<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14
OF THE SECURITIES EXCHANGE ACT OF 1934
<TABLE>
<S> <C>
[X] Filed by the registrant [ ] Preliminary proxy statement
[ ] Filed by a party other than the registrant [X] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to
Rule 14-a 11(c) or Rule 14a-12
</TABLE>
SIRROM CAPITAL CORPORATION
(Name of Registrant as Specified in its Charter)
----------------------------------------------------------------------------
SIRROM CAPITAL CORPORATION
(Name of Person(s) filing Proxy Statement)
----------------------------------------------------------------------------
Payment of Filing Fee (Check the appropriate box):
[ ] Fee computed on table below per Exchange Act Rule 14a-6(i)(3) 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 or transaction computed
pursuant to Exchange Act Rule 0-11;
(4) Proposed maximum aggregate value of transaction:
(5) Total Fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing:
(1) Amount previously paid:
(2) Form, schedule or registration statement no.:
(3) Filing party:
(4) Date filed:
<PAGE> 2
SIRROM CAPITAL CORPORATION
500 Church Street, Suite 200
Nashville, Tennessee 37219
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON APRIL 4, 1997
To the Shareholders:
As a shareholder of Sirrom Capital Corporation (the "Company"), you are
hereby given notice of and invited to attend in person or by proxy the Annual
Meeting of Shareholders of the Company to be held at The Hermitage Suite Hotel,
231 6th Avenue, Nashville, Tennessee, on Friday, April 4, 1997, at 8:00 a.m.,
for the following purposes:
1. To elect ten directors of the Company to serve until the next annual
meeting of shareholders and until their successors are elected and
qualified;
2. To approve the adoption of an amendment to the Company's 1996
Incentive Stock Option Plan increasing the number of shares available
for grant thereunder;
3. To ratify the selection of Arthur Andersen LLP to serve as independent
public accountants for the Company for the year ending December 31,
1997; and
4. To transact such other business as may properly come before the
meeting or any adjournment thereof.
The Board of Directors of the Company has fixed the close of business on
February 14, 1997, as the record date (the "Record Date") for the determination
of shareholders entitled to notice of, and to vote at, the meeting and any
adjournment thereof. Only shareholders of record at the close of business on the
Record Date are entitled to notice of and to vote at such meeting.
You are cordially invited to attend the meeting. WHETHER OR NOT YOU EXPECT
TO ATTEND THE MEETING, MANAGEMENT DESIRES TO HAVE THE MAXIMUM REPRESENTATION AT
THE MEETING AND RESPECTFULLY REQUESTS THAT YOU DATE, EXECUTE AND MAIL PROMPTLY
THE ENCLOSED PROXY IN THE ENCLOSED STAMPED ENVELOPE FOR WHICH NO ADDITIONAL
POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES. A proxy may be revoked by a
shareholder any time prior to its use as specified in the enclosed proxy
statement.
BY ORDER OF THE BOARD OF DIRECTORS,
Maria-Lisa Caldwell
Secretary
March 5, 1997
<PAGE> 3
SIRROM CAPITAL CORPORATION
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 4, 1997
--------------------------
PROXY STATEMENT
--------------------------
DATE, TIME, PLACE AND PURPOSES OF
ANNUAL MEETING
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Sirrom Capital Corporation (the "Company")
for use at the Company's 1997 Annual Meeting of Shareholders (the "Annual
Meeting") to be held on April 4, 1997, at the time and place and for the
purposes set forth in the accompanying Notice of Annual Meeting of Shareholders,
or at any adjournments thereof. This Proxy Statement, the accompanying proxy
card and the Company's Annual Report to Shareholders for the year ended December
31, 1996, are first being sent to shareholders on or about March 5, 1997. The
Company's principal executive offices are located at 500 Church Street, Suite
200, Nashville, Tennessee 37219.
INFORMATION CONCERNING THE PROXY
The enclosed proxy is solicited on behalf of the Board of Directors of the
Company and is subject to revocation at any time prior to the voting of the
proxy. Shares represented by valid proxies will be voted in accordance with
instructions contained therein. If no specification is made, such shares will be
voted FOR the election of the ten director nominees, FOR the approval of the
adoption of the amendment to the Company's 1996 Incentive Stock Option Plan (the
"1996 Employee Plan") increasing the number of shares available for grant
thereunder, and FOR the ratification of Arthur Andersen LLP as the independent
accountants of the Company. Any shareholder of the Company has the unconditional
right to revoke his or her proxy at any time prior to the voting thereof by any
action inconsistent with the proxy, including notifying the Secretary of the
Company in writing, executing a subsequent proxy, or personally appearing at the
Annual Meeting and casting a contrary vote. However, no such revocation will be
effective unless and until such notice of revocation has been received by the
Company at or prior to the Annual Meeting.
The Board of Directors is not aware of any matter to be presented for
action at the Annual Meeting other than the matters set forth herein. Should any
other matter requiring a vote of shareholders arise, the proxies on the enclosed
form confer upon the persons entitled to vote the shares represented by such
proxies discretionary authority to vote the same in accordance with their best
judgment in the interest of the Company.
The cost of soliciting proxies on the accompanying form will be borne by
the Company. In addition to the use of mail, officers of the Company may solicit
proxies by telephone or telecopy. Upon request, the Company will reimburse
brokers, dealers, banks, and trustees, or their nominees, for reasonable
expenses incurred by them in forwarding proxy material to beneficial owners of
the Common Stock.
The record of shareholders entitled to vote at the Annual Meeting was taken
at the close of business on February 14, 1997 (the "Record Date"), and on such
date the Company had issued and outstanding 15,038,813 shares of Common Stock,
no par value per share (the "Common Stock"). Only holders of the Common Stock on
the Record Date are entitled to vote at the Annual Meeting and such holders will
be entitled to one vote for each share of Common Stock so held, which may be
given in person or by proxy duly authorized in writing.
