<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (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 sec. 240.14a-11(c) or sec. 240.14a-12
SierraCities.Com 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)(l) 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:
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<PAGE> 2
SIERRACITIES.COM INC.
600 TRAVIS STREET
SUITE 7050
HOUSTON, TEXAS 77002
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 9, 2000
To the Stockholders of
SIERRACITIES.COM INC.
The Annual Meeting of Stockholders (the "Annual Meeting") of
SierraCities.com Inc., formerly First Sierra Financial, Inc., a Delaware
corporation (the "Company"), will be held at the Chase Center Auditorium at 601
Travis Street, Houston, Texas on May 9, 2000 at 9:30 A.M. Central Daylight Time,
for the following purposes:
1. To elect two Class III directors; and
2. To consider and transact such other business as may properly come
before the Annual Meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on March 15, 2000 as
the record date for determining the stockholders entitled to notice of and to
vote at the Annual Meeting.
By Order of the Board of Directors,
/s/ ALAN L. LANGUS
Alan L. Langus
Corporate Secretary, Executive Vice
President and General Counsel
April 7, 2000
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE DATE, SIGN AND MAIL
THE ENCLOSED PROXY IN THE ENVELOPE PROVIDED (WHICH REQUIRES NO POSTAGE FOR
MAILING IN THE UNITED STATES). A PROMPT RESPONSE IS HELPFUL, AND YOUR
COOPERATION WILL BE APPRECIATED.
<PAGE> 3
SIERRACITIES.COM INC.
600 TRAVIS STREET
SUITE 7050
HOUSTON, TEXAS 77002
---------------------
PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS TO BE HELD MAY 9, 2000
---------------------
This Proxy Statement is being mailed to stockholders on or about April 7,
2000 and is furnished in connection with the solicitation by the Board of
Directors of SierraCities.com Inc., a Delaware corporation (the "Company"), of
proxies for the Annual Meeting of Stockholders to be held on May 9, 2000 (the
"Annual Meeting") for the purpose of considering and acting upon the following
proposals:
1. To elect two Class III directors; and
2. To consider and transact such other business as may properly come
before the Annual Meeting or any adjournment thereof.
If the form of Proxy which accompanies this Proxy Statement is executed and
returned, it will be voted. A Proxy may be revoked at any time prior to the
voting thereof by written notice to the Corporate Secretary of the Company.
A majority of the outstanding shares entitled to vote at this meeting and
represented in person or by proxy will constitute a quorum. With regard to the
election of directors, approval requires the affirmative vote of a plurality of
the shares entitled to vote and represented in person or by proxy at this
meeting. With respect to any other proposal which may be submitted to a vote,
approval requires the affirmative vote of a majority of the shares entitled to
vote and represented in person or by proxy at the meeting. Shares represented by
proxies which are marked "abstain" or to deny discretionary authority on any
matter will be treated as shares present and entitled to vote, which will have
the same effect as a vote against any such matters. Broker "non-votes" will not
affect the determination of the outcome of the vote on any proposal to be
decided at the meeting.
Expenses incurred in the solicitation of proxies will be borne by the
Company. Officers of the Company may make additional solicitations in person or
by telephone.
The Annual Report to Stockholders for fiscal year 1999 accompanies this
Proxy Statement. If you did not receive a copy of the report, you may obtain one
by writing to the Corporate Secretary of the Company.
As of March 15, 2000, the Company had outstanding 19,047,960 shares of
Common Stock ("Common Stock") and such shares are the only shares entitled to
vote at the Annual Meeting. Each share is entitled to one vote on each matter to
be voted upon at the Annual Meeting.
<PAGE> 4
SECURITIES BENEFICIALLY OWNED BY
PRINCIPAL STOCKHOLDERS AND MANAGEMENT
The following table sets forth the beneficial ownership of the Company's
Common Stock as of March 15, 2000 by (i) each stockholder known by the Company
to be the beneficial owner of more than 5% of the outstanding shares of Common
Stock, (ii) each director or nominee, (iii) each executive officer named in the
Summary Compensation Table, and (iv) all directors and executive officers as a
group. Unless otherwise indicated, each such person (alone or with family
members) has sole voting and dispositive power with respect to the shares listed
opposite such person's name. The address of Redstone Group, Ltd., Redstone, Inc.
and Messrs. Shindeldecker and Solomon is 109 North Post Oak Lane, Suite 200,
Houston, Texas 77024. Except as otherwise indicated, the address of all other
named individuals is c/o SierraCities.com Inc., 600 Travis Street, Suite 7050,
Houston, Texas 77002.
