Executive 2000 371,538 0 37,073(2) 0
Officer 1999 305,769 62,000 32,509(2) 190,000(3)
William A. Luca........................ 2001 400,000 0 23,613(4) 75,000
Vice President, Treasurer, Chief
Financial 2000 335,769 0 0 80,000
Officer and Chief Operating Officer 1999 305,769 62,000 0 276,412(3)
Daniel C. Alloway...................... 2001 250,000 0 0 75,000
Vice President of Sales 2000 201,827 0 0 30,000
1999 175,000 45,000 0 203,091(3)
Leonard J. Konecny..................... 2001 152,369 0 0 15,000
Vice President of Purchasing 2000 132,714 0 0 10,000
1999 130,278 23,000 0 73,917(3)
Michael T. Dower(5).................... 2001 130,577 0 0 15,000
Vice President of Information
Technology........................... 2000 121,250 0 0 10,000
</Table>

---------------
(1) Profit-sharing bonuses were not paid to Messrs. Montgomery, Luca, Alloway,
Konecny and Dower in fiscal 2001 for corporate profitability in fiscal 2000.
No profit-sharing bonuses will be paid to Messrs. Montgomery, Luca, Alloway,
Konecny and Dower in fiscal 2002 for corporate profitability in fiscal 2001.

(2) Perquisites for fiscal 2001 include the reimbursement of legal fees of
$19,339 incurred in conjunction with the early repayment of Mr. Montgomery's
$12.0 million obligation to the Company, and personal use of a corporate
airplane of $33,899. Perquisites for fiscal 2000 and fiscal 1999 include
personal use of a corporate airplane of $28,830 and $28,804, respectively.

(3) Includes the replacement of 90,000, 246,412, 173,091 and 58,917 options that
were previously granted to Messrs. Montgomery, Luca, Alloway and Konecny,
respectively, and canceled pursuant to the repricing of options on September
3, 1998.

(4) Amount represents gross-up payment for tax liabilities associated with a
home mortgage note from the Company.

(5) Mr. Dower was appointed Vice President of Information Technology in
September 1999.

8
11

The following table sets forth certain information regarding stock options
granted during fiscal 2001 by the Company to the executive officers named in the
Summary Compensation Table above.

OPTION GRANTS IN FISCAL YEAR 2001

<Table>
<Caption>
INDIVIDUAL GRANTS POTENTIAL
-------------------------------------------------- REALIZABLE VALUE
PERCENT AT ASSUMED ANNUAL
NUMBER OF OF TOTAL RATES OF STOCK
SECURITIES OPTIONS PRICE APPRECIATION
UNDERLYING GRANTED TO EXERCISE FOR OPTION TERM(2)
OPTIONS EMPLOYEES IN PRICE EXPIRATION -------------------
NAME GRANTED(1) FISCAL YEAR PER SHARE DATE 5% 10%
---- ---------- ------------ --------- ---------- -------- --------

Joseph S. Montgomery......... 75,000 7.12% $5.00 2/7/11 $251,717 $622,942
William A. Luca.............. 75,000 7.12 5.00 2/7/11 251,717 622,942
Daniel C. Alloway............ 75,000 7.12 5.00 2/7/11 251,717 622,942
Leonard J. Konecny........... 15,000 1.42 5.00 2/7/11 50,343 124,588
Michael T. Dower............. 5,000 0.47 5.50 8/16/10 19,819 47,848
10,000 0.95 5.00 2/7/11 33,562 83,059
</Table>

---------------
(1) Options vest over a three- or five-year period from the date of grant.

(2) Amounts represent hypothetical gains that could be achieved for the
respective options if exercised at the end of the option term. These gains
are based upon assumed rates of share price appreciation set by the
Securities and Exchange Commission of five percent and ten percent of the
fair value of the Common Stock on the date of grant of the options,
compounded annually from the date of grant to the option expiration dates.
The gains shown are net of the option exercise price, but do not include
deductions for taxes or other expenses associated with the exercise. Actual
gains, if any are dependent on the performance of the Common Stock and the
date on which the option is exercised. There can be no assurance that the
values reflected would be achieved.