SECURITY OWNERSHIP OF MANAGEMENT
AND CERTAIN BENEFICIAL OWNERS
The following table sets forth, as of February 14, 1997, the beneficial
ownership of each current director, each nominee for director, each of the
executive officers named in the Compensation Table (the "Compensated Persons"),
the executive officers and directors as a group, and each shareholder known to
management of the Company to own
1
<PAGE> 4
beneficially more than 5% of the outstanding shares of Common Stock of the
Company. Unless otherwise indicated, the Company believes that the beneficial
owner set forth in the table has sole voting and investment power.
<TABLE>
<CAPTION>
NAME AND ADDRESS Amount and Nature of
OF BENEFICIAL OWNER Beneficial Ownership Percent of Class (1)
- --------------------------------------------- ---------------------- --------------------
<S> <C> <C>
E. Townes Duncan 12,200(2) *
Comptronix Corporation
Three Maryland Farms, Suite 140
Brentwood, TN 37027
William D. Eberle 13,500(2) *
1 Cranberry Hill
Lexington, MA 02173
H. Hiter Harris, III 336,479 2.2%
Harris Williams & Co.
1313 E. Main Street
Suite 300
Richmond, VA 23219
Edward J. Mathias 79,330(2)(3) *
The Carlyle Group
1001 Pennsylvania Avenue, NW
Suite 220 S
Washington, DC 20004
Robert A. McCabe, Jr. 12,104(2) *
First American Trust Company
800 First American Center
Nashville, TN 37238
George M. Miller, II 680,281(4) 4.4
500 Church Street
Suite 200
Nashville, TN 37219
John A. Morris, Jr., M.D. 2,393,204(5) 15.9
243 Medical Center South
2100 Pierce Avenue
Nashville, TN 37212
Pilgrim Baxter & Associates, Ltd. 1,033,600(6) 6.8
11255 Drummers Lane, Suite 300
Wayne, PA 19087
Raymond H. Pirtle, Jr. 34,903(7) *
Equitable Securities
900 Nashville City Center
Nashville, TN 37219
David M. Resha 115,000(8) *
1614 Stop Thirty Road
Hendersonville, TN 37075
</TABLE>
2
<PAGE> 5
<TABLE>
<CAPTION>
NAME AND ADDRESS Amount and Nature of
OF BENEFICIAL OWNER Beneficial Ownership Percent of Class (1)
- --------------------------------------------- ---------------------- --------------------
<S> <C> <C>
Carl W. Stratton 75,000(9) *
3331 Golf Club Lane
Nashville, TN 37215
Keith M. Thompson --- ---
Republic Automotive Parts
500 Wilson Pike Circle, Suite 115
Brentwood, TN 37027
Christopher H. Williams 333,979 2.2%
Harris Williams & Co.
1313 E. Main Street
Suite 300
Richmond, VA 23219
L. Edward Wilson 62,964(7) (10) *
SRF, Inc.
500 Church Street
Suite 200
Nashville, TN 37219
Sirrom Partners, L.P. 2,035,148 13.5
500 Church Street
Suite 200
Nashville, TN 37219
Executive officers and directors, as a 3,848,944(11) 24.4
group (12 persons)
</TABLE>
- ------------------------
* Less than one percent.
(1) Pursuant to the rules of the Securities and Exchange Commission, shares of
Common Stock subject to options held by directors and executive officers of
the Company that are exercisable within 60 days of February 14, 1996, are
deemed outstanding for the purposes of computing such director's or
executive officer's beneficial ownership and the beneficial ownership of
all executive officers and directors as a group.
(2) Includes 12,000 shares issuable pursuant to a stock option that vests on
April 18, 1997.
(3) Includes 33,165 shares owned by Mr. Mathias' spouse and 1,000 shares owned
by his daughter.
(4) Includes 488,047 shares issuable pursuant to certain stock options granted
to Mr. Miller . The option for the purchase of 150,000 shares becomes
exercisable as to 25% of the shares on August 1, 1997, as to an additional
25% of the shares on August 1, 1998 and as to the remaining 50% of the
shares on August 1, 1999. The option for the purchase of 56,966 shares
vests as to 20% of the shares on December 15, 1996 and each December 15th
thereafter. The remaining option for the purchase of 56,966 shares vests as
to 20% of the shares on February 1, 1997 and each February 1st thereafter.
The option for 224,115 shares vests as to 20% of the shares on October 1,
1997 and each October 1st thereafter. This number also includes 95,415
shares held by three trusts established for the benefit of Mr. Miller's
children. Mr. Miller's spouse is the trustee of these trusts.
(5) Includes 2,035,148 shares owned by Sirrom Partners, L.P., a limited
partnership owned by Dr. Morris and his family, and 358,056 shares owned by
Sirrom, Ltd., a limited partnership whose general partner is All Scarlet,
Inc., a corporation owned 50% by Dr. Morris and 50% by Alfred H. Morris,
the brother of Dr. Morris. Dr. Morris has shared voting power and shared
investment power with respect to all of these shares.
(6) Pilgrim Baxter & Associates, Ltd. ("Pilgrim Baxter"), an investment
advisor, has sole dispositive power and shared voting power with respect to
such shares. The information included herein is based upon a Schedule 13G
filed by Pilgrim Baxter with the Securities and Exchange Commission.
(7) Includes 18,000 shares issuable pursuant to an option that vests on April
18, 1997.
3
<PAGE> 6
(8) Represents 115,000 shares issuable pursuant to an option granted to Mr.
Resha that is vested as to 15,000 shares and that vests as to 25,000 shares
each year beginning July 5, 1997.
(9) Represents 75,000 shares issuable pursuant to two options granted to Mr.
Stratton that vest as to 20% of the shares each year beginning April 8,
1997.
