SIRROM CAPITAL CORP, DEF 14A, 1998-03-13

SIRROM CAPITAL CORP
DEF 14A, 1998-03-13
LOAN BROKERS

Previous: BRYLANE INC, SC 14F1, 1998-03-13

Next: STORAGE COMPUTER CORP, 10KSB, 1998-03-13

<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

|X| Filed by the Registrant
|_| Filed by a Party other than the Registrant

Check the appropriate box:
|_| Preliminary Proxy Statement |_| Confidential, For Use of the
|X| Definitive Proxy Statement Commission Only (as permitted
|_| Definitive Additional Materials by Rule 14a-6(e)(2))
|_| Soliciting Material Pursuant to
Rule 14-a 11(c) or Rule 14a-12

SIRROM CAPITAL CORPORATION
(Name of Registrant as Specified in its Charter)
----------------------------------------------------------------------------

(Name of Person(s) filing Proxy Statement if other than Registrant)
----------------------------------------------------------------------------

Payment of Filing Fee (Check the appropriate box):

|X| No Fee Required

|_| Fee computed on table below per Exchange Act Rule 14a-6(i)(1) and 0-11.

(1) Title of each class of securities to which transaction applies:

(2) Aggregate number of securities to which transaction applies:

(3) Per unit price or other underlying value 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 17, 1998

To our 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 Loews Vanderbilt Plaza
Hotel, 2100 West End Avenue, Nashville, Tennessee, on Friday, April 17, 1998, at
7:30 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 approve the adoption of an amendment to the Company's 1995 Stock
Option Plan for Non-Employee Directors providing for the automatic
issuance of stock options for Non-Employee Directors upon their
re-election to the Board of Directors and increasing the number of
shares available for grant thereunder;

4. To approve the adoption of an amendment the Company's Amended and
Restated Charter increasing the number of authorized number of shares
of Common Stock to 75,000,000;

5. To approve the adoption of an amendment to the Company's fundamental
investment policies necessitated by the growth of the Company's public
company securities portfolio;

6. To ratify the selection of Arthur Andersen LLP to serve as independent
public accountants for the Company for the year ending December 31,
1998; and

7. 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 26, 1998, 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 13, 1998

<PAGE> 3

SIRROM CAPITAL CORPORATION
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 17, 1998

--------------------------

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 1998 Annual Meeting of Shareholders (the "Annual
Meeting") to be held on April 17, 1998, 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, 1997, are first being sent to shareholders on or about March 13, 1998. 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, FOR the approval of the adoption of the amendment to the Company's
1995 Stock Option Plan for Non Employee Directors (the "Director Plan")
providing for the automatic issuance of certain stock options to Non-Employee
Directors and increasing the number of shares available for grant thereunder,
FOR the approval of the adoption of an amendment to the Company's Amended and
Restated Charter (the "Charter") increasing the authorized number of shares of
Common Stock to 75,000,000, FOR the approval of the adoption of the amendment to
the Company's fundamental investment policies necessitated by the growth of the
Company's public company securities portfolio, and FOR the ratification of
Arthur Andersen LLP as the independent public 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 26, 1998 (the "Record Date"), and on such
date the Company had issued and outstanding 31,094,708 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.

<PAGE> 4

SECURITY OWNERSHIP OF MANAGEMENT
AND CERTAIN BENEFICIAL OWNERS

The following table sets forth, as of February 26, 1998, 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 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>
E. Townes Duncan 24,400 *
Solidus, LLC
30 Burton Hills Boulevard, Suite 100
Nashville, TN 37215

William D. Eberle 27,000 *
13 Garland Road
Concord, MA 01742

H. Hiter Harris, III 672,958 2.2%
Harris Williams & Co.
1313 E. Main Street, Suite 300
Richmond, VA 23219

Edward J. Mathias 158,660(2) *
The Carlyle Group
1001 Pennsylvania Avenue, NW
Suite 220 S
Washington, DC 20004

Robert A. McCabe, Jr. 12,600 *
First American Trust Company
800 First American Center
Nashville, TN 37238

George M. Miller, II 1,859,543(3) 5.7
500 Church Street, Suite 200
Nashville, TN 37219

John A. Morris, Jr., M.D. 4,786,408(4) 15.4
243 Medical Center South
2100 Pierce Avenue
Nashville, TN 37212

Pilgrim Baxter & Associates, Ltd. 2,067,200(5) 6.6
11255 Drummers Lane, Suite 300
Wayne, PA 19087

Raymond H. Pirtle, Jr. 74,006 *
SunTrust Equitable Securities
900 Nashville City Center
Nashville, TN 37219
</TABLE>

<PAGE> 5

<TABLE>
<CAPTION>
NAME AND ADDRESS Amount and Nature of
OF BENEFICIAL OWNER Beneficial Ownership Percent of Class (1)
------------------- -------------------- --------------------
<S> <C>
Provident Investment Counsel, Inc. 1,567,174(6) 5.0%
300 N. Lake Avenue, Suite 1001
Pasadena, CA 91101

