SCHEDULE 14A INFORMATION

PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )

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PACER TECHNOLOGY
--------------------------------------------------------------------------------
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2

PACER TECHNOLOGY
9420 SANTA ANITA AVENUE,
RANCHO CUCAMONGA, CA 91730
(909) 987-0550
FAX (909) 987-5298

October 11, 2001

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 13, 2001, at 9:00 A.M. Pacific Standard 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. 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,

/s/ RICHARD P. KAY
RICHARD S. KAY
Chairman, Chief Executive Officer and
President
3

PACER TECHNOLOGY
9420 SANTA ANITA AVENUE
RANCHO CUCAMONGA, CALIFORNIA 91730
(909) 987-0550
---------------------

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD NOVEMBER 13, 2001

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 Standard Time, on Tuesday, November 13, 2001,
for the following purposes:

1. To elect the following five 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,
Richard S. Kay and Larry K. Reynolds.

2. To approve the Pacer Technology 2001 Stock Incentive Plan (the
"Plan"), which authorizes the grant by the Company of options to purchase
up to a maximum of 300,000 shares of Pacer's common stock (which represents
approximately 9.8% of its currently outstanding shares), to Pacer's
officers, employees, directors, and service providers.

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 as of the close of business on September
28, 2001 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 Standard Time (10:00 A.M. Pacific Standard Time),
on Monday, November 12, 2001.

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,

/s/ RICHARD P. KAY
RICHARD S. KAY
Chairman, Chief Executive Officer and
President

Rancho Cucamonga, California
October 11, 2001
4

PACER TECHNOLOGY
9420 SANTA ANITA AVENUE
RANCHO CUCAMONGA, CALIFORNIA 91730
(909) 987-0550
---------------------

PROXY STATEMENT
---------------------
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD NOVEMBER 13, 2001
---------------------

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 2001 Annual
Meeting of Shareholders to be held on Tuesday, November 13, 2001, at 9:00 A.M.
Pacific Standard Time, 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 11, 2001.

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 12, 2001.

- 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 STANDARD TIME (10:00 A.M.
PACIFIC STANDARD TIME) ON MONDAY, NOVEMBER 12, 2001. 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 voted 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" Adoption of the 2001 Incentive Stock Plan
(Proposal Two).

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 28, 2001 (the
5

"Record Date") are entitled to notice of and to vote at the Annual Meeting or
any adjournment or postponement thereof. As of the Record Date, there were
3,060,705 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.

PRINCIPAL SHAREHOLDERS AND OWNERSHIP OF SHARES BY MANAGEMENT

Set forth below is certain information as of September 28, 2001 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 current executive officers that are
named in the Summary Compensation Table below, and (iv) all of Pacer's current
directors and executive officers as a group.

<Table>
<Caption>
AMOUNT AND NATURE OF
NAME AND ADDRESS(1) BENEFICIAL OWNERSHIP(2) PERCENT OF CLASS
------------------- ----------------------- ----------------

John G. Hockin, II................................ 349,208(3)(4) 10.5%
E. T. Gravette, Jr................................ 137,300(3) 4.5%
Richard S. Kay.................................... 80,000(3) 2.6%
Carl E. Hathaway.................................. 40,000(3) 1.3%
Larry K. Reynolds................................. 29,342(3)(5) 1.0%
Laurence R. Huff.................................. 14,800(3) *
All directors and officers as a group (6 in
number)......................................... 650,650(6) 18.8%
</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, subject to any applicable community property
laws, each of the persons named in the table has sole voting and investment
power with respect to the shares shown opposite his name above.

(3) Includes shares subject to outstanding stock options exercisable during the
60-day period ending November 27, 2001, as follows: Dr. Hockin -- 260,000
shares; Mr. Gravette -- 20,000 shares; Mr. Kay -- 70,000 shares; Mr.
Hathaway -- 20,000 shares; Mr. Reynolds -- 20,000 shares; and Mr.
Huff -- 7,000 shares.

(4) Includes 89,208 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 9,342 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 397,000 shares subject to outstanding options
exercisable during the 60-day period ending November 27, 2001.

2
6

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 2002 Annual Meeting of Shareholders. The Board of Directors will
vote each proxy 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 Richard S. Kay, who was appointed to the Board by
unanimous vote of the other Directors in February 2001. 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. 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 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 as a director 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

Set forth below is the name and certain biographical information concerning
each of the members of the Board of Director, who are also the nominees selected
by the Board for election to serve as directors of the Company for the ensuing
year.

<Table>
<Caption>
DIRECTOR
NAME AND AGE SINCE POSITIONS WITH PACER
------------ -------- --------------------

Richard S. Kay, 59................ 2001 Chairman, Chief Executive Officer, President
and Director
Ellis T. Gravette, Jr., 75........ 2000 Director
Carl E. Hathaway, 68.............. 1985 Director
John G. Hockin, II, 57............ 1984 Director
Larry K. Reynolds, 57............. 1995 Director
</Table>

Richard S. Kay. Mr. Kay was appointed Chairman of the Company's Board of
Directors on February 21, 2001 and the Company's Chief Executive Officer and
President on July 9, 2001. Mr. Kay has been a CEO and CFO for several companies
operating in different industries, including manufacturing and consumer
products, energy, healthcare and food service. He was the CFO for three
different companies during their initial public offerings and the CFO for four
companies during the course of their merger transactions. Most recently he was,
from 1999 to 2000, the COO and CFO for TruCost Food Systems, a company formed in
1999 to develop a foodservice web site. Beginning in 1992 he served as CFO of
Paragon Steakhouse Restaurants. He was promoted to be the CEO in 1997 and was
responsible for the turnaround for this owner and operator of 73 upscale casual
restaurants, with more than 4,000 employees located in eleven states. Paragon
was sold in 1999.