<TABLE>
<CAPTION>
NUMBER OF
BENEFICIALLY-OWNED PERCENT
SHARES OF CLASS(1)
------------------ -----------
<S> <C> <C>
Thomas J. Depping........................................... 1,908,415(2) 9.9%
Redstone Group, Ltd.(3)..................................... 1,183,151 6.2%
David L. Solomon............................................ 1,868,131(4) 9.8%
David C. Shindeldecker...................................... 1,323,149(4) 6.9%
Sandy B. Ho................................................. 309,577(5) 1.6%
Richard J. Campo............................................ 113,161(6) *
Norman J. Metcalfe.......................................... 54,761(6) *
Michael A. Sabel............................................ 219,484(7) 1.1%
Robert Ted Enloe, III....................................... 7,083(8) *
Brian E. McManus............................................ 7,083(8) *
E. Roger Gebhart............................................ 24,650(9) *
David L. Pederson........................................... 9,100(10) *
Portfolio LL Investors, L.P.(11)............................ 1,729,100 9.1%
Ontario Teachers' Pension Plan Board(12).................... 1,070,779 5.6%
All directors and executive officers as a group (12
persons).................................................. 6,112,368(13) 31.04%
</TABLE>
- ---------------
* Less than one percent
(1) The applicable percentage of ownership is based upon 19,047,960 shares of
Common Stock outstanding as of March 15, 2000.
(2) Includes 235,015 shares issuable pursuant to options exercisable within
sixty days and 1,595,800 shares held of record by the Depping 1999
Investment Limited Partnership.
(3) According to an amended Schedule 13G filed as of February 14, 2000,
Redstone Group Ltd. ("Redstone") is a Texas limited partnership, of which
Redstone, Inc., a Texas corporation ("Redstone, Inc."), is the general
partner.
(4) Includes 55,131 shares issuable pursuant to options exercisable within
sixty days and 1,183,151 shares which are owned of record by Redstone.
Messrs. Shindeldecker and Solomon are Co-Chief Executive Officers of
Redstone, Inc., the general partner of Redstone.
(5) Includes 63,577 shares issuable pursuant to options exercisable within
sixty days.
(6) Includes 16,761 shares issuable pursuant to options exercisable within
sixty days.
(7) Includes 139,484 shares issuable pursuant to options exercisable within
sixty days.
(8) Consists entirely of shares issuable pursuant to options exercisable within
sixty days.
(9) Includes 15,000 shares issuable pursuant to options exercisable within
sixty days.
(10) Includes 9,000 shares issuable pursuant to options exercisable within sixty
days.
2
<PAGE> 5
(11) According to an amended Schedule 13G filed as of October 27, 1999,
Portfolio LL Investors, L.P. ("PLL") is a Delaware limited partnership. The
address of PLL is 201 Main Street, Suite 3200, Fort Worth, Texas 76102.
(12) According to an amended Schedule 13D filed as of January 28, 2000, Ontario
Teachers' Pension Plan Board ("OTP") is an Ontario, Canada corporation. The
address of OTP is 5650 Yonge Street, 5th Floor, Toronto, Ontario M2M 4H5,
Canada.
(13) Includes 641,026 shares issuable pursuant to options exercisable within
sixty days.
ELECTION OF DIRECTORS
The Restated Certificate of Incorporation of the Company provides that the
Board of Directors of the Company shall be divided into three classes, as nearly
equal in number as possible, with one class being elected each year for a
three-year term. There are currently seven members of the Company's Board of
Directors.
At the Annual Meeting, two Class III directors are to be elected to serve
until the Company's annual meeting in 2003 and the five remaining directors will
continue to serve in accordance with their prior election or appointment.
It is intended that the proxies (except proxies marked to the contrary)
will be voted for the nominees listed below, who are members of the present
Board of Directors. It is expected that the nominees will serve, but if they
decline or are unable to serve for any unforeseen cause the proxies will be
voted to fill any vacancy so arising in accordance with the discretionary
authority of the persons named in the proxies.
The Board of Directors recommends a vote FOR each of the Class III
nominees.
NOMINEES AND CONTINUING DIRECTORS
The following table sets forth certain information with respect to the
nominees and the continuing directors:
<TABLE>
<CAPTION>
NAME, AGE AND YEAR
FIRST ELECTED DIRECTOR PRINCIPAL OCCUPATION AND OTHER INFORMATION
---------------------- ------------------------------------------
<S> <C>
CLASS III NOMINEES FOR ELECTION WITH TERMS EXPIRING IN 2003
Thomas J. Depping Mr. Depping has served as Chairman of the Board, President
Age 41 1994 and Chief Executive Officer of the Company since its
inception in June 1994. Mr. Depping has over 17 years of
experience in the financial services industry, including 11
years with SunAmerica Financial Resources and its
predecessor company (which was acquired by SunAmerica, Inc.
in 1991). From 1991 to May 1994, Mr. Depping served as
President of SunAmerica Financial Resources, the equipment
leasing and financial division of SunAmerica, Inc.
David L. Solomon Mr. Solomon has served as Chairman and Co-Chief Executive
Age 46 1994 Officer of Redstone, Inc., general partner of Redstone
Group, Ltd. ("Redstone"), since 1996. Redstone is an
investment company with investments and operations in
hotels, restaurants and real estate. Mr. Solomon has also
served as an executive officer and director of numerous
entities that are affiliated with Redstone and/or its
predecessor entities since 1989. Mr. Solomon was a Senior
Vice President with Paine Webber from August 1994 through
October 1998. Mr. Solomon serves on the Board of Directors
of TeleServe, Inc., an affiliate of Camden Property Trust.
