Schedule 14A.
Information Required in Proxy Statement
- --------------------------------------------------------------------------------
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
[Amendment No. 1]
Filed by the Registrant [ X ]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ X ] Preliminary Proxy Statement.
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2)).
[ ] Definitive Proxy Statement.
[ ] Definitive Additional Materials.
[ ] Soliciting Material underss.240.14a-12.
Sparta Surgical Corporation
----------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[ ] No fee required.
[ ] $125 per Exchange Act Rules 0-11(c)1)(ii), 14a-6(i)(1), 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and O-11:
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction 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 by written preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
- --------------------------------------------------------------------------------
Schedule 14A
<PAGE>
Preliminary Proxy Dated May 9, 2000.
SPARTA SURGICAL CORPORATION
Olsen Centre, 2100 Meridian Park Boulevard
Concord, California 94520
PROXY STATEMENT AND
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD _________________, 2000
To the shareholders of Sparta Surgical Corporation:
A Special Meeting of the shareholders of Sparta Surgical Corporation (the
"Company") will be held at the Company's executive offices, Olsen Centre, 2100
Meridian Park Boulevard, Concord, California 94520, at 10:00 a.m. on
_________________, 2000, or at any adjournment or postponement thereof, for the
following purposes:
1. To amend the Company's Certificate of Incorporation in order to
increase its authorized number of shares of common stock from
8,000,000 shares to 25, 000,000 shares.
2. To transact such other business as may properly come before the
meeting.
Details relating to the above matters are set forth in the attached Proxy
Statement. All shareholders of record of the Company as of the close of business
on _____________, 2000, will be entitled to notice of and to vote at such
meeting or at any adjournment or postponement thereof.
ALL SHAREHOLDERS ARE CORDIALLY INVITED TO ATTEND THE 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
MEETING.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Thomas F. Reiner
-------------------------------------------
Thomas F. Reiner, Chairman, Chief Executive
Officer and President
<PAGE>
PROXY STATEMENT
SPARTA SURGICAL CORPORATION
Olsen Centre, 2100 Meridian Park Boulevard
Concord, California 94520
Telephone: (925) 825-8151
SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ______________, 2000
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 to be voted
at a Special Meeting of Shareholders of the Company ("Special Meeting") to be
held at 10:00 a.m. on _____________, 2000, 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 shareholders of the Company
on or about _____________, 2000. The shares represented by all proxies that are
properly executed and submitted will be voted at the meeting in accordance with
the instructions indicated thereon. Unless otherwise directed, votes will be
cast for the proposal to increase the authorized shares of common stock. The
holders of a majority of the shares represented at the Special Meeting in person
or by proxy will be required to approve this matter.
Any shareholders 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 SHAREHOLDERS
The close of business on _______________, 2000, has been fixed by the Board
of Directors of the Company as the record date (the "record date") for the
determination of shareholders entitled to notice of and to vote at the Special
Meeting. On the record date, there were outstanding 7,350,011 shares of common
stock. The Company is also committed to issue up to 950,000 shares to Thomas F.
Reiner, its Chairman and Chief Executive Officer, under the circumstances
described in the paragraph below. Each issued and outstanding share entitles the
holder to one vote. The 950,000 shares are not outstanding and accordingly may
not be voted.
-1-
<PAGE>
A majority of the issued and outstanding shares entitled to vote,
represented at the meeting in person or by proxy, constitutes a quorum at any
shareholders' meeting.
Between September and November 1999, the Company agreed to issue 950,000
shares of its common stock to Thomas F. Reiner, its Chief Executive Officer, in
consideration of Mr. Reiner guaranteeing loans incurred by the Company in the
total amount of $426,000 and providing the Company with a line of credit under
which it could borrow up to $750,000 from Mr. Reiner on an unsecured basis. The
Company further agreed with Mr. Reiner that the 950,000 shares would be placed
in escrow and not released to Mr. Reiner unless:
o The Company failed to repay loans and other indebtedness which Mr.
Reiner guaranteed on its behalf within 12 months from the date of Mr.
