SPARTA SURGICAL CORPORATION
Bernal Corporate Park
7068 Koll Center Parkway, Suite 401
Pleasanton, CA 94566

PROXY STATEMENT AND
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD NOVEMBER 25, 1997

To the shareholders of Sparta Surgical Corporation:

The Annual Meeting of the shareholders of Sparta Surgical Corporation (the
"Company") will be held at the Company's executive offices, Bernal Corporate
Park, 7068 Koll Center Parkway, Suite 401, Pleasanton, California 94566, at 3:00
P.M. on November 25, 1997 for the following purposes:

1. To elect three (3) directors of the Company;

2. To approve the creation of the Company's 1997 Annual and
Long-Term Incentive-Performance Plan;

3. To ratify the appointment of Grant Thornton LLP as the Company's
independent public accountants for the fiscal year ending
February 28, 1998; and

4. 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 October 10, 1997 are entitled to notice of and to vote at such meeting or at
any adjournment or postponed thereof.

ALL SHAREHOLDERS ARE CORDIALLY INVITED TO ATTEND THE MEETING. IF YOU DO NOT
PLAN TO ATTEND THE 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

Thomas F. Reiner

Thomas F. Reiner
Chairman of the Board, President
and Chief Executive Officer

October 20, 1997

PROXY STATEMENT

SPARTA SURGICAL CORPORATION
Bernal Corporate Park
7068 Koll Center Parkway, Suite 401
Pleasanton, CA 94566
Telephone: (510) 417-8812

ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD NOVEMBER 25, 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, from the holders of the Company's $.002 par
value Common Stock ("Common Stock") and $4.00 par value Redeemable Convertible
Preferred Stock ("1992 Preferred Stock"), to be voted at the Annual Meeting of
Shareholders of the Company ("Annual Meeting") to be held at 3:00 P.M. on
November 25, 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 such shareholders on or about October 20, 1997. 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 election of the nominees
for directors hereinafter named and in favor of the other proposals set forth
herein. Vote of the holders of a majority of the shares represented at the
meeting in person or by proxy will be required to approve all proposed matters.
Any shareholder 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 bearing a later date, or by requesting, in person, at the Annual
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
share 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 October 10, 1997 has been fixed by the Board of
Directors of the Company as the record date for the determination of
shareholders entitled to notice of and to vote at the Annual Meeting. On October
10, 1997, there were outstanding 915,904 shares of Common Stock, each share of
which entitles the holder thereof to one vote on each matter which may come
before the meeting and 135,483 shares of 1992 Preferred Stock, each share of
which entitles the holder to a .333 vote on each matter which may come before
the meeting. Cumulative voting is not permitted. 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.

Security Ownership of Certain Beneficial Owners and Management

The following table sets forth certain information concerning stock
ownership of the Company's 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, by all individuals named in the "Summary Compensation Table" of "Item
10. Executive Compensation" section and by all directors and officers as a
group, as of October 10, 1997. 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 Preferred
Stock 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 share for share on all matters on which the Common Stock is
entitled to vote. 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, Suite 401, 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) 752,831 47.5%
Joseph Barbrie (2) 30,418 3.1%
Wm. Samuel Veazey (2) 31,251 3.1%
Michael Y. Granger (3) 8,334 .9%
Allan J. Korn (3) 7,501 .8%
Charles C. Johnston (4) 130,002 12.8%
Arbora A.G.(5) 93,751 9.0%
All officers and directors
as a group (five persons) (6) 830,335 50.0%

- ----------
(1) Includes (i) 12,500 shares issuable upon exercise of options at $13.50 per
share at any time until February 14, 1999; (ii) 33,334 shares issuable upon
exercise of options at $13.50 per share at any time until February 28, 2004;
(iii) 66,667 shares issuable upon exercise of options at $13.50 per share at any
time until November 1, 1999; (iv) 83,334 shares issuable upon exercise of
options at $2.40 per share at any time until December 4, 2003; (v) 90,000 shares
issuable upon exercise of options at $1.98 per share at any time until December
4, 2003 and (vi) certain shares; (vii) 7,500 shares issuable upon exercise of
options at $1.375 per share at any time until June 5, 2004; (viii) 97,000 shares
issuable upon exercise of options at $1.28 per share at any time until May 21,
2002; (ix) 150,000 shares issuable upon exercise of options at $1.25 per share
at any time until July 25, 2004; and (x) 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 16,667 shares at $13.50
per share at any time until February 28, 2004 contingent upon the Company
achieving certain goals and 7,500 shares at $1.375 per share at any time until
June 5, 2004 which vest on June 6, 1998.
(2) Includes 2,084 and 2,917 shares issuable upon exercise of options to Messrs.
Barbrie and Veazey, respectively, at $13.50 per share until February 14, 2004;
8,334 shares issuable to each of Messrs. Barbrie and Veazey upon exercise of
options at $2.40 per share until December 4, 2003; and 20,000 shares issuable to
each of Messrs. Barbrie and Veazey upon exercise of options at $1.25 per share
until June 5, 2004. Does not include 20,000 shares issuable to each of Messrs.
Barbrie and Veazey upon exercise of options at $1.25 per share until June 5,
2004 which vest on June 6, 1998.
(3) Includes 1,667 and 834 shares issuable upon exercise of options to Messrs.
Granger and Korn, respectively, at $13.50 per share at any time until February
14, 2004; 1,667 shares to each of Messrs. Granger and Korn issuable upon
exercise of options at $2.40 per share until December 4, 2003; and 5,000 shares
issuable to each of Messrs. Granger and Korn upon exercise of options at $1.25
per share until June 5, 2004. Does not include 5,000 shares issuable to each of
Messrs. Granger and Korn upon exercise of options at $1.25 per share until June
5, 2004 which vest on June 6, 1998.
(4) Includes warrants owned by Mr. Johnston or by companies controlled by Mr.
Johnston which entitle them to purchase up to 6,667 shares at $12.60 per share
at any time until August 18, 1999, 8,334 shares at $2.25 per share at any time
until January 4, 1999, 20,834 shares at $3.00 per share at any time until July
18, 1999, and 16,667 shares at $.60 per share at any time until March 17, 2001.
(5) Includes warrants to purchase up to 83,334 shares at $2.82 per share issued
to Arbora and related parties at any time until November 8, 1998. The warrants
and shares owned by Arbora are subject to a voting trust agreement which
provides the Company's Chairman, President and Chief Executive Officer, Thomas
F. Reiner with voting rights.
(6) Includes an aggregate of 701,173 shares issuable upon exercise of currently
exercisable options.

