<PAGE> 1
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a)
OF THE SECURITIES EXCHANGE ACT OF 1934
Filed by the registrant [X]
Filed by a party other than [ ] the registrant
Check the appropriate box:
<TABLE>
<CAPTION>
<S> <C>
[ ] Preliminary proxy statement [ ] Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e) (2))
[X] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
CEM Corporation
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
[ ] (1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transactions applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing of 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.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE> 2
[CEM Logo]
MATTHEWS, NORTH CAROLINA
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD NOVEMBER 4, 1999
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of CEM
Corporation (the "Company") will be held at the principal office of the Company,
3100 Smith Farm Road, Matthews, North Carolina, on Thursday, November 4, 1999,
at 11:00 a.m., local time, for the purpose of considering and acting upon the
following:
1. The election of four directors.
2. A proposal to ratify the selection of PricewaterhouseCoopers
LLP as the Company's independent public accountants for the
fiscal year ending June 30, 2000.
3. Any and all other matters that may properly come before the
meeting or any adjournment thereof.
The Board of Directors of the Company has fixed the close of business
on September 8, 1999 as the record date for determining the shareholders
entitled to notice of and to vote at the meeting and any adjournment thereof,
and only holders of Common Stock of the Company of record at such date will be
entitled to notice of or to vote at the meeting.
THE BOARD OF DIRECTORS WILL APPRECIATE THE PROMPT RETURN OF THE
ENCLOSED PROXY, DATED AND SIGNED. THE PROXY MAY BE REVOKED BY YOU AT ANY TIME
BEFORE IT IS EXERCISED AND WILL NOT BE EXERCISED IF YOU ATTEND THE MEETING AND
VOTE IN PERSON.
By Order of the Board of Directors
/s/ MICHAEL J. COLLINS
President and Chief Executive Officer
Matthews, North Carolina
October 1, 1999
<PAGE> 3
CEM CORPORATION
Post Office Box 200, Matthews, North Carolina 28106
PROXY STATEMENT
GENERAL
This Proxy Statement is furnished in connection with the solicitation
by the Board of Directors of proxies to be used at the Annual Meeting of
Shareholders of CEM Corporation (the "Company") to be held at its principal
office, 3100 Smith Farm Road, Matthews, North Carolina, at 11:00 a.m., local
time, on Thursday, November 4, 1999. This Proxy Statement and accompanying proxy
are first being sent to the shareholders of the Company on or about October 1,
1999.
The only matters to be considered at the meeting, so far as known to
the Board of Directors of the Company, are the matters set forth in the Notice
of Annual Meeting of Shareholders, and routine matters incidental to the conduct
of the meeting. However, if any other matters should come before the meeting or
any adjournment thereof, it is the intention of the persons named in the
accompanying form of proxy, or their substitutes, to vote said proxy in
accordance with their judgment on such matters.
Shares of the Company's Common Stock represented by proxies in the form
solicited will be voted in the manner directed by the shareholders. If no
direction is given, the proxy will be voted FOR the election of the nominees for
the directors named in this Proxy Statement and FOR the ratification and
approval of the appointment of PricewaterhouseCoopers LLP as the Company's
independent auditors. Any proxy delivered in the accompanying form may be
revoked by the person executing the proxy at any time, before the authority
thereby granted is exercised, by written request addressed to Secretary, CEM
Corporation, Post Office Box 200, Matthews, North Carolina 28106 or by attending
the meeting and electing to vote in person. Proxies received in such form will
be voted as therein set forth at the meeting or any adjournment thereof.
Only holders of the Common Stock of the Company whose names appear of
record on the Company's books at the close of business September 8, 1999 will be
entitled to vote at the Annual Meeting. As of that date, a total of 3,043,443
shares of Common Stock were outstanding, each share being entitled to one vote.