The following table sets forth certain information with respect to the
exercises of stock options during the fiscal year ended June 30, 2001 (none of
the named executive officers exercised any options during fiscal 2001), and
presents the fiscal year-end value of unexercised stock options held as of June
30, 2001 by the executive officers named in the Summary Compensation Table
above.

AGGREGATE OPTIONS EXERCISED IN FISCAL 2001 AND
FISCAL 2001 YEAR END OPTION VALUES

<Table>
<Caption>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
SHARES OPTIONS AT JUNE 30, 2001 OPTIONS AT JUNE 30, 2001(1)
ACQUIRED ON VALUE --------------------------- ---------------------------
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- -------- ----------- ------------- ----------- -------------

Joseph S. Montgomery..... -- $ -- 128,750 175,000 $139,500 $0
William A. Luca.......... -- -- 227,462 226,800 82,260 0
Daniel C. Alloway........ -- -- 179,549 155,667 97,650 0
Leonard J. Konecny....... -- -- 41,582 57,335 0 0
Michael T. Dower......... -- -- 7,099 41,401 0 0
</Table>

---------------
(1) The values in this column represent the closing sales price of the Company's
Common Stock on the Nasdaq National Market on June 29, 2001, $3.94, less the
respective option exercise price.

9
12

EMPLOYMENT AGREEMENTS AND SEPARATION PLANS

The Company entered into employment agreements with Michael Dower and
Leonard Konecny, as of June 1, 1992 and June 6, 1994, respectively. Pursuant to
such agreements, Mr. Dower agreed to serve as Manager of Operating Systems and
Mr. Konecny agreed to serve as Vice President of Purchasing of the Company. The
annual base salary to be paid under each agreement to Mr. Dower and Mr. Konecny
was $80,000 per annum. The agreements may be terminated either by Mr. Dower and
Mr. Konecny or the Company upon at least 14 days prior written notice, or by the
Company effective immediately for cause. The agreements also contain a
non-competition provision which requires among other things, that Mr. Dower and
Mr. Konecny not perform functions or provide the same or substantially similar
services to those performed or provided by them for the Company for any
competitor of the Company for a period of one year following the termination of
employment for any reason.

On February 5, 1998, the Company entered into Change-of Control Employment
Agreements with Joseph Montgomery, William Luca and Daniel Alloway (each, an
"Executive"). Each agreement is identical and provides that upon a Change of
Control (as defined in each agreement), the Company will continue to employ the
Executive for three years after the Change of Control occurs (the "Employment
Period"), unless the agreement is terminated earlier in accordance with its
terms. During the Employment Period, each Executive will receive an annual base
salary at least equal to 12 times the highest monthly base salary paid or
payable to each respective Executive for the 12 month period prior to the Change
of Control ("Annual Base Salary"). In addition, each Executive is entitled to
receive an annual profit-sharing bonus at least equal to the highest
profit-sharing bonus paid to each respective Executive in the past three fiscal
years ("Annual Bonus"). Pursuant to the terms of each agreement, each
Executive's employment with the Company may be terminated by the Executive at
any time and for any reason or no reason at all. Upon a termination of
employment during the Employment Period (other than for death or disability (as
defined in each agreement)), the Company shall pay to the Executive the
aggregate of the following amounts: (1) the Executive's Annual Base Salary
through the Date of Termination (as defined in each agreement) to the extent not
already paid; (2) the product of (x) the higher of (i) the amount of any Annual
Bonus, annualized in the event the Executive was not employed for the full
fiscal year relating thereto and (ii) the Annual Bonus paid or payable,
including any bonus or portion thereof which has been earned but deferred (and
annualized for any fiscal year consisting of less than 12 full months or during
which the Executive was employed for less than 12 full months), for the most
recently completed fiscal year during the Employment Period, if any (such higher
amount being referred to as the "Highest Annual Bonus") times (y) a fraction,
the numerator of which is the number of days in the current fiscal year through
the Date of Termination, and the denominator of which is 365; (3) any
compensation previously deferred by the Executive (together with any accrued
interest or earnings thereon) and any accrued vacation pay, in each case to the
extent not already paid; (4) the amount equal to the product of (i) three and
(ii) the sum of (x) the Executive's Annual Base Salary and (y) the Highest
Annual Bonus; and (5) any Gross-Up Payments (as defined in each agreement) for
certain tax obligations of the Executive. Each Executive shall also be entitled
to certain benefits and limited payments relating to specific obligations of the
Company. During the Employment Period, the Company may terminate each
Executive's employment with the Company upon an Executive's death or disability
with specified payment obligations in each instance for accrued obligations and
other benefits.

