Preliminary Proxy Statement dated January 28, 1997.
SPARTA SURGICAL CORPORATION
Bernal Corporate Park
7068 Koll Center Parkway, Suite 401
Pleasanton, CA 94566
PROXY STATEMENT AND
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD MARCH 27, 1997
To the stockholders of Sparta Surgical Corporation:
A Special Meeting of the stockholders of Sparta Surgical Corporation (the
"Company") will be held at the Company's executive offices, 7068 Koll Center
Parkway, Suite 401, Pleasanton, CA 94566, on March 27, 1997, or at any
adjournment or postponement thereof, for the following purposes:
1. To reverse split the Company's Common Stock on the basis of one
share for each six shares outstanding.
2. To reduce the number of authorized shares of Common Stock from
30,000,000 shares to 8,000,000 shares.
3. To reduce the number of authorized shares of Preferred Stock (the
"Preferred Stock") from 5,000,000 shares to 750,000 shares.
4. To transact such other business as may properly come before the
Special Meeting.
Details relating to the above matters are set forth in the attached Proxy
Statement. All stockholders of record of the Company as of the close of business
on February 14, 1997 will be entitled to notice of and to vote at such Special
Meeting or at any adjournment or postponement thereof.
ALL STOCKHOLDERS ARE CORDIALLY INVITED TO ATTEND THE SPECIAL MEETING. IF
YOU DO NOT PLAN TO ATTEND THE SPECIAL MEETING, YOU ARE URGED TO SIGN, DATE AND
PROMPTLY RETURN THE ENCLOSED PROXY. A REPLY CARD IS ENCLOSED FOR YOUR
CONVENIENCE. THE GIVING OF A PROXY WILL NOT AFFECT YOUR RIGHT TO VOTE IN PERSON
IF YOU ATTEND THE SPECIAL MEETING.
BY ORDER OF THE BOARD OF DIRECTORS
Wm. Samuel Veazey
Wm. Samuel Veazey
Secretary
February 19, 1997
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PROXY STATEMENT
SPARTA SURGICAL CORPORATION
Bernal Corporate Park
7068 Koll Center Parkway, Suite 401
Pleasanton, CA 94566
Telephone: (510) 417-8812
SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD MARCH 27, 1997
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Sparta Surgical Corporation (the
"Company"), a Delaware corporation, of .002 par value Common Stock ("Common
Stock") and $4.00 par value redeemable preferred stock (the "1992 Preferred
Stock") to be voted at the Special Meeting of Stockholders of the Company
("Special Meeting") to be held at 11:00 A.M. on March 27, 1997, or at any
adjournment or postponement thereof. The Company anticipates that this Proxy
Statement and the accompanying form of proxy will be first mailed or given to
all stockholders of the Company on or about February 19, 1997. The shares
represented by all proxies that are properly executed and submitted will be
voted at the Special Meeting in accordance with the instructions indicated
thereon. Unless otherwise directed, votes will be cast for the proposed reverse
stock split, the reduction in the authorized shares of Common Stock and the
reduction in the authorized shares of Preferred Stock. The holders of a majority
of the shares represented at the Special Meeting in person or by proxy will be
required to approve all proposed matters.
Any stockholders giving a proxy may revoke it at any time before it is
exercised by delivering written notice of such revocation to the Company, by
substituting a new proxy executed at a later date, or by requesting, in person,
at the Special Meeting, that the proxy be returned.
All of the expenses involved in preparing, assembling and mailing this
Proxy Statement and the materials enclosed herewith and all costs of soliciting
proxies will be paid by the Company. In addition to the solicitation by mail,
proxies may be solicited by officers and regular employees of the Company by
telephone, telegraph or personal interview. Such persons will receive no
compensation for their services other than their regular salaries. Arrangements
will also be made with brokerage houses and other custodians, nominees and
fiduciaries to forward solicitation materials to the beneficial owners of the
shares held of record by such persons, and the Company may reimburse such
persons for reasonable out of pocket expenses incurred by them in so doing.
VOTING SHARES AND PRINCIPAL STOCKHOLDERS
The close of business on February 14, 1997 has been fixed by the Board of
Directors of the Company as the record date (the "record date") for the
determination of stockholders entitled to notice of and to vote at the Special
Meeting. On the record date, there were outstanding 4,582,492 shares of Common
Stock, each share of which entitles the holder thereof to one vote on each
matter which may come before the Special Meeting and 162,178 shares of 1992
Preferred Stock each share of which entitles the holder to two votes on each
such matters. Cumulative voting is not permitted.
A majority of the issued and outstanding shares entitled to vote,
represented at the Special Meeting in person or by proxy, constitutes a quorum
at any stockholders' meeting.