ELECTION OF DIRECTORS

At the Annual Meeting, the shareholders will elect three (3) directors of
the Company. Cumulative voting is not permitted in the election of directors of
the Company. All of the nominees are presently members of the Board of
Directors. Each of the nominees has consented to be named herein and to serve if

elected. It is not anticipated that any nominee will become unable or unwilling
to accept nomination or election, but if such should occur, the person named in
the proxy intends to vote for the election in his stead of such person as the
Board of Directors of the Company may recommend.

The following table sets forth certain information as to each nominee's
and officer's age, positions with the Company, and the year when the nominee or
officer first became an officer or director of the Company.

Officer or
Director
Name Age Office Since
---- --- ------ -----
Thomas F. Reiner 51 Chairman of the Board of Directors, 1987
Chief Executive Officer, President,
Treasurer, and Director

Joseph Barbrie 43 Vice President of Sales 1989

Wm. Samuel Veazey 36 Vice President of Finance 1990
and Administration, Secretary

Michael Y. Granger 41 Director 1991

Allan J. Korn 54 Director 1994

Directors hold office until the earlier of the next annual meeting of
stockholders or until their successors are duly elected and qualified. Officers
of the Company are elected by, and serve at the discretion of, the Board of
Directors. None of the above individuals has any family relationship with any
other. Messrs. Granger and Korn receive $750 each per meeting for attending
Board of Directors' meetings and are reimbursed for out-of-pocket expenses.

The following is a summary of the business experience of each officer and
director of the Company:

Thomas F. Reiner co-founded the Company and has been Chief Executive
Officer, President and a director of the Company since its organization in July
1987 and Chairman since January 1994. From 1972 to 1983, Mr. Reiner was employed
by Sparta Instrument Corporation, becoming its President in 1979. Mr. Reiner
co-founded Healthmed in 1983, serving as Vice President of Sales and Marketing
until 1985 and President until 1987. Mr. Reiner earned a B.S. degree in Business
Management and an M.B.A. degree in finance and general management from Fairleigh
Dickinson University.

Joseph Barbrie has been Vice President of Operations since March 1989 and
Vice President of Sales since March 1996. From 1979 to 1989 he was employed by
Superior Healthcare Group, becoming its director of purchasing/operations in
1984. Mr. Barbrie earned a B.A. degree in Business Management from Johnson &
Wales College.

Wm. Samuel Veazey has been Vice President of Finance and Administration
since January 1990 and Secretary since January 1994. From January 1988 to
December 1989, he was Vice President of Corporate Finance for Interco Funding
Group, Inc., a Florida-based investment banking firm. Mr. Veazey earned a B.S.
degree in Biology and Chemistry, an M.S. degree in Biomedical Engineering and an
M.B.A. degree in Finance and General Management, all from the University of
Miami.

Michael Y. Granger, a director of the Company since June 1991, has been
President of Ark Capital Management, Inc., an independent investment management
consulting firm since April 1991. From March 1990 to April 1991, he was Vice
President and Portfolio Manager for LINC Capital Management ("LINC"), one of the
Company's former lenders, where he was responsible for negotiating and
structuring financial transactions for emerging growth companies in health care
and other advanced technology fields. From July 1986 to March 1990, Mr. Granger
was Investment Manager for Xerox Venture Capital, with responsibility for
structuring investments in high technology emerging growth companies. Mr.
Granger earned a B.S. degree in Electrical Engineering from the University of
Massachusetts at Amherst and an M.B.A. degree in Finance and General Management
from Dartmouth College.

Allan J. Korn, a director of the Company since February 1994, has been Vice
President of Marketing for Ohm Labs, Inc. since January 1994. From March 1985
until September 1993, he held various sales and marketing executive positions
with DuPont Multi-Source Products, Inc. Mr. Korn earned a B.A. degree in
Economics from Queens College, Flushing, New York and an M.B.A. degree in
Marketing from Fairleigh Dickinson University. Mr. Korn is also an Adjunct
Professor in Business Administration at Union County College.

Meetings of the Board of Directors and its Committees

During the fiscal year ended February 28, 1997, the Board of Directors held
ten meetings. Each of the incumbent directors, while serving during the last
fiscal year, attended all of the meetings of the Board of Directors and all of
the meetings held by each committees of the Board on which they served. Among
the standing committees of the Board of Directors of the Company are the Audit
Committee and Compensation Committee.

Messrs. Reiner, Granger and Korn serve as members of the Audit Committee,
which during the last fiscal year held one meeting. The principal duties and
responsibilities of the Audit Committee are to recommend to the Board the
accounting firm to be engaged as the Company's independent auditors and the
terms of its engagement, and to meet with the Company's independent and internal
accountants to review the scope of their audits and audit findings.

Messrs. Reiner, Granger and Korn serve as members of the Compensation
Committee, whose principal function is to determine the salary and bonus for all
corporate officers at the level of vice president or higher, and to administer
the Company's stock incentive plan. During the last fiscal year, the
Compensation Committee held four meetings.

Compliance with Section 16(a) of the Exchange Act

During the fiscal year ended February 28, 1997, all of the Company's
officers and directors timely filed reports on Forms 3 and 4.