The Company has also entered into identical non-competition agreements,
dated as of February 16, 2000, with each of the Executives. Under the terms of
each agreement, if, after a Change of Control (as defined in the agreement) of
the Company, the Executive's employment with the Company is terminated other
than for death or disability, the Executive has agreed that he will not engage
in any business that engages in the bicycle or motorcycle manufacturing,
marketing or distribution business and will not interfere with any business
relationship between the Company and any of its customers, suppliers, lessors,
lessees or employees for a period of two years after the termination of his
employment. In consideration for his covenant not to complete, the Company would
pay to the Executive within 30 days after his termination of employment a lump
sum payment equal to two times the sum of the Executive's Annual Base Salary and
Highest Annual Bonus (as such terms are defined in the agreement).

10
13

On February 16, 2000, the Company entered into a severance agreement with
William Luca. Together with the non-competition agreement, this agreement
replaces and supersedes a prior employment agreement between the Company and Mr.
Luca. Pursuant to the terms of the severance agreement, if, prior to a Change of
Control (as defined in the agreement) of the Company, Mr. Luca's employment is
terminated by the Company without Cause or by Mr. Luca for Good Reason (as such
terms are defined in the agreement), the Company will be obligated to pay Mr.
Luca substantially the same amounts and provide substantially the same benefits
that Mr. Luca would have been entitled to receive pursuant to the terms of his
change-of-control employment agreement and his non-competition agreement if his
employment was terminated after a Change of Control of the Company. The
agreement also contains a two-year non-competition provision which prohibits Mr.
Luca from, among other things, engaging in any business that engages in the
bicycle or motorcycle manufacturing, marketing or distribution business or
interfering with any business relationship between the Company and any of its
customers, suppliers, lessors, lessees or employees for a period of two years
after the termination of his employment.

Leonard Konecny is a participant in the Company's Change-of-Control
Separation Plan A. The plan provides that Mr. Konecny will continue to be a
participant in the plan until he ceases to be employed by the Company or his
designation as a participant of the plan is rescinded by the Board of Directors.
Upon a Change of Control (as defined in the plan), the Company will be obligated
to pay Mr. Konecny, subject to certain federal tax limitations, the aggregate of
the following amounts if he is terminated for any reason other than for cause
(as defined in the plan), death or disability (as defined in the plan): (1) his
Annual Base Salary at the time of a Change of Control through the Date of
Termination (as defined in the plan) to the extent not already paid; (2) any
compensation previously deferred (together with any accrued interest or earnings
thereon) and any accrued vacation pay, in each case to the extent not already
paid; and (3) the amount equal to the product of (i) one and one-half and (ii)
Mr. Konecny's Annual Base Salary. Upon such termination, Mr. Konecny shall also
be entitled to certain benefits and limited payments relating to specific
obligations of the Company. After a Change of Control, the Company may also
terminate Mr. Konecny for death or disability with specified payment obligations
in each instance for accrued obligations.

11
14

COMPARISON OF CUMULATIVE TOTAL RETURNS

The following graph compares the performance of the Company's Common Stock
with the performance of the Nasdaq Stock Market (U.S. Companies) Stock Price
Index (the "Nasdaq Index") and a peer group index created by the Company, during
the five-year period ended June 29, 2001. The graph assumes that $100 was
invested on June 28, 1996, in each of the Company's Common Stock, the Nasdaq
Index and the peer group index, and that all dividends were reinvested.