There is no cumulative voting. If a shareholder returns a proxy withholding
authority to vote the proxy with respect to any or all of the nominees for
director, then the shares of the Common Stock covered by such proxy shall be
deemed present at the Annual Meeting for purposes of determining a quorum and
for purposes of calculating the vote with respect to such nominee, but shall not
be deemed to have been voted for such nominee or nominees. If a shareholder
abstains from voting as to any matter, then the shares held by such shareholder
shall be deemed present at the meeting for purposes of determining a quorum and
for purposes of calculating the vote with respect to such matter, but shall not
be deemed to have been voted in favor of such matter. If a broker returns a
"non-vote" proxy, indicating a lack of authority to vote on such matter, then
the shares covered by such non-vote shall be deemed present at the Annual
Meeting for purposes of determining a quorum, but shall not be deemed to be
present and entitled to vote at the Annual Meeting for purposes of calculating
the vote with respect to such matter.
Solicitation of proxies other than by mail may be made personally and
by telephone by regularly employed officers and employees of the Company, who
will not be additionally compensated therefor. The Company will request brokers,
dealers, banks or voting trustees, or their nominees, who hold stock in their
names for others or hold stock for others who have the right to give voting
instructions, to forward proxy materials to their principals and request
authority for the execution of the proxy and will reimburse such institutions
for their reasonable expenses in so doing. In addition, the Company has engaged
Corporate Communications, Inc. ("CCI") to solicit proxies from these
institutions. CCI will be reimbursed for its printing costs, postage and freight
charges, and other expenses and will be paid a solicitation fee of approximately
$3,500. The total cost of soliciting proxies will be borne by the Company.
<PAGE> 4
PRINCIPAL SHAREHOLDERS AND HOLDINGS OF MANAGEMENT
The following table shows, as of September 8, 1999, the holdings of the
Common Stock by (i) any entity or person known to the Company to be the
beneficial owner of more than 5% of the Common Stock, (ii) each director and
each of the executive officers named in the Summary Compensation Table below,
and by all directors and executive officers of the Company as a group.
<TABLE>
<CAPTION>
Name and Address of Number of Shares and Nature Percent of Common Stock
Beneficial Owner of Beneficial Ownership Outstanding(1)
- ----------------------------------------- --------------------------- -----------------------
<S> <C> <C>
Michael J. Collins(2) 504,892 16.5%
David L. Babson & Co., Inc.(3) 377,500 12.4%
T. Rowe Price Associates, Inc.(4) 300,000 9.9%
Dimensional Fund Advisors Inc.(5) 247,600 8.1%
Royce & Associates, Inc.(6) 211,400 6.9%
Phronesis, L.P.(7) 173,400 5.7%
Richard N. Decker(8) 33,234 *
Ronald A. Norelli(9) 20,305 *
John L. Chanon(10) 7,100 *
Directors and Executive Officers(11) 565,531 18.2%
</TABLE>
- --------------------
* Less than 1%.
(1) Based on the number of shares outstanding plus options that are
currently exercisable or are exercisable within 60 days of September 8,
1999.
(2) Includes 24,750 shares subject to options that are currently
exercisable or are exercisable within 60 days of September 8, 1999 and
27,450 shares held by Mr. Collins' wife as custodian for their
children. Mr. Collins' address is 10225 Thomas Payne Circle, Charlotte,
North Carolina 28277.
(3) David L. Babson & Company, Inc. ("Babson") is an investment adviser.
Babson has sole voting power over all of the shares. Babson's address
is One Memorial Drive Cambridge, Massachusetts 02142-1300.
(4) The shares are owned by the T. Rowe Price Small-Cap Value Fund, in
respect of which T. Rowe Price Associates, Inc. ("Price Associates")
serves as investment adviser. Price Associates has sole dispositive
power but no voting power over such shares. For purposes of the
reporting requirements of the Securities Exchange Act of 1934, Price
Associates is deemed to be a beneficial owner of such securities;
however, Price Associates expressly disclaims that it is, in fact, the
beneficial owner of such securities. Price Associate's address is 100
E. Pratt Street, Baltimore, Maryland 21202.
(5) All of the shares owned by Dimensional Fund Advisors Inc.
("Dimensional") are held in portfolios of DFA Investment Dimensions
Group Inc., a registered open-end investment company, or in a series of
the DFA Investment Trust Company, a Delaware business trust, or the DFA
Group Trust and DFA Participation Group Trust, investment vehicles for
qualified employee benefit plans, all of which Dimensional serves as
investment manager. Dimensional disclaims beneficial ownership of all
such shares. Dimensional's address is 1299 Ocean Avenue, 11th Floor,
Santa Monica, California 90407.