Executive Compensation

The following table sets forth the compensation for services rendered to
the Company in all capacities awarded to, earned by, or paid to the Chief
Executive Officer and the Company's other executive officers who received
compensation of more than $100,000 in the fiscal year ended February 28, 1997
and for each of the three fiscal years ended February 28, 1997.

Summary Compensation Table
Long-Term
Annual Compensation Compensation
Other Annual Awards All Other
Name and Principal Position Year Salary Bonus Compensation Options Compensation
- --------------------------- ---- ------ ----- ------------ ------- ------------

Thomas F. Reiner ............................. 1997 $274,299(1) $ 0 $ 11,976(3) 0 $ 0
Chairman, Chief Executive 1996 293,288(1) 63,000(2) 9,165(3) 83,334(4) 0
Officer, Treasurer, Director 1995 266,395(1) 0 85,538(3) 116,668(5) 0
Joseph Barbrie ............................... 1997 116,308 0 0 0 0
Vice President of Sales 1996 113,743 6,000(6) 0 8,334(7) 0
1995 105,355 0 23,576(8) 0 0
Wm. Samuel Veazey ............................ 1997 112,933 0 0 0 0
Vice President of Finance 1996 98,734 11,000(6) 0 8,334(7) 0
and Administration 1995 106,259 0 0 0 0

- ----------
(1) Includes salaries and an automobile and insurance allowance. See "-
Employment Agreements."
(2) Includes a $50,000 bonus in consideration of completing the sale of the
medical product line and a bonus of $13,000 accrued in Fiscal 1996 related to
the Company's management bonus plan.
(3) Represents an unpaid vacation accrual in Fiscal 1997 and paid vacation
accruals in Fiscal 1996 and Fiscal 1995.
(4) In December 1995, in connection with the sale of the medical product line,
the Company issued to Mr. Reiner options to purchase 83,334 shares of Common
Stock at $2.40 per share exercisable until December 4, 2003.

(5) Under the terms of the April 1994 employment agreement, Mr. Reiner received
options to purchase 33,334 shares of Common Stock at $13.50 per share and
options to purchase an additional 16,667 shares of Common Stock at $13.50 per
share if the Company reports income from operations of $1,000,000 or more for
any fiscal year through the fiscal year ending February 28, 2004. See "-
Employment Agreements."
In October 1994, the Company issued to Mr. Reiner stock options to purchase
up to 66,667 shares of Common Stock exercisable until November 1, 1999 at $13.50
per share.
(6) Represents paid bonuses under the Company's management bonus plan which were
accrued in Fiscal 1996.
(7) In December 1995, in connection with the sale of the medical product line,
the Company issued options to Messrs. Barbrie and Veazey to purchase 8,334
shares of Common Stock each at $2.40 per share at any time until December 4,
2003.
(8) Represents reimbursement of relocation expenses.

Option Grants in Last Fiscal Year and Stock Option Grant

The following table provides information on option grants during the year
ended February 28, 1997 to the named executive officers:

Individual Grants

% of Total Options
Granted to
Options Employees in
Name Granted Fiscal Year Exercise Price Expiration Date
- ---- ------- ----------- -------------- ---------------
Thomas F. Reiner 0 0% $ 0 --
Joseph Barbrie 0 0 0 --
Wm. Samuel Veazey 0 0 0 --

Aggregate Option Exercise in Last Fiscal Year and Fiscal Year-End Option Values

The following table provides information on the value of the named
executive officers' unexercised options at February 28, 1997. No shares of
Common Stock were acquired upon exercise of options during the fiscal year ended
February 28, 1997.

Number of Value of Unexercised
Unexercised Options In-The-Money Options
at Fiscal Year End (1) at Fiscal Year End (1)
Name Exercisable Unexercisable Exercisable Unexercisable
---- ----------- ------------- ----------- -------------
Thomas F. Reiner 198,440 16,667 $ 0 $ 0
Joseph Barbrie 12,502 0 0 0
Wm. Samuel Veazey 12,814 0 0 0

- ----------
(1) The closing price of the Common Stock on February 28, 1997 as reported by
Nasdaq was $1.69.

Employment Agreements

On April 8, 1996, the Company entered into an employment agreement through
February 28, 2003 ("Agreement") with Mr. Reiner replacing the April 22, 1994 (as
subsequently amended) employment agreement which replaced the September 29, 1993
employment agreement. The Agreement provides for a base salary of $239,500 per
year, (with annual increases based upon the greater of 4% or the Producer Price
Index For Surgical and Medical Instruments and Apparatus published by the U.S.
Department of Labor), 50% of the Management Bonus, $500,000 whole life and
$1,000,000 term life insurance policies to be owned by Mr. Reiner, an automobile
allowance and significant termination payments to Mr. Reiner (aggregating over
seven times his annual salary) in the event the Agreement is canceled for any
reason other than cause, and references existing stock options to purchase up to
50,001 shares of the Company's Common Stock at $13.50 per share of which options
to purchase 33,334 shares were granted and options to purchase an additional
16,667 shares were granted but may not be exercised unless the Company reports
income from operations of at least $1,000,000 for any fiscal year through

February 28, 2004. Mr. Reiner is also to receive annual cash bonuses based upon
the Company reaching certain annual levels of income from operations during the
term of the Agreement as follows:

Income from
Operations Amount of Bonus (1)
$150,000 $15,000
210,000 30,000
300,000 50,000
450,000 65,000
600,000 75,000
750,000 85,000
900,000 95,000

On April 8, 1996, the Company amended the Management Bonus Plan providing
for pooled bonuses of 8% of the Company's pre-tax net income to be shared among
the Company's management for the fiscal years through February 28, 2003.

- ----------
(1) Fifty percent of any bonus amount will be applied to reduce any indebtedness
of Mr. Reiner to the Company as of the date of the bonus payment. However, if
the Agreement is terminated by the Company for any reason other than "cause" as
defined in the Agreement, any indebtedness owed by Mr. Reiner to the Company is
automatically canceled.

