SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act
of 1934 (Amendment No. ____)
Filed by the Registrant [ X ]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] 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 ss.240.14a-11(c) or ss.240.14a-12
SPARTA FOODS, INC.
(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):
[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 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 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 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:
<PAGE>
SPARTA FOODS, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
to be held
February 26, 1998
The Annual Meeting of Shareholders of Sparta Foods, Inc. will be held at
the Marquette Hotel, 710 Marquette Avenue, Minneapolis, Minnesota, on Thursday,
February 26, 1998, at 3:30 p.m. (Central Standard Time), for the following
purposes:
1. To set the number of members of the Board of Directors at six (6).
2. To elect directors of the Company for the ensuing year.
3. To take action upon any other business that may properly come before
the meeting or any adjournment thereof.
Accompanying this Notice of Annual Meeting is a Proxy Statement, form of
Proxy and the Company's 1997 Annual Report, which are sent to you by order of
the Board of Directors.
Only shareholders of record shown on the books of the Company at the close
of business on January 15, 1998, will be entitled to vote at the meeting or any
adjournment thereof. Each shareholder is entitled to one vote per share on all
matters to be voted on at the meeting.
You are cordially invited to attend the meeting. Whether or not you plan to
attend the meeting, please sign, date and return your Proxy in the return
envelope provided as soon as possible. Your cooperation in promptly signing and
returning the Proxy will help avoid further solicitation expense to the Company.
A. Merrill Ayers,
Secretary
Dated: January 22, 1998
New Brighton, Minnesota
<PAGE>
SPARTA FOODS, INC.
PROXY STATEMENT
for
Annual Meeting of Shareholders
to be held February 26, 1998
INTRODUCTION
This Proxy Statement is being furnished to the shareholders of Sparta
Foods, Inc. ("Sparta" or the "Company") in connection with the solicitation by
the Company's Board of Directors of proxies to be voted at the Annual Meeting of
Shareholders (the "Annual Meeting") to be held on February 26, 1998, and at any
adjournment thereof, for the purposes set forth in the attached Notice of Annual
Meeting. The mailing address of the Company's principal executive office is 1565
First Avenue N.W., New Brighton, Minnesota 55112. This Proxy Statement and the
related Proxy and Notice of Annual Meeting is first being mailed to Sparta
shareholders on or about January 22, 1998.
The cost of soliciting Proxies, including preparing, assembling and mailing
the Proxies and soliciting material, will be borne by the Company. Directors,
officers and regular employees of the Company may, without compensation other
than their regular compensation, solicit Proxies personally or by telephone.
Any shareholder of record giving a Proxy may revoke it at any time prior to
its use at the Annual Meeting by giving written notice of such revocation to the
Secretary or other officer of the Company or by filing a new written Proxy with
an officer of the Company. Personal attendance at the Annual Meeting is not, by
itself, sufficient to revoke a Proxy unless written notice of the revocation or
a subsequent Proxy is delivered to an officer before the revoked or superseded
Proxy is used at the Annual Meeting.
The presence at the Annual Meeting in person or by proxy of the holders of
a majority of the outstanding shares of Sparta's Common Stock entitled to vote
shall constitute a quorum for the transaction of business. Proxies not revoked
will be voted in accordance with the instructions specified by shareholders by
means of the ballot provided on the Proxy for that purpose. Proxies which are
signed but which lack any such specific instructions with respect to any
proposal will, subject to the following, be voted in favor of the proposals set
forth in the Notice of Meeting and in favor of the number and slate of directors
proposed by the Board of Directors and listed herein. If a shareholder abstains
from voting as to any proposal, then the shares held by such shareholder 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 proposal, but shall
<PAGE>
not be deemed to have been voted in favor of such proposal. Abstentions as to
any proposal, therefore, will have the same effect as votes against such
proposal. If a broker returns a "non-vote" proxy, indicating a lack of voting
instruction by the beneficial holder of the shares and a lack of discretionary
authority on the part of the broker to vote on a particular proposal, then the
shares covered by such non-vote proxy shall be deemed present at the Annual
Meeting for purposes of determining a quorum, but shall not be deemed to be
represented at the Annual Meeting for purposes of calculating the vote required
for approval of such proposal.