(10) Includes 37,664 shares owned by the L.E. and Mary Lou Wilson Revocable
Living Trust, of which Mr. Wilson is a trustee, and 800 shares owned by Mr.
Wilson's wife. This amount does not include 4,200 shares owned by the
Estate of L.E. Wilson, Sr., of which Mr. Wilson is the attorney-in-fact,
and Mr. Wilson disclaims beneficial ownership of such shares.
(11) Includes the shares issuable pursuant to the options described in footnotes
(2), (4), (7), (8) and (9).
4
<PAGE> 7
PROPOSAL 1: ELECTION OF DIRECTORS
The Company's directors are elected at each annual meeting of shareholders.
Prior to the approval of an increase in the size of the Board of Directors to
ten members on February 28, 1997, the size of the Board of Directors was set at
eight members. At the Annual Meeting, shareholders will elect ten directors,
constituting the entire membership of the Board of Directors of the Company to
serve until the next annual meeting of shareholders and until their successors
have been elected and qualified. The nominees for election as directors at the
Annual Meeting set forth in the table below are all incumbent directors, except
for Christopher H. Williams and Keith M. Thompson. Each of the nominees has
consented to serve as a director if elected. In the event that any of the
nominees for director should before the Annual Meeting become unable to serve if
elected, it is intended that shares represented by proxies which are executed
and returned will be voted for such substitute nominees as may be recommended by
the Company's existing Board of Directors, unless other directions are given in
the proxies. To the best of the Company's knowledge, all the nominees will be
available to serve, and, therefore, at this time there are no substitute
nominees under consideration.
A shareholder using the enclosed form of proxy can vote for or withhold his
or her vote from any or all of the nominees. The election of directors requires
the vote of a plurality of the Company's Common Stock. If the proxy card is
properly executed but unmarked, it is the intention of the persons named as
proxies to vote such proxy FOR the election of all the nominees named below.
Certain information, as of February 14, 1997, with respect to each of the
ten nominees for election at the Annual Meeting is set forth below.
<TABLE>
<CAPTION>
NAME AND YEAR FIRST
ELECTED DIRECTOR BACKGROUND INFORMATION
- --------------------------- -------------------------------------------------------------------------------------
<S> <C>
John A. Morris, Jr.* Dr. Morris, 50, is Chairman of the Board and co-founded the Company in August
1991 1991. Dr. Morris currently holds appointments of Professor of Surgery and
Director of the Division of Trauma and Surgical Critical Care at the Vanderbilt
University School of Medicine, Medical Director of the LifeFlight Air Ambulance
Program at Vanderbilt University Hospital, and Associate in the Department of Health
Policy and Management at the Johns Hopkins University.
George M. Miller, II* Mr. Miller, 37, is President and Chief Executive Officer and co-founded the
1991 Company in August 1991. Prior to August 1991, Mr. Miller worked for two years
as a vice president in the Investment Banking Group of Equitable Securities
Corporation ("Equitable"). From 1987 to 1989, Mr. Miller worked as an associate in
the Corporate Finance department of J.C. Bradford & Co. Prior to that time, Mr.
Miller spent four and one-half years on active duty in the United States Marine
Corps. Mr. Miller holds a Master of Business Administration from the University
of North Carolina - Chapel Hill and a Bachelor of Science degree from the
University of Tennessee.
E. Townes Duncan Mr. Duncan, 43, has been the President of Solidus, LLC, a private investment
1994 firm, since January 1, 1997. Sirrom Partners, L.P., a limited partnership owned by
Dr. Morris and his family, is the principal investor in Solidus, LLC. Mr. Duncan
is also a director of Comptronix Corporation, a provider of electronics contract
manufacturing services, since April 1988, and has served as its Chairman of the
Board and Chief Executive Officer since November 1993. Comptronix Corporation
filed a petition for Chapter 11 protection on August 9, 1996. Mr. Duncan was a
Vice-President of Massey Burch Investment Group, Inc., a Nashville venture capital firm,
from 1985 to November 1993. Mr. Duncan is also a director of J. Alexander's Corporation,
an owner and operator of restaurants in eight states.
</TABLE>
5
<PAGE> 8
<TABLE>
<CAPTION>
NAME AND YEAR FIRST
ELECTED DIRECTOR BACKGROUND INFORMATION
- --------------------------- -------------------------------------------------------------------------------------
<S> <C>
William D. Eberle Mr. Eberle, 73, is chairman of Manchester Associates, Ltd., a venture capital and
1994 international consulting firm, and is Of Counsel to the law firm of Kaye, Scholer,
Fierman, Hays & Handler. Mr. Eberle is also Chairman of America Service
Group, Inc., a health care services company, and is a director of Ampco-Pittsburgh
Corp., a steel fabrication equipment company, Barry's Jewelry, a retail jewelry
chain, Fiberboard Corporation, a timber manufacturer, Mitchell Energy and
Development, a gas and oil company, and Mid-States PLC , an auto parts
distributor headquartered in Nashville. Mr. Eberle is also the Vice Chairman of
the U.S. Council of the International Chamber of Commerce.
Edward J. Mathias Mr. Mathias, 55, has been a managing director of The Carlyle Group, a
1994 Washington, D.C. based private merchant bank, since 1994. Mr. Mathias served
as a managing director of T. Rowe Price Associates, Inc., an investment
management firm, from 1971 to 1993. Mr. Mathias is also a director of U.S.
Office Products, a supplier of office products, and PathoGenesis Corporation, a
biotechnology company.
Robert A. McCabe, Jr. Mr. McCabe, 46, has been the Vice Chairman of First American Corporation, a
1994 bank holding company headquartered in Nashville, since 1993 and the President
of First American Enterprises, a division of First American Corporation, since
1994. Prior to that time, Mr. McCabe served as President of the General Bank
and First American National Bank, a subsidiary of First American Corporation.
Mr. McCabe is also a director of First American Corporation.