The peer group index created by the Company is composed of companies in
bicycle, motorsports or other recreational product lines of business. The
Company's peer group has been adjusted this year as a result of the
consolidation of the bicycle industry and the Company's advancement into the
motorsports industry. Bell Sports Corp, The Coleman Company, Inc., and GT
Bicycles, Inc. are no longer independently traded companies and are therefore
omitted from the Company's peer group. Rockshox, Inc. was removed from the index
as it is no longer considered comparable to the peer group. The common stock of
the following companies has been included in the self determined peer group
index: Adams Golf, Inc., Brass Eagle Inc., Callaway Golf Company, Ducati Motor
Holding S.p.A., First Team Sports, Inc., Huffy Corporation, K2, Inc., Oakley
Inc., and Polaris Industries Inc. The prior peer group index is shown (which
includes Callaway Golf Company, First Team Sports, Inc., Huffy Corporation, K2,
Inc., and Rockshox, Inc.) for comparative purposes.

[PERFORMANCE GRAPH]

<Table>
<Caption>
CANNONDALE NASDAQ STOCK MARKET SELF-DETERMINED PEER PRIOR SELF-DETERMINED
CORPORATION (U.S. COMPANIES) GROUP PEER GROUP
----------- ------------------- -------------------- ---------------------

06/28/1996 100.00 100.00 100.00 100.00
06/27/1997 87.70 121.60 93.40 109.30
06/26/1998 66.10 160.10 71.10 62.60
07/02/1999 56.20 230.20 57.60 45.20
06/30/2000 32.10 340.40 56.50 46.20
06/29/2001 19.50 184.50 50.60 48.60
</Table>

12
15

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

In fiscal 2001, James Scott Montgomery was paid approximately $99,000 for
consulting services he provided to the Company, and was reimbursed for expenses
of approximately $31,000. Mr. Montgomery was also granted 75,000 options in
fiscal 2001 to purchase the Common Stock of the Company. Such options are
exercisable over a three-year vesting period, beginning one year after the date
of grant, at an exercise price per share equal to the fair market value of a
share of Common Stock at the date of grant.

In fiscal 1997, the Company agreed to provide up to $450,000 in
interest-free loans to William Luca to enable him to purchase a home in the
vicinity of the Company's headquarters. In fiscal 1999, fiscal 2000 and fiscal
2001, the Company provided to Mr. Luca an additional $200,000, $200,000 and
$95,000, respectively, of interest-free loans. These advances were incorporated
into the original loan agreement and are subject to the same terms and
conditions as the original loan. As of September 28, 2001, $945,000 had been
advanced to Mr. Luca. The loans mature on December 29, 2006, at which time the
entire principal balance is due. The loans are secured by a mortgage on Mr.
Luca's residence.

In fiscal 1997, the Company agreed to provide up to $125,000 in
interest-free loans to Leonard Konecny to enable him to purchase a home in the
vicinity of the Company's headquarters. In fiscal 2000, the Company agreed to
provide Mr. Konecny an additional $20,000 of interest-free loans under the same
terms and conditions as the original loan. In the beginning of fiscal 2001, the
Company advanced to Mr. Konecny an additional $30,000. These advances were
incorporated into the original loan agreement and are subject to the same terms
and conditions as the original loan. As of September 28, 2001, $175,000 had been
advanced to Mr. Konecny. The loans mature on September 1, 2007, at which time
the entire principal balance is due. The loans are secured by a mortgage on Mr.
Konecny's residence.

In fiscal 1999, the Company provided Daniel Alloway with an $80,000
interest-free advance against his future salary. In fiscal 2000, the Company
advanced to Mr. Alloway an additional $15,000. The total amount advanced to Mr.
Alloway was converted into a demand note receivable during fiscal 2000. In
fiscal 2001, the Company agreed to provide Mr. Alloway an additional
interest-free advance in the amount of $66,638. This advance is included in the
total demand note receivable with Mr. Alloway as of September 28, 2001, in the
amount of $161,638.