OUTSTANDING SHARES AND VOTING RIGHTS
The Board of Directors of the Company has fixed January 15, 1998, as the
record date (the "Record Date") for determining shareholders entitled to vote at
the Annual Meeting. Persons who were not shareholders on the Record Date will
not be allowed to vote at the Annual Meeting. At the close of business on the
Record Date, 6,798,637 shares of Sparta's Common Stock were issued and
outstanding. The Common Stock is the only outstanding class of capital stock of
the Company. Each share of Common Stock is entitled to one vote on each matter
to be voted upon at the Annual Meeting. Holders of the Common Stock are not
entitled to cumulative voting rights.
PRINCIPAL SHAREHOLDERS
The following table sets forth the number of shares of the Company's Common
Stock beneficially owned as of January 15, 1998, by each person known to the
Company to be the beneficial owner of 5% or more of the Company's Common Stock:
<TABLE>
<CAPTION>
Name and Address of Number of Shares Percent
Shareholder Beneficially Owned(1) of Class(2)
-------------------- --------------------- -----------
<S> <C> <C>
Carmen S. Abril-Lopez 764,480(3) 11.2%
901 West Culver
Phoenix, AZ 85007
Donald R. Brattain 662,000(4) 9.2%
601 Lakeshore Parkway
Minnetonka, MN 55305
Okabena Partnership K 600,000(5) 8.1%
Norwest Center
Minneapolis, MN 55402
Larry P. Arnold 371,000(6) 5.3%
1545 Hunter Drive
Wayzata, MN 55391
- ---------------------
</TABLE>
<PAGE>
(1) Unless otherwise indicated, the person listed as the beneficial owner of
the shares has sole voting and sole investment power over the shares.
(2) Shares not outstanding but deemed beneficially owned by virtue of the right
of a person to acquire them as of January 15, 1998, or within sixty days of
such date are treated as outstanding only when determining the percent
owned by such individual and when determining the percent owned by the
group.
(3) Includes 754,480 shares held by a trust of which Ms. Abril-Lopez is trustee
and a beneficiary and 10,000 shares which may be purchased upon exercise of
a warrant which is exercisable as of January 15, 1998 or within 60 days of
such date.
(4) Includes 360,000 shares which may be purchased upon exercise of currently
exercisable warrants.
(5) Includes 600,000 shares which may be purchased upon exercise of currently
exercisable warrants.
(6) Includes 203,000 shares which may be purchased upon exercise of options
which are exercisable as of January 15, 1998 or within 60 days of such
date.
<PAGE>
MANAGEMENT SHAREHOLDINGS
The following table sets forth the number of shares of the Company's Common
Stock beneficially owned as of January 15, 1998, by each executive officer of
the Company named in the Summary Compensation Table, by each director and
nominee for director and by all directors, nominees and executive officers
(including the named individuals) as a group:
<TABLE>
<CAPTION>
Name and Address of Number of Shares Percent
Shareholder or Identity of Group Beneficially Owned(1) of Class(2)
-------------------------------- --------------------- -----------
<S> <C> <C>
Larry P. Arnold 371,000(3) 5.3%
1545 Hunter Dr.
Wayzata, MN 55391
Michael J. Kozlak 265,000(4) 3.8%
5049 Green Farms Road
Edina, MN 55436
Joel P. Bachul 241,500(5) 3.5%
1565 First Ave. N.W.
New Brighton, MN 55112
Richard H. Leepart 218,000(6) 3.2%
105 5th Ave., Suite 512
Minneapolis, MN 55402
Thomas C. House 139,434(7) 2.0%
1565 First Avenue N.W.
New Brighton, MN 55112
A. Merrill Ayers 92,250(8) 1.3%
1565 First Ave. N.W.
New Brighton, MN 55112
R. Dean Nelson 73,000(9) 1.1%
18733 East Mescalero
Rio Verde, AZ 85263
Edward K. Jorgensen 53,000(10) *
5N175 Deerpath Way
St. Charles, IL 60175
Officers and Directors as a group (9 persons) 1,469,184(11) 19.1%
- ---------------------
</TABLE>
* Less than 1%.
(1) See footnote (1) to preceding table.
(2) See footnote (2) to preceding table.
(3) See footnote (7) to preceding table.
(4) Includes 165,000 shares which may be purchased upon exercise of options and
warrants which are exercisable as of January 15, 1998 or within 60 days of
such date.
<PAGE>
(5) Includes 187,500 shares which may be purchased upon exercise of options and
warrants which are exercisable as of January 15, 1998 or within 60 days of
such date.