</TABLE>
3
<PAGE> 6
<TABLE>
<CAPTION>
NAME, AGE AND YEAR
FIRST ELECTED DIRECTOR PRINCIPAL OCCUPATION AND OTHER INFORMATION
---------------------- ------------------------------------------
<S> <C>
CLASS II DIRECTORS WITH TERMS EXPIRING IN 2002
Robert Ted Enloe, III Mr. Enloe has served as Managing General Partner of Balquita
Age 61 1998 Partners, Ltd., a real estate and securities investment
partnership, since 1996. From April 18, 1999 through July
31, 1999, he served as Interim CEO of Compaq Computer
Corporation ("Compaq"), a manufacturer of personal computers
and servers. From 1975 to 1986, he served as President, and
from 1992 to 1996 as Chief Executive Officer, of Liberte
Investors, an entity seeking new acquisitions. Mr. Enloe
currently serves as a director of Compaq, Leggett & Platt,
Inc., a diversified manufacturer of foam, plastic, steel and
wire components for the automotive, home furnishings and
office equipment industries, SIXX Holdings, Incorporated, a
restaurant company that operates the Patrizio Italian
restaurants in Dallas, Texas and Liberte Investors, Inc. Mr.
Enloe was initially elected as a director of the Company by
the Board of Directors on April 30, 1998.
Brian E. McManus Mr. McManus has been a Portfolio Manager for Q Investments
Age 60 1998 of Fort Worth, Texas since August 1999. From 1990 to August
1999, Mr. McManus was an investment manager for Taylor &
Co., an investment consulting firm. Mr. McManus was
initially elected as a director of the Company by the Board
of Directors on September 11, 1998.
Norman J. Metcalfe Mr. Metcalfe has served as managing director of a private
Age 57 1997 investment and consulting firm since January 1977. Mr.
Metcalfe serves as a director of Tejon Ranch Co., a land
development and agribusiness company. From February 1993 to
December 1996, Mr. Metcalfe served as Vice Chairman and
Chief Financial Officer of The Irvine Company.
CLASS I DIRECTORS WITH TERMS EXPIRING IN 2001
Richard J. Campo Mr. Campo has been Chairman of the Board and Chief Executive
Age 45 1997 Officer of Camden Property Trust, a self-administered,
self-managed real estate investment trust based in Houston,
Texas, since May 1993. Mr. Campo has over twenty years of
experience in the real estate industry.
David C. Shindeldecker Mr. Shindeldecker has been Chairman and Chief Executive
Age 51 1994 Officer of Northwest Bancorporation Inc. since June 1988. In
addition, he currently serves as President and Co-Chief
Executive Officer of Redstone, Inc., general partner of
Redstone, and has served as an executive officer and
director of Redstone, Inc. since 1994. Redstone and
Northwest Bancorporation Inc. are affiliates of each other.
Mr. Shindeldecker has also served as an executive officer
and director of numerous entities that are affiliated with
Redstone and/or its predecessor entities since 1989. He
currently serves as a director of Northwest Bank, N.A.
</TABLE>
4
<PAGE> 7
ORGANIZATION AND REMUNERATION OF BOARD OF DIRECTORS
The Board of Directors has an Audit Committee, a Compensation Committee and
a Stock Option Committee.
The Audit Committee reviews with the Company's independent auditors the
scope of their annual and interim examinations and consults with the auditors
during any audit when appropriate. The Audit Committee is also responsible for
appraising the effectiveness of the audit effort, determining that no
restrictions were placed by management on the scope of the examination or its
implementation, inquiring into the effectiveness of the Company's accounting and
internal control functions, exercising supervision over the Company's policies
that permit improper or illegal payments, reporting to the Board of Directors on
the results of the Committee's activities and recommending any changes in the
appointment of the independent auditors which the Committee deems to be in the
best interests of the Company and its stockholders. The Audit Committee held one
meeting during the fiscal year ended December 31, 1999. The current members of
the Audit Committee are Messrs. Campo and McManus.
The Compensation Committee determines the cash compensation of the officers
of the Company. The Compensation Committee held one meeting during the fiscal
year ended December 31, 1999. The current members of the Compensation Committee
are Messrs. Campo, Metcalfe and Solomon.
The Stock Option Committee administers the Company's 1997 Stock Option
Plan. The Stock Option Committee held one meeting during the fiscal year ended
December 31, 1999, and also acted from time to time by unanimous written
consent. The current members of the Stock Option Committee are Messrs. Campo,
Metcalfe and Solomon.
The Board of Directors held six meetings during the fiscal year ended
December 31, 1999, and also acted from time to time by unanimous written
consent. During 1999, no director attended fewer than 75% of the aggregate of
the total number of meetings of the Board and all committees on which he served.