Stock Option Plan and Stock Option Grant

In 1987, the Company adopted its 1987 Stock Option Plan (the "Plan"), which
provides for the grant to employees, officers, directors and consultants of
options to purchase shares of Common Stock, consisting of both "incentive stock
options" within the meaning of Section 422A of the United States Internal
Revenue Code of 1986 (the "Code") and "non-qualified" options. Incentive stock
options are issuable only to employees of the Company, while non-qualified
options may be issued to non-employee directors, consultants and others, as well
as to employees of the Company. In January 1994, the Company's stockholders
approved an increase in the number of stock options available under the Plan to
a total of 250,000 options. The Plan expired pursuant to its terms in July 1997.

The Plan is administered by the Board of Directors, which determines those
individuals who shall receive options, the time period during which the options
may be partially or fully exercised, the number of shares of Common Stock that
may be purchased under each option, and the option price.

The per share exercise price of the Common Stock subject to an incentive
stock option or nonqualified option may not be less than the fair market value
of the Common Stock on the date the option is granted. The per share exercise
price of the Common Stock subject to a non-qualified option is established by
the Board of Directors. The aggregate fair market value (determined as of the
date the option is granted) of the Common Stock that any employee may purchase
in any calendar year pursuant to the exercise of incentive stock options may not
exceed $100,000. No person who owns, directly or indirectly, at the time of the
granting of an incentive stock option to him, more than 10% of the total
combined voting power of all classes of stock of the Company is eligible to
receive any incentive stock options under the Plan unless the option price is at
least 110% of the fair market value of the Common Stock subject to the option,
determined on the date of grant. Non-qualified options are not subject to this
limitation.

No incentive stock option may be transferred by an optionee other than by
will or the laws of descent and distribution, and during the lifetime of an
optionee, the option will be exercisable only by him or her. In the event of
termination of employment other than by death or disability, the optionee will
have three months after such termination during which he or she can exercise the
option. Upon termination of employment of an optionee by reason of death or
permanent total disability, his or her option remains exercisable for one year
thereafter to the extent it was exercisable on the date of such termination. No
similar limitation applies to non-qualified options.

Options under the Plan must be granted within ten years from the effective
date of the Plan. The incentive stock options granted under the Plan cannot be
exercised more than ten years from the date of grant except that incentive stock
options issued to 10% or greater stockholders are limited to five year terms.
All options granted under the Plan provide for the payment of the exercise price

in cash or by delivery to the Company of shares of Common Stock already owned by
the optionee having a fair market value equal to the exercise price of the
options being exercised, or by a combination of such methods of payment.
Therefore, an optionee may be able to tender shares of Common Stock to purchase
additional shares of Common Stock and may theoretically exercise all of his
stock options with no additional investment other than his original shares.

Any unexercised options that expire or that terminate upon an optionee
ceasing to be an officer, director or an employee of the Company become
available once again for issuance. As of October 10, 1997, options to purchase
235,336 shares have been granted under the Plan. A total of 127,836 options are
currently exercisable, and no options have been exercised.

In April 1994, under the terms of the employment agreement, Mr. Reiner
received options to purchase 33,334 shares of Common Stock at $13.50 per share
and options to purchase an additional 16,667 shares of Common Stock at $13.50
per share if the Company reports income from operations of $1,000,000 or more
for any fiscal year through the fiscal year ending February 28, 2004. See
"-Employment Agreements."

In October 1994, the Company issued to Mr. Reiner options to purchase up to
66,667 shares of Common Stock at $13.50 per share until November 1, 1999 in
consideration for Mr. Reiner providing personal guarantees for the Congress loan
and certain other debts of the Company.

In July 1995, in consideration for Mr. Reiner's efforts in successfully
negotiating long term contracts having an aggregate value of approximately
$7,500,000, the Company issued to Mr. Reiner options to purchase 104,167 shares
at $6.00 per share and options to purchase an additional 16,667 shares at $6.00
per share if the price of the Company's common stock is in excess of $13.50 per
share for a period of ten consecutive trading days through the fiscal year
ending February 28, 2000. In May 1996, Mr. Reiner canceled these options.

In December 1995, in consideration of negotiating and completing the sale
of the medical product line for a sale price of approximately $5,700,000, the
Company issued to Messrs. Reiner, Barbrie, Veazey, Granger and Korn options to
purchase 83,334, 8,334, 8,334, 1,667, and 1,667 shares, respectively, at $2.40
per share until December 4, 2003.

In March 1997, in consideration for Mr. Reiner personally guaranteing an
aggregate of $540,000 in Company debt owed to Halstead and J & C Resources, the
Company issued to Mr. Reiner options to purchase 90,000 shares of its Common
Stock at $1.98 per share through March 2004.

In May 1997, in consideration for Mr. Reiner providing the Company with a
working capital credit facility pursuant to which Mr. Reiner is providing the
Company with up to $200,000 in working capital on an as needed basis, the
Company issued Mr. Reiner a warrant to purchase up to 97,000 shares of its
Common Stock exercisable at $1.28 per share at any time until May 21, 2002.

On July 25, 1997, in consideration for Mr. Reiner providing his personal
guarantee for the NationsCredit Loan, the Company issued to Mr. Reiner 80,000
shares of Common Stock and an option to purchase up to 150,000 of its Common
Stock exercisable at $1.25 per share at any time until July 25, 2004.

CERTAIN TRANSACTIONS

Management is of the opinion that each transaction described below between
the Company and its officers, directors or stockholders was on terms at least as
fair to the Company as had the transaction been concluded with an unaffiliated
party, except for the loans advanced by the Company to an officer which does not
bear interest. All material transactions between the Company and its officers,
directors or principal stockholders are subject to approval by a majority of the
Company's directors not having an interest in the transaction. There are
currently two outside directors. Mr. Reiner is the Company's Chairman, Chief
Executive Officer and President.