(6) Includes 40,000 shares held by Perception Communications Corporation, a
corporation owned by Mr. Leepart, and 88,000 shares which may be purchased
upon exercise of options and warrants which are exercisable as of January
15, 1998 or within 60 days of such date.
(7) Includes 1,767 shares held by Mr. House's wife and 106,667 shares which may
be purchased upon exercise of options and warrants which are exercisable as
of January 15, 1998 or within 60 days of such date.
(8) Includes 81,250 shares which may be purchased upon exercise of options and
warrants which are exercisable as of January 15, 1998 or within 60 days of
such date.
(9) Includes 43,000 shares which may be purchased upon exercise of options and
warrants which are exercisable as of January 15, 1998 or within 60 days of
such date.
(10) Includes 33,000 shares which may be purchased upon exercise of options and
warrants which are exercisable as of January 15, 1998 or within 60 days of
such date.
(11) Includes 907,417 shares which may be purchased upon exercise of options and
warrants which are exercisable as of January 15, 1998 or within 60 days of
such date.
ELECTION OF DIRECTORS
(Proposals #1 and #2)
General Information
The Company's Bylaws provide that the number of directors, which shall be
not less than two (2), shall be the number set by a majority vote of the
shareholders or by the Board of Directors. The Board of Directors unanimously
recommends that the number of directors be set at six (6) and that six directors
be elected at the Annual Meeting.
Vote Required THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS
APPROVE SETTING THE NUMBER OF DIRECTORS AT SIX AND VOTE "FOR" EACH OF THE
MANAGEMENT NOMINEES LISTED BELOW. Under applicable Minnesota law, approval of
the proposal to set the number of directors requires the affirmative vote of the
holders of the greater of (1) a majority of the voting power of the shares
represented in person or by proxy at the Annual Meeting with authority to vote
on such matter, or (2) a majority of the voting power of the minimum number of
shares that would constitute a quorum for the transaction of business at the
Annual Meeting. The election of each nominee requires the affirmative vote of a
majority of the shares represented in person or by proxy at the Annual Meeting.
<PAGE>
The persons named below have been nominated for election by management. All
nominees are currently directors or the Company. In the absence of other
instructions, the Proxies will be voted for each of the individuals named below.
If elected, such persons shall serve until the next annual meeting of
shareholders and until their successors are duly elected and qualified. If any
of the nominees should be unable to serve as a director by reason of death,
incapacity or other unexpected occurrence, the Proxies solicited by the Board of
Directors shall be voted by the proxy representatives for such substitute
nominee(s) as is selected by the Board of Directors or, in the absence of such
selection, for such fewer number of directors as results from such death,
incapacity or other unexpected occurrence.
The following table provides certain information with respect to the
Company's nominees for director.
Name Age Position with Company
- ----- --- ---------------------
Joel P. Bachul 55 President, Chief Executive
Officer and Director
Larry P. Arnold 54 Director
Edward K. Jorgensen 58 Director
Michael J. Kozlak 44 Director
Richard H. Leepart 50 Director
R. Dean Nelson 73 Director
Joel P. Bachul, has been the Chief Executive Officer and President of the
Company, and its wholly-owned subsidiary, La Canasta of Minnesota, Inc. ("La
Canasta"), since December 1, 1994 and a director of the Company since March
1995. From August 1991 until July 1994, Mr. Bachul served as the Executive Vice
President and Chief Operating Officer of Old Home Foods, Inc., a food processing
and distribution concern. From July 1990 until July 1991, Mr. Bachul was the
Executive Vice President and Chief Operating Officer of Bell Cold Storage, which
provides public and cold storage services. Mr. Bachul served as Senior Vice
President of J.P. Foodservice, a foodservice distributor, from July 1989 through
February 1990. From 1980 until July 1989, Mr. Bachul served as Vice President,
Senior Vice President and Chief Operating Officer of PYA/Monarch, also a
foodservice distributor.
Larry P. Arnold, a director since February 1996, has been retired since
January 1993. For more than five years prior thereto, he was Managing General
Partner of Wessels, Arnold & Henderson, a Minneapolis-based investment banking
firm. Mr. Arnold is also a director of Van Wagoner Funds.
<PAGE>
Edward K. Jorgensen, a director since February 1996, has been President of
Nordex International, a food distribution company, since September 1994.
Effective August 31, 1994, Mr. Jorgensen retired as Vice President of Trade
Relations for CPC Foodservice, an international food manufacturer, with whom he
had been associated since January 1993. For 27 years prior thereto, he served as
Senior Vice President of Foodservice for the Kellogg Company.