Each director who is not an officer or employee of the Company or any of
its subsidiaries or affiliated with Redstone (each, an "Outside Director") is
eligible to receive, (i) as of the date of each annual meeting of stockholders,
at the election of the Outside Director either (a) a cash retainer of $25,000 or
(b) options to purchase (at an exercise price equal to the fair market value of
the Common Stock on the date of grant) a number of shares of Common Stock equal
to $25,000 divided by one-half of the closing price of the Common Stock on the
date of grant, and (ii) at the time that the Company grants annual stock options
to its employees, options to purchase 2,500 shares of Common Stock at an
exercise price equal to the fair market value of the Common Stock on the date of
grant. In addition, directors are reimbursed for their out-of-pocket expenses
incurred in connection with attending meetings of the Board of Directors and
committees thereof.
5
<PAGE> 8
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table presents summary information concerning compensation of
the Chief Executive Officer and each of the other four most highly compensated
executive officers as of December 31, 1999 (together, the "Named Executive
Officers") for the periods indicated for services rendered to the Company and
its subsidiaries.
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
----------------------- ------------
SECURITIES
UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS COMPENSATION
--------------------------- ---- -------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Thomas J. Depping...................... 1999 $349,500 -- 101,067(1) $ 8,089(2)
President, Chairman of the Board and 1998 250,000 $350,000(3) -- 5,000(2)
Chief Executive Officer 1997 239,250 -- 587,536(4) 12,750
Sandy B. Ho............................ 1999 200,000 47,880(5) 25,000(1) 8,333(2)
Executive Vice President, Chief 1998 185,000 100,000(3) 60,000(6) 5,000(2)
Financial Officer and Asst. Secretary 1997 160,000 -- 178,941(7) 4,750(2)
Michael A. Sabel(8).................... 1999 249,999 53,201(5) 55,000(1) 8,750(2)
Executive Vice President and Chief 1998 148,437 -- 804,521(9) --
E-Commerce Officer
E. Roger Gebhart(10)................... 1999 165,667 48,878(5) 45,000(1) 10,000(2)
Executive Vice President, Capital 1998 112,925 100,000(3) 45,000(11) 4,517(2)
Markets and Treasurer 1997 86,050 100,000 50,000(12) 3,442(2)
David L. Pederson(13).................. 1999 204,375 53,200(5) 45,000(1) 6,750(2)
Executive Vice President and Chief 1998 110,738 82,500(3) 45,000 3,063(2)
Information Officer
</TABLE>
- ---------------
(1) Consists of options granted in 2000 based upon the Named Executive
Officer's performance during 1999.
(2) Consists of amounts contributed by the Company on behalf of the Named
Executive Officer to the Company's 401(k) plan.
(3) This amount was paid during 1999 based upon the Named Executive Officer's
performance during 1998.
(4) Includes 220,000 options that were granted in 1998 based upon Mr. Depping's
performance during 1997 and in lieu of a cash bonus.
(5) This amount was paid during 2000 based upon the Named Executive Officer's
performance during 1999.
(6) Includes 50,000 replacement options granted in November 1998 upon
cancellation of 50,000 options previously granted in March 1998.
(7) Includes 50,000 options that were granted in 1998 based upon Ms. Ho's
performance during 1997 and in lieu of a cash bonus. Such options were
subsequently cancelled and replaced. See footnote (6) above.
(8) Mr. Sabel's employment with the Company began as of May 27, 1998.
(9) Includes 500,000 options granted upon commencement of Mr. Sabel's
employment with the Company in May 1998. Also includes 304,521 replacement
options granted in November 1998 upon cancellation of 449,041 of the
options granted in May 1998.
(10) Mr. Gebhart's employment with the Company began as of May 19, 1997.
(11) Includes 35,000 replacement options granted in November 1998 upon
cancellation of 35,000 options previously granted in March 1998.
6
<PAGE> 9
(12) Includes 35,000 options that were granted in 1998 based upon Mr. Gebhart's
performance in 1997. Such options were subsequently cancelled and replaced.
See footnote (11) above.
(13) Mr. Pederson's employment with the Company began as of April 13, 1998.
OPTION GRANTS IN 1999
No options were granted during 1999 to the Named Executive Officers.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
No options were exercised during 1999 by the Named Executive Officers. The
following table sets forth information concerning fiscal year-end option values:
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF
UNDERLYING OPTIONS AT IN-THE-MONEY OPTIONS AT
DECEMBER 31, 1999 DECEMBER 31, 1999(1)
--------------------------- ---------------------------
EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Thomas J. Depping............................ 235,015 352,521 $1,341,512 $2,012,254
Sandy B. Ho.................................. 63,577 125,364 545,640 1,005,948
Michael A. Sabel............................. 139,484 215,996 520,085 1,268,976
E. Roger Gebhart............................. 15,000 45,000 112,125 311,627
David L. Pederson............................ 9,000 36,000 73,125 292,500
</TABLE>
- ---------------
(1) Calculated as the difference between the aggregate fair market value of such
options based on the last reported sale price of the Common Stock as of
December 31, 1999 ($17.125 per share) and the aggregate exercise price.