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Security Ownership of Certain Beneficial Owners and Management
The following table sets forth certain information concerning stock
ownership of the Company's $.002 par value Common Stock by all persons known to
the Company to own beneficially 5% or more of the outstanding shares of Common
Stock, by each director, and by all directors and officers as a group, as of
January 27, 1997 and prior to the proposed reverse stock split. None of the
named individuals or any other executive officers own any shares of 1992
Preferred Stock or Series A Convertible Redeemable Preferred Stock ("1994
Preferred Stock") nor does any person own beneficially 5% or more of the
outstanding shares of 1992 or 1994 Preferred Stock. For purposes of determining
the percentage ownership of the individuals and group listed in the table, the
1992 Preferred Stock and the Common Stock have been treated as one class, since
both classes are entitled to vote on all matters on which the Common Stock is
entitled to vote. In such instances, each share of the 1992 Preferred Stock is
entitled to two votes. The 1994 Preferred Stock has not been included as it is
non-voting.
The Company knows of no arrangements that will result in a change in
control at a date subsequent hereto. Except as otherwise noted, the persons
named in the table own the shares beneficially and of record and have sole
voting and investment power with respect to all shares shown as owned by them,
subject to community property laws, where applicable. Each stockholder's address
is in care of the Company at 7068 Koll Center Parkway, Pleasanton, California
94566. The table reflects all shares of Common Stock which each individual has
the right to acquire within 60 days from the date hereof upon exercise of
options, warrants, rights or other conversion privileges or similar obligations.
Number Percent
of Shares of of Class of
Common Common
Name Stock Owned Stock Owned
- ---- ----------- -----------
Thomas F. Reiner(1) 1,931,595 29.3%
Joseph Barbrie(2) 75,000 1.5%
Wm. Samuel Veazey(2) 76,875 1.5%
Michael Y. Granger(3) 20,000 .4%
Allan J. Korn(3) 15,000 .3%
Charles C. Johnston(4) 380,000 7.4%
Arbora A.G.(5) 562,500 10.4%
All officers and directors as a group
(five persons)(6) 2,118,470 31.2%
(1) Includes (i) 15,625 shares of Common Stock issuable upon exercise of options
at $8.80 per share at any time until July 1, 1997; (ii) 75,000 shares issuable
upon exercise of options at $2.25 per share at any time until February 14, 1999;
(iii) 200,000 shares issuable upon exercise of options at $2.25 per share at any
time until February 28, 2004; (iv) 400,000 shares issuable upon exercise of
options at $2.25 per share at any time until November 1, 1999; (v) 500,000
shares issuable upon exercise of options at $.40 per share at any time until
December 4, 2003; and (vi) certain shares and options to purchase shares for
which Mr. Reiner acts as trustee under a voting trust agreement. See footnote
(5), below. Does not include options to purchase 100,000 shares at $2.25 per
share at any time until February 28, 2004 contingent upon the Company achieving
certain goals.
(2) Includes 12,500 and 9,375 shares issuable upon exercise of options to
Messrs. Barbrie and Veazey, respectively, at $8.00 per share until July 1, 1997;
12,500 and 17,500 shares issuable upon exercise of options to Messrs. Barbrie
and Veazey, respectively, at $2.25 per share until February 14, 2004; and 50,000
shares issuable to each of Messrs. Barbrie and Veazey upon exercise of options
at $.40 per share until December 4, 2003.
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(3) Includes 10,000 and 5,000 shares of Common Stock issuable upon exercise of
options to Messrs. Granger and Korn, respectively, at $2.25 per share at any
time until February 14, 2004 and 10,000 shares of Common Stock each issuable
upon exercise of options at $.40 per share until December 4, 2003.
(4) Includes shares and warrants owned by Mr. Johnston or by companies
controlled by Mr. Johnston which entitle them to purchase up to 40,000 shares at
$2.10 per share at any time until August 18, 1999, 50,000 shares at $.375 per
share at any time until January 4, 1999 and 125,000 shares at $.50 per share at
any time until July 18, 1999.
(5) Includes warrants to purchase up to 500,000 shares at $.47 per share issued
to Arbora and related parties at any time until November 8, 1998 and 62,500
shares of Common Stock currently owned by Arbora. These warrants and shares are
subject to a voting trust agreement which provides the Company's Chairman,
President and Chief Executive Officer, Thomas F. Reiner with sole voting rights.
(6) Includes an aggregate of 1,877,500 shares of Common Stock issuable upon
exercise of currently exercisable options.
REVERSE STOCK SPLIT
The Company's Board of Directors has approved an amendment to its
Certificate of Incorporation which provides for the implementation of a one
share for each six shares reverse stock split of the Company's Common Stock. As
a result of the reverse stock split, the number of outstanding shares of Common
Stock would be reduced to 763,749 based upon the number of shares of Common
Stock outstanding on the record date without giving effect to the rounding up to
the next whole number of shares with respect to any fractional shares.
If the reverse stock split is approved and effected, the Company will
notify current stockholders of the filing of the applicable documents with the
Secretary of State of Delaware and will furnish stockholders of record as of the
close of business on such filing date with a letter of transmittal for use in
exchanging such certificates. The Company's stockholders, promptly after the
amendment to the Certificate of Incorporation becomes effective, must mail their
certificates representing their Common Stock to the Company's Transfer Agent if
they wish to obtain a new stock certificate giving effect to the reverse stock
split.