The Company holds a promissory note due it from Mr. Reiner in the amount of
$210,000, at February 28, 1997. The promissory note does not bear interest and
was payable on February 1, 1997. The Company also has a receivable from Mr.
Reiner of $136,943 at February 28, 1997. The receivable does not bear interest
and is due on demand. The Company also has a note receivable from Mr. Reiner of
$222,419 due in July 2006 with interest at 6% per annum.

In April 1997, the Company entered into a debt repayment agreement with Mr.
Reiner. The amounts owed by Mr. Reiner will be repaid at varying amounts through
April 2004. In addition, all amounts owed by Mr. Reiner are extended to April
2004 and no interest will be charged on the notes owed by Mr. Reiner and the
Company will reimburse Mr. Reiner for certain income tax related considerations.
In June 1997, the Company amended its debt repayment agreement with Mr. Reiner
increasing the repayment amount for the next twelve months from approximately
$24,000 to $50,000.

In April 1993, the Company borrowed $350,000 from Asset Factoring
International, Inc. ("Asset Factoring"), a company controlled by Charles C.
Johnston, a principal stockholder of the Company, evidenced by a promissory
note. The principal due on the promissory note plus $50,000 in interest was due
in October 1995. The promissory note was subordinated to the promissory note
payable to Congress Financial Corporation ("Congress") and was guaranteed by
Messrs. Kramer and Reiner. In August 1994, the Company issued 6,667 Common Stock
purchase warrants exercisable at $12.60 per share at any time until August 18,
1999 in consideration of Asset Factoring extending the due date of the $350,000
promissory note and $50,000 interest payment until June 1995. In connection with
the financing, the Company issued a warrant to purchase up to 10,417 shares of
its Common Stock exercisable at $18.00 per share at any time until March 31,
1998. In connection with the subordination of the loan to Congress, Asset
Factoring received an additional warrant to purchase up to 10,417 shares at
$12.00 per share at any time until August 31, 1998. Both warrants were exercised
in April 1994 based upon a net issuance of 6,667 shares of Common Stock. The
Company also entered into a one year consulting agreement with Asset Factoring
in which the Company paid Asset Factoring $50,000 for one year of consulting
services. In December 1995, the Company paid Asset Factoring $469,710 consisting
of the principal due on the promissory note plus accrued interest. In addition,
in connection with extending the promissory note through December 1995, Mr.
Johnston received a warrant to purchase up to 8,334 shares of its Common Stock
exercisable at $2.25 per share at any time until January 4, 1999.

In July 1996, the Company borrowed $200,000 from Asset Factoring, evidenced
by a promissory note bearing 12% interest per annum due in July 1997. The
promissory note was subordinated to FINOVA and was personally guaranteed by Mr.
Reiner. In connection with the financing, the Company issued Asset Factoring a
warrant to purchase up to 20,834 shares of its Common Stock exercisable at $3.00
per share at any time until July 18, 1999. The Company also entered into a one
year consulting agreement with Asset Factoring in which the Company paid Asset
Factoring $25,000 for one year of consulting services. On November 11, 1996, the
Company borrowed $400,000 from Halstead LLC ("Halstead"), a company controlled
by Charles C. Johnston, evidenced by a $600,000 promissory note due on the
earlier of (a) the receipt of $1,500,000 from the sale of the Company's equity
securities; (b) the payment of the note receivable from Tecnol Medical Products,
Inc. ("Tecnol"); or (c) December 1997. Interest of $150,000 is due at maturity
less $10,000 if the entire balance is paid in full by July 1, 1997. The $600,000
promissory note was delivered to Halstead in consideration for the cancellation
of a promissory note in the principal amount of $200,000 owing from the Company
to Asset Factoring and the receipt by the Company of $400,000 from Halstead.

On March 19, 1997, the Company repaid $575,000 against the amount of
$740,000 in principal and accrued interest owing under the $600,000 promissory
note issued to Halstead. This amount was required to be paid by the Company upon
the Company's negotiated settlement with Tecnol, the settlement resulted in
Tecnol paying the Company $575,000. On that same date, the Company issued
Halstead a promissory note in the principal amount of $165,000 bearing 12%
interest per annum due December 1997. The $165,000 promissory note represents
the remaining principal amount owed of $25,000 plus the $140,000 in accrued
interest under the $600,000 note. The promissory note is subordinated to FINOVA,
the Company's primary lender, and is personally guaranteed by Mr. Reiner.

On March 20, 1997, the Registrant borrowed $375,000 from J&C Resources,
Inc. ("J&C Resources"), a company controlled by Mr. Johnston evidenced by a
promissory note bearing 15% interest per annum due in March 1999. The promissory
note is subordinated to FINOVA, and is personally guaranteed by Mr. Reiner. In
connection with the financing, the Company issued J&C Resources 50,000 shares of
Common Stock and a warrant to purchase up to 16,667 shares of its Common Stock
exercisable at $.60 per share at any time until March 17, 2001. The Company also
entered into a two year consulting agreement with J&C Resources in which the
Company is required to pay J&C Resources $50,000 per year for consulting
services.

In July 1995, in consideration for Mr. Reiner's efforts in successfully
negotiating long term contracts having an aggregate value of approximately
$7,500,000, the Company issued to Mr. Reiner options to purchase 104,167 shares
of its Common Stock at $6.00 per share and options to purchase an additional
16,667 shares of its Common Stock at $6.00 per share if the price of the
Company's Common Stock is in excess of $13.50 per share for a period of ten
consecutive trading days through the fiscal year ending February 28, 2000. In
May 1996, Mr. Reiner canceled these options.

On September 23, 1992, the Company issued to Mr. Reiner options to purchase
up to 31,250 shares at $25.44 per share at any time until May 31, 2002 if the
Company reaches certain annual gross revenue levels prior to February 28, 1998.
Mr. Reiner's option was canceled by mutual agreement of Mr. Reiner and the
Company in connection with the execution of an employment agreement with Mr.
Reiner on April 22, 1994. Under the terms of the new employment agreement, Mr.
Reiner received options to purchase 33,334 shares at $13.50 per share and
options to purchase an additional 16,667 shares at $13.50 per share if the
Company reports income from operations of $1,000,000 or more for any fiscal year
through the fiscal year ending February 28, 2004.