Putnam Investments, Inc. 3,149,342(7) 10.1
One Post Office Square
Boston, MA 02109

David M. Resha 280,200(8) *
1614 Stop Thirty Road
Hendersonville, TN 37075

Carl W. Stratton 230,400(9) *
3331 Golf Club Lane
Nashville, TN 37215

Keith M. Thompson 13,000 *
Republic Automotive Parts
500 Wilson Pike Circle, Suite 115
Brentwood, TN 37027

Christopher H. Williams 669,958 2.2
Harris Williams & Co.
1313 E. Main Street, Suite 300
Richmond, VA 23219

L. Edward Wilson 129,928(10) *
L. Edward Wilson & Associates
500 Church Street, Suite 200
Nashville, TN 37219

Sirrom Partners, L.P. 4,070,296 13.1
500 Church Street, Suite 200
Nashville, TN 37219

Executive officers and directors, as a 9,031,680(11) 25.8
group (13 persons)
</TABLE>

- ------------------------
* Less than one percent.
(1) Pursuant to the rules of the Securities and Exchange Commission (the
"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 26, 1998 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 66,330 shares owned by Mr. Mathias' spouse and 2,000 shares
owned by his daughter.
(3) Includes 1,461,094 shares issuable pursuant to certain stock options
granted to Mr. Miller. An option for the purchase of 225,000 shares
becomes exercisable as to 25% of the shares on August 1, 1998 and as to
the remaining shares on August 1, 1999. An option for the purchase of
91,146 shares vests as to 20% of the shares on December 15, 1997 and each
December 15th thereafter. An option for the purchase of 59,146 shares
vests as to 20% of the shares on February 1, 1998 and each February 1st
thereafter. An option for the purchase of 37,572 shares is vested as to
5,572 shares and vests as to an additional 20% of the unvested shares on
February 1, 1997 and each February 1st thereafter. An option for 448,230
shares vests as to 20% of the shares on October 1, 1997 and each October
1st thereafter. An option for the purchase of 600,000 shares vests 20% a
year beginning October 10, 1998 and is subject to shareholder approval of
an increase in the number of shares issuable under the 1996 Employee
Plan. This number also includes 190,830 shares held by three trusts
established for the benefit of Mr. Miller's children. Mr. Miller's spouse
is the trustee of these trusts.

<PAGE> 6

(4) Includes 4,070,296 shares are owned of record by Sirrom Partners, L.P., a
limited partnership owned by Dr. Morris and his family, and 716,112
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.
(5) 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 Commission.
(6) This information is based on the information included in Schedule 13G
filed with the Commission by Provident Investment Counsel, Inc. on
December 11, 1997.
(7) All of these shares are not beneficially owned by Putnam Investments,
Inc., but it or its subsidiaries may exercise investment discretion with
respect to such shares. This information is based on the information
included in the Schedule 13G filed with the Commission by Putnam
Investments, Inc. on January 27, 1998.
(8) Includes 230,000 shares issuable pursuant to an option granted to Mr.
Resha that is vested as to 80,000 shares and that vests as to an
additional 50,000 shares each year beginning July 5, 1998 and 50,000
shares issuable pursuant to an option granted to Mr. Resha that vests 20%
a year beginning July 5, 1996, which is subject to shareholder approval
of an increase in the number of shares issuable under the 1996 Employee
Plan.
(9) Includes 100,000 shares issuable pursuant to an option granted to Mr.
Stratton that vest as to 20% of the shares each year beginning April 8,
1997 and 130,000 shares issuable pursuant to three options that vest as
to 20% of the shares each year beginning October 1, 1996, which is
subject to shareholder approval of an increase in the number of shares
issuable under the 1996 Employee Plan.
(10) Includes 75,328 shares owned by the L.E. and Mary Lou Wilson Revocable
Living Trust, of which Mr. Wilson is a trustee, and 1,600 shares owned by
Mr. Wilson's wife. This amount does not include 8,400 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 (3), (8) and (9).

PROPOSAL 1: ELECTION OF DIRECTORS

The Company's directors are elected at each annual meeting of
shareholders. 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. 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
its, 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 26, 1998, 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, 51, is Chairman of the Board and co-founded the Company in
1991 August 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. Dr. Morris is also a director of American Retirement Corporation.
</TABLE>

<PAGE> 7

<TABLE>
<CAPTION>
NAME AND YEAR FIRST
ELECTED DIRECTOR BACKGROUND INFORMATION
- ------------------------------- -----------------------------------------------------------------------------------------
<S> <C>
George M. Miller, II* Mr. Miller, 38, 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 SunTrust Equitable Securities
Corporation ("SunTrust 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 at Chapel Hill and a Bachelor
of Science degree from the University of Tennessee.

E. Townes Duncan Mr. Duncan, 44, 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 ten states, Corporate Family
Solutions, Inc., an operator of employer sponsored child care centers, and Continental
Circuits, Inc., a manufacture of printed circuit boards.