Ellis T. Gravette, Jr. Mr. Gravette became a member of the Board of
Directors on February 1, 2000 and served as the Chairman of the Board from March
24, 2000 until February 21, 2001, when he relinquished that

3
7

position to Mr. Kay. Mr. Gravette, who is currently a private investor, 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 was
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 registered investment advisory 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.

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 & Swan LLP, in Riverside, California, which provided
legal services to the Company in fiscal 2001 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 11 meetings during the year
ended June 30, 2001. Each incumbent Director attended at least 75% of the sum of
(i) the number of meetings of the Board, and (ii) the number of meetings of all
committees of the Board on which he served, that were held during his term of
office in that fiscal year.

COMMITTEES OF THE BOARD OF DIRECTORS

The Board of Directors of the Company has established a standing Audit
Committee that 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 current members of the Audit
Committee are Ellis T. Gravette, Jr., Carl E. Hathaway and John G. Hockin, II,
none of whom has ever served as an officer or employee of the Company. The Audit
Committee held one meeting during the year ended June 30, 2001.

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, 2001 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. Kay, who is a director and the Chief Executive
Officer and President of the Company, does not participate in the deliberations
of or in voting by the Board with respect to his compensation or 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 shares of the Company.

4
8

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, 2001.

COMPENSATION OF EXECUTIVE OFFICERS

The following table sets forth compensation received for the three fiscal
years ended June 30, 2001 by executive officers of the Company that received
cash compensation in excess of $100,000 during the fiscal year ended June 30,
2001 (the "Named Officers").

SUMMARY COMPENSATION TABLE

<Table>
<Caption>
LONG TERM
COMPENSATION
AWARDS
ANNUAL COMPENSATION -------------
------------------------------ STOCK OPTIONS ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($)(5) (SHARES)(#) COMPENSATION(6)
--------------------------- ---- --------- ----------- ------------- ---------------

Current Officers:
Richard S. Kay(1).................. 2001 $ 64,962 $0 100,000 $ 385
Chairman, Chief Executive Officer
and President
Laurence R. Huff(2)................ 2001 $114,141 $0 0 $ 3,181
Vice President and Chief
Financial 2000 82,788 0 7,000 770
Officer
Former Officers:
W. T. Nightingale III(3)........... 2001 $167,454 $0 0 $149,684
Chief Executive Officer and
President 2000 161,929 0 0 4,280
1999 134,695 0 0 3,630
Roger R. Vanderlaan(4)............. 2001 $141,277 $0 $ 73,099
Vice President of Operations 2000 127,000 0 0 1,155
1999 37,500 0 10,000 385
</Table>

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

(1) Mr. Kay was appointed Pacer's Chairman and became a full time officer of the
Company on February 21, 2001, at an annual base salary of $200,000. On July
9, 2001, following the termination of Mr. Nightingale's employment with the
Company, Mr. Kay assumed the positions of Chief Executive Officer and
President of the Company, at no increase in salary or other compensation.

(2) Mr. Huff joined the Company as Vice President and Chief Financial Officer in
September 1999.

(3) Mr. Nightingale's employment with the Company terminated on July 9, 2001. In
connection with that termination, he received severance compensation in the
amount of $145,967 in July 2001.

(4) Mr. Vanderlaan's employment with the Company terminated on July 9, 2001 and
he also received severance compensation of $70,000 in July 2001.

(5) 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 for any of those periods.

(6) All Other Compensation consists of contributions by Pacer to Qualified
Tax-Deferred Savings Plan accounts and premiums paid by Pacer for group life
insurance benefits provided to the officers, except that in the case of
Messrs. Nightingale and Vanderlaan, these amounts include severance
compensation of $145,967 and $70,000, respectively.

5
9

STOCK OPTIONS

Mr. Kay was the only officer and also the only employee that was granted
any options in the fiscal year ended June 30, 2001. Set forth below is certain
information regarding those options.

OPTION GRANTS IN LAST FISCAL YEAR

<Table>
<Caption>
POTENTIAL REALIZABLE
VALUE OF OPTIONS AT
ASSUMED ANNUAL RATES OF
NUMBER OF STOCK PRICE APPRECIATION
SHARES FOR OPTION TERM(2)
UNDERLYING EXERCISE PRICE EXPIRATION -------------------------
NAME OPTIONS GRANTED ($/SHARE) DATES(1) 5% 10%
---- --------------- -------------- ---------- ----------- -----------

Richard S. Kay.................... 100,000 $2.625 2011 $165,085 $418,357
</Table>

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

(1) Options to purchase a total of 20,000 of the shares became exercisable on
February 21, 2001, which was the date of grant. The remaining options to
purchase a total of 80,000 shares become exercisable in four equal annual
installments of 20,000 shares on each successive anniversary of the date of
grant.

(2) There is no assurance that the values that may be realized by Mr. Kay 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 the 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, 2001, the currently
exercisable and currently unexercisable options held by each of the Named
Officers, none of whom exercised any options during the fiscal year ended June
30, 2001.