During fiscal 1999, the Company provided Joseph Montgomery, Chairman,
President and Chief Executive Officer, with a loan in the principal amount of
$10.0 million for the purchase of certain real property. This loan was combined
with a previous loan in the principal amount of $2.0 million which enabled him
to meet certain tax obligations in April 1998. The interest rate on the loan was
set at the prime rate as published in the Wall Street Journal from time to time,
and the loan was secured by a pledge to the Company of all of the shares of the
Company's Common Stock held by Mr. Montgomery and by a third mortgage on certain
real property. The Company deferred the first interest payment of approximately
$900,000 payable by Mr. Montgomery due August 1, 1999 pursuant to the terms of
the loan. Under the terms of the deferral, Mr. Montgomery was obligated to sell
75,000 shares of his Company Common Stock per quarter beginning in the third
quarter of fiscal 2000, and the net proceeds of such sales were to be remitted
to the Company to pay the deferred interest. The stock selling program by Mr.
Montgomery was subject to applicable securities laws and other restrictions
which precluded him from selling a total of 75,000 shares per quarter. During
the third and fourth quarters of fiscal 2000, Mr. Montgomery sold 98,100 shares
of his stock pursuant to the terms of the agreement, thus reducing his deferred
interest balance by approximately $614,000. The Company also deferred the
interest payment due August 1, 2000 of approximately $1.1 million until August
28, 2000. At such time, Mr. Montgomery paid $1.4 million to the Company as full
payment of all deferred interest and accrued interest thereon. In December 2000,
Mr. Montgomery repaid his entire $12.0 million obligation to the Company, plus
accrued interest of approximately $431,000.

During fiscal 2001, the Company issued a $2.0 million debenture to Mr.
Montgomery which is due June 28, 2005 and is convertible into shares of the
Company's Common Stock at an initial conversion price of $4.50 per share. The
debenture bears interest at 8.0%, and the Company accrued $28,000 in interest
payable to Mr. Montgomery as of June 30, 2001.

13
16

The Board of Directors of the Company believes that the terms of loans to
employees were fair and reasonable under the circumstances. The Company
anticipates that future transactions with affiliated parties will be approved by
a majority of the Company's disinterested directors and will be on terms no less
favorable to the Company than those that could be obtained from unaffiliated
parties.

ITEM 2 -- RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS

The Company has appointed Ernst & Young LLP as the Company's independent
accountants for fiscal 2002. Ernst & Young LLP has served as the Company's
independent accountants since 1993. Services provided to the Company and its
subsidiaries by Ernst & Young LLP with respect to fiscal 2001 included the audit
of the Company's consolidated financial statements, limited reviews of quarterly
reports, services related to filings with the Securities and Exchange Commission
and consultations on various tax matters. Representatives of Ernst & Young LLP
will be present at the Annual Meeting to respond to appropriate questions and to
make such statements as they may desire.

Ratification of the appointment of Ernst & Young LLP as the Company's
independent accountants for fiscal 2002 will require the affirmative vote of a
majority of the shares of Common Stock represented in person or by proxy and
entitled to vote at the Annual Meeting. In the event stockholders do not ratify
the appointment of Ernst & Young LLP as the Company's independent accountants
for the forthcoming fiscal year, such appointment will be reconsidered by the
Audit Committee and the Board of Directors.

INDEPENDENT ACCOUNTANTS' FEES

During fiscal 2001, Ernst & Young LLP billed the Company for the following
professional services:

- Audit Fees rendered for the audit of the Company's financial statements
and for its reviews of the Company's unaudited quarterly financial
statements for the year ended June 30, 2001 amounted to approximately
$259,000.

- All Other Fees including both audit and non-audit related services
amounted to approximately $238,000. Audit related services generally
include fees for accounting consultations, pension and statutory audits,
and Securities and Exchange Commission registration statements. There
were no fees paid for financial information systems design and
implementation.

The Audit Committee has considered whether the provision of non-audit
services is compatible with maintaining the independence of Ernst & Young LLP,
and has determined that, in its opinion, they are compatible.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" RATIFICATION OF THE
APPOINTMENT OF ERNST & YOUNG LLP AS THE COMPANY'S INDEPENDENT ACCOUNTANTS FOR
FISCAL 2002.

14
17

OTHER MATTERS

As of the date of this proxy statement, the Company knows of no business
that will be presented for consideration at the Annual Meeting other than the
items referred to above. Proxies in the enclosed form will be voted in respect
of any other business that is properly brought before the Annual Meeting in
accordance with the judgment of the person or persons voting the proxies.