William D. Eberle Mr. Eberle, 74, is chairman of Manchester Associates, Ltd., a venture capital
1994 and 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 Showscan Entertainment, Inc., a movie-based software and
technology 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 part distributor headquartered in Nashville. Barry's Jewelry filed a petition for
Chapter 11 protection on May 11, 1997. Mr. Eberle is also the Vice Chairman of the U.S.
Council of the International Chamber of Commerce.

Edward J. Mathias Mr. Mathias, 56, 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, USA Floral Products, a consolidator of floral wholesalers and importers, and The
Fortress Group, residential builders.
</TABLE>

<PAGE> 8

Robert A. McCabe, Jr. Mr. McCabe, 47, 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 of 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, 56, is a managing director and a member of the Board of Directors
1991 of SunTrust Equitable, having joined the firm in February 1989. Prior to that
date, Mr. Pirtle was a general partner of J.C. Bradford & Co. Mr. Pirtle also
serves as a director of Premiere Technologies, Inc., a telecommunications
company.

Keith M. Thompson Mr. Thompson, 57, has been the President and Chief Executive Officer of
1997 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, 35, co-founded Harris Williams & Co. ("Harris Williams") in
1997 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, 53, is president of L. Edward Wilson and Associates, Inc., a
1993 management consulting firm providing services to individuals and companies
with interests in engineering and construction related businesses which he
founded in May 1997. Prior to that, Mr. Wilson was a partner in Sirrom
Resource Funding, L.P. ("SRF"), a privately owned partnership providing
capital to environmental service firms. 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., a
public traded environmental services company that acquired the EDGe Group,
which Mr. Wilson co-founded.
</TABLE>

- --------------------------------

* "Interested Person" as defined in Section 2(a)(19) of the Investment
Company Act of 1940, as amended.

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

<PAGE> 9

the Company, and reviews the Company's loan underwriting and asset
valuation procedures. 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., L. Edward Wilson, and Keith M. Thompson.

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 4 formal meetings during fiscal 1997. The
Compensation Committee held 2 formal meetings during fiscal 1997 and the Audit
Committee held 4 meetings during fiscal 1997. 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 1997, each non-employee director received a fee of $10,000 if they
attended 75% of the meetings held by the Company's Board of Directors and each
separate committee upon which they served. The following table sets forth
certain details of compensation paid to directors during 1997, as well as to
each of the Company's three most highly compensated executive officers (the
"Compensated Persons"). 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 $310,451 $500,000(1) 600,000
Executive Officer
David M. Resha, Chief Operating Officer 150,000 175,000(1) 50,000
Carl W. Stratton, Chief Financial Officer 113,750 150,000(1) 80,000

DIRECTOR FEES
E. Townes Duncan, Director $10,000 ---
William D. Eberle, Director 10,000 ---
Robert A. McCabe, Jr., Director 10,000 ---
Edward J. Mathias, Director 10,000 ---
</TABLE>

<PAGE> 10

<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
----------------------------------
Aggregate
NAME AND POSITION Compensation from the Company Securities Underlying Options(#)
- ----------------------------------------------- ------------------------------------ ----------------------------------
<S> <C> <C>
John A. Morris, Jr., Director 10,000 ---
Raymond H. Pirtle, Jr., Director 10,000 ---
Keith M. Thompson , Director 10,000 12,000
L. Edward Wilson, Director 10,000 ---
</TABLE>

- ----------------------------
(1) These amounts represent 1997 bonuses paid on January 2, 1998.

OPTIONS GRANTED IN LAST FISCAL YEAR

The following table summarizes certain information regarding stock
options granted to the Compensated Persons during fiscal 1997. 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
INDIVIDUAL GRANTS APPRECIATION FOR OPTION TERM(1)
------------------------------------------------------------- ------------------------------------
Number of % of Total Exercise
Securities Options Granted or Base
Underlying Options to Employees in Price Expiration
Name Granted (#) Fiscal Year ($/sh) Date 5%($) 10%($)
- ---- ----------- ----------- ------ ---- ----- ------
<S> <C> <C> <C> <C> <C> <C>
George M. Miller, II 600,000(2) 19.0% $23.88 10/10/07 $9,008,916 $22,830,361
David M. Resha 50,000(3) 1.6% 17.00 8/15/07 534,560 1,354,681
Carl W. Stratton 30,000(4) 1.0% 13.97 4/03/07 263,546 667,878
50,000(4)(5) 1.6% 18.75 9/02/07 589,589 1,494,134
</TABLE>

- -----------------

(1) Potential realizable value is calculated from a base stock price equal to
the relevant exercise price of the options.
(2) 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 10, 1998. If there is a
change in control (as defined in the 1996 Employee Plan) any stock
options that 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. These options vest as to
20% of the shares each year beginning July 5, 1996. If there is a change
in control (as defined in the 1996 Employee Plan) any stock options that
are not then exercisable become fully exercisable and vested.
(4) These options vest as to 20% of the shares each year beginning October 1,
1996. If there is a change in control (as defined in the 1996 Employee
Plan) any stock options that 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.