The Company has been advised that: (i) the proposed reverse stock split
will not be a taxable transaction to the Company; (ii) the Company's
stockholders will not recognize any gain or loss as a result of the reverse
stock split; (iii) the aggregate tax basis of the Common Stock received by the
stockholder pursuant to the reverse stock split will equal the aggregate tax
basis of the stockholders' Common Stock prior to the reverse stock split; and
(iv) the holding period of the Common Stock received by the Company's
stockholders will include the holding period of the stockholders' Common Stock
before the reverse stock split, provided the Common Stock was a capital asset in
the hands of such stockholder.
The purpose of the reverse stock split is to increase the market price of
the Company's Common Stock in order to remain in compliance with listing
requirements of the Company's Common Stock on the Nasdaq SmallCap Market.
The Board of Directors recommends that the Company's stockholders approve
this amendment to the Certificate of Incorporation providing for a one share for
six shares reverse stock split of all outstanding shares of the Company's Common
Stock. A majority of the outstanding shares represented at the Special Meeting
is required to approve the reverse stock split.
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<PAGE>
REDUCTION IN AUTHORIZED COMMON STOCK
The Company's board of directors has approved, and recommends stockholder
approval for, a proposal to reduce the number of authorized shares of Common
Stock from 30,000,000 shares to 8,000,000 shares. The purpose of the proposed
reduction of authorized shares is to reduce annual corporate franchise fees
payable to the State of Delaware, the Company's state of incorporation. A
majority of the outstanding shares represented at the Special Meeting and the
approval by the Company's stockholders of the proposal to reverse split the
Common Stock is required to approve the proposal to reduce the authorized shares
of Common Stock from 30,000,000 to 8,000,000.
REDUCTION IN AUTHORIZED PREFERRED STOCK
The Company's board of directors has approved, and recommends stockholder
approval for, a proposal to reduce the number of authorized shares of Preferred
Stock from 5,000,000 shares to 750,000 shares. The purpose of the proposed
reduction of authorized shares is to reduce annual corporate franchise fees
payable to the State of Delaware, the Company's state of incorporation. A
majority of the outstanding shares represented at the Special Meeting is
required to approve the proposal to reduce the authorized shares of Preferred
Stock from 5,000,000 to 750,000.
OTHER BUSINESS
The management of the Company is not aware of any other matters which are
to be presented to the Special Meeting, nor has it been advised that other
persons will present any such matters. However, if other matters properly come
before the Special Meeting, the individual named in the accompanying proxy shall
vote on such matters in accordance with his best judgment.
The above notice and Proxy Statement are sent by order of the Board of
Directors.
Wm. Samuel Veazey
Wm. Samuel Veazey
Secretary
February 19, 1997
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THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
PROXY
FOR THE SPECIAL MEETING OF STOCKHOLDERS OF
SPARTA SURGICAL CORPORATION
TO BE HELD MARCH 27, 1997
The undersigned hereby appoints Thomas F. Reiner as the lawful agent and
Proxy of the undersigned (with all the powers the undersigned would possess if
personally present, including full power of substitution), and hereby authorizes
him to represent and to vote, as designated below, all the shares of Common
Stock of Sparta Surgical Corporation held of record by the undersigned on
February 14, 1997, at the Special Meeting of Stockholders to be held March 27,
1997, or any adjournment or postponement thereof.
1. To reverse split the Company's Common Stock on the basis of one share
for each six shares outstanding.
For __________ Against __________ Abstain __________
2. To reduce the number of authorized shares of Common Stock from
30,000,000 shares to 8,000,000 shares.
For __________ Against __________ Abstain __________
3. To reduce the number of authorized shares of Preferred Stock from
5,000,000 shares to 750,000 shares.
For __________ Against __________ Abstain __________
4. In his discretion, the Proxy is authorized to vote upon any matters
which may properly come before the Special Meeting, or any adjournment or
postponement thereof.
It is understood that when properly executed, this proxy will be voted in
the manner directed herein by the undersigned stockholder. WHERE NO CHOICE IS
SPECIFIED BY THE STOCKHOLDER THE PROXY WILL BE VOTED FOR THE REVERSE STOCK
SPLIT, THE REDUCTION IN AUTHORIZED SHARES OF COMMON STOCK AND THE REDUCTION IN
AUTHORIZED SHARES OF PREFERRED STOCK.
The undersigned hereby revokes all previous proxies relating to the shares
covered hereby and confirms all that said Proxy may do by virtue hereof.
Please sign exactly as name appears below. When shares are held by joint
tenants, both should sign. When signing as attorney, executor, administrator,
trustee or guardian, please give full title as such. If a corporation, please
sign in full corporate name by President or other authorized officer. If a
partnership, please sign in partnership name by authorized person.
Dated:
Signature
PLEASE MARK, SIGN, DATE
AND RETURN THE PROXY
CARD PROMPTLY USING THE
ENCLOSED ENVELOPE.
Signature, if held jointly
PLEASE CHECK THIS BOX IF YOU INTEND TO BE PRESENT AT THE SPECIAL MEETING OF
STOCKHOLDERS. _____