STOCKHOLDER PROPOSALS FOR THE 2002 ANNUAL MEETING

Pursuant to the Securities and Exchange Commission rules promulgated under
the Securities Exchange Act of 1934, any proposal of a stockholder intended to
be presented at the Company's 2002 Annual Meeting of Stockholders must be
received by the Secretary of the Company, for inclusion in the Company's proxy
statement relating to the 2002 Annual Meeting, by June 14, 2002. In accordance
with the advance notice provisions contained in the Company's Bylaws, the
Company generally must receive notice of a stockholder's intent to propose any
business at an annual meeting no later than the close of business on the 70th
day and no earlier than the close of business on the 90th day prior to the first
anniversary of this year's Annual Meeting (November 14, 2002).

ADDITIONAL INFORMATION

The cost of soliciting proxies in the enclosed form will be borne by the
Company. Officers and regular employees of the Company may, but without
compensation other than their regular compensation, solicit proxies by further
mailing or personal conversations, or by telephone, telex or facsimile. The
Company will, upon request, reimburse brokerage firms and others for their
reasonable expenses in forwarding solicitation material to the beneficial owners
of stock.

October 12, 2001 By Order of the Board of Directors

JOHN T. CAPETTA
Secretary

15
18

APPENDIX A

CANNONDALE CORPORATION

AUDIT COMMITTEE OF THE BOARD OF DIRECTORS

CHARTER

I. PURPOSE

The Audit Committee shall provide assistance to the corporate directors
in fulfilling their responsibility to the shareholders, potential shareholders
and investment community relating to corporate accounting, reporting practices
of the Corporation and the quality and integrity of the financial reports of the
Corporation. The Audit Committee's primary duties and responsibilities are to:

-- Oversee that management has maintained the reliability and
integrity of the accounting policies and financial reporting and
disclosure practices of the Corporation.

-- Oversee that management has established and maintained processes to
assure that an adequate system of internal control is functioning
with the Corporation.

-- Oversee that management has established and maintained processes to
assure compliance by the Corporation with all applicable laws,
regulations and corporate policy.

The Audit Committee will fulfill these responsibilities primarily by
carrying out the activities enumerated in Section IV of this Charter.

II. COMPOSITION

The Audit Committee shall be comprised of three or more directors as
determined by the Board, each of whom shall be an independent director, and free
from any relationship that, in the opinion of the Board, would interfere with
the exercise of his or her independent judgment as a member of the Audit
Committee. All members of the Audit Committee shall have a working familiarity
with basic finance and accounting practices, and at least one member of the
Audit Committee shall have accounting or related financial management expertise.
Audit Committee members may enhance their familiarity with finance and
accounting by participating in educational programs conducted by the Corporation
or an outside consultant.

The members of the Audit Committee shall be elected by the Board at the
annual organizational meeting of the Board, to serve until the next annual
organizational meeting or until their successors shall be duly elected and
qualified. Unless a Chairperson is elected by the full Board, the members of the
Audit Committee may designate a Chairperson by majority vote of the full Audit
Committee membership.

III. MEETINGS

The Audit Committee shall meet at least four times annually, or more
frequently as circumstances dictate. As part of its job to foster open
communication, the Audit Committee should meet at least annually with
management, the director of the internal auditing department (if such position
exists at the time) and the independent accountants separately to discuss any
matters that the Audit Committee or each of these groups believe should be
discussed privately. In addition, the Audit Committee or at least its
Chairperson should meet with the independent accountants and management
quarterly to review the Corporation's financials consistent with Section IV.4
below.

16
19

IV. RESPONSIBILITIES AND DUTIES

To fulfill its responsibilities and duties, the Audit Committee shall:

Documents/Reports Review

1. Review and reassess, at least annually, the adequacy of this Charter,
and make recommendations to the Board, as conditions dictate, to
update this Charter.

2. Review with management and the independent accountants the
Corporation's annual financial statements, including a discussion with
the independent accountants of the matters required to be discussed by
Statement of Auditing Standards No. 61 ("SAS No. 61").

3. Review with management and the independent accountants the Form 10-Q
prior to its filing or prior to the release of earnings, including a
discussion with the independent accountants of the matters required to
be discussed by SAS No. 61. The Chairperson of the Audit Committee may
represent the entire Audit Committee for purposes of this review.