CERTAIN TRANSACTIONS

Raymond H. Pirtle, Jr., a director and shareholder of the Company, is a
managing director and a member of the board of directors of SunTrust Equitable.
SunTrust Equitable was one of the underwriters of the Company's public offering
in February 1997. SunTrust Equitable also from time to time acts as a
broker-dealer in transactions involving the sale of publicly traded stocks held
in the Company's portfolio.

<PAGE> 11

Prior to the conversion of the Company from a limited partnership to a
corporation in February 1995, employees of the Company, including John Harrison
and Jennifer K. Waugh, 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 such promissory note is as follows: Mr. Harrison,
$440,142.16 and Ms. Waugh, $107,678.51.

L. Edward Wilson, a director and shareholder of the Company, has entered
into a consulting arrangement with the Company pursuant to which he is paid
$75,000 for the business analysis and technical due diligence services he
provides with respect to potential portfolio companies and workout situations.

George M. Miller, II, President, Chief Executive Officer and director of
the Company, has entered into an aircraft lease agreement with the Company
pursuant to which he leases an aircraft to the Company for $17,000 a month. The
aircraft lease is terminable by either party on 90 days notice.

PROPOSAL 2: APPROVAL OF AMENDMENT NO. 2 TO
THE 1996 EMPLOYEE PLAN

In order to provide the Company with greater flexibility to adapt to
changing economic and competitive conditions and to attract and retain the
individual talent necessary for the implementation of long range financial goals
and expansion plans, the Company adopted the 1996 Employee Plan on February 1,
1996, which was subsequently approved by the Company's shareholders. At the time
the 1996 Employee Plan was adopted, the Company had 14 employees. Since that
time the Company's total assets have increased from approximately $180.0 million
to approximately $510.0 million, annual pretax operating income has increased
from approximately $9.0 million to $33.0 million dollars and annual pretax
operating income per share has increased from approximately $.55 per share to
$1.04 per share. This tremendous growth was fueled by the addition of 13
portfolio managers and created the need for additional management and
administrative staff. In addition, the Company acquired Harris Williams, its
merger and acquisition advisory services boutique, following the adoption of the
1996 Employee Plan. As a result, the number of employees employed by the Company
from early 1996 to early 1998 increased from approximately 14 to 76 (including
26 employees of Harris Williams that are eligible to participate under the 1996
Employee Plan).

The Company's Board of Directors and its Compensation Committee (the
"Committee"), which consists entirely of directors who are not employees of the
Company, believe that stock-based incentive compensation, particularly 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 the interests of the
shareholders. The dramatic increase in the number of employees, and more
particularly executives and portfolio managers who are essential to the
continued growth and success of the Company, necessitated an increase in the
number of shares authorized for issuance under the 1996 Employee Plan. There are
presently 2,280,000 shares reserved for issuance under the Plan. However, in
connection with the significant hiring effort the Company has recently
completed, the Company granted options with respect to 4,527,098 shares, of
which options to purchase 2,247,098 shares are subject to shareholder approval
of an increase in the shares available for grant under the 1996 Employee Plan.
The Board proposes the adoption of an amendment (the "Employee Plan Amendment")
to the 1996 Employee Plan to increase the number of shares of Common Stock
authorized for issuance by 3,427,098 shares, 11% of the 31,094,708 shares of
Common Stock outstanding on February 26, 1998. The increase in shares issuable
under the 1996 Employee Plan would cover the conditional options previously
granted and provide an additional 1,180,000 shares for issuance to future
employees. The Committee and Board of Directors believe that the approval of the
Employee Plan Amendment is essential to the long-term stability and financial
success of the Company as the current labor market requires stock-based
compensation to attract, motivate and retain qualified employees.

<PAGE> 12

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 total number of shares of Common Stock available for issuance
under options granted pursuant to the 1996 Employee Plan is 2,280,000. Options
for the purchase of 4,527,098 shares are outstanding, of which options to
purchase 2,247,098 shares are subject to shareholder approval of the Employee
Plan Amendment. If the Employee Plan Amendment is approved, then the number of
shares of Common Stock available for issuance will be 5,707,098 shares. 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 74.

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 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 or
with the permission of the Committee, options may be transferred to family
members (or trusts established for the benefit of family members) for estate
planning and gift tax purposes.

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

<PAGE> 13

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.

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

<PAGE> 14

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.