EMPLOYMENT AGREEMENTS
The Company has an employment agreement with Mr. Thomas J. Depping
effective as of May 20, 1997. Mr. Depping's employment agreement has an initial
term of three years with an evergreen three year extension continuing after the
initial term unless either the Company or Mr. Depping gives 90 days' notice of
termination. Pursuant to his employment agreement, Mr. Depping is entitled to
receive an annual salary of not less than $250,000. In addition, if the
agreement is terminated without cause by the Company, or with cause by Mr.
Depping (including certain changes in control of the Company), the Company is
obligated to pay Mr. Depping a termination fee equal to three times the amount
of Mr. Depping's then-current annual rate of total compensation. In addition,
the agreement contains a covenant prohibiting Mr. Depping from competing with
the Company for a period of one year following termination of his employment
with the Company. The agreement also provides for customary benefits and
perquisites.
The Company has an employment agreement with Ms. Sandy B. Ho effective as
of April 1, 1998. The employment agreement has an initial term of three years
with an evergreen three year extension continuing after the initial term unless
either the Company or Ms. Ho gives 90 days' notice of termination. Pursuant to
the agreement, Ms. Ho is entitled to receive an annual base salary of not less
than $185,000. If the agreement is terminated without cause by the Company, the
Company is obligated to pay Ms. Ho termination fees equal to the aggregate of
three times her annual salary and three times the bonus received by Ms. Ho for
the year immediately preceding such termination (each paid over a period of 36
months), and an additional lump sum equal to the bonus received by Ms. Ho for
the year immediately preceding her termination as prorated for the number of
days in the year prior to such termination. In the event of a "Change in
Control" of the Company, Ms. Ho may terminate the agreement and receive an
amount equal to her annual salary plus a bonus equal to the bonus she received
for the year immediately preceding such termination or the bonus she received in
the year immediately preceding the change in control, whichever is greater. The
agreement contains covenants prohibiting Ms. Ho from competing with the Company
for a period of one year following the termination of her employment with the
Company. The agreement also provides for customary benefits and perquisites.
7
<PAGE> 10
The Company has an employment agreement with Mr. Michael A. Sabel effective
as of May 27, 1998. Mr. Sabel's employment agreement has a term of five years.
Pursuant to his employment agreement, Mr. Sabel is entitled to receive an annual
salary of not less than $249,999. If the agreement is terminated without cause
by the Company, the Company is obligated to pay Mr. Sabel a termination fee
(over a period of twelve months) equal to the aggregate of Mr. Sabel's annual
salary plus the bonus he received for the year immediately preceding such
termination. In the event of a "Change in Control" of the Company, the Company
is obligated to pay Mr. Sabel an amount equal to 2.99 times the amount of cash
compensation paid to Mr. Sabel for the year immediately preceding the Change in
Control, subject to certain adjustments. In addition, the agreement contains a
covenant prohibiting Mr. Sabel from competing with the Company for a period of
one year following termination of his employment with the Company. The agreement
also provides for customary benefits and perquisites.
The Company has an employment agreement with Mr. David L. Pederson
effective as of April 13, 1998. Mr. Pederson's employment agreement has a term
of five years. Pursuant to his employment agreement, Mr. Pederson is entitled to
receive an annual salary of not less than $175,000. If the agreement is
terminated without cause by the Company, the Company is obligated to pay Mr.
Pederson a termination fee equal to the balance of the base compensation due Mr.
Pederson over the remaining portion of the five-year term of the agreement
(payable, at the discretion of the Company, on a monthly basis). If Mr.
Pederson's employment is terminated following the acquisition of the Company by
another entity where the Company is not the surviving entity, Mr. Pederson is
entitled to receive a termination fee equal to the amount of his base salary due
over the remaining months in the five-year term of the employment agreement. In
addition, the agreement contains a covenant prohibiting Mr. Pederson from
competing with the Company following the termination of his employment with the
Company until the earlier of (i) if Mr. Pederson is terminated without cause by
the Company, a period of one year after the period through which the Company
agrees to pay Mr. Pederson's termination fee, or (ii) the expiration of six
years from the date of the employment agreement. The agreement also provides for
customary benefits and perquisites.
The Company has an employment agreement with Mr. E. Roger Gebhart effective
as of October 13, 1998. Mr. Gebhart's employment agreement has a term of three
years. Pursuant to his employment agreement, Mr. Gebhart is entitled to receive
an annual salary of not less than $130,000. If the agreement is terminated
without cause by the Company, the Company is obligated to pay Mr. Gebhart a
termination fee equal to 125% of twelve months of Mr. Gebhart's base
compensation then in effect. In addition, the agreement contains a covenant
prohibiting Mr. Gebhart from competing with the Company for a period of one year
following termination of his employment with the Company. The agreement also
provides for customary benefits and perquisites.
REPORT ON EXECUTIVE COMPENSATION
GENERAL
The Company's Board of Directors has established a Compensation Committee
(the "Compensation Committee") and a Stock Option Committee (the "Stock Option
Committee" and together with the Compensation Committee, the "Committees"), each
of which is currently comprised of the same three outside directors named below.