In December 1995, in consideration of locating a purchaser for and
negotiating the sale of the medical product line for a purchase price of
approximately $5,700,000, the Company issued to Mr. Reiner options to purchase
83,334 shares of its Common Stock at $2.40 per share until December 4, 2003.

In connection with the 1992 Offering, Mr. Reiner placed 15,625 shares of
the Company's Common Stock owned by him in escrow, which shares were to be
canceled on February 28, 1996 unless the closing bid price of the Company's
Common Stock, as reported by Nasdaq, averaged in excess of $230.88 per share for
30 consecutive trading days at any time prior to February 28, 1996. The Company
did not meet any of the criteria for release of the shares from escrow and
consequently the shares were canceled effective February 28, 1996.

The Company repaid $1,000,000 to Arbora, A.G. ("Arbora") as of December 14,
1995, which together with the return of a $809,500 promissory note issued to the
Company by an affiliate of Arbora, served as principal consideration to redeem
and cancel 793,641 shares of the Company's Common Stock. The 793,641 shares were
issued to Arbora on December 4, 1995 in consideration of the conversion of a
$1,000,000 note into equity and the issuance to the Company of a promissory note
in the amount of $809,500 by an affiliate of Arbora pursuant to an agreement
reached between it and the Company. In connection with this transaction, the
Company also canceled a warrant to purchase 166,667 shares of the Company's
Common Stock at $8.40 per share held by Arbora and issued Arbora and its
affiliated parties warrants to purchase up to 125,000 shares of the Company's
common stock at $2.82 per share at any time until November 8, 1998. In addition,
a voting trust was entered into which provided Mr. Reiner, with voting rights as
to such shares. On April 22, 1996, 41,667 shares of Common Stock were issued to
Arbora in connection with the exercise of 41,667 Common Stock purchase warrants.

In May 1997, the Company entered into a working capital credit facility
agreement with Mr. Reiner pursuant to which Mr. Reiner is providing the Company
with up to $200,000 in working capital on an as needed basis. Working capital
advances are evidenced by demand promissory notes bearing 12% interest per annum
due the earlier of (i) thirty (30) calendar days from the advance; (ii) the
closing of a minimum of $1,000,000 equity or debt financing by the Company; or
(iii) Mr. Reiner's demand with a five day notice to the Company. The promissory
notes are subordinated to the Company's senior lender with a junior lien on all
assets of the Company. In connection with the financing, the Company gave Mr.
Reiner, at his sole discretion, the right to convert any portion of the
outstanding amount owed into the Company's common stock at 75% of the average
closing bid price during the five (5) business days prior to the conversion as
reported by Nasdaq. In addition, the Company issued Mr. Reiner a warrant to
purchase up to 97,000 shares of its Common Stock exercisable at $1.28 per share
at any time until May 21, 2002. As of October 10, 1997, the outstanding balance
on the loans from Mr. Reiner was $30,000.

On July 25, 1997, NationsCredit Commercial Corporation through its
NationsCredit Commercial Funding Division provided the Company with a 48-month
Revolving Line of Credit of up to $2,500,000. In consideration for Mr. Reiner
providing his personal guarantee for the NationsCredit Loan, on July 25, 1997,
the Company issued to Mr. Reiner 80,000 shares of Common Stock and an option to
purchase up to 150,000 of its Common Stock exercisable at $1.25 per share at any
time until July 25, 2004.

PROPOSAL TO APPROVE THE CREATION OF THE COMPANY'S 1997 ANNUAL
AND LONG-TERM INCENTIVE-PERFORMANCE PLAN

General

The Board authorized the creation of the Sparta Surgical Corporation 1997
Annual and Long-Term Incentive Performance Plan (the "1997 Plan") in September
1997 upon the terms set forth below, which plan is subject to stockholder
approval. The Company's 1987 Stock Option Plan expired in July 1997. The Board
recommends adoption of the 1997 Plan to attract, retain, fairly compensate and
motivate qualified employees of the Company and its subsidiaries to contribute
to its performance and growth.

Proposed Terms of the 1997 Plan

Approval of the 1997 Plan upon terms substantially similar to those which
follow is being sought by the Company. Awards granted under the 1997 Plan may be
(i) annual performance awards ("Annual Performance Awards"); (ii) stock options
("Options"), which may be designated as nonqualified stock options ("NSOs") not
intended to qualify as incentive stock options ("ISOs") under Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code") or ISOs; or (iii) other
forms of stock-based performance awards (collectively, (i), (ii) and (iii) shall
be referred to as "Awards"). Shares covered by the 1997 Plan may be either
previously unissued or reacquired (treasury) shares of the Company's Common
Stock. Shares that are forfeited or cease to be subject to an option because of
its expiration or termination will again be available for the grant of options
until termination of the 1997 Plan.

Administration. The 1997 Plan will be administered by the Compensation
Committee of the Board (the "Committee"). The Committee will have broad
discretion to determine the types, amounts and terms of Awards under the Plan,
including sole discretion to (i) establish criteria to measure performance
("Performance Criteria"); (ii) set annual performance goals ("Performance
Goals") with respect to Performance Criteria, which may be Company-wide goals or
goals relating to specific corporate units or individual; (iii) determine the
weighting to be assigned to Performance Criteria and Performance Goals; (iv)
determine the specific form of payment (cash, Common Stock including restricted
shares, or any combination thereof) and the terms and conditions of any Options
or restricted shares; (v) select the participants in the Plan; (vi) determine
vesting schedules (subject to a minimum vesting period of six months from the
date of the grant); and (vii) determine the number of shares subject to each
grant and prescribe the other terms and conditions of each Award. All Directors,
officers and other key employees of the Company are eligible to receive awards
under the 1997 Plan.