<Table>
<Caption>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED
OPTIONS AT YEAR END
2001(#)
---------------------------
NAME EXERCISABLE UNEXERCISABLE
---- ----------- -------------

Richard S. Kay.............................................. 20,000 80,000
Laurence R. Huff............................................ 2,000 5,000
W. T. Nightingale, III(1)................................... 90,000 0
Roger R. Vanderlaan(2)...................................... 10,000 0
</Table>

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

(1) Mr. Nightingale's options will terminate on October 13, 2001 if not
exercised by that date.

(2) Mr. Vanderlaan's options terminated on August 13, 2001.

As of June 30, 2001, none of the options shown in the above table were
"in-the-money" options, as the exercise prices of the options did not exceed the
per share market price of Pacer's common stock on that date.

DIRECTORS' FEES

During fiscal 2001, 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, 2001, the Company paid fees totaling
$83,000 to Reynolds, Jensen & Swan, 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.

6
10

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

The Board of Directors, as a whole, serves as and performs the functions of
a Compensation Committee. Mr. Kay, a member of the Board of Directors, also is
Pacer's Chief Executive Officer and President. The Board believes that Mr. Kay's
participation in management compensation decisions is important, because he is
most knowledgeable with respect to the performance of members of management.
However, Mr. Kay 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 & Swan, 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 is 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 the Company's and the individual's 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 the 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 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 be
awarded. The recommendation of the CEO is also considered in determining the
amount of any recommended bonus.

7
11

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 depend 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, without
Mr. Kay participating, determined his compensation for the fiscal year ended
June 30, 2001. That determination was made on the basis of the policies and
principles described above. Additionally, in order to align his financial
interests with those of the shareholders, he was granted options to purchase up
to a total of 100,000 shares of Pacer's common stock at an exercise price of
$2.625 per share, which was equal to the closing price per share of Pacer's
common stock, as reported by NASDAQ, on the date the options were granted.

<Table>

E. T. Gravette, Jr. Larry K. Reynolds
Carl Hathaway Richard S. Kay
John G. Hockin, II
</Table>

REPORT OF THE AUDIT COMMITTEE

The Audit Committee has reviewed and discussed the audited financial
statements of the Company for the fiscal year ended June 30, 2001 with
management. The Audit Committee also has discussed with Ernst & Young, LLP, the
Company's independent public accountants for fiscal year 2001, the matters
required to be discussed by the Statement on Auditing Standards No. 61
(Communications with Audit Committee). In addition, the Audit Committee has
received the written disclosures and the letter from Ernst & Young, LLP as
required by the Independence Standards Board Standard No. 1 (Independence
Discussions with Audit Committees) and the Audit Committee has discussed the
independence of Ernst & Young, LLP with that firm.

Based on the Audit Committee's review of the matters noted above and its
discussions with the Company's independent certified public accountants and the
Company's management, the audit committee recommended to the Board of Directors
that the Company's financial statements be included in the Company's Annual
Report on Form 10-K.

Ellis T. Gravette, Jr.
Carl E. Hathaway
John G. Hockin, II

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COMPANY PERFORMANCE

The following graph sets forth a five year comparison of cumulative total
returns on investment for the Company, the Russell 2000 Index, which is a broad
market index, and the S&P Chemicals (Specialty) Index, which is an index
comprised of publicly traded companies engaged in businesses similar to the
Company's business. 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, 1996 and ended June 30, 2001. The total shareholder
return assumes $100 invested at the beginning of the period in the Company's
common stock, the Russell 2000 Index and the S&P Chemicals (Specialty) Index.
The data for the graph was obtained from Research Data Group, Inc.

COMPARISON OF CUMULATIVE TOTAL RETURN

(PERFORMANCE GRAPH)

<Table>
<Caption>
--------------------------------------------------------------------------------
6/30/96 6/30/97 6/30/98 6/30/99 6/30/00 6/30/01
--------------------------------------------------------------------------------

Pacer Technology 100.00 92.85 107.14 85.71 66.67 39.92
Russell 2000 100.00 116.33 135.53 137.56 157.27 158.30
S&P Chemicals
(Specialty) 100.00 107.62 107.93 134.58 96.74 94.37
--------------------------------------------------------------------------------
</Table>

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 Reports of
the Compensation Committee and Audit Committee, and the Performance Graph, shall
not be incorporated by reference into any such filings.

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PROPOSAL NO. 2

ADOPTION OF 2001 STOCK INCENTIVE PLAN

INTRODUCTION AND BOARD RECOMMENDATION

INTRODUCTION AND PURPOSES OF THE PLAN

The Board of Directors has unanimously adopted and is requesting that the
shareholders approve the Pacer Technology 2001 Stock Incentive Plan (the
"Plan"). The Plan sets aside 300,000 shares of Pacer's common stock for the
grant of stock options to Pacer's officers and other key management employees
and directors and to consultants and other providers of services to Pacer. The
Board of Directors believes that the Plan will enhance Pacer's ability to
attract and retain the services of officers and qualified employees and
directors and outside consultants and other service providers, upon whose
judgment, initiative and efforts the successful conduct and development of the
Company's businesses largely depends, and will provide an additional incentive
for such persons to devote their utmost time and efforts to the financial
success of the Company. The Board of Directors also believes that the granting
of options to such persons will serve to align their financial interests with
those of Pacer's shareholders. Since options are granted at an exercise price
equal to the market value of the Company's shares on the date of grant, the
financial reward provided by stock options is largely a product of the
appreciation in the market value of the Company's shares, thereby effectively
rewarding executives, directors and service providers for performance that
results in improved market performance of the Company's stock, which directly
benefits all shareholders.