(6) Royce & Associates, Inc. ("Royce") has sole voting and dispositive
power over all shares. Royce's address is 1414 Avenue of the Americas,
New York, New York 10019.
(7) Phronesis, L.P. has sole dispositive power over all shares. Phronesis,
L.P.'s address is 197 East Broad Street, Ste. 200, Columbus, Ohio
43215.
(8) Includes 31,500 shares subject to options that are currently
exercisable or are exercisable within 60 days of September 8, 1999.
(9) Includes 7,000 shares subject to currently exercisable options, 405
shares held as custodian for his children and 5,900 shares held in a
joint account with his wife.
(10) Includes 4,000 shares subject to currently exercisable options and 100
shares held by his son.
(11) Includes 67,250 shares subject to options that are currently
exercisable or are exercisable within 60 days of September 8, 1999.
2
<PAGE> 5
ELECTION OF DIRECTORS
The Bylaws of the Company provide for not less than four nor more than
nine directors, as determined from time to time by resolution of the
shareholders or the Board of Directors of the Company. The Board of Directors
has set the number of directors of the Company at four.
At this Annual Meeting, four directors will be elected to serve,
subject to the provisions of the Bylaws, until the 2000 Annual Meeting of
Shareholders or until their successors are duly elected and qualified. The
accompanying proxy may be voted for only four directors. Directors are elected
by a plurality of the votes cast by the holders of the shares entitled to vote
at a meeting at which a quorum is present. Provided a quorum is present,
abstentions and shares not voted are not taken into account in determining a
plurality. A quorum consists of a majority of votes entitled to be cast. It is
the intention of the persons named in the accompanying proxy to vote all proxies
solicited by the Board of Directors FOR the four nominees listed below unless
authority to vote for the nominees or any individual nominee is withheld by a
shareholder in such shareholder's proxy. If for any reason any nominee shall not
become a candidate for election as a director at the meeting, an event not now
anticipated, the proxies will be voted for the four nominees including such
substitutes as shall be designated by the Board of Directors.
The four nominees for election as director, all of whom are currently members of
the Board of Directors, are listed below. The four nominees were elected to
their current terms, which expire in 1999, at the Annual Meeting of shareholders
held on November 5, 1998, except for Mr. Krall, who was appointed as a director
in May 1999 by the Board of Directors in accordance with the Company's Bylaws to
fill a vacancy created by the resignation of a director.
<TABLE>
<CAPTION>
Name and
Director Since Age Information about Nominees and Directors
- ---------------------------- ------------------ ---------------------------------------------------------------------
<S> <C> <C>
Michael J. Collins 57 President and Chief Executive Officer of the Company since 1978
1971
Ronald A. Norelli 54 Chairman of the Board of the Company since 1992; President and
1985 Chief Executive Officer of Norelli & Company (strategic management
consulting firm) since 1981; Director of Pluma, Inc.(manufacturer
and distributor of fleece and jersey products) since 1998 following
an engagement of Norelli & Company. Mr. Norelli acted as interim
CEO of Pluma, Inc. from January 31, 1999 through May 9, 1999.
Pluma, Inc. filed a bankruptcy petition under the federal
bankruptcy laws on May 14, 1999. Mr. Norelli is a Certified
Turnaround Professional, and has from time-to-time served in
interim senior executive positions of companies that were clients
of Norelli & Company.
John L. Chanon 56 Area Partner of Tatum CFO Partners LLP ("CFO Services") since 1996;
1987 Senior Vice President - Finance of Harris-Teeter, Inc. (regional
supermarket chain) 1993-1996; President of Jordan Graphics, Inc.
(printing company) 1989-1993; Harris-Teeter, Inc. and Jordan
Graphics, Inc. are a subsidiary and former subsidiary,
respectively, of Ruddick Corporation (holding company)
George F. Krall 62 President and Chief Executive Officer, Mebane Packaging Group since
1999 1995; President and Chief Operating Officer 1992 - 1995; President
Wilkata Packaging Corporation 1987 - 1992; Director Paperboard
Packaging Council.