Stock Options. The Committee is authorized to determine the terms and
conditions of all option grants (except that the term of any option cannot
exceed ten years), which may be ISOs or NSOs. Options may be awarded subject to
time, performance or other vesting limitations (subject to a minimum vesting
period of six months from the date of grant), except that the term of an ISO
shall not exceed ten years from the date of grant. The exercise price of any ISO
shall not be less than the fair market value of the Common Stock on the date of
grant. The purchase price of the Common Stock subject to the ISO or NSO may be
paid in cash. At the discretion of the Committee, the purchase price may also be
paid by the tender of Common Stock or through a combination of Common Stock and
cash or through such other means as the Committee determines are consistent with
the Plan's purpose and applicable law. No fractional shares of Common Stock will
be issued or accepted. Without limiting the foregoing, to the extent permitted
by law (including relevant state law), the Committee may agree to accept, as
full or partial payment of the purchase price of Common Stock issued upon the
exercise of the NSO, a promissory note of the person exercising the NSO
evidencing the person's obligation to make future cash payments to the Company
and shall bear interest at a rate established by the Committee. Payment in full
of the exercise price must be made upon the exercise of each option in cash.

The proceeds received by the Company upon the exercise of options granted
under the 1997 Plan will be used for general corporate purposes. Options granted
under the 1997 Plan may not be transferred except to the personal representative
of a deceased employee. All options must be granted under the 1997 Plan, if at
all, within ten years from the date of its approval by the stockholders,
although the expiration date of previously granted options may extend beyond
that date. The number of shares covered by the 1997 Plan and the exercise price
of outstanding options shall be subject to customary antidilution adjustments in
the event of any recapitalization or similar change affecting the Common Stock.

Annual Performance Awards. The Committee shall be authorized to grant
annual performance awards which may be denominated or payable in cash, Common
Stock (including without limitation, restricted stock), other securities or
other awards. Such Annual Performance Awards shall confer on the holder thereof
the right to receive payment, in whole or in part, upon the achievement of
Performance Goals and Performance Criteria established by the Committee.

Other Stock-Based-Awards. The Committee is authorized to grant Awards under
this 1997 Plan that provide the participant with the right to purchase Common
Stock or that are valued by reference to the fair market value of the Company
Stock (including, but not limited to, phantom securities or dividend
equivalents).

Shares Underlying 1997 Plan. The total number of shares authorized for
issuance under the 1997 Plan shall be 250,000 shares, which is subject to
customary antidilution adjustments in the event of any recapitalization or
similar change affecting the Common Stock.

Change of Control. In the event of a change of control, all Awards that
have not expired and which are then held by any participant shall become fully
and immediately vested and exercisable and may be exercised for the remaining
term of the applicable Award.

Amendment and Termination. The Committee shall have the right to at any
time amend, suspend or terminate the 1997 Plan; provided, however, that (i) no
change in any Awards previously granted may be made without consent of the
holder thereof and (ii) no amendment (other than an amendment authorized by
dilution or other such adjustment) may be made increasing the aggregate number
of shares of the Common Stock with respect to which Awards may be granted,
reducing the minimum option price at which Options may be granted, extending the
maximum period during which Awards may be exercised or changing the class of
employees eligible to receive Awards hereunder, without the approval of the
holders of a majority of the outstanding voting shares of the Company. No
amendment may adversely affect the then outstanding Option without the consent
of the optionee.

Compliance with Law. All of the proposed terms of the 1997 Plan are suject
to modification to the extent necessary for the 1997 Plan to comply with
applicable laws or as otherwise deemed necessary by the Board of Directors to
carry out the purposes of the 1997 Plan as stated herein.

Section 162(m) of the Federal Income Tax Code

Section 162(m) of the Code generally precludes a publicly-owned corporation
from taking a federal income tax deduction for annual compensation in excess of
$1.0 million paid to "covered employees" as defined in section 162(m).
Exceptions are made for, among other things, qualified performance-based
compensation. Participants who are or may be covered employees nevertheless may
receive awards under the Plan that do not satisfy all of the requirements of
section 162(m), for reasons other than performance-based compensation, which
awards may result in annual compensation in excess of $1.0 million in the
aggregate that is not deductible by the Company for federal income tax purposes.

Other Federal Income Tax Matters

The following discussion summarizes relevant federal income tax
considerations relating to options to be issued under the 1997 Plan. The summary
is based on existing provisions of the Code, and could be affected by future
changes in the tax laws.

All options to be granted under the 1997 Plan shall be either (i) options
not intended to qualify as incentive stock options within the meaning of Section
422 of the Code ("NSOs"), or (ii) options intended to qualify as incentive stock
options ("ISOs") within the meaning of Section 422 of the Code.

An employee receiving NSOs under the 1997 Plan should not be in receipt of
taxable income upon the grant of the NSOs generally, but may recognize taxable
ordinary income upon the timely exercise of the NSO, in an amount equal to the
difference between the aggregate fair market value of the shares exercised and
their purchase price. Generally, exercise of an NSO will be timely if made
during its term and if the optionee remains an employee of the Company or a
subsidiary at all times during the period beginning on the date of grant of the
NSO and ending on the date three months before the date of exercise (or one year
before the date of exercise in the case of a deceased employee). Upon ultimate
sale of the stock received upon exercise, the employee generally will recognize

a long-term capital gain or loss (if the stock is a capital asset of the
employee) equal to the difference between the amount realized upon the sale and
fair market value of the shares at the time of exercise. The Company, under
these circumstances, will be entitled to a federal income tax deduction in an
amount equal to the recognized gain in connection with the exercise of the NSO,
but will not be entitled to a federal income tax deduction in connection with
the sale of the underlying stock by the employee.