Raymond H. Pirtle, Jr.* Mr. Pirtle, 55, is a managing director and a member of the Board of Directors of
1991 Equitable, having joined the firm in February 1989. Prior to that date, Mr. Pirtle
was a general partner of J.C. Bradford & Co.
Keith M. Thompson Mr. Thompson, 56, has been the President and Chief Executive Officer of
Republic Automotive Parts, Inc., a distributor of automotive parts and supplies
since 1986. Mr. Thompson is also a director of Acklands Limited, a Canadian
automotive parts and industrial supplies distributor.
Christopher H. Williams* Mr. Williams, 34, co-founded Harris Williams & Co. ("Harris Williams") in 1991
and has served as co-chairman of Harris Williams since the Company's
acquisition of the firm in August 1996. From 1987 to 1991, Mr. Williams served
as Vice President of Bowles Hollowell & Conner. Mr. Williams holds a Master of
Business Administration from Harvard Graduate School of Business
Administration and a Bachelor of Arts degree in Business Administration from
Washington and Lee University.
L. Edward Wilson, P.E. Mr. Wilson, 52, is president of Sirrom Resource Texas, Inc. ("SRF"), the general
1993 partner of Sirrom Resource Funding, L.P., a privately owned partnership that
provides capital to environmental service firms and that is controlled by Sirrom
Partners, L.P., a limited partnership owned by Dr. Morris and his family. Prior to
joining SRF, Mr. Wilson served as president and chief executive Officer of OSCO, Inc.,
a Nashville-based environmental services company. Prior to that, Mr. Wilson served
as executive vice president of ERC Environmental & Energy Services, Inc.
("ERC"), where he was in charge of all eastern regional operations of this
publicly-traded environmental services company. He joined ERC after it acquired
the EDGe Group, a company he founded in 1982.
</TABLE>
- --------------------------------
6
<PAGE> 9
* "Interested Person" as defined in Section 2(a)(19) of the Investment
Company Act of 1940.
The Board of Directors holds regular quarterly meetings and meets on other
occasions when required by special circumstances. Certain directors also devote
their time and attention to the Board's principal standing committees. The
committees, their primary functions, and memberships are as follows:
Audit Committee -- This committee makes recommendations to the Board of
Directors with respect to the Company's financial statements and the
appointment of independent auditors, reviews significant audit and
accounting policies and practices, meets with the Company's independent
public accountants concerning, among other things, the scope of audits and
reports and financial controls of the Company, and reviews the Company's
loan underwriting procedures and asset valuation procedure. Members of the
Audit Committee are E. Townes Duncan, Edward J. Mathias and Robert A.
McCabe, Jr.
Compensation Committee -- This committee has the responsibility for
reviewing and approving the salaries, bonuses, and other compensation and
benefits of executive officers, reviewing and advising management regarding
benefits and other terms and conditions of compensation of management, and
administering the Company's Amended and Restated 1994 Stock Option Plan
(the "1994 Employee Plan") and the 1996 Employee Plan. Members of the
Compensation Committee are William D. Eberle, Raymond H. Pirtle, Jr. and L.
Edward Wilson.
The Board of Directors does not have a standing nominating committee.
Nominations for election to the Board of Directors may be made by the Board of
Directors, a nominating committee appointed by the Board of Directors, or by any
shareholder entitled to vote for the election of directors. Nominations made by
shareholders must be made by written notice (setting forth the information
required by the Company's Bylaws) received by the Secretary of the Company at
least 120 days in advance of an annual meeting or within 10 days of the date on
which notice of a special meeting for the election of directors is first given
to shareholders.
The Board of Directors held three formal meetings during fiscal 1996. The
Compensation Committee held no formal meetings during fiscal 1996 and the Audit
Committee held three meetings during fiscal 1996. Each of the directors attended
at least 75% of the meetings of the Board of Directors and the committees on
which he served.
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
During 1996, each non-employee director received a fee of $1,000 for each
meeting of the Board of Directors of the Company or each separate committee
meeting attended. On January 11, 1996, the Company received an exemptive order
from the Securities and Exchange Commission approving the 1995 Stock Option Plan
for Non-Employee Directors (the "Director Plan") and the issuance of shares
thereunder that was also approved by the shareholders at the Annual Meeting of
Shareholders held April 19, 1996. Pursuant to the Director Plan, options to
acquire 84,000 shares of Common Stock were automatically granted to the
Company's non-employee directors (excluding John A. Morris, Jr., M.D., who is
not eligible to participate under the Director Plan.) Messrs. Pirtle and Wilson
each received an option to purchase 18,000 shares of Company's Common Stock at
an exercise price of $24.25, the current market value of the Company's Common
Stock on the date of grant. Messrs. Duncan, Eberle, Mathias and McCabe each
received an option to purchase 12,000 shares of the Company's Common Stock at an
exercise price of $24.25, the current market value of the Company's Common Stock
on the date of grant. Upon the initial election/appointment of a future
non-employee director (including Mr. Thompson), an option to acquire 6,000
shares of the Company's Common Stock at an exercise price equal to the current
market value of the Company's Common Stock on the date of grant will be issued
to such director.
7
<PAGE> 10
The following table sets forth certain details of compensation paid to
directors during 1996, as well as to each of the Company's five most highly
compensated executive officers. As of January 1, 1997, the Company established a
401K plan that does not provide for matching contributions by the Company.
COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term
Compensation
Aggregate --------------------------------
NAME AND POSITION Compensation from the Company Securities Underlying Options(#)
- ----------------------------------------------- ----------------------------- --------------------------------
SALARY BONUS
<S> <C> <C> <C>
George M. Miller, II, President and Chief $229,883 $225,000(1) 281,081
Executive Officer
David M. Resha, Chief Operating Officer $150,293 $100,000(1) ---
Carl W. Stratton, Chief Financial Officer $ 91,586 $100,000(1) 75,000
H. Hiter Harris, III, Co-Chairman of Harris $100,000(2) --- ---
Williams
Christopher H. Williams, III, Co-Chairman of $100,000(2) --- ---
Harris Williams
DIRECTOR FEES
-------------
E. Townes Duncan, Director $ 2,000 12,000
William D. Eberle, Director 3,000 12,000
Robert A. McCabe, Jr., Director 3,000 12,000
Edward J. Mathias, Director 2,000 12,000
John A. Morris, Jr., Director 3,000 ---
Raymond H. Pirtle, Jr., Director 3,000 18,000
DIRECTOR FEES
-------------
L. Edward Wilson, Director 3,000 18,000
</TABLE>
- ----------------------------
(1) These amounts represent 1996 bonuses paid on January 2, 1997.
(2) These amounts do not include $22,500 contributed by Harris Williams to each
of Messrs. Harris' and Williams' SEP/IRA account pursuant to the terms of
the Harris Williams SEP/IRA Plan.
8
<PAGE> 11
OPTIONS GRANTED IN LAST FISCAL YEAR
The following table summarizes certain information regarding stock options
granted to the Compensated Persons during fiscal 1996. No stock appreciation
rights ("SARs") have been granted by the Company.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE AT
ASSUMED ANNUAL RATES OF
STOCK PRICE APPRECIATION FOR
INDIVIDUAL GRANTS OPTION TERM(1)
---------------------------------------------------------------------------- ----------------------------
Number of Securities % of Total Options Exercise or
Underlying Options Granted to Employees in Base Price Expiration
Name Granted (#) Fiscal Year ($/sh) Date 5%($) 10%($)
- ---- -------------------- ----------------------- ----------- ---------- ----- ------
<S> <C> <C> <C> <C> <C> <C>
George M. Miller, II 56,966 (2) 7.4% $18.63 2/1/06 $ 667,252 $ 1,690,948
224,115 (3) 29.3 30.00 10/1/06 4,228,342 10,715,448
David M. Resha --- --- --- --- --- ---
Carl W. Stratton 50,000 (4) 6.6 23.25 4/1/06 731,090 1,852,726
25,000 (4)(5) 3.3 31.75 10/8/06 499,185 1,265,033
H. Hiter Harris, III --- --- --- --- --- ---
Christopher H. Williams --- --- --- --- --- ---
</TABLE>
- -----------------
(1) Potential realizable value is calculated from a base stock price equal to
the relevant exercise price of the options.
(2) This option vests as to 25% of the shares on August 1, 1997, as to an
additional 25% of the shares on August 1, 1997 and as to the remaining 50%
of the shares on August 1, 1999. If there is a change in control (as
defined in the 1994 Employee Plan) any stock options which are not then
exercisable become fully exercisable and vested.
(3) The grant of this option is subject to the approval of the shareholders of
the Company at the Annual Meeting of an increase in the number of shares
available under the 1996 Employee Plan. This option vests as to 20% of the
shares each year beginning on October 1, 1997. If there is a change in
control (as defined in the 1996 Employee Plan) any stock options which are
not then exercisable become fully exercisable and vested.
(4) These options vest as to 20% of the shares each year beginning April 8,
1997. If there is a change in control (as defined in the 1996 Employee
Plan) any stock options which are not then exercisable become fully
exercisable and vested.
(5) The grant of this option is subject to the approval of the shareholders of
the Company at the Annual Meeting of an increase in the number of shares
available under the 1996 Employee Plan.
9
<PAGE> 12
CERTAIN TRANSACTIONS
Raymond H. Pirtle, Jr., is a director and shareholder of the Company, is a
managing director and a member of the board of directors of Equitable. Equitable
was one of the underwriters of the Company's initial public offering in February
1996 and second public offering in August 1996. Equitable also acted as broker
in two transactions involving the sale of publicly traded stocks held in the
Company's portfolio.
The Robinson-Humphrey Company, Inc. ("Robinson-Humphrey"), one of the
Company's underwriters, was engaged by the Company as its exclusive placing
agent in connection with the obtaining and placement of the ING Credit Facility.
Robinson-Humphrey has received a fee equal to 0.5% of the aggregate debt
commitment. In addition, Sirrom agreed to indemnify Robinson-Humphrey with
respect to certain matters.
Sirrom, Ltd., a family-owned limited partnership, owned 20% of Harris
Williams that it purchased in 1994 for $500,000. The general partner of Sirrom,
Ltd. is All Scarlet, Inc., a corporation owned equally by John A. Morris, Jr.,
M.D., Chairman of the Company, and Alfred H. Morris, the brother of Dr. Morris.
Sirrom, Ltd. received 170,706 shares of the Company's stock as part of the
acquisition of Harris Williams.
Prior to the conversion of the Company from a limited partnership to a
corporation, employees of the Company including Peter T. Socha, an executive
officer of the Company until December 31, 1996, were granted ownership interests
in the Company. In connection therewith, each such employee executed a
promissory note for the purchase price of such interest that bears interest at
7.25% per annum, payable annually, matures November 1, 2001, and is secured by a
pledge of the Common Stock owned by each such employee. As of the date hereof,
the outstanding principal balance of Mr. Socha's promissory note was $90,587.18.
10
<PAGE> 13
PROPOSAL 2: APPROVAL OF AMENDMENT NO. 1 TO
THE 1996 EMPLOYEE PLAN
The Company's 1996 Employee Plan was originally adopted on February 1,
1996. The 1996 Employee Plan initially authorized for issuance 390,000 shares of
the Company's Common Stock.