</TABLE>
3
<PAGE> 6
THE BOARD OF DIRECTORS AND ITS COMMITTEES
The Board of Directors met four times during the 1999 fiscal year. Each
director attended all of the meetings of the Board of Directors and Committees
on which he served. The Company has Audit and Compensation Committees. The Board
of Directors does not have a Nominating Committee.
The Audit Committee is composed of John L. Chanon and Ronald A. Norelli
and is responsible for recommending independent auditors for the Company,
reviewing the Company's financial statements, audit report, internal financial
controls and internal audit procedures, and approving services to be performed
by the Company's independent auditors. John L. Chanon is Chairman of the Audit
Committee. The Audit Committee met twice during the 1999 fiscal year.
The Compensation Committee is composed of Ronald A. Norelli, John L.
Chanon and George F. Krall and reviews and makes recommendations with respect to
executive and officer compensation and administers the Company's 1993 Management
Equity Plan and the Management Incentive Compensation Plan. Ronald A. Norelli is
Chairman of the Compensation Committee. The Compensation Committee met twice
during the 1999 fiscal year.
COMPENSATION COMMITTEE REPORT
The Compensation Committee of the Board of Directors of the Company,
whose members are named above, provides overall guidance to the Company's
executive compensation process. The Compensation Committee is composed of three
outside members of the Board of Directors and meets periodically to review the
Company's executive officer compensation. The Compensation Committee's
recommendations regarding the salary of the Chief Executive Officer and the
other officers of the Company are subject to approval by the entire Board of
Directors, except for decisions about grants under the 1987 Stock Option Plan
and the 1993 Management Equity Plan (the "Management Equity Plan"). As
administrator of the 1987 Stock Option Plan and the Management Equity Plan, the
Compensation Committee granted options under the 1987 Stock Option Plan in prior
years and grants options and makes other equity-based awards under the
Management Equity Plan and determines the terms and conditions of such awards.
The Compensation Committee's compensation policies are designed to
fairly compensate the officers of the Company for the effective exercise of
their responsibilities, their management of the business functions for which
they are responsible, the motivation of those officers and employees reporting
to them, their extended period of service to the Company and their dedication
and diligence in carrying out their responsibilities. The 1999 annual
compensation of the executive officers named in the Summary Compensation Table
set forth below (collectively, the "Named Executive Officers") consisted of a
base salary only. Bonuses were not paid to the Named Executive Officers during
fiscal 1999. In considering salaries and bonuses for the 1999 fiscal year, the
Compensation Committee considered the Company's overall performance over a
period of years, the performance of the individual officer and the officers'
salaries compared with the salaries of comparable officers at comparable
companies. In fiscal year 1999, the Compensation Committee, and in prior years,
the Board of Directors, which served the function of the Compensation Committee,
has usually granted increases in the base salaries of the Named Executive
Officers each year based on recommendations from the Chief Executive Officer who
has consulted with other officers of the Company. From time to time, the Board
of Directors has made adjustments to such recommendations.
Stock options granted under the Company's 1987 Stock Option Plan and
stock options and other equity based awards granted under the Management Equity
Plan are designed to create a proprietary interest in the Company among the
officers and other key employees of the Company who are granted stock options
and to more closely align the long-term interests of the optionees with those of
the shareholders of the Company. During the 1999 fiscal year, Mr. Collins and
Mr. Decker were granted options (and related stock appreciation rights) to
purchase 10,000 and 8,000 shares respectively, of Common Stock under the
Management Equity Plan.
4
<PAGE> 7
Mr. Collins' 1999 annual compensation consisted of a base salary which
was determined based on a number of factors, including the performance of the
Company and his individual performance and by comparison to the salaries of
chief executive officers at comparable companies.
This report is presented by the members of the Compensation Committee:
Ronald A. Norelli
John L. Chanon
George F. Krall
SHAREHOLDER RETURN PERFORMANCE GRAPH
Included below is a line graph comparing the yearly percentage change
in the cumulative total shareholder return on the Company's Common Stock against
the cumulative total return of the Nasdaq Stock Market (U.S. Companies) Index
and the Company's peer group for the period commencing June 30, 1994 and ending
June 30, 1999, covering the Company's five fiscal years ended June 30, 1999.