NEW PLAN BENEFITS 1996 EMPLOYEE PLAN

<TABLE>
<CAPTION>
NUMBER OF SHARES EXERCISE PRICE VALUE OF
NAME AND POSITION SUBJECT TO OPTION PER SHARE OPTIONS(1)
- -------------------------------------------- -------------------------- ------------------------ ------------------
<S> <C> <C> <C>
George M. Miller, II, 600,000 $23.85 $1,440,000
President and Chief Executive Officer
David M. Resha, 50,000 17.00 462,500
Chief Operating Officer
Carl W. Stratton, 50,000 18.75 375,000
Chief Financial Officer
Executive Officers, as a group (3 persons) 700,000 17.00 - 23.85 2,277,500
Non-executive officer/employees, as a group 1,547,098 13.97 - 23.06 13,977,225
(71 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 26,
1998 ($26.25) exceeds the option's exercise price.

CONCLUSION AND RECOMMENDATION

The Board of Directors believes it is in the best interests of the
Company and its shareholders to adopt the Employee Plan Amendment, 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 THE EMPLOYEE PLAN AMENDMENT.

PROPOSAL 3: APPROVAL OF AMENDMENT NO. 1 TO THE
DIRECTOR PLAN

In order to retain and attract highly qualified directors, and to insure
close identification of interests between non-employee directors and the
Company's shareholders, the Company's Board of Directors adopted the Director
Plan on June 9, 1995, which provides for the automatic grant of options to
directors of the Company that are not employees or officers of the Company other
than John A. Morris, Jr., M.D. ("Non-Employee Directors") upon their election to
the Board. The Company obtained an exemptive order from the Commission approving
the Director Plan on January 11, 1996, and the Director Plan was approved by the
Company's shareholders on April 19, 1996. The Director Plan initially authorized
the issuance of up to 228,000 shares of the Company's Common Stock. In order to
provide the Company with greater flexibility to adapt to changing economic and
competitive conditions and to attract and retain directors who are important to
the long term success of the

<PAGE> 15

Company, the Board proposed the adoption of certain amendments to the Director
Plan (the "Director Plan Amendment"). The Director Plan Amendment provides for
the automatic grant of an option to purchase 4,000 shares of the Company's
Common Stock at the current market value on the date of grant of such option to
each Non-Employee Director upon such Non-Employee Director's re-election to the
Board ("Re-Election Options"). The Director Plan Amendment also provides that
the Re-Election Options are to be granted to the Non-Employee Directors
re-elected in 1997 and to Non-Employee Directors re-elected in the future,
commencing with the annual meeting of shareholders of the Company in 1998. Since
the Re-Election Options will be automatic grants throughout the term of the
Director Plan, the Plan Amendment also includes an increase in the number of
shares of Common Stock issuable under the Director Plan by 264,000 to 492,000
shares to ensure that a sufficient number of shares are reserved for future
automatic grants.

The Board's approval of the Director Plan Amendment was based on the
recommendation of the directors of the Company who are ineligible to participate
in the Director Plan (the "Director Plan Committee") that Non-Employee Director
compensation be increased from $1,000 for each Board or committee meeting
attended (which equated to $4,000 per year) to $10,000 per year if a director
attends 75% of the meetings of the Board for the year and that each Non-Employee
Director receive an option to purchase 4,000 shares of the Company's Common
Stock upon re-election to the Board of Directors. That recommendation was made
following an analysis of the compensation of outside directors of public
companies comparable to the Company headquartered in the geographical region
where the Company's headquarters is located. The Director Plan Committee
concluded that, in order for the Company to attract and retain Non-Employee
Directors of the quality necessary to provide the Company with guidance that
would contribute to increasing shareholder value, the increase in cash
compensation and the issuance of the Re-election Options were necessary and
appropriate. In order to provide a sufficient number of shares of Common Stock
for issuance under the Plan upon exercise of Re-election Options as well as
options granted to Non-Employee Directors who join the Board in the future, the
Director Plan Committee determined that it would be appropriate to increase the
number of shares of Common Stock issuable under the Director Plan by 264,000
shares. That amount, when added to the 48,000 shares reserved for issuance under
the Director Plan, but as to which options have not yet been granted, would
provide shares to cover the grant of (i) Re-election Options for seven
Non-Employee Directors (the current number of such directors) with respect to
annual elections of directors through April 2006, the month of termination of
the Director Plan and (ii) options available for granting to up to three
additional Non-Employee Directors upon their joining the Board.

The Director Plan Amendment was approved by the Board of Directors on
December 19, 1997, to become effective on the later of (i) the date of approval
of the Director Plan Amendment by the shareholders of the Company and (ii) the
date of approval of the Director Plan Amendment by the Commission. An
application for an exemption has already been filed with the Commission. The
Board of Directors approved the aforesaid cash compensation increase for
Non-Employee Directors on April 17, 1997 effective for 1997.

SUMMARY OF MATERIAL PROVISIONS OF THE DIRECTOR PLAN

The following is a summary of the material provisions of the Director
Plan.

Shares. The total number of shares of Common Stock available for issuance
under options granted pursuant to the Director Plan is currently 228,000 shares,
of which options for the purchase of 180,000 shares have been granted. If the
Director Plan Amendment is approved, then the number of shares of Common Stock
available for issuance will be 492,000 shares.