Independent Accountants

4. Review the performance of the independent accountants and make
recommendations to the Board regarding the appointment or termination
of the independent accountants. The Audit Committee and the Board have
the ultimate authority and responsibility to select, evaluate, and
where appropriate, replace the outside auditor. The independent
accountants are ultimately accountable to the Audit Committee and the
entire Board for such accountant's review of the financial statements
and controls of the Corporation. On an annual basis, the Audit
Committee should review and discuss with the accountants all
significant relationships the accountants have with the Corporation to
determine the accountants' independence.

5. Oversee independence of the accountants by:

-- receiving from the accountants, on a periodic basis, a formal
written statement delineating all relationships between the
accountants and the Corporation consistent with Independence
Standards Board Standard No. 1 ("ISB Standard No. 1");

-- reviewing, and actively discussing with the Board, if necessary,
and the accountants, on a periodic basis, any disclosed
relationships or services between the accountants and the
Corporation or any other disclosed relationships or services that
may impact the objectivity and independence of the accountants;
and

-- recommending, if necessary, that the Board take certain action to
satisfy itself of the auditor's independence.

Financial Reporting Process

6. In consultation with the independent accountants and the internal
auditors, review the integrity of the Corporation's financial
reporting processes, both internal and external.

7. Consider and approve, if appropriate, major changes to the
Corporation's auditing and accounting principles and practices as
suggested by the independent accountants, management or the internal
auditing department.

8. Establish regular systems of reporting to the Audit Committee by each
of management, the independent accountants and the internal auditors
regarding any significant judgments made in management's preparation
of the financial statements and any significant difficulties
encountered during the course of the review or audit, including any
restrictions on the scope of work or access to required information.

9. Review any significant disagreement among management and the
independent accountants or the internal auditing department in
connection with the preparation of the financial statements.

17
20

Legal Compliance/General

10. Review, with the Corporation's counsel, any legal matter that could
have a significant impact on the Corporation's financial statements.

11. Report through its Chairperson to the Board following meetings of the
Audit Committee.

12. Maintain minutes or other records of meetings and activities of the
Audit Committee.

* * * *
Adopted June 13, 2000

18
21

22
PROXY

CANNONDALE CORPORATION

ANNUAL MEETING OF STOCKHOLDERS

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

The undersigned hereby appoints Joseph S. Montgomery and William A. Luca, and
each of them individually, as proxies, each with the power of substitution, and
hereby authorizes them to vote all shares of Common Stock of the undersigned at
the Annual Meeting of the Company, to be held at the Company's Corporate
Headquarters, 16 Trowbridge Drive, Bethel, Connecticut, on Wednesday, November
14, 2001 at 10:00 a.m., Eastern Standard Time, and at any adjournments or
postponements thereof.

WHEN PROPERLY EXECUTED, THIS PROXY WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED STOCKHOLDERS. IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE
VOTED "FOR" THE ELECTION OF DIRECTORS AND "FOR" THE PROPOSAL SET FORTH ON THE
REVERE SIDE.

Please date, sign and mail your
proxy card back as soon as possible!

Annual Meeting of Stockholders
CANNONDALE CORPORATION

November 14, 2001

+ Please Detach and Mail in the Envelope Provided +

A [X] Please mark your
votes as in this
example.

The Board of Directors recommends a vote FOR proposals 1 and 2.

FOR WITHHELD
1. Election of Class I Directors [ ] [ ] Nominees:
(01) Joseph S. Montgomery
(02) Michael J. Stimola
[ ]______________________________________
For all nominees except at noted above

FOR AGAINST ABSTAIN
2. Selection of Independent Accountants. [ ] [ ] [ ]

3. The proxies are authorized to vote upon such other business that may properly
come before the meeting. In accordance with the judgment of the person or
persons voting this proxy.

MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT [ ]

Signature: _______________ Date:________ Signature:______________ Date:_________

NOTE: Please sign exactly as name appears hereon. Joint owners should each sign.
When signing as attorney, executor, administrator, trustee or guardian,
please give full title as such.