VOTE REQUIRED AND BOARD RECOMMENDATION

The affirmative vote of a majority of the shares present in person or
represented by proxy and entitled to vote at the Annual Meeting will be required
to approve the Plan. Abstentions will be considered shares entitled to vote in
the tabulation of the votes cast on this Proposal and will have the same effect
as negative votes. Broker non-votes will not be counted for any purpose in
determining whether this matter has been approved.

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE PROPOSAL TO
APPROVE THE PACER TECHNOLOGY 2001 STOCK INCENTIVE PLAN.

DESCRIPTION OF THE PLAN

The following description of the principal features of the Plan is
qualified in its entirety by reference to the text of that Plan, a copy of which
will be furnished to any shareholder that makes a request therefor addressed to
the Secretary of the Company, Pacer Technology, 9420 Santa Anita Avenue, Rancho
Cucamonga, California 91730.

Number of Authorized Shares. The Plan authorizes the issuance of up to
300,000 shares of the Company's common stock, which represents a number of
shares equal to 9.8% of the total number of shares of Company Common Stock that
are currently outstanding. As described in more detail below, the authorized
number of shares that may be issued under the Plan will be subject to adjustment
in the event of stock splits, stock dividends or certain other changes in the
capital structure of the Company.

Incentive and Nonqualified Stock Options. The Plan provides for grants of
"incentive stock options" as defined in Section 422 of the Internal Revenue Code
of 1986, as amended (the "Code") and nonqualified stock options. Incentive stock
options and nonqualified stock options may be granted to employees of the
Company. Nonqualified stock options also may be granted to officers and other
key employees and also to non-employee directors of and outside consultants and
providers of services to the Company. As of this date no options have been
granted under the Plan and none will be granted unless the shareholders approve
the Plan.

Administration of the Plan. The Compensation Committee of the Board of
Directors (the "Committee"), which currently is comprised of all of the
directors of the Company, will administer and, subject to the specific terms and
provisions of the Plan, will have the full power and authority to interpret the
Plan, select the

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recipients of options, determine and authorize the type, terms and conditions
of, including vesting provisions, and the number of shares subject to, grants
under the Plan, and adopt, amend and rescind rules relating to that Plan.

Exercise Price of Options. The option exercise price for each share
granted pursuant to an incentive or nonqualified stock option may not be less
than 100% of the fair market value of a share of common stock at the time such
option is granted (110% of fair market value in the case of any option granted
to a person who owns more than 10% of the combined voting power of all classes
of stock of the Company). The maximum number of shares for which options may be
granted to any one person during any one calendar year under the Plan will be
100,000 shares, which number shall be subject to adjustment in the event of
stock splits, stock dividends or certain other similar changes in the capital
structure of the Company. The aggregate fair market value of the common stock
(determined as of the date of grant) with respect to which incentive stock
options granted under the Plan or any other stock option plan of the Company
become exercisable for the first time by any optionee during any calendar year
may not exceed $100,000, and any amounts that become exercisable by an optionee
in any year in excess of that $100,000 will be treated as nonqualified stock
options.

Payment of Exercise Price. The exercise price of an incentive stock option
or nonqualified stock option is payable in full upon exercise. Payment of the
option price upon exercise of a stock option may be made in cash, by check, or,
at the discretion of the Committee, by the delivery of shares of common stock
(valued at their fair market value as of the date of the exercise of an option),
by the optionee's promissory note in a form and on terms acceptable to the
Committee, by the cancellation of indebtedness of the Company to the optionee,
by the waiver of compensation due or accrued to the optionee for services
rendered, or by any combination of the foregoing methods of payment. In
addition, the option price for options granted under the Plan may be made by a
"same day sale" commitment or by a "margin commitment" from the optionee and a
broker-dealer that is a member of the National Association of Securities
Dealers, Inc. ("NASD Dealer") whereby (i) the optionee irrevocably elects to
exercise his or her option and to either sell a number of those option shares,
or borrow funds from the NASD Dealer on security of his or her option shares,
sufficient to generate the amounts needed to pay the exercise price of his or
her options, and (ii) the NASD Dealer irrevocably commits upon receipt of such
shares to forward those amounts directly to the Company.

Vesting and Termination of Options. At the time of grant the Committee
will determine whether the options granted will become exercisable (that is will
"vest") at any time in whole, or from time to time in installments over the term
of the options. However, subject to the provisions of the Plan permitting
acceleration of the vesting of outstanding options, no option will vest prior to
the expiration of six months from the date it is granted, but at least 20% of
the options granted to any optionee shall vest each year during the first five
years of the term of any option granted under the Plan. The term of options may
not exceed 10 years from the date of grant (except in the case of any option
granted to a person who owns more than 10% of the combined voting power of all
classes of stock of the Company, in which case the term may not exceed five
years). In the event of a termination of an optionee's employment (or, in the
case of a non-employee director or service provider, a cessation of his or her
service with the Company) all options that had previously become vested will
continue to be exercisable for a period of three months, except in the case of a
termination due to the death or disability of the optionee, in which event the
vested options will continue to be exercisable for 12 months following such a
termination. However, upon any such termination of employment or cessation of
service all options that had not already become vested will terminate and will
not be exercisable. The Compensation Committee also shall have discretion to
accelerate the vesting of any outstanding options granted under the Plan as the
Committee deems appropriate.