The Compensation Committee is generally responsible for considering and
approving compensation arrangements for the Company's senior management,
including its executive officers. The Stock Option Committee is responsible for
administering the Company's 1997 Stock Option Plan. The Committees' principal
objectives in establishing compensation arrangements for senior management are
to: (i) attract, retain and motivate key executives who are important to the
continued success of the Company and the accomplishment of its business
objectives, and (ii) provide strong financial incentives for executives to
enhance stockholder value.
The primary components of the Company's executive compensation program for
1999 were annual cash compensation, consisting of base salary and possible cash
bonus awards, and stock options.
8
<PAGE> 11
Base Salaries. The minimum base salary of each executive officer is
provided for in such officer's employment agreement. The Compensation Committee
considers appropriate increases in base salaries of the Company's executive
officers based on individual performance, comparative industry compensation
levels and other relevant considerations. The Compensation Committee believes
that the base salaries of its executive officers are generally below those of
comparable executive positions in the financial services industry.
Cash Bonus Awards. Each executive officer of the Company, other than Mr.
Depping, is eligible to receive a cash bonus pursuant to the provisions of the
Company's 1999 Senior Management Short-term Incentive (Bonus) Plan (the
"Executive Plan"). The objectives of the Executive Plan are to focus the
Company's executive officers on financial and operational goals essential to the
success of the Company, reward executive officers when performance goals are
attained and provide competitive levels of incentive opportunity.
There are three elements of performance under the Executive Plan: (i)
financial performance, measured by the Company's attainment of objective targets
with respect to earnings per share and size of lease portfolio, (ii) operational
performance, measured by the Company's attainment of objective targets with
respect to delinquency statistics and loss statistics, and (iii) individual
performance, measured by each executive officer's attainment of pre-established
individual objectives identified for such executive officer, as determined by a
subjective evaluation of the executive officer's performance by the Chief
Executive Officer or the Board of Directors.
The financial performance measures constitute 60% of the executive
officer's award and the operational performance measures constitute 40% of the
award. The individual performance measures respect a multiplier (between .8 and
1.2) that is applied to the total award determined under the financial and
operational measures. No incentive is paid if the threshold level of performance
is not satisfied with respect to (i) the executive officer's individual
performance measures, or (ii) both the Company's financial and operational
performance measures.
The measures and targets of the Executive Plan are reviewed regularly and
adjusted as necessary. The Compensation Committee believes that the use of cash
bonus awards provides executive officers the opportunity to earn a significant
part of their annual cash compensation in the form of incentive compensation.
Stock Options. All executive officers are eligible to participate in the
Company's Stock Option Plan. The purpose of the Stock Option Plan is to provide
long-term equity incentives to participants to maximize stockholder value. The
Committees believe that equity ownership by executive officers provides a strong
incentive to maximize stockholder value and thereby aligns the interests of such
officers with those of the stockholders.
COMPENSATION OF THE PRESIDENT AND CHIEF EXECUTIVE OFFICER
During 1999, Mr. Depping received a base salary of $349,500. In addition,
Mr. Depping was awarded, as of January 3, 2000, options exercisable for 101,067
shares of the Company's Common Stock pursuant to the Company's 1999 CEO
Long-term Compensation Plan (the "CEO Plan").
The provisions of the CEO Plan permit Mr. Depping to receive options to
purchase the Company's Common Stock based on the Company's performance and Mr.
Depping's individual performance, as measured by the following indicators: (i)
financial performance, measured by the Company's attainment of objective targets
with respect to earnings per share and size of lease portfolio, (ii) operational
performance, measured by the Company's attainment of objective targets with
respect to delinquency statistics and loss statistics, and (iii) individual
performance, measured by Mr. Depping's attainment of pre-established individual
objectives, as determined by a subjective evaluation of Mr. Depping's
performance by the Board of Directors.
The financial performance measures constitute 60% of Mr. Depping's award
and the operational performance measures constitute 40% of the award. The
individual performance measures represent a multiplier (between .8 and 1.2) that
is applied to the total award determined under the financial and operational
measures. No options are awarded if the threshold level of performance is not
satisfied with respect
9
<PAGE> 12
to (i) Mr. Depping's individual performance measures, or (ii) both the Company's
financial and operational performance measures.
The Compensation Committee believes that, as a result of the stock option
awards to Mr. Depping pursuant to the CEO Plan, a substantial portion of Mr.
Depping's overall compensation is influenced by the Company's performance and is
tied directly to the creation of stockholder value.
DEDUCTIBILITY OF COMPENSATION IN EXCESS OF $1 MILLION PER YEAR
Internal Revenue Code section 162(m), in general, precludes a public
corporation from claiming a tax deduction for compensation in excess of $1
million in any taxable year for any executive officer named in the summary
compensation table in such corporation's proxy statement. Certain
performance-based compensation is exempt from this tax deduction limitation. The
Compensation Committee's policy is to structure executive compensation in order
to maximize the amount of the Company's tax deduction. However, the Compensation
Committee reserves the right to deviate from that policy to the extent it is
deemed necessary to serve the best interests of the Company and its
stockholders.