Michael J. Kozlak, a director since March 1995, has been a consultant with
Kozlak Associates, a firm which provides consulting services to the banking and
mortgage banking industries, since January 1998. He served as Senior Executive
Vice President of PNC Mortgage Corporation of America, a mortgage banking
company, from January 1996 to December 1997, and as a consultant with Kozlak
Associates from January 1994 through November 1995. From March 1985 until
December 1993, Mr. Kozlak served as President and Chief Executive Officer of
First Bank Mortgage, a wholly-owned mortgage banking subsidiary of First Bank,
N.A. In addition to his position at First Bank Mortgage, Mr. Kozlak assumed the
responsibility for the Financial Services Division within First Bank System. Mr.
Kozlak has served as a member of various senior level committees at First Bank
System, including its Retail Banking Task Force, Senior Asset and Liability
Committee and Consumer Credit Committee.
Richard H. Leepart, a director since February 1996, is President of
Perception Communication Corporation ("PCC"), a company he founded in 1971. PCC
works with product manufacturers to develop strategic marketing plans and
advertising campaigns.
R. Dean Nelson, a director since February 1996, was employed by Kraft
General Foods for 36 years prior to his retirement in 1989. He was named Group
Vice President and President of the Kraft Foodservice Group in 1982, a position
he held until his retirement.
Compensation of Directors
General Policy. Each director who is not an employee of the Company
receives $500 for each Board meeting attended. Directors may be reimbursed for
expenses incurred in attending meetings of the Board of Directors.
Stock Options. Under the Company's Amended and Restated Stock Option Plan,
each person who becomes a nonemployee director of the Company is automatically
granted a nonqualified option exercisable for 15,000 shares of Common Stock, and
each nonemployee director who is reelected to the Board of Directors will
thereafter receive a nonqualified option for 2,000 shares. On February 27, 1997,
the date of the 1997 annual meeting of shareholders, Messrs. Arnold, Jorgensen,
Kozlak, Leepart and Nelson each received an option to purchase 2,000 shares at
an exercise price of $1.125, which was the fair market value of the Company's
Common Stock on such date. If re-elected at the Annual Meeting, each such
director will be granted an option as of February 26, 1998 to purchase 2,000
shares at the fair market value of the Company's stock on such date.
<PAGE>
Committee and Board Meetings
The Board of Directors has a Compensation and Stock Option Committee, which
provides recommendations concerning salaries and incentive compensation for
employees of the Company and awards qualified and non-qualified options to
various employees and non-employees, and an Audit Committee, which reviews the
results and scope of the audit and other services provided by the Company's
independent auditors. During fiscal 1997, the Compensation and Stock Option
Committee (whose members are Messrs. Kozlak, Arnold and Nelson) met twice and
the Audit Committee (whose members are Messrs. Arnold, Jorgensen and Leepart)
did not meet formally. During fiscal 1997 the Board held four meetings.
Directors and Committee members frequently take formal action by unanimous
written consent, in accordance with Minnesota law, rather than hold formal Board
and Committee meetings. During fiscal 1997, each incumbent director except
Richard D. Nelson attended 75% or more of the total number of meetings of the
Board or of Committees of which he was a member.
CERTAIN TRANSACTIONS
In October 1995, the Company raised $400,000 in a bridge financing by
issuing Units, each Unit consisting of a $25,000 Convertible Promissory Note
(the "Notes") and a Warrant to purchase 25,000 shares of Common Stock at $0.50
per share (the "Note Warrants") to select accredited investors to raise
additional capital until it completed its private placement. The Note Warrants
expire in October 1998. Holders of the Notes could convert all or any portion of
the principal amount and accrued but unpaid interest into Units offered in the
Company's private placement, at $0.50 per Unit, each Unit consisting of one
share of Common Stock and a Warrant, exercisable for three years, to purchase
one share of Common Stock at $0.75 per share. Michael J. Kozlak and Richard H.
Leepart, directors, and Joel P. Bachul, an officer and director, participated in
the bridge financing by investing $50,000, $25,000 and $25,000, respectively. On
February 2, 1996, the Company raised $1,280,000 pursuant to a private offering
of 2,560,000 Units. The Company granted to investors in the offering one-time
demand and piggy-back registration rights, which expire on February 1, 1998.