Participation. All directors of the Company who are neither full-time
employees of the Company nor officers of the Company, except John A. Morris,
Jr., M.D., participate in the Director Plan. There are currently seven directors
eligible for awards under the Director Plan.

Administration. The Director Plan is administered by a committee of the
Company's Board of Directors comprised of those directors that are not eligible
to participate under the Director Plan. The committee is presently comprised of
John A. Morris, Jr., M.D., George A. Miller, II, and Christopher H. Williams.

<PAGE> 16

Option Terms. The option exercise price under the Director Plan will be
equal to 100% of the Current Market Value (as defined in the Director Plan) of
the Common Stock on the date of the option grant. Options shall vest one year
after the date of grant. The option exercise price may be paid in cash, shares
of Common Stock, or a combination of cash and shares. All options granted to
non-employee directors are nontransferable, other than by will or the laws of
descent and distribution, and each option is exercisable, during the lifetime of
the optionee, only by the optionee. In the event of the death or the Disability
(as defined in the Director Plan) of a non-employee director during his service
as a director, all of his unexercised options shall immediately become
exercisable and may be exercised for a period of three years following the date
of death or one year following the date of disability (but not later than the
expiration date of the option). In the event of termination of a non-employee
director's service as a director for Cause (as defined in the Director Plan),
all of his unexercised options shall terminate immediately upon such
termination, unless otherwise determined by the Committee. If a person ceases to
be a non-employee director for any reason other than death, Disability or by the
Company for Cause, his or her options generally will be exercisable for a period
of one year thereafter (but not later than the expiration date of the option).

Change in Control Provisions. In the event of a dissolution of the
Company or a reorganization, merger or consolidation in which the Company is not
the surviving corporation, the Company by action of its Board shall either (i)
terminate outstanding and unexercised options as of the effective date of such
dissolution, merger or consolidation by giving notice to each optionee of its
intention to do so and permitting the exercise, during the period prior to such
effective date to be specified by the Board, of all outstanding and unexercised
options or portions thereof (provided, however, that no option shall become
exercisable hereunder either after the expiration date thereof or prior to six
(6) months from the date of grant thereof), or (ii) in the case of such
reorganization, merger or consolidation, arrange for an appropriate
substitution of shares or other securities of the corporation with which the
Company is reorganized, merged or consolidated in lieu of the shares which are
subject to any outstanding and unexercised options.

Amendment. The Director Plan may be amended by the Board of Directors,
except that the Board may not (i) change any option previously made under the
Director Plan in a manner which would impair the recipients' rights without
their consent, (ii) amend the Director Plan without approval of the Company's
shareholders if the effect of the amendment would be to (a) materially increase
the number of shares reserved under or benefits accruing to the participants
under the Director Plan or, (b) materially change the requirements for
eligibility under the Director Plan, except as authorized by the Director Plan,
and (iii) amend the Director Plan within six months for a prior amendment,
except as required for compliance with the Internal Revenue Code of 1986, as
amended from time to time, or the rules thereunder.

Adjustment. In the case of a reorganization, recapitalization, stock
split, reverse stock split, stock dividend, exchange or combination of shares,
merger, consolidation, rights offering, or any change in capitalization of the
Company, appropriate adjustments will be made by the Committee, in its sole
discretion, in the number of shares for which options may be granted pursuant to
the Director Plan.

Federal Income Tax Aspects. With respect to the nonqualified stock
options to be granted pursuant to the Director Plan (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 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 the date of exercise is treated as a short-term or a
long-term capital gain or loss, depending upon the length of time that the
participant has held the shares.

Director Plan Benefits. The table below sets forth benefits to be
received by the persons listed therein in the event the Director Plan Amendment
is approved by the shareholders and the Commission. Each of the directors listed
in the table and Keith M. Thompson will also be granted an additional option to
purchase 4,000 shares if re-elected at the Annual Meeting. The options will have
an exercise price equal to the current market value of the Company's Common
Stock on the date of grant of the options.

<PAGE> 17

<TABLE>
<CAPTION>
NUMBER OF SHARES
NAME OF DIRECTOR SUBJECT TO OPTION
- --------------------------------------- ------------------------
<S> <C>
E. Townes Duncan 4,000
William D. Eberle 4,000
Edward J. Mathias 4,000
Robert A. McCabe, Jr. 4,000
Raymond H. Pirtle, Jr. 4,000
L. Edward Wilson 4,000
</TABLE>

CONCLUSION AND RECOMMENDATION

The Board of Directors believes it is in the best interests of the
Company and its shareholders to adopt the Director Plan Amendment to help
attract and retain well-qualified directors and to further align their interests
with those of the Company's shareholders generally.