Reiner's guarantee (November 2000); or
o There is a change in control of the Company defined as meaning that
any person who is not currently an owner of 20% of the Company's
securities becomes the owner of 20% of the Company's securities or the
Company's current directors become less than a majority of the
Company's board of directors in the future; or
o The Company becomes insolvent or voluntarily files for bankruptcy.
In April 2000 the 950,000 shares were removed from escrow and canceled
subject to the Company's agreement to reissue the shares and deposit them back
into escrow if the proposal herein to increase the authorized shares is
approved. Since the shares were canceled, Mr. Reiner has no right to vote the
shares unless the proposal is approved. If the proposal is not approved, 302,094
shares will be canceled and the remaining 647,906 shares will be reissued and
deposited back into escrow. Accordingly, Mr. Reiner has a substantial interest
in the outcome of the proposal.
The Company currently has outstanding options and warrants to purchase
4,648,540 shares of its common stock. Details concerning these commitments to
issue shares are set forth in the chart below:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------
Dates of Exercise Number of Expiration Value Upon
Name of Security Issuance Prices Shares Date Exercise (1)
Per Share Purchasable
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Employee Stock Options February 1989 through $1.00 to $13.50 2,995,088 July 2000 through $4,953,280
Options (2) March 1997 March 2007
- ----------------------------------------------------------------------------------------------------------------------------
Consultant's Options April 1998 to $.60 to $5.00 1,653,452 September 2000 $3,733,526
and Warrants (3) April 2000 through April 2005
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Represents the aggregate exercise price to be paid to the Company assuming
exercise of all stock options and warrants.
(2) Represents the aggregate of all stock options issued to the Company's
employees which are currently exercisable.
(3) Represents an aggregate of all stock options and warrants issued to
consultants of the Company which are currently exercisable.
-2-
<PAGE>
If the proposal to increase the authorized shares of common stock is
approved, the Company will have 12,999,366 shares not reserved for any specific
use and available for future issuance.
SECURITY OWNERSHIP OF EXECUTIVE OFFICERS,
DIRECTORS AND BENEFICIAL OWNERS OF GREATER
THAN 5% OF THE COMPANY'S COMMON STOCK
The following table sets forth information with respect to the beneficial
ownership of the Company's common stock owned, as of February 29, 2000, by:
o The holders of more than 5% of the Company's common stock;
o Each of the Company's directors;
o The Company's executive officers, and
o All directors and executive officers of the Company as a group.
For purposes of computing the percentages under the table below, it is
assumed that all options and warrants to acquire the Company's common stock
which have been issued to the directors, executive officers and the holders of
more than 5% of the Company's common stock and are fully vested or will become
fully vested within 60 days of the date of this Proxy have been exercised by
these individuals and the appropriate number of shares of common stock have been
issued to these individuals.
In addition, for purposes of determining the percentages under the table,
the Company's 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. None of the Company's officers or directors
own any shares of preferred stock. The Company's Series A and Series AA
Preferred Stock have not been included as they are non-voting. 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. Each shareholder's address is in care of the Company at
2100 Meridian Park Boulevard, Concord, California 94520.
-3-
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
Name of Beneficial Owner Number of Shares of Percent of Class of
Common Stock Owned Common Stock Owned
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Thomas F. Reiner (1)(2) 7,303,367 55.42%
- -----------------------------------------------------------------------------------------------
Joseph Barbrie 100,418 .76%
- -----------------------------------------------------------------------------------------------
John O'Hanlon 25,000 .19%
- -----------------------------------------------------------------------------------------------
Joel Flig 10,000 .08%
- -----------------------------------------------------------------------------------------------
Michael Y. Granger 13,334 .10%
- -----------------------------------------------------------------------------------------------
Allan J. Korn 10,834 .08%
- -----------------------------------------------------------------------------------------------
Charles C. Johnston and Affiliates 1,791,731 13.60%
- -----------------------------------------------------------------------------------------------
Coridal, N.V. 932,000 7.07%
- -----------------------------------------------------------------------------------------------
Spags Investment Group, N.V. 1,135,000 8.61%
- -----------------------------------------------------------------------------------------------
All officers and directors as a 7,437,953 56.63%
group (five persons)
- -----------------------------------------------------------------------------------------------
</TABLE>
(1) Includes:
o 1,780,335 shares issuable under options at prices ranging
from $0.60 to $13.50 per share exercisable through various
dates until January 15, 2005; and
o 4,477,987 shares for which Mr. Reiner acts as voting trustee
under various voting trust agreements.