Transferability. Except as otherwise approved by the Committee, options
granted under the Plan may not be transferred other than by will or by the laws
of descent and distribution.

Adjustments to Number and Exercise Price of Options. In the event Pacer's
outstanding shares of common stock are increased or decreased or changed into or
exchanged for a different number or kind of shares or other securities of the
Company by reason of merger, consolidation or reorganization in which the
Company is the surviving Company, or by reason of a stock split, combination of
shares, reclassification, stock dividend, or other similar change in Pacer's
capital structure while the Plan is in effect, appropriate

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adjustments will be made to the aggregate number and kind of shares issuable
under that Plan, and the number and kind of shares and the price per share
subject to outstanding incentive options and nonqualified options in order to
preserve, but not to increase, the benefits to persons then holding options
under the Plan.

Effect of Changes in Control. In the event of the consummation of a Change
in Control (as defined below) of the Company, the time period relating to the
exercise or realization of all outstanding options shall automatically
accelerate immediately prior to the consummation of such Change of Control
unless the surviving corporation or its parent corporation in such Change in
Control transaction agrees to assume, or exchange its options for, the options
outstanding under the Plan as of the effective date of the Change of Control.
For purposes of the Plan, "Change in Control" means (i) the acquisition,
directly or indirectly, by any person or group (within the meaning of Section
13(d)(3) of the Securities Exchange Act of 1934, as amended) of the beneficial
ownership of securities of the Company possessing more than fifty percent (50%)
of the total combined voting power of all outstanding securities of the Company;
(ii) a merger or consolidation in which the Company is not the surviving entity,
except for a transaction in which the holders of the outstanding voting
securities of the Company immediately prior to such merger or consolidation
hold, in the aggregate, securities possessing more than fifty percent (50%) of
the total combined voting power of all outstanding voting securities of the
surviving entity immediately after such merger or consolidation; (iii) a reverse
merger in which the Company is the surviving entity but in which securities
possessing more than fifty percent (50%) of the total combined voting power of
all outstanding voting securities of the Company are transferred to or acquired
by a person or persons different from the persons holding those securities
immediately prior to such merger; (iv) the sale, transfer or other disposition
(in one transaction or a series of related transactions) of all or substantially
all of the assets of the Company; or (v) the approval by the shareholders of a
plan or proposal for the liquidation or dissolution of the Company.

Amendments to and Termination of the Plan. The Board of Directors may
alter, amend, suspend or terminate the Plan at any time. However, any changes
which would adversely affect or impair, in any material respect, the rights of
any person who holds any outstanding options under the Plan will not apply to
those options without the consent of the optionee. Unless sooner terminated by
the Board of Directors, the Plan will terminate on July 31, 2011, which is
within ten years of the date the Plan was adopted by the Board of Directors.

FEDERAL INCOME TAX CONSEQUENCES

The following is a summary of certain federal income tax consequences of
participation in the Plan. The summary should not be relied upon as being a
complete statement. Federal tax laws are complex and subject to change and the
federal tax consequences of participation in the Plan may vary depending on the
personal tax situation of the optionees. Moreover, participation in the Plan may
also have consequences under state and local tax laws which may vary from the
federal tax consequences described below.

Incentive Options. No taxable income will be recognized by an optionee
under the Plan upon either the grant or the exercise of an incentive option.
Instead, a taxable event will occur upon the sale or other disposition of the
shares acquired upon exercise of an incentive option, and the tax treatment of
the gain or loss realized will depend upon how long the shares were held before
their sale or disposition. As is discussed below, the exercise of an incentive
option also may result in an "item of adjustment" for purposes of the
"alternative minimum tax."

If a sale or other disposition of the shares received upon the exercise of
an incentive option occurs more than (i) one year after the date of exercise of
the option and (ii) two years after the date of grant of the option, the holder
will recognize long-term capital gain or loss at the time of sale equal to the
full amount of the difference between the proceeds realized and the exercise
price paid. However, a sale, exchange, gift or other transfer of legal title of
such stock before the expiration of either the one-year period or the two-year
period described above will constitute a "disqualifying disposition." A
disqualifying disposition involving a sale or exchange will result in ordinary
income to the optionee in an amount equal to the lesser of (i) the fair market
value of the stock on the date of exercise minus the exercise price, or (ii) the
amount realized on disposition minus the exercise price. If the amount realized
in a disqualifying disposition exceeds the fair market value of

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the stock on the date of exercise, the gain realized, in excess of the amount
taxed as ordinary income as indicated above, will be taxed as capital gain. A
disqualifying disposition as a result of a gift will result in ordinary income
to the optionee in an amount equal to the difference between the exercise price
and the fair market value of the stock on the date of exercise. Any loss
realized upon a disqualifying disposition will be treated as a capital loss.
Capital gains and losses resulting from disqualifying dispositions will be
treated as long-term or short-term depending upon whether the shares were held
for more or less than the applicable statutory holding period (which is
currently more than 12 months for long-term capital gains). The Company will be
entitled to a tax deduction in an amount equal to the ordinary income recognized
by the optionee as a result of the disqualifying disposition.