Messrs. Bachul and Leepart converted the principal amount of their Notes into
Units. In addition, Messrs. Nelson, Arnold, Kozlak and Jorgensen, directors of
the Company, and A. Merrill Ayers and Thomas C. House, officers of the Company,
participated in the private placement by investing $15,000 $50,000, $50,000,
$10,000, $5,000 and $15,000, respectively. See "Principal Shareholders" and
"Management Shareholdings."
EXECUTIVE COMPENSATION
Summary Compensation Table
Set forth in the table below is the compensation paid by the Company during
each of the last three fiscal years to the Company's Chief Executive Officer and
each other executive officer whose total salary and bonus for fiscal 1997
exceeded $100,000.
<PAGE>
<TABLE>
<CAPTION>
Long-Term
Annual Compensation Compensation
-------------------------------------- ------------
Awards
------
Securities
Other Annual Underlying
Name and Principal Position Year Salary ($) Bonus ($) Compensation Options (#)
- --------------------------- ---- ---------- --------- ------------ -----------
<S> <C> <C> <C> <C> <C>
Joel P. Bachul 1997 139,231 31,250 None 100,000
President and Chief Executive Officer 1996 114,634 20,000 None 50,000
1995 83,333 None None 125,000
A. Merrill Ayers 1997 114,231 25,000 None 75,000
Vice President and Chief Financial Officer 1996 93,750 20,000 None 35,000
1995 83,366 None None 75,000
Thomas C. House 1997 96,038 21,250 None 75,000
Vice President of Operations 1996 80,833 10,000 None 35,000
1995 73,558 15,000 None 50,000
</TABLE>
No other current executive officer of the Company received a salary and
bonus from the Company in excess of $100,000 during any of the past three fiscal
years.
Change in Control Arrangements
The Company has entered into Salary Continuation Agreements with Joel P.
Bachul, President and Chief Executive Officer, A. Merrill Ayers, Chief Financial
Officer and Thomas C. House, Vice President of Operations. Such Agreements
provide that in the event that the officer's employment is terminated without
cause in connection with a sale or merger of the Company, such officer will be
entitled to receive severance payments for 24 months equal to his base
compensation at the time of termination. The Agreements also provide that any
outstanding stock option held by such officers will vest immediately prior to
the effective date of a change of control.
<PAGE>
Option/SAR Grants During 1997 Fiscal Year
The following table sets forth the options that have been granted to the
executive officers listed in the Summary Compensation Table during the Company's
last fiscal year ended September 30, 1997.
<TABLE>
<CAPTION>
Number of Percent of
Securities Total Options/
Underlying SARs Granted to Exercise or
Options/SARs Employees in Base Price Expiration
Name Granted (#) Fiscal Year ($/Share) Date
---- ------------- -------------- ------------ ----------
<S> <C> <C> <C> <C>
Joel P. Bachul 100,000(1) 32.0% $1.0625 11/18/01
A. Merrill Ayers 75,000(1) 24.0% $1.0625 11/18/01
Thomas C. House 75,000(1) 24.0% $1.0625 11/18/01
</TABLE>
(1) Such option is exercisable as to 25% of the total number of shares per year
for four years beginning November 18, 1997.
Option/SAR Exercises During Fiscal 1997
and Fiscal Year-End Option/SAR Values
The following table provides certain information regarding the exercise of
stock options to purchase shares of the Company's Common Stock during the year
ended September 30, 1997, by the officers named in the Summary Compensation
Table and the fiscal year-end value of unexercised stock options held by such
officers.
<TABLE>
<CAPTION>
Value of Unexercised In-
Number of Shares Value Number of Unexercised the-Money Options at
Acquired on Realized Options at Fiscal Year End Fiscal Year End ($)
Name Exercise ($) (exercisable/unexercisable) (exercisable/unexercisable)(1)
---- ---------------- -------- ----------------------------- ------------------------------
<S> <C> <C> <C> <C> <C> <C>
Joel P. Bachul None 0 75,000 200,000 64,881 164,944
A. Merrill Ayers None 0 46,250 138,750 40,330 114,751
Thomas C. House None 0 57,917 128,750 40,330 114,751
</TABLE>
(1) Based on a fiscal year-end of September 30, 1997 and a Common Stock price
of $1.938 per share, which is the last sale price of the Company's Common
Stock on September 30, 1997. The value of in-the-money options is
calculated as the difference between the fair market value of the Common
Stock underlying the options and the exercise price of the options at
fiscal year end. Exercisable options refer to those options that are
exercisable as of September 30, 1997, while unexercisable options refer to
those options that are not exercisable as of September 30, 1997, but which
will become exercisable at various times in the future.