PROPOSAL 4: AMENDMENT TO CHARTER TO INCREASE
THE AUTHORIZED NUMBER OF SHARES TO 75,000,000

On January 5, 1998, the Company announced a two-for-one stock split
effective January 30, 1998. In connection with the doubling of the number of
shares issued and outstanding as a result of the two-for-one stock split, the
Board of Directors has adopted a resolution declaring it advisable and in the
best interest of the Company and its shareholders that the Company's Charter be
amended to provide for an increase in the authorized number of shares of the
Company from 50,000,000 shares to 75,000,000 shares of Common Stock. The
resolution also recommends that the Charter Amendment be approved and adopted by
the Company's shareholders and directs that such proposal be submitted to the
Company's shareholders at the Annual Meeting.

The Company is currently authorized to issue up to 50,000,000 shares of
Common Stock. As of the Record Date there were 31,094,708 shares of Common Stock
issued and outstanding. If the proposal of the Board of Directors is approved by
the Company's shareholders, the Company would have authority to issue up to
75,000,000 shares of Common Stock without further action by the shareholders,
except as may be required by law.

The text of the proposed Charter Amendment to Article 6 of the Company's
Charter is as follows:

6. The number of shares of stock which the Corporation is authorized
to issue is seventy-five million (75,000,000) shares of Common
Stock, no par value.

The Charter Amendment will become effective upon approval by the
shareholders and the filing of the Articles of Amendment containing the Charter
Amendment with the Secretary of State of Tennessee. If approved by the
shareholders, the Company anticipates that such Articles of Amendment will be
filed as soon as possible thereafter.

<PAGE> 18

CONCLUSION AND RECOMMENDATION

The Board of Directors believes it is in the best interests of the
Company and its shareholders to approve the Charter Amendment increasing the
authorized number of shares of Common Stock to 75,000,000.

Votes cast in favor of the Charter Amendment must exceed votes cast
opposing the Charter Amendment in order to approve the Charter Amendment. THE
BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE CHARTER AMENDMENT.

PROPOSAL 5: MODIFICATION OF THE COMPANY'S FUNDAMENTAL
INVESTMENTS POLICIES

When the Company became a business development company in 1995 and
adopted its fundamental investment policies, almost its entire portfolio
consisted of private company securities. Since that time, the securities of a
number of those private companies have been listed on the Nasdaq National Market
or other national securities exchanges and are publicly traded. In addition, the
Company has expanded its business to include making loans to and investments in
micro-cap public companies. Typically, the resale of the securities obtained
through these investments is restricted under Federal securities laws and
therefore, may not necessarily be sold at the time and price deemed by the
Company to be most beneficial. In order to protect and enhance the value of
these public company securities and to manage the liquidity of these positions,
the Board of Directors believes an amendment to the Company's fundamental
investment policies ("Fundamental Investment Policies Amendment") is necessary
and desirable. One of the Company's fundamental investment policies restricts
the Company's ability to sell securities short and write or buy put or call
options (except under certain enumerated circumstances). The Fundamental
Investment Policies Amendment provides that the Company will not (i) sell short
securities it does not own or (ii) write or buy put or call options with respect
to securities it does not own (except to the extent of warrants or conversion
privileges obtained in connection with its loans, and rights to require the
issuers of such investments or their affiliates to repurchase them under certain
circumstances). The Board of Directors believes that the flexibility offered by
this modification will offer the Company additional opportunities to protect and
enhance the value of, and manage the liquidity of, its public company portfolio,
without exposing the Company or its shareholders to additional risk.

CONCLUSION AND RECOMMENDATION

The Board of Directors believes it is in the best interests of the
Company and its shareholders to approve the Fundamental Investment Policies
Amendment.

The approval of a majority of shares of Common Stock outstanding is
necessary for approval of the Fundamental Investment Policies Amendment. THE
BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE FUNDAMENTAL INVESTMENT
POLICIES AMENDMENT.

PROPOSAL 6: 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, 1998, 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, as amended. 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.

<PAGE> 19

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 New York Stock Exchange 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 1997 all Section 16(a) filing
requirements applicable to its executive officers, directors and shareholders
were timely satisfied, except one transaction by Peter Socha, a former executive
officer, that was corrected by a filing of a Form 4 and transactions by Mr.
Thompson's spouse, with beneficial ownership of which was disclaimed by Mr.
Thompson and which was corrected by the filing of a Form 4.

PROPOSALS OF SHAREHOLDERS

Any proposal intended to be presented for action at the 1999 Annual
Meeting of Shareholders by any shareholder of the Company must be received by
the Secretary of the Company not later than November 13, 1998 in order for such
proposal to be considered for inclusion in the Company's Proxy Statement and
proxy relating to its 1999 Annual Meeting of Shareholders. Nothing in this
paragraph shall be deemed to require the Company to include any shareholder
proposal which does not meet all the requirements for such inclusion established
by the Commission in effect at that time.