The Company has selected a peer group consisting of the six
publicly-traded companies, consisting of Bio-Rad Laboratories, Inc., Instron
Corporation, Isco, Inc., Modern Controls, Inc., O.I. Corporation and Pacific
Scientific Company. Each of these peer companies is in the laboratory and
analytical instrument industry. Many of the Company's direct competitors and
peers are privately-held companies or subsidiaries or divisions of larger
publicly-held companies so that the available members of the peer group are
limited.
The graph assumes the investment of $100 on June 30, 1994 in each of
the three investments and the reinvestment of all dividends. The past
performance of the Company's Common Stock is not necessarily indicative of its
future performance.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
AMONG THE COMPANY, NASDAQ STOCK MARKET INDEX AND PEER GROUP
[GRAPH OMITTED]
<TABLE>
<CAPTION>
COMPANY MARKET PEER
DATE YEAR CEM NASDAQ Peer Group
- -------------- ------------- -------------- ------------- -------------
<S> <C> <C> <C> <C>
6/30/94 1994 100.000 100.000 100.000
6/30/95 1995 108.700 133.500 144.800
6/30/96 1996 115.200 171.400 167.500
6/30/97 1997 75.000 208.400 143.500
6/30/98 1998 105.400 274.400 209.400
6/30/99 1999 65.200 392.200 189.900
</TABLE>
The foregoing report of the Compensation Committee of the Board of Directors of
the Company on executive compensation and the above performance graph shall not
be deemed to be soliciting material or to be filed under the Securities Act of
1933 or the Securities Exchange Act of 1934, or incorporated by reference in any
document so filed.
5
<PAGE> 8
EXECUTIVE COMPENSATION
The table below shows the compensation paid or accrued by the Company,
for each of the three fiscal years ended June 30, 1999, to or for the account of
each of the Named Executive Officers, who are the only executive officers and
employees of the Company whose total annual salary and bonus exceeded $100,000
for the 1999 fiscal year.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
Annual Compensation Long Term Compensation Awards
---------------------------------- -----------------------------
Other Annual Restricted Options/ All Other
Name and Fiscal Salary Bonus Compensation Stock Awards SARs Compensation
Principal Position Year ($) ($) ($) (1) ($) (#) (2) ($) (3)
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Michael J. Collins 1999 220,000 - - - 10,000 15,875
President and Chief 1998 213,758 21,000 - - 5,000 21,308
Executive Officer 1997 202,420 - - - 15,394
Richard N. Decker 1999 143,800 - - - 8,000 10,782
Vice President-Finance, 1998 137,527 13,700 - - 5,000 15,919
Chief Financial Officer, 1997 124,825 - - - 5,000 13,095
Secretary & Treasurer
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) No Named Executive Officer has received personal benefits during the
listed years in excess of 10% of his annual salary.
(2) The options granted to the Named Executive Officers during each of the
three fiscal years ended June 30, 1999 included related stock
appreciation rights ("SARs").
(3) These amounts represent contributions by the Company under the
Company's 401(k) plan/profit-sharing plan and supplemental savings
plan.
The table below shows all options and SARs granted during the fiscal
year ended June 30, 1999 to the Named Executive Officers and the potential
realizable value of each grant assuming annualized appreciation in the Common
Stock at the rate of 5% and 10% over the ten-year term of the option.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Potential Realizable
Number of Percent of Value at Assumed Annual
Securities Total Rates of Stock Price
Underlying Options/SARS Appreciation for Option
Options/SARs Granted to Exercise or Term (2)
Granted Employees in Base Price Expiration -----------------------
Name (#) Fiscal Year (1) ($/Share) Date 5% ($) 10% ($)
- --------------------- ------------ --------------- ----------- ---------- ------ -------
<S> <C> <C> <C> <C> <C> <C>
Michael J. Collins 5,000 4.3% $ 11.3750 8/05/08 35,768 90,644
Michael J. Collins 5,000 4.3% $ 10.1750 1/27/09 31,995 81,082
Richard N. Decker 5,000 4.3% $ 11.3750 8/05/08 35,768 90,644
Richard N. Decker 3,000 2.6% $ 9.2500 1/27/09 17,452 44,226
</TABLE>
- ---------------
(1) The total number of options granted to employees of the Company in
fiscal year ended June 30, 1999 represented 116,050 shares of Common
Stock of the Company.