The Compensation Committee (the "Committee"), which consists entirely of
directors who are not employees of the Company, reviewed the Company's
stock-based incentive compensation plan and concluded that the number of shares
authorized under the 1996 Plan was insufficient to provide flexibility with
respect to stock-based compensation, or to establish appropriate long-term
incentives to achieve Company objectives. The Committee and the Board believe
that stock-based incentive compensation, particularly through the award of stock
options is a key element of officer and key employee compensation. Stock-based
compensation advances the interests of the Company by encouraging and providing
for the acquisition of equity interests in the Company by officers and key
employees, thereby providing substantial motivation for superior performance and
more fully aligning their interests with shareholders. In order to provide the
Company with greater flexibility to adapt to changing economic and competitive
conditions, and to implement long range goals and expansion plans through
stock-based compensation strategies which will attract and retain those
employees who are important to the long term success of the Company, the Board
proposed the adoption, effective as of September 16, 1996 and subject to
shareholder approval, of an amendment of the 1996 Employee Plan to increase the
number of shares of Common Stock authorized for issuance under the 1996 Employee
Plan by 750,000 shares, or 4.9% of the 15,038,813 shares of Common Stock
outstanding on February 14, 1997. The Committee and Board of Directors believe
that the approval of this amendment is essential to further the long-term
stability and financial success of the Company by attracting, motivating and
retaining qualified employees through the use of stock incentives.
SUMMARY OF MATERIAL PROVISIONS OF THE 1996 EMPLOYEE PLAN
The following is a summary of the material provisions of the 1996 Employee
Plan.
Shares. The Amendment provides that the 1996 Employee Plan be amended to
provide a total of 1,140,000 shares of the Company's Common Stock reserved and
available. Options for the purchase of 834,547 shares are outstanding, of which
options to purchase 444,547 shares are subject to shareholder approval of the
Amendment. Shares awarded under the 1996 Employee Plan may consist, in whole or
in part, of any combination of authorized and unissued shares of Common Stock or
treasury shares. If shares subject to an option under the 1996 Employee Plan
cease to be subject to such option, or if shares awarded under the 1996 Employee
Plan are forfeited, or otherwise terminate without a payment being made to the
participant in the form of Common Stock and without the payment of any dividends
thereon, such shares will again be available for future distribution under the
1996 Employee Plan.
Participation. Awards may be made to key employees and officers of the
Company and its subsidiaries. The number of officers and other key employees
currently eligible for awards pursuant to the 1996 Employee Plan is
approximately forty-three.
Administration. The 1996 Employee Plan is administered by a Committee of no
less than two disinterested individuals appointed by the Board of Directors,
which Committee is currently the Compensation Committee.
Terms of Options. The Committee has the authority to grant stock options
under the 1996 Employee Plan. Incentive stock options ("ISO") and non-qualified
stock options may be granted for such number of shares of Common Stock as the
Committee determines, but subject to the per person limitation on awards. A
stock option will be exercisable at such times and subject to such terms and
conditions as the Committee will
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<PAGE> 14
determine and over a term to be determined by the Committee, which term will be
no more than ten years after the date of grant. The option price for any ISO
will not be less than 100% (110% in the case of certain 10% shareholders) of the
fair market value of the Common Stock as of the date of grant. Shares purchased
upon exercise of options, in whole or in part, must be paid for in cash or by
means of unrestricted shares of Common Stock or any combination thereof. The
Board of Directors may, however, in its discretion and at the grantee's request,
cause the Company to lend to the grantee up to an amount equal to the exercise
price of the option or portion thereon then sought to be exercised. No such loan
may have a term of more than ten years, must be fully secured at all times by
collateral that may include securities issued by the Company, and must bear
interest at a rate at least equal to the higher of the then applicable federal
rate under the Internal Revenue Code (the "Code") or the then prevailing rate
applicable to 90-day U.S. Treasury bills.
Under the current 1996 Employee Plan, no option is assignable or
transferable, other than by will or by the laws of descent and distribution.
During the lifetime of an optionee, an option is exercisable only by such
optionee. Recent changes in federal income tax laws permit the transferability
of options to family members (or trusts established for the benefit of family
members), which provide the potential for estate and gift tax savings. Under the
proposed Amendment to the 1996 Employee Plan, the Compensation Committee would
be provided the discretion to permit the transfer of options to take advantage
of these developments.
The expiration date of an option will be determined by the Committee at the
time of the grant, but in no event will an option be exercisable after the
expiration of 10 years from the date of grant. An option may be exercised at any
time or from time to time or only after a period of time or in installments, as
the Committee determines; provided, however, options granted to officers of the
Company shall not be exercisable until after the expiration of a period of at
least six months following the date of grant. Upon termination of an option
holder's employment for Cause (as defined in the 1996 Employee Plan), such
employee's stock options will terminate. If employment is involuntarily
terminated without Cause, stock options will be exercisable, to the extent
already exercisable, for three months following termination or until the end of
the option period, whichever is shorter. On the employee's retirement, stock
options will be exercisable, to the extent already exercisable, within the
lesser of the remainder of the option period or three months from the date of
retirement. Upon death or disability of an employee, stock options will be
exercisable, to the extent already exercisable, by the deceased employee's
representative within the lesser of the remainder of the option period or one
year from the date of the employee's death or disability.
Change in Control Provisions. In the event of a dissolution or liquidation
of the Company, a sale of all or substantially all of the assets of the Company,
a merger or share exchange in which the Company is not the surviving
corporation, other capital reorganization in which more than 50% of the shares
of the Company entitled to vote are exchanged or such other corporate
reorganization as may be described by the Committee, any outstanding options
under the 1996 Employee Plan shall be immediately fully exercisable by an
optionee.
Amendment. The 1996 Employee Plan may be amended by the Board of Directors,
except that the Board of Directors may not, without the approval of the
Company's shareholders, increase the total number of shares reserved for the
purposes of the 1996 Employee Plan, materially increase the benefits accruing to
participants under the 1996 Employee Plan, or materially modify the requirements
as to eligibility for participation in the 1996 Employee Plan.