Respectfully Submitted:
The Compensation Committee and
The Stock Option Committee
Richard J. Campo
Norman J. Metcalfe
David L. Solomon
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Messrs. Campo, Metcalfe and Solomon are the members of the Compensation and
Stock Option Committees of the Board of Directors. No member of the Company's
Compensation Committee or Stock Option Committee was an officer or employee of
the Company or any of its subsidiaries during 1999 or was formerly an officer of
the Company or any of its subsidiaries. No executive officer of the Company
served as a director or member of the Compensation Committee or Stock Option
Committee of another entity, one of whose executive officers served as a
director or member of the Compensation Committee or Stock Option Committee of
the Company.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Upon completion of the Company's initial public offering in May 1997, the
Company entered into a $5 million subordinated revolving credit facility with
Redstone, with the commitment level thereunder decreasing by $1 million per
year. Due to availability of funds under other facilities, it was determined
that the revolving credit facility was no longer needed and was terminated in
1999, based upon mutual agreements of all parties involved. Advances under the
subordinated revolving credit facility bore interest at 11.00% per annum.
The Company and an affiliate of Redstone (the "Affiliate") are parties to
an agreement dated December 20, 1996 (the "Referral Agreement") whereby the
Affiliate may introduce potential lease customers or vendors of equipment to the
Company. Pursuant to this agreement, the Company is required to pay a referral
fee to the Affiliate equal to 5.0% of the total equipment cost funded for each
lease the Company enters into with a customer referred to it by the Affiliate,
which fee is consistent with referral fees paid by the Company to other referral
sources. As of December 31, 1999, the Company had paid less than $1,000.00 to
the Affiliate pursuant to the Referral Agreement.
10
<PAGE> 13
During 1998, in the ordinary course of business, the Company entered into
lease financing agreements with Augusta Foods, LLC ("Augusta Foods"), the sole
owner of Cafe Express Holdings ("Cafe Express"), which operates restaurants, for
the financing of restaurant equipment. Augusta Foods and Cafe Express are
affiliates of Redstone. Pursuant to Guaranty Agreements entered into in
connection with these transactions, Redstone guaranteed payment of Augusta
Foods' and Cafe Express' obligations under the leases. The aggregate amount of
equipment financed pursuant to such leases during 1998 was approximately $6.2
million and during 1999 was approximately $1.1 million.
During 1999, in the ordinary course of business, the Company entered into a
lease agreement with Houstonian Golf, Ltd. ("Houstonian Golf"), for the
financing of golf course maintenance equipment related to the Houstonian Golf
Course located at the Houstonian Hotel, Club and Spa in Houston, Texas.
Houstonian Golf is an affiliate of Redstone. Pursuant to Guaranty Agreements
entered into in connection with this transaction, Redstone guaranteed payment of
Houstonian Golf's obligations under the lease. The aggregate amount financed
pursuant to the lease during 1999 was approximately $669,000.
The Company believes that the terms of the foregoing transactions are no
less favorable to the Company than the terms of any similar transaction that
could have been obtained through arms-length negotiations with an unaffiliated
third party.
11
<PAGE> 14
COMMON STOCK PERFORMANCE GRAPH
The following graph compares the percentage change in the Company's
cumulative total stockholder return on its Common Stock for the period during
which the Common Stock was registered under Section 12 of the Exchange Act
against the cumulative total return of the Nasdaq Total Return (U.S.) Index (the
"Nasdaq Index") and the cumulative total return of the Nasdaq Financial Index
(the "Nasdaq Financial Index") for the same period. The graph assumes an
investment of $100 on May 15, 1997 in each of the Common Stock and the stocks
comprising the Nasdaq Index and the Nasdaq Financial Index, and assumes
reinvestment of dividends, if any.
Graph
<TABLE>
<CAPTION>
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5/15/97* 12/31/97 12/31/98 12/31/99
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<S> <C> <C> <C> <C>
SierraCities.com Inc. 100 222 153 214
Nasdaq Index 100 118 162 291
Nasdaq Financial Index 100 139 136 122
* The Company's Common Stock began trading publicly on May 15, 1997.
</TABLE>
12
<PAGE> 15
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's directors and
executive officers, and persons who own more than ten percent of the Company's
Common Stock, to file with the SEC initial reports of ownership and reports of
changes in ownership of Common Stock and other equity securities of the Company.
Officers, directors and greater than ten percent stockholders also are required
by SEC regulation to furnish the Company with copies of all Section 16(a) forms
that are filed with the SEC.
To the Company's knowledge, based solely on a review of the copies of such
reports furnished to the Company and representations that no other reports were
required, during the fiscal year ended December 31, 1999, all Section 16(a)
filing requirements applicable to its officers, directors and greater than ten
percent beneficial owners were complied with.