<PAGE>
SECTION 16(a) BENEFICIAL OWNERSHIP
REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires executive
officers and directors of the Company, and persons who beneficially own more
than 10 percent of the Company's outstanding shares of Common Stock, to file
initial reports of ownership and reports of changes in ownership of securities
of the Company with the Securities and Exchange Commission. Officers, directors
and greater than 10 percent shareholders are required by Securities and Exchange
Commission Regulations to furnish the Company with copies of all Section 16(a)
forms they file.
Based solely on a review of the copies of such reports furnished to or
obtained by the Company or written representations that no other reports were
required, the Company believes that during the fiscal year ended September 30,
1997, all filing requirements applicable to its directors, officers or
beneficial owners of more than 10% of the Company's outstanding shares of Common
Stock were complied with.
INDEPENDENT PUBLIC ACCOUNTANTS
McGladrey & Pullen, LLP served as Sparta's independent accountants for
fiscal 1997. Representatives of McGladrey & Pullen, LLP are expected to be
present at the Annual Meeting, will be given an opportunity to make a statement
regarding financial and accounting matters of Sparta if they so desire, and will
be available to respond to appropriate questions from Sparta's shareholders.
SHAREHOLDER PROPOSALS
Any appropriate proposal submitted by a shareholder of the Company and
intended to be presented at the 1999 Annual Meeting must be received by the
Company at its offices by September 23, 1998, to be considered for inclusion in
the Company's proxy statement and related proxy for the 1999 Annual Meeting.
OTHER BUSINESS
The Board of Directors knows of no other matters to be presented at the
meeting. If any other matter does properly come before the meeting, the
appointees named in the Proxies will vote the Proxies in accordance with their
best judgment.
<PAGE>
ANNUAL REPORT
A copy of the Company's Annual Report to Shareholders for the fiscal year
ended September 30, 1997, including financial statements, accompanies this
Notice of Annual Meeting and Proxy Statement. No portion of the Annual Report is
incorporated herein or is to be considered proxy soliciting material.
THE COMPANY WILL FURNISH WITHOUT CHARGE A COPY OF ITS ANNUAL REPORT ON FORM
10-KSB FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 1997, TO ANY SHAREHOLDER OF THE
COMPANY UPON WRITTEN REQUEST. REQUESTS SHOULD BE SENT TO A. MERRILL AYERS, CHIEF
FINANCIAL OFFICER, SPARTA FOODS, INC., 1565 FIRST AVENUE N.W., NEW BRIGHTON,
MINNESOTA 55112.
Dated: January 22, 1998
New Brighton, Minnesota
<PAGE>
SPARTA FOODS, INC.
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints JOEL P. BACHUL and A. MERRILL AYERS, or either
of them acting alone, with full power of substitution, as proxies to represent
and vote, as designated below, all shares of Common Stock of Sparta Foods, Inc.
registered in the name of the undersigned, at the Annual Meeting of the
Shareholders to be held on Thursday, February 26, 1998, at 3:30 p.m., Central
Standard Time, at the Marquette Hotel, 710 Marquette Avenue, Minneapolis,
Minnesota, and at all adjournments of such meeting. The undersigned hereby
revokes all proxies previously granted with respect to such meeting.
The Board of Directors recommends that you vote "FOR" the following proposals:
(1) SET NUMBER OF DIRECTORS AT SIX.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(2) ELECT DIRECTORS: Nominees: Larry P. Arnold, Joel P. Bachul, Michael J.
Kozlak, Edward K. Jorgensen, Richard H. Leepart and R. Dean Nelson.
[ ] FOR all Nominees listed above [ ] WITHOUT AUTHORITY
(except those whose names have to vote for all nominees
been written on the line below) listed above
(To withhold authority to vote for any nominee, write that nominee's name
on the line below.)
(3) OTHER MATTERS. In their discretion, the appointed proxies are authorized to
vote upon such others business as may properly come before the Meeting or
any adjournment.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS DIRECTED OR, IF NO DIRECTION
IS GIVEN FOR A PARTICULAR PROPOSAL, WILL BE VOTED FOR SUCH PROPOSAL.
Date _________________, 1998. ___________________________________
___________________________________
PLEASE DATE AND SIGN ABOVE exactly as
name appears at the left, indicating,
where appropriate, official position or
representative capacity. If stock is
held in joint tenancy, each joint owner
should sign.