Adjustment. In the case of a stock split, stock dividend, reclassification,
recapitalization, merger, reorganization, or other changes in the Company's
structure affecting the Common Stock, appropriate adjustments will be made by
the Committee, in its sole discretion, in the number of shares reserved under
the 1996 Employee Plan and in the number of shares covered by options and other
awards then outstanding under the 1996 Employee Plan and, where applicable, the
exercise price for awards under the 1996 Employee Plan.
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<PAGE> 15
Federal Income Tax Aspects with Respect to Stock Options. The following
is a brief summary of the Federal income tax aspects of stock options granted
under the 1996 Employee Plan based upon the Federal income tax laws in effect on
the date hereof. This summary is not intended to be exhaustive and does not
describe state or local tax consequences.
1 . ISOs. No taxable income is realized by the participant upon the
grant or exercise of an ISO. If Common Stock is issued to a participant
pursuant to the exercise of an ISO, and if no disqualifying disposition
of the shares is made by the participant within two years of the date of
grant or within one year after the transfer of the shares to the
participant, then: (i) upon the sale of the shares, any amount realized
in excess of the option price will be taxed to the participant as a
long-term capital gain, and any loss sustained will be a capital loss,
and (ii) no deduction will be allowed to the Company for Federal income
tax purposes. The exercise of an ISO will give rise to an item of tax
preference that may result in an alternative minimum tax liability for
the participant unless the participant makes a disqualifying disposition
of the shares received upon exercise.
If Common Stock acquired upon the exercise of an ISO is disposed of
prior to the expiration of the holding periods described above, then
generally: (i) the participant will realize ordinary income in the year
of disposition in an amount equal to the excess, if any, of the fair
market value of the shares at exercise (or, if less, the amount realized
on the disposition of the shares) over the option price paid for such
shares, and (ii) the Company will be entitled to deduct any such
recognized amount. Any further gain or loss realized by the participant
will be taxed as short-term or long-term capital gain or loss, as the
case may be, and will not result in any deduction by the Company.
Subject to certain exceptions for disability or death, if an ISO is
exercised more than three months following the termination of the
participant's employment, the option will generally be taxed as a
non-qualified stock option.
2 . Non-qualified Stock Options. With respect to non-qualified stock
options: (i) no income is realized by the participant at the time the
option is granted; (ii) generally upon exercise of the option, the
participant realizes ordinary income in an amount equal to the difference
between the option price paid for the shares and the fair market value of
the shares on the date of exercise and the Company will be entitled to a
tax deduction in the same amount; and (iii) at disposition, any
appreciation (or depreciation) after date of exercise is treated either
as short-term or long-term capital gain or loss, depending upon the
length of time that the participant has held the shares.
1996 EMPLOYEE PLAN BENEFITS
The table below sets forth benefits to be received by the persons listed
therein in the event the Amendment increasing the number of shares available for
grant is approved by the shareholders.
<TABLE>
<CAPTION>
NUMBER OF SHARES EXERCISE PRICE VALUE OF
NAME AND POSITION SUBJECT TO OPTION PER SHARE OPTIONS
- -------------------------------------------- ----------------- -------------- ----------
<S> <C> <C> <C>
George M. Miller, II, 224,115 $30 $1,568,805
President and Chief Executive Officer
David M. Resha, --- --- ---
Chief Operating Officer
Carl W. Stratton, 25,000 31 3/4 131,250
Chief Financial Officer
Executive Officers, as a group (4 persons) 249,115 30 - 31 3/4 1,700,055
</TABLE>
13
<PAGE> 16
<TABLE>
<CAPTION>
NUMBER OF SHARES EXERCISE PRICE VALUE OF
NAME AND POSITION SUBJECT TO OPTION PER SHARE OPTIONS
- -------------------------------------------- ----------------- -------------- ----------
<S> <C> <C> <C>
Non-executive officer/employees, as a group 201,500 26 1/3 - 35 3/4 698,960
(11 persons)
All non-executive officer directors, as a group N/A N/A N/A
</TABLE>
- --------------------------------------
(1) For purposes of this table, the value of each option equals the number of
shares issuable pursuant to such option multiplied by the amount, if any,
that the closing market price of a share of Common Stock on February 14,
1997 ($37) exceeds the option's exercise price. None of these options is
presently exercisable, except options with respect to 11,000 shares.
CONCLUSION AND RECOMMENDATION
The Board of Directors believes it is in the best interests of the Company
and its shareholders to adopt Amendment No. 1 to the 1996 Employee Plan which
increases the number of shares available for grant thereunder, to help attract
and retain key persons of outstanding competence and to further align their
interests with those of the Company's shareholders.
A majority of the votes of all shares present, represented and entitled to
vote is necessary for approval of this proposal. THE BOARD OF DIRECTORS
RECOMMENDS A VOTE FOR APPROVAL OF AMENDMENT NO. 1 TO THE 1996 EMPLOYEE PLAN.
PROPOSAL 3: RATIFICATION OF SELECTION OF AUDITORS
Arthur Andersen LLP has served as independent public accountants for the
Company since 1993 and has been selected to serve in such capacity for the year
ending December 31, 1997, by all of those members of the Board of Directors who
are not "interested persons" of the Company, as defined in the Investment
Company Act of 1940. This selection is subject to ratification or rejection by
the shareholders of the Company. Arthur Andersen LLP has no financial interest
in the Company. A representative of Arthur Andersen LLP is expected to be
present at the Annual Meeting, will have an opportunity to make a statement if
he or she so desires and is expected to be available to respond to appropriate
questions. THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION OF ARTHUR
ANDERSEN LLP AS INDEPENDENT PUBLIC ACCOUNTANTS TO THE COMPANY.