(2) Potential realizable value is based on an assumption that the price of
Common Stock will appreciate at the annual rate shown (compounded
annually) from the date of grant until the end of the option/SAR term.
The numbers are calculated based on the requirements promulgated by the
Securities and Exchange Commission and do not affect the Company's
estimate of future stock price growth. There can be no assurances that
the market value of the Common Stock will appreciate in the assumed
manner.
6
<PAGE> 9
The table below shows, on an aggregated basis, each exercise of stock
options or SARs during the fiscal year ended June 30, 1999 by each of the Named
Executive Officers and the 1999 fiscal year-end value of unexercised options and
SARs.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
Number of Unexercised Value of Unexercised
Options/SARs In-the-Money Options/SARs
at FY-End (# Shares) at FY-End ($)(1)
Shares Acquired on Value Exercisable/Unexercisable Exercisable/Unexercisable
Name Exercise (# Shares) Realized ($) (#) ($)
- ------------------------ -------------------- ----------------- ------------------------- -------------------------
<S> <C> <C> <C> <C>
Michael J. Collins - - 24,750/13,750 -/-
Richard N. Decker - - 26,500/15,500 -/-
</TABLE>
- ----------------------
(1) No options held by the Named Executive Officers were "in-the-money" as
of September 8, 1999, because all such options had exercise prices
higher than the market value of the Company's Common Stock on that
date.
DIRECTOR COMPENSATION
Directors who are employees of the Company or its subsidiaries receive
no additional compensation for serving as directors. Directors who are not
employees of the Company or its subsidiaries receive an annual retainer of
$8,000 and $500 for each Committee meeting attended, except the fee for a
Committee meeting held on the same day as a Board meeting is $250. Ronald A.
Norelli receives $39,000 per year and no annual retainer as Chairman of the
Board of the Company.
The 1993 Nonqualified Stock Option Plan for Non-Employee Directors was
adopted by the Board of Directors and approved by the shareholders in 1993. The
1993 Director Plan was amended in 1995 and the amendments were approved by the
shareholders at the 1995 Annual Meeting on November 8, 1995. The Board of
Directors has reserved 25,000 shares of Common Stock for issuance upon exercise
of options granted under the 1993 Director Plan. This number, as well as the
number of shares issuable upon exercise of an option, is subject to adjustment
in the event of stock dividends and splits, recapitalizations and similar
transactions.
The only persons eligible to receive options under the 1993 Director
Plan are directors of the Company who are not regular employees of the Company
on the date of grant of the option. Under the 1993 Director Plan, each director
who was eligible to receive options under such plan was automatically granted an
option to purchase 500 shares of Common Stock on February 1, 1994 and 1995, and
was automatically granted an option to purchase 1,000 shares of Common Stock on
February 1, 1996, each subject to adjustment in the event of stock dividends and
splits, recapitalizations and similar transactions. Pursuant to the 1995
amendments to the 1993 Director Plan, each eligible newly elected director was
automatically granted an option to purchase 5,000 shares of Common Stock and all
eligible directors were automatically granted an option to purchase 1,000 shares
on February 1, 1997 and 1998. If there are not sufficient shares reserved for
such grants, the eligible directors will receive an option for a pro rata number
of the remaining shares reserved for grant. The exercise price of options
granted under the 1993 Director Plan is the fair market value of the Common
Stock on the date of grant. On May 5, 1999, George Krall received an option to
purchase 5,000 shares of Common Stock at an exercise price of $7.50 per share.
An option granted under the 1993 Director Plan is not exercisable
unless the optionee remains available to serve as a director of the Company
until the first anniversary of the date of grant. On or after such first
anniversary, any or all of such option may be exercised through the expiration
or termination of the option. Upon the exercise of an option or portion thereof,
the exercise price must be paid in full in cash or its equivalent.