An employee receiving an ISO will not be in receipt of a taxable income
upon the grant of the ISO or upon its timely exercise except under alternative
minimum tax rules. Generally, exercise of an ISO will be timely if made during
its term and if the optionee remains an employee of the Company or a subsidiary
at all times during the period beginning on the date of grant of the ISO and
ending on the date three months before the date of exercise (or one year before
the date of exercise in case of a deceased employee). Upon ultimate sale of the
stock received upon exercise, except as noted below, the employee will recognize
long-term capital gain or loss (if the stock is a capital asset of the employee)
equal to the difference between the amount realized upon the sale and the option
exercise price. The Company, under these circumstances, will not be entitled to
any federal income tax deduction in connection with either the exercise of the
ISO or the sale of the underlying stock by the employee.

If the stock acquired upon the exercise of an ISO is sold by the employee
prior to the expiration of two years from the grant date of the ISO or within
one year from the date of transfer of the stock (a "disqualifying disposition"),
any gain realized by the employee generally will be taxable at the time of the
disqualifying disposition as follows: (i) at ordinary income rates to the extent
of the difference between the option exercise price and the lesser of the fair
market value of the stock on the date of the ISO is exercised or the amount
realized upon the disqualifying disposition, and (ii) if the stock is a capital
asset of the employee, as a short-term or long-term capital gain to the extent
of any excess of the amount realized upon the disqualifying disposition over the
fair market value of the stock on the date governing the determination of his
ordinary income. In that case, the Company may claim a federal income tax
deduction at the time of the disqualifying disposition for the amount taxable to
the employee as ordinary income.

For purposes of the alternative minimum tax, an employee exercising an ISO
will have alternative minimum taxable income resulting from the exercise. The
amount of alternative minimum taxable income and the tax basis in the shares
received upon exercise of an ISO will be determined in the year of exercise
unless the shares received upon exercise are sold to an unrelated party in the
same tax year. In that event, there will generally be no adverse effect because
the alternative minimum taxable income will then be limited to the taxable gain
on the sale as determined for regular tax purposes.

Restricted stock granted under the 1997 Plan generally will not be taxed to
the employee, nor deductible by the Company, at the time of grant. After
satisfaction of the specified performance goals established by the Committee or
the date restrictions lapse, whichever is later, and the stock becomes
transferable or not subject to a substantial risk of forfeiture, whichever is
applicable, the employees will recognize ordinary income equal to the excess of
the fair market value of the stock on that date over the purchase price, if any,
paid for the stock. Generally, the Company will be entitled to a corresponding
tax deduction in an amount equal to the income recognized by the employee.

An employee receiving an Annual Performance Award should not be in receipt
of taxable income upon the grant of the Award, generally, but may recognize
taxable ordinary income upon the receipt of payment, if any, with respect to the
Award.

Vote Required and Board of Directors' Recommendation

The Board of Directors believes the 1997 Plan will attract, retain, fairly
compensate and motivate qualified employees of the Company to contribute to its
performance and growth. The affirmative vote of a majority of the votes cast at
the Annual Meeting of Stockholders, at which a quorum representing a majority of
all outstanding shares of voting stock of the Company is present and voting,
either in person or by proxy, is required for approval of this proposal.
Abstentions and broker non-votes (which may occur if a beneficial owner of stock
where shares are held in a brokerage or bank account fails to provide the broker
or the bank voting instructions as to such shares) will each be counted as
present for purposes of determining the presence of a quorum, but will not be
counted as having been voted on the proposal. THE BOARD OF DIRECTORS UNANIMOUSLY
RECOMMENDS A VOTE "FOR" THE CREATION OF THE COMPANY'S 1997 PLAN.

RATIFICATION OF APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS

The Board of Directors has appointed Grant Thornton LLP as the Company's
independent accountants for the fiscal year ending February 28, 1998. Angell &
Deering, Certified Public Accountants, served as the Company's independent
accountant since 1990. Angell & Deering conducted the audit of the Company's
financial statements for the year ended February 29, 1997. It is the Company's
understanding that Grant Thornton LLP is obligated to maintain audit
independence as prescribed by the accounting profession and certain requirements
of the Securities and Exchange Commission. As a result, the directors of the
Company do not specifically approve, in advance, non-audit services provided by
Grant Thornton LLP, nor do they consider the effect, if any, of such services on
audit independence. A representative of Grant Thornton LLP is expected to be
present at the Annual Meeting with the opportunity to make a statement if the
representative desires to do so, and is expected to be available to respond to
appropriate questions.

Vote Required and Board of Directors' Recommendation

Ratification of the appointment of Grant Thornton LLP as the Company's
independent accountants for fiscal 1998 will require the affirmative vote of a
majority of the votes cast at the Annual Meeting of Stockholders, at which a
quorum representing a majority of all outstanding shares of voting stock of the
Company is present and voting, either in person or by proxy, is required for
approval of this proposal. Abstentions and broker non-votes will each be counted
as present for purposes of determining the presence of a quorum, but will not be
counted as having been voted on the proposal. In the event stockholders do not
ratify the appointment of Grant Thornton LLP, the appointment will be
reconsidered by the Audit Committee and the Board of Directors. THE BOARD OF
DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE RATIFICATION OF THE
APPOINTMENT OF GRANT THORNTON LLP AS THE COMPANY'S INDEPENDENT ACCOUNTANTS FOR
FISCAL 1998.

PROPOSALS OF SHAREHOLDERS FOR PRESENTATION
AT NEXT ANNUAL MEETING OF SHAREHOLDERS

Any shareholder of the Company who desires to submit a proper proposal for
inclusion in the proxy materials relating to the next annual meeting of
shareholders must do so in writing and it must be received at the Company's
principal executive offices prior to the Company's fiscal year end. The
proponent must be a shareholder entitled to vote at the next annual meeting of
shareholders on the proposal and must continue to own the securities through the
date on which the meeting is held.

OTHER BUSINESS

The management of the Company is not aware of any other matters which are
to be presented to the Annual 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.

Thomas F. Reiner
Chairman of the Board, President
and Chief Executive Officer

October 20, 1997