(2) Does not include 950,000 shares which may be issued to Mr. Reiner
subject to approval of the proposal to increase the Company's
authorized shares, for which Mr. Reiner has no voting rights.
PROPOSAL TO INCREASE AUTHORIZED SHARES
The Company seeks approval to amend its Certificate of Incorporation in
order to increase its authorized shares of $0.002 par value common stock from
8,000,000 shares to 25,000,000 shares. There are currently 7,352,094 shares
outstanding, together with 950,000 shares which the Company may be obligated to
issue to Mr. Reiner. The Company anticipates that additional shares may be
needed in connection with the Company's business needs, opportunities to raise
capital and potential acquisition activities. However, at this time the Company
has no plans or proposals to use any of the additional shares and has not
entered into any negotiations, understandings or agreements in connection with
any acquisitions which would require the use of any of the proposed additional
authorized shares.
-4-
<PAGE>
Stockholders should note that certain disadvantages may result from the
adoption of this proposal. After the proposed amendment to the Certificate of
Incorporation is effected, there would be a greater number of shares of common
stock available for issuance by the Company, and individual shareholders could,
therefore, experience a significant reduction in the shareholders' relative
percentage interest in the Company with respect to earnings per share, voting,
liquidation value and book and market values per share if the additional
authorized shares are issued. Moreover, adoption of the proposal would generally
empower the directors to issue additional shares without prior notice to
shareholders or their approval, unless such issuance was in connection with a
merger or acquisition by the Company wherein shareholder approval would be
required under Delaware law.
The availability for issuance of additional shares of the Company's common
stock would also enable the Board to render more difficult or discourage an
attempt to obtain control of the Company. For example, the issuance of shares in
a public or private sale, merger or similar transaction would increase the
number of outstanding shares, thereby possibly diluting the interest of a party
attempting to obtain control of the Company. However, the proposal has not been
submitted as a result of or in response to any accumulation of stock or
threatened takeover. The Company does not have any plans to subsequently
implement additional measures having anti-takeover effects. The Company does not
have any provisions in its Certificate of Incorporation, Bylaws or other
agreements, which have material anti-takeover effects.
Each additional share of common stock authorized by the amendment to the
Certificate of Incorporation would have the same rights and privileges as each
share of common stock currently authorized or outstanding.
The Board of Directors recommends a vote in favor of this proposal.
OTHER BUSINESS
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 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.
/s/ Thomas F. Reiner
----------------------------------------
Thomas F. Reiner, Chairman, Chief
Executive Officer and President
May 9, 2000
-5-
<PAGE>
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
PROXY
FOR THE SPECIAL MEETING OF SHAREHOLDERS
OF SPARTA SURGICAL CORPORATION
TO BE HELD______________, 2000
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
__________, 2000, at the Special Meeting of Shareholders to be held ___________,
2000, or any adjournment or postponement thereof.
1. To amend the Company's Certificate of Incorporation in order to increase
the authorized number of shares of the Company's common stock from 8,000,000
shares to 25,000,000 shares.
For __________ Against __________ Abstain __________
2. 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 shareholder. WHERE NO CHOICE IS
SPECIFIED BY THE SHAREHOLDER, THE PROXY WILL BE VOTED FOR THE INCREASE IN THE
AUTHORIZED SHARES SET FORTH ABOVE.
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 your 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
-------------------------------
(Signature, if held jointly)
PLEASE MARK, SIGN, DATE AND RETURN
THE PROXY CARD PROMPTLY USING THE
ENCLOSED ENVELOPE.
PLEASE CHECK THIS BOX IF YOU INTEND TO BE PRESENT AT THE SPECIAL MEETING OF
STOCKHOLDERS:
---------------