7
<PAGE> 10
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's directors and
executive officers and persons who own more than 10% of the Company's Common
Stock to file with the Securities and Exchange Commission initial reports of
ownership and reports of changes in ownership of the Common Stock and other
equity securities. Officers, directors and greater than 10% shareholders are
required to furnish the Company with copies of all such reports they file. To
the Company's knowledge, based solely on a review of the copies of such reports
furnished to the Company and written representations that no other reports were
required, during the fiscal year ended June 30, 1999, all Section 16(a) filing
requirements applicable to its executive officers, directors and greater than
10% beneficial shareholders were complied with, except that the Initial
Statement of Beneficial Ownership of Securities on Form 3 for Mr. Krall, that
should have been filed when Mr. Krall became a director in May 1999, was not
filed until August 1999, and one Statement of Change of Beneficial Ownership of
Securities on Form 4 for Mr. Norelli was filed approximately one week after the
required filing date.
RATIFICATION OF SELECTION OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has selected PricewaterhouseCoopers LLP as
independent public accountants to audit the financial statements of the Company
for the fiscal year ending June 30, 2000. This selection is being presented to
the shareholders for their ratification at the Annual Meeting of shareholders.
The firm of PricewaterhouseCoopers LLP has audited the Company's financial
statements annually since 1981 and is considered well qualified.
Representatives of PricewaterhouseCoopers LLP are expected to be
present at the Annual Meeting of shareholders with an opportunity to make a
statement if they desire to do so, and they are expected to be available to
respond to appropriate questions.
The Board of Directors recommends a vote FOR the ratification of the
selection of PricewaterhouseCoopers LLP as independent public accountants to
audit the financial statements of the Company for the fiscal year ending June
30, 2000, and proxies solicited by the Board of Directors will be so voted
unless shareholders specify a different choice.
If the shareholders do not ratify the selection of
PricewaterhouseCoopers LLP, the selection of independent public accountants will
be reconsidered by the Board of Directors.
SHAREHOLDER PROPOSALS
Any proposal that a shareholder intends to present for action at the
2000 Annual Meeting of Shareholders must be received by the Company no later
than June 4, 2000 for the proposal to be included in the proxy statement and
form of proxy for the 2000 Annual Meeting of Shareholders. The proposal should
be sent to Secretary, CEM Corporation, Post Office Box 200, Matthews, North
Carolina 28106.
8
<PAGE> 11
APPENDIX A
CEM CORPORATION
PROXY
PROXY SOLICITED BY THE BOARD OF DIRECTORS FOR THE
ANNUAL MEETING TO BE HELD NOVEMBER 4, 1999
The undersigned hereby appoints Michael J. Collins and Richard N.
Decker, and each or either of them, proxies, with full power of substitution,
with the powers the undersigned would possess if personally present, to vote, as
designated on the reverse side, all shares of the $.05 par value Common Stock of
the undersigned in CEM Corporation at the Annual Meeting of Shareholders to be
held on November 4, 1999, and at any adjournment thereof.
THIS PROXY WILL BE VOTED AS SPECIFIED HEREIN AND, UNLESS OTHERWISE
DIRECTED, WILL BE VOTED FOR THE ELECTION OF ALL NOMINEES AS DIRECTORS AND FOR
PROPOSAL 2 ON THE REVERSE SIDE. THE BOARD OF DIRECTORS RECOMMENDS VOTING FOR ON
EACH ITEM.
1. ELECTION OF DIRECTORS: Nominees are Michael J. Collins, Ronald A.
Norelli, John L. Chanon and George F. Krall
[ ] FOR all listed nominees (except do not vote for the
nominee(s) whose name(s) I have written below)
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[ ] WITHHOLD AUTHORITY to vote for the listed nominees
(CONTINUED FROM OTHER SIDE)
2. RATIFICATION OF SELECTION OF PRICEWATERHOUSECOOPERS LLP AS INDEPENDENT
PUBLIC ACCOUNTANTS
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting.
Receipt of Notice of Annual Meeting of Shareholders and accompanying Proxy
Statement is hereby acknowledged.
PLEASE DATE AND SIGN EXACTLY AS PRINTED BELOW AND RETURN PROMPTLY IN THE
ENCLOSED POSTAGE PAID ENVELOPE.
Dated: , 1999.
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(When signing as attorney, executor,
administrator, trustee, guardian, etc., give
title as such. If joint account, each joint
owner should sign.)