If legal title to any shares acquired upon exercise of an incentive option
is transferred by sale, gift or exchange, such transfer will be treated as a
disposition for purposes of determining whether a "disqualifying disposition"
has occurred. However, certain transfers will not be treated as dispositions for
such purposes, such as transfers to an estate or by inheritance upon an
optionee's death, a mere pledge or hypothecation, or a transfer into the name of
the optionee and another person as joint tenants.

Section 55 of the Code imposes an "alternative minimum tax" on an
individual's income to the extent the amount of the alternative minimum tax
exceeds the individual's regular tax for the year. For purposes of computing the
alternative minimum tax, the excess of the fair market value (on the date of
exercise) of the shares received upon the exercise of an incentive option over
the exercise price paid is included in alternative minimum taxable income in the
year the option is exercised. If the shares are sold in the same year that the
option is exercised, the regular tax treatment and the alternative tax treatment
will be the same. If the shares are sold during a year subsequent to that in
which the option was exercised, the basis of the stock acquired will equal its
fair market value on the date of exercise for purposes of computing alternative
minimum taxable income in the year of sale. For example, assume that an
individual pays an exercise price of $10 to purchase stock having a fair market
value of $15 on the date of exercise. The amount included in alternative minimum
taxable income is $5, and the stock has a basis of $10 for regular tax purposes
and $15 for alternative minimum tax purposes. If the individual sells the stock
in a subsequent year for $20, the gain recognized is $10 for regular tax
purposes and $5 for alternative minimum tax purposes.

An optionee who is subject to the alternative minimum tax in the year of
exercise of an incentive option may claim as a credit against the optionee's
regular tax liability in future years, the amount of alternative minimum tax
paid that is attributable to the exercise of the incentive option. This credit
is available in the first year following the year of exercise in which the
optionee has a regular tax liability.

Under the Plan, the Committee may permit an optionee to pay the exercise
price of an incentive option by delivering shares of common stock of the Company
already owned by the optionee, valued at their fair market value on the date of
exercise. Generally, if the exercise price of an incentive option is paid with
already-owned shares or by a combination of cash and already-owned shares, there
will be no current taxable gain or loss recognized by the optionee on the
already-owned shares exchanged. A special rule applies, however, if the shares
exchanged were previously acquired through the exercise of an incentive option
and the applicable holding period requirements for favorable tax treatment of
such shares have not been met at the time of the exchange. In such event, the
exchange will be treated as a disqualifying disposition of such shares and will
result in the recognition of income to the optionee, in accordance with the
rules described above for disqualifying dispositions. If this special rule does
not apply, then the new shares received by the optionee upon the exercise of the
option equal in number to the old shares exchanged will have the same tax basis
and holding period for capital gain purposes as the optionee's basis and holding
period in the old shares. The balance of the shares received by the optionee
upon exercise of the option will have a tax basis equal to any cash paid by the
optionee, and if no cash was paid, the tax basis of such shares will be zero.
The holding period of the additional shares for capital gain purposes will
commence on the date of exercise. The holding period for purposes of the
one-year and two-year periods described above will commence on the date of
exercise as to all of the shares received upon the exercise of an incentive
option. If any of the shares that are subject to the basis allocation rules
described above are subsequently transferred in a disqualifying disposition, the
shares with the lowest tax basis will be treated as being transferred first.

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Nonqualified Options. No taxable income is recognized by an optionee upon
the grant of a nonqualified option. Upon exercise, however, the optionee will
recognize ordinary income in the amount by which the fair market value of the
shares purchased exceeds, on the date of exercise, the exercise price paid for
such shares. The income recognized by an optionee who is an employee will be
subject to income tax withholding by the Company out of the optionee's current
compensation. If such compensation is insufficient to pay the taxes due, the
optionee will be required to make a direct payment to the Company for the
balance of the tax withholding obligation. The Company will be entitled to a tax
deduction equal to the amount of ordinary income recognized by the optionee,
provided certain reporting requirements are satisfied.

If the exercise price of a nonqualified option is paid by the optionee in
cash, the tax basis of the shares acquired will be equal to the cash paid plus
the amount of income recognized by the optionee as a result of such exercise. If
the exercise price is paid by delivering shares of common stock of the Company
already owned by the optionee or by a combination of cash and already-owned
shares, there will be no current taxable gain or loss recognized by the optionee
on the already-owned shares exchanged (however, the optionee will nevertheless
recognize ordinary income to the extent that the fair market value of the shares
purchased on the date of exercise exceeds the price paid, as described above).
The new shares received by the optionee equal in number to the old shares
exchanged will have the same tax basis and holding period as the optionee's
basis and holding period in the old shares. The balance of the shares received
will have a tax basis equal to any cash paid by the optionee plus the amount of
income recognized by the optionee as a result of such exercise, and will have a
holding period commencing with the date of exercise.

Upon the sale or disposition of shares acquired pursuant to the exercise of
a nonqualified option, the difference between the proceeds realized and the
optionee's basis in the shares will be a capital gain or loss and will be
treated as long-term or short-term capital gain or loss if the shares have been
held for more than the applicable statutory holding period.