AUDITORS
Arthur Andersen, LLP has been selected as the Company's independent
auditors for the 2000 fiscal year. Representatives of Arthur Andersen, LLP will
be present at the Annual Meeting with the opportunity to respond to appropriate
questions and to make a statement if they desire to do so.
PROPOSALS OF SECURITY HOLDERS
A stockholder proposal to be presented at the 2001 Annual Meeting must be
received at the Company's executive offices by no later than December 9, 2000,
for evaluation as to inclusion in the Proxy Statement in connection with such
meeting.
Under the Company's Restated Certificate of Incorporation, in order for a
stockholder to propose business (including to nominate a candidate for director)
to be considered at the 2001 Annual Meeting, timely notice must be given in
writing to the Corporate Secretary of the Company. To be timely, such notice
must be received at the principal executive offices of the Company no later than
60 days before the Annual Meeting or 10 days after the notice of the meeting is
sent to stockholders, whichever is later. Such notice must provide certain
information as specified in the Restated Certificate of Incorporation regarding
the stockholder giving the notice and the nature of the business to be proposed.
Such notice is separate from and in addition to the requirements a stockholder
must meet to have a proposal included in the Company's proxy statement.
OTHER MATTERS TO COME BEFORE THE MEETING
The Board of Directors of the Company knows of no other business that may
come before the Annual Meeting. However, if any other matters are properly
presented to the meeting, the persons named in the proxies will vote upon them
in accordance with their best judgment.
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE SIGN THE PROXY AND
RETURN IT IN THE ENCLOSED STAMPED ENVELOPE.
By Order of the Board of Directors
/s/ ALAN L. LANGUS
Alan L. Langus
Corporate Secretary, Executive Vice
President and General Counsel
April 7, 2000
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<PAGE> 16
SIERRACITIES.COM INC.
600 TRAVIS STREET, SUITE 7050
HOUSTON, TEXAS 77002
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF
DIRECTORS OF SIERRACITIES.COM INC.
FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON MAY 9, 2000.
The undersigned stockholder(s) of SierraCities.com Inc.
("SierraCities.com"), formerly First Sierra Financial, Inc., hereby
constitute(s) and appoint(s) Thomas J. Depping and Alan L. Langus and each of
them acting individually, with full power of substitution and revocation, the
true and lawful attorneys and proxies of the undersigned to vote all shares of
the common stock, par value $.01 per share, of SierraCities.com (the
"SierraCities.com Common Stock") owned by or of record in the name of the
undersigned, at the Annual Meeting of the Stockholders of SierraCities.com to be
held on May 9, 2000 at the Chase Center Auditorium at 601 Travis Street,
Houston, Texas (the "Annual Meeting"), or at any adjournments or postponements
thereof, for the purposes listed on the reverse side hereof.
This Proxy, when properly executed, will be voted in the manner directed
on the reverse side by the undersigned stockholder(s). IF NO DIRECTION IS MADE,
THIS PROXY WILL BE VOTED FOR THE PROPOSALS SET FORTH ON THE REVERSE SIDE OF
THIS PROXY. This Proxy may be revoked at any time before it is voted at the
Annual Meeting by (i) executing and returning a proxy bearing a later date,
(ii) filing written notice of such revocation with SierraCities.com at 600
Travis Street, Suite 7050, Houston, Texas 77002, Fax Number 713/221-1818,
Attention: Alan L. Langus c/o Sharron Reed, or (iii) attending the Annual
Meeting and voting in person.
Continued and to be signed on the reverse side
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<PAGE> 17
SIERRACITIES.COM INC.
PLEASE MARK YOUR VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY. [X]
THE BOARD OF DIRECTORS OF SIERRACITIES.COM UNANIMOUSLY
RECOMMENDS A VOTE FOR ITEM 1.
Item 1. Election of Directors
Two Class III directors are to be elected to serve until
SierraCities.com's annual meeting in 2003
The nominees are 01 Thomas J. Depping and 02 David L. Solomon.
WITHHOLD AUTHORITY
FOR all to vote for FOR all nominees, except
nominees all nominees vote withheld for those named below:
[ ] [ ] [ ]
Should any other matters requiring a vote of the stockholders arise, the
attorneys above are authorized to vote the same in accordance with their best
judgment in the best interest of SierraCities.com. Management is not aware of
any matter that is to be presented for action at the meeting other than the
Election of Directors as set forth herein.
INSTRUCTIONS: To withhold vote for any individual nominee, write that
nominee's name in the space provided below.
____________________________________________________________________________
MARK HERE FOR ADDRESS CHANGE [ ]
AND NOTE AT LEFT
Please mark date sign exactly as your
name(s) appear(s) at left and return in
the enclosed envelope. If acting as
attorney, executor, administrator,
trustee, guardian, etc., please give full
title. If the signer is a corporation,
please sign the full corporate name, by
fully authorized officer. If shares are
held jointly, each stockholder named
should sign.
SIGNATURE:
__________________________________________
DATE:
__________________________________________
SIGNATURE:
__________________________________________
DATE:
__________________________________________
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