SECTION 16(A) BENEFICIAL
OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 and the disclosure
requirements of Item 405 of Regulation S-K require the directors and executive
officers of the Company, and any persons holding more than 10% of any class of
equity securities of the Company, to report their ownership of such equity
securities and any subsequent changes in that ownership to the Securities and
Exchange Commission, The Nasdaq National Market and the Company. Based solely on
a review of the written statements and copies of such reports furnished to the
Company by its executive officers, directors and greater than 10% beneficial
owners, the Company believes that during fiscal 1996 all Section 16(a) filing
requirements applicable to its executive officers, directors and stockholders
were timely satisfied, except one transaction by Dr. Morris that was corrected
by a timely filing of a Form 5.
PROPOSALS OF SHAREHOLDERS
Any proposal intended to be presented for action at the 1998 Annual Meeting
of Shareholders by any shareholder of the Company must be received by the
Secretary of the Company not later than November 5, 1997 in order for such
proposal to be considered for inclusion in the Company's Proxy Statement and
proxy relating to its 1998 Annual Meeting of Shareholders. Nothing in this
paragraph shall be deemed to require the
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<PAGE> 17
Company to include any shareholder proposal which does not meet all the
requirements for such inclusion established by the Securities and Exchange
Commission in effect at that time.
METHOD OF COUNTING VOTES
Unless a contrary choice is indicated, all duly executed proxies will be
voted in accordance with the instructions set forth on the back side of the
proxy card. Abstentions and "non-votes" will be counted as present only for
purposes of determining a quorum. Abstentions are treated as votes against the
proposals presented to the shareholders other than the election of directors.
Because directors are elected by a plurality of the votes cast, abstentions are
not considered in the election. A "non-vote" occurs when a nominee holding
shares on behalf of a beneficial owner votes on one proposal but does not vote
on another proposal because the nominee does not have discretionary voting power
and has not received instructions from the beneficial owner.
FINANCIAL STATEMENTS AVAILABLE
A copy of the Company's 1997 Annual Report containing audited financial
statements accompanies this Proxy Statement. The Annual Report does not
constitute a part of the proxy solicitation material.
UPON WRITTEN REQUEST TO MARIA-LISA CALDWELL, SECRETARY, SIRROM CAPITAL
CORPORATION, 500 CHURCH STREET, SUITE 200, NASHVILLE, TENNESSEE 37219, THE
COMPANY WILL PROVIDE, WITHOUT CHARGE, COPIES OF THE COMPANY'S ANNUAL REPORT ON
FORM 10-K.
BY ORDER OF THE BOARD OF DIRECTORS,
Maria-Lisa Caldwell
Secretary
March 5, 1997
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<PAGE> 18
AMENDMENT NO. 1 TO
1996 INCENTIVE STOCK OPTION PLAN
WHEREAS, the Board of Directors of Sirrom Capital Corporation has
approved certain amendments to the 1996 Incentive Stock Option Plan ("Plan"),
pursuant to resolutions of the Board of Directors approved as of February 28,
1997; and
WHEREAS, this Amendment No. 1 shall serve to evidence such amendments.
1. The first sentence of Section 3(a) of the Plan shall be modified to
read in its entirety as follows:
"(a) Shares of Common Stock Reserved Under the Plan. The aggregate
number of shares reserved and available for distribution under the Plan
shall be 1,140,000 shares."
2. Section 5(b)(vi) of the Plan shall be amended to include the
following sentence at the end thereof:
"Notwithstanding the foregoing, the Committee shall have the
authority to permit transfer of options to family members or trusts
established for the benefit of family members in accordance with
federal income tax laws."
<PAGE> 19
Appendix A
PROXY
SIRROM CAPITAL CORPORATION
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS FOR THE ANNUAL MEETING OF
SHAREHOLDERS OF SIRROM CAPITAL CORPORATION (THE "COMPANY") TO BE HELD ON APRIL
4, 1997.
The undersigned hereby appoints George M. Miller, II, and Carl W. Stratton,
and each of them, as proxies, with full power of substitution, to vote all
shares of the undersigned as shown below on this proxy at the Annual Meeting of
Shareholders of the Company to be held at The Hermitage Suite Hotel, 231 6th
Avenue, Nashville, Tennessee, on Friday, April 4, 1997, at 8:00 a.m., local
time, and any adjournment thereof.
<TABLE>
<S> <C> <C> <C> <C> <C>
(1) Election of Directors:
[ ] FOR all of the following director nominees (except as
indicated to the contrary below):
E. Townes Duncan William D. Eberle Edward J. Mathias Robert A. McCabe, Jr. George M. Miller, II
John A. Morris, Jr. Raymond A. Pirtle, Jr. Keith M. Thompson Christopher H. Williams L. Edward Wilson
AGAINST the following nominees (please print name or names):
----------------------------------------------------------
WITHHOLD AUTHORITY (ABSTAIN) to vote for the following nominees (please print name or names):
---------------------------
[ ] AGAINST all nominees. [ ] WITHHOLD AUTHORITY (ABSTAIN) to vote for all nominees.
(2) Approval of Amendment No. 1 to the Company's 1996 Incentive Stock Option Plan (the "1996 Plan"):
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(3) Ratification of appointment of accountants:
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(4) In their discretion on any matter that may properly come before said meeting or any adjournment thereof.
(PLEASE DATE AND SIGN THIS PROXY ON THE REVERSE SIDE.)
</TABLE>
Your shares will be voted in accordance with your instructions. If no choice
is specified, shares will be voted FOR the election of all ten nominees, FOR the
approval of Amendment No. 1 to the 1996 Plan, and FOR the ratification of
accountants.
PLEASE SIGN HERE AND RETURN
PROMPTLY
-------------------------------
-------------------------------
Date: , 1997
--------------------
Please sign exactly as your
name appears on your stock
certificate. If registered in
the names of two or more
persons, each should sign.
Executors, administrators,
trustees, guardians, attorneys,
and corporate officers should
show their full titles.
------------------------------------------------------------
If you have changed your address, please PRINT your new address on this line.