TAX WITHHOLDING

The Plan grants the Company the power to withhold, or require a participant
to remit to the Company, an amount sufficient to satisfy Federal, state and
local tax withholding requirements with respect to any options exercised or
restricted stock issued under that Plan. To the extent permissible under
applicable tax, securities, and other laws, the Committee may, in its sole
discretion, permit a participant to satisfy an obligation to pay any such tax,
in whole or in part, up to an amount determined on the basis of the highest
marginal tax rate applicable to such participant, by (i) directing the Company
to apply shares of common stock to which the participant is entitled as a result
of the exercise of an option, or (ii) delivering to the Company shares of common
stock already owned by the participant.

INDEPENDENT PUBLIC ACCOUNTANTS

Ernst & Young LLP, who have been the Company's independent accountants for
the fiscal years ended June 30, 2001 and 2000 ("Ernst & Young"), have been
selected by the Board of Directors as the Company's independent accountants for
the fiscal year ending June 30, 2002. 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.

KPMG LLP ("KPMG") were the Company's independent accountants and audited
the Company's financial statements as of and for the year ended June 30, 1999.
Effective October 12, 1999, the Board of Directors approved the selection of
Ernst & Young, and dismissed KPMG, as the registrant's independent accountant.
As confirmed by KPMG in a letter dated October 15, 1999 that was filed with the
Securities Exchange Commission, there had never been (i) any disagreements
between the Company and KPMG on any matter of accounting principles or
practices, financial statement disclosure or auditing scope or procedures or
(ii) any "reportable events" (as defined in Paragraph (a)(v) of Item 304 of
Regulation S-K as promulgated by the Securities and Exchange Commission).

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At no time during the two fiscal years or any subsequent interim period
preceding the engagement of Ernst & Young as the Company's independent certified
public accountants did the Company consult with Ernst & Young regarding the
application of accounting principles to any transaction, the type of audit
opinion that might be rendered on the financial statements of the Company, or
any disagreement or reportable event.

FEES PAID TO ACCOUNTING FIRMS

Ernst & Young's aggregate fees for professional services for the audit of
the Company's annual consolidated financial statements that were included in the
Company's Annual Report on Form 10-K and its review of the consolidated
financial statements included in the Company's Forms 10-Q for fiscal 2001
totaled $100,250.

Ernst & Young did not provide, and it did not bill and it was not paid any
fees for, financial information systems design and implementation services in
fiscal 2001. The aggregate fees paid by the Company for all other services
rendered by Ernst & Young in fiscal 2001, which consisted of tax compliance and
consulting services, were $25,493. The Audit Committee has determined that the
provision of services, in addition to audit services, rendered by Ernst & Young
and the fees paid therefor in fiscal 2001 were compatible with maintaining Ernst
& Young's independence.

During fiscal 2001 the only services rendered by KPMG to the Company
related to the inclusion of KPMG's audit opinion with respect to Company's
financial statements for the year ended June 30, 1999 in the Company's Annual
Report filed with the Securities and Exchange Commission on Form 10-K for its
fiscal year ended June 30, 2001.

SOLICITATION OF PROXIES

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, telecopy 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.

SHAREHOLDER PROPOSALS

Any shareholder desiring to submit a proposal for action at the 2002 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 13, 2002. 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.

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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,

/s/ RICHARD P. KAY
RICHARD S. KAY
Chairman, Chief Executive Officer and
President

October 11, 2001

The Annual Report to Shareholders of the Company for the fiscal year ended
June 30, 2001 is being mailed concurrently with this Proxy Statement to all
shareholders of record as of September 28, 2001. 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,
2001 WILL BE PROVIDED TO SHAREHOLDERS WITHOUT CHARGE UPON WRITTEN REQUEST TO THE
SECRETARY, PACER TECHNOLOGY, 9420 SANTA ANITA AVENUE, RANCHO CUCAMONGA,
CALIFORNIA 91730.

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EXHIBIT A

PACER TECHNOLOGY

CHARTER OF THE AUDIT COMMITTEE
OF THE BOARD OF DIRECTORS

1. ORGANIZATION

This charter governs the operations of the Audit Committee ("Committee")
for Pacer Technology, a California Corporation ("Pacer"). The Committee shall
review and reassess the charter at least annually and obtain the approval
thereof by Pacer's Board of Directors ("Board"). The Committee shall be
appointed by the Board of Directors and shall be comprised of at least three
Board members, each of whom are independent of management and Pacer. Members of
the Committee shall be considered independent if they have no relationship that
may interfere with the exercise of their independence from management and Pacer.
All Committee members shall be financially literate, or shall become financially
literate within a reasonable period of time after appointment to the Committee,
and at least one member shall have accounting or related financial management
expertise.

2. STATEMENT OF POLICY

The Committee shall provide assistance to the Board in fulfilling its
oversight responsibility relating to Pacer's financial statements and the
financial reporting process, the systems of internal accounting and financial
controls, the annual independent audit of Pacer's financial statements, and the
legal compliance and ethics programs as established by management and the Board.
In so doing, it is the responsibility of the Committee to maintain free and open
communication between the Committee, independent auditors and management of
Pacer. In discharging its oversight role, the Committee is empowered to
investigate any matter brought to its attention with full access to all books,
records, facilities, and the personnel of Pacer and the power to retain outside
counsel, or other experts for this purpose.

3. RESPONSIBILITIES AND PROCESSES

The primary responsibility of the Committee is to oversee Pacer's financial
reporting process on behalf of the Board and report the results of its
activities to the Board. Management is responsible for preparing Pacer's
financial statements and the independent auditors are responsible for auditing
those financial statements. The Committee in carrying out its responsibilities
believes its policies and procedures should remain flexible, in order to best
react to changing conditions and circumstances. The Committee should take the
appropriate actions to set the overall corporate "tone" for quality financial
reporting, sound business risk practices, and ethical behavior.

4. PRINCIPAL RECURRING PROCESSES

The following shall be the principal recurring processes of the Committee
in carrying out its oversight responsibilities. The processes are set forth as a
guide with the understanding that the Committee may supplement or revise them as
it deems appropriate. The Committee shall have a clear understanding with
management and the independent auditors that the independent auditors are
ultimately accountable to the Board and the Committee, as representatives of
Pacer's Shareholders. The Committee shall have the ultimate authority and
responsibility to evaluate and, where appropriate, and with the approval of the
full Board of Directors to replace, the independent auditors. The Committee
shall discuss with the auditors their independence from management and Pacer and
the matters included in the written disclosures required by the Independence
Standards Board. Annually, the Committee shall review and recommend to the Board
the selection of Pacer's independent auditors.

- The Committee shall discuss with the independent auditors the overall
scope and plans for their annual audit including the adequacy of staffing
and compensation. Also, the Committee shall discuss with

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management and the independent auditors the adequacy and effectiveness of
the accounting and financial controls, including Pacer's systems to
monitor and manage business risk, and legal and ethical compliance
programs. Further, the Committee shall meet separately with the
independent auditors, with and without management present, to discuss the
results of their examinations.

- The Committee shall review the interim financial statements with
management and the independent auditors prior to the filing of Pacer's
Quarterly Report on Form 10-Q. Also, the Committee shall discuss the
results of the quarterly review and any other matters required to be
communicated to the Committee by the independent auditors under generally
accepted auditing standards.

- The Committee shall review with management and the independent auditors
the financial statements to be included in Pacer's Annual Report on Form
10-K (or the annual report to shareholders if distributed prior to the
filing of Form 10-K), including their judgement about the quality, not
just acceptability, of accounting principles as applied in the Company's
financial reporting, the reasonableness of significant judgments and the
clarity of the disclosures in the financial statements. Also, the
Committee shall discuss the results of the annual audit and any other
matters required to be communicated to the Committee by the independent
auditors under generally accepted auditing standards.

- The Committee shall review the independence and performance of the
auditors and annually recommend to the Board of Directors the appointment
of the independent auditors or approve any discharge of auditors when
circumstances warrant. In furtherance thereof, the Committee shall review
and discuss, at least on an annual basis, with the independent auditors
all significant relationships they have with the Company that could
impair the auditors' independence.

- The Committee shall approve the fees and other significant compensation
to be paid to the independent auditors.

- The Committee shall discuss with the auditors the matters required to be
communicated to audit committees in accordance with AICPA SAS 61.

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22
PACER TECHNOLOGY

PROXY SOLICITED BY THE BOARD OF DIRECTORS
ANNUAL MEETING OF THE SHAREHOLDERS

TUESDAY, NOVEMBER 13, 2001

AT 9:00 A.M. PACIFIC TIME

AT THE HILTON HOTEL - ONTARIO AIRPORT
700 NORTH HAVEN AVENUE
ONTARIO, CALIFORNIA 91764

PACER TECHNOLOGY
9420 SANTA ANITA AVENUE
RANCHO CUCAMONGA, CA 91730 PROXY
--------------------------------------------------------------------------------

The undersigned hereby revokes all previously granted proxies, and nominates,
constitutes and appoints Richard S. Kay, E.T. Gravette, Jr., and Larry K.
Reynolds, 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 2001
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.
23
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

- Use the Internet to vote your proxy 24 hours a day, 7 days a week until 12
Noon (CT) on November 12, 2001.

- You will be prompted to enter your 3-digit Company Number and your 7-digit
Control Number which is located above to obtain your records and create an
electronic ballot.

- Your Internet vote will authorize the named Proxies to vote your shares in
the same manner as if you had marked, signed and returned your proxy card
with the same voting instructions.

VOTE BY MAIL

Mark, sign and date your proxy card and return it in the postage-paid envelope
we've 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 -

THE DIRECTORS RECOMMEND A VOTE FOR THE ELECTION OF THE DIRECTORS NAMED BELOW AND
FOR THE 2001 STOCK INCENTIVE PLAN PROPOSAL

1. Election of directors:
Election of the following nominees as directors for a term of one year:

01 Richard S. Kay
02 Ellis T. Gravette, Jr.
03 Carl Hathaway
04 John D. Hockin, II
05 Larry K. Reynolds

[ ] FOR all nominees [ ] WITHHOLD authority
(except as marked to to vote for all
the contrary below) nominees

(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY NOMINEE, PRINT THAT
NOMINEE'S NUMBER IN THE SPACE PROVIDED TO THE RIGHT.) [ ]

2. APPROVAL OF PACER TECHNOLOGY 2001 STOCK INCENTIVE PLAN

Authorizing the grant by Pacer of options to purchase up to 300,000 shares
of common stock to Pacer's officers, employees, directors and consultants
and other service providers.

[ ] 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 2001
PACER TECHNOLOGY 2001 STOCK INCENTIVE PLAN 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.

Address Change? Mark Box [ ] I plan to attend the Annual Meeting [ ]
Indicate changes below:

Date ________________________, 2001

______________________________________

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.)