METHOD OF COUNTING VOTES

The holders of a majority of the shares of Common Stock issued and
outstanding and entitled to vote, present in person or represented by proxy,
will constitute a quorum for the transaction of business. An affirmative vote of
a plurality of the shares represented and voting in person or by proxy at the
Annual Meeting is required for the election of directors. The affirmative vote
of a majority of the shares represented and entitled to vote is required for
approval of the Employee Plan Amendment and the Director Plan Amendment. The
affirmative vote of a majority of the shares of Common Stock outstanding is
necessary for the approval of the Fundamental Investment Policies Amendment. The
affirmative vote of a plurality of the shares represented and voting is required
for the approval of the Charter Amendment, the ratification of the Company's
selection of independent auditors and all other business as may properly come
before the meeting or any adjournments thereof.

Under applicable securities laws and Tennessee law, withholding of
authority to vote will have no effect on the election of directors, the approval
of the Charter Amendment or the ratification of the Company's selection of
independent auditors, since each of these matters is determined by the number of
votes cast. With regard to such matters, however, shares represented at the
meeting by proxies containing instructions to abstain, or withholding authority
to vote, will nonetheless be counted as present for purposes of determining
whether a quorum exists. An abstention or withholding of authority to vote will
have the effect of a vote against approval of the Employee Plan Amendment, the
Director Plan Amendment and the Fundamental Investment Policies Amendment,
because the affirmative vote of a majority of the shares present or represented
and voting (or outstanding in the case of the Fundamental Investment Policies
Amendment) will be required to approve such matters.

A broker non-vote occurs when a broker holding shares registered in a
street name is permitted to vote, in the broker's discretion, on routine matters
without receiving instructions from the client, but is not permitted to vote
without instructions on non-routine matters, and the broker returns a proxy card
with no vote (the "non-vote") on the non-routine matter. The proposal to
approve the Employee Plan Amendment, the Director Plan Amendment, the
Fundamental Investment Policies Amendment and the Charter Amendment are deemed
to be non-routine matters. Under Tennessee law shares represented by a proxy
card marked with a non-vote will be

<PAGE> 20

counted as present for purposes of determining the existences of a quorum.

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 13, 1998

18
<PAGE> 21
SIRROM CAPITAL CORPORATION

AMENDED AND RESTATED
1996 INCENTIVE STOCK OPTION PLAN

SECTION 1. PURPOSE; DEFINITIONS.

(a) PURPOSE. The purpose of the Plan is to advance the growth and
prosperity of the Company by providing key employees with an additional
incentive to contribute to the best interests of the Company and its
Subsidiaries, and strengthen the mutuality of interests between such individuals
and the Company's shareholders, by offering such key employees Options with
respect to shares of Common Stock of the Company. The creation of the Plan shall
not diminish or prejudice other compensation programs approved from time to time
by the Board.

Except as otherwise provided herein, Options granted under the Plan are
intended to qualify as Incentive Stock Options under Section 422 of the Code.

(b) DEFINITIONS. For purposes of the Plan, the following terms are
defined as set forth below:

(i) "Board" means the Board of Directors of the Company.

(ii) "Cause" has the meaning provided in Section 5(b)(v) of the Plan.

(iii) "Common Stock" means the Company's Common Stock, without par
value.

(iv) "Code" means the Internal Revenue Code of 1986, as amended from
time to time, and any successor thereto.

(v) "Commission" means the Securities and Exchange Commission.

(vi) "Committee" has the meaning provided in Section 2 of the Plan.

(vii) "Company" means Sirrom Capital Corporation, a corporation
organized under the laws of the State of Tennessee, or any successor
corporation.

(viii) "Current Market Value" means the last sale price of the Common
Stock on the principal exchange on which the Common Stock is then listed, or if
the Common Stock is not then listed on any exchange, on the National Association
of Securities Dealers Automated Quotation National Market System ("NMS"), or, if
price quotations for the Common Stock are not available on NMS, the mean between
the closing bid and asked price of the Common Stock on the National Association
of Securities Dealers Automated Quotation System ("NASDAQ"), or if no bid

<PAGE> 22

quotation is available on NASDAQ, the fair value of such Common Stock as
determined by the Committee, in each case, on the date the determination is
made, or if such day is not a business day, the business day immediately
preceding the date on which the determination is made.

(ix) "Disability" means disability as determined under the Company's
long-term disability insurance policy or, if there is no such definition, as
reasonably determined by the Committee.

(x) "Disinterested Person" has the meaning set forth in Rule
16b-3(c)(2)(i) as promulgated by the Commission under the Exchange Act, or any
successor definition adopted by the Commission.

(xi) "Early Retirement" means retirement, for purposes of this Plan
with the express consent of the Company at or before the time of such
retirement, from active employment with the Company and any Subsidiary prior to
age 65, in accordance with any applicable early retirement policy of the Company
then in effect.

(xii) "Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time, and any successor thereto.

(xiii) "Incentive Stock Option" means any Option granted under the Plan
that qualifies as an "Incentive Stock Option" within the meaning of Section 422
of the Code.

(xiv) "Non-Qualified Stock Option" means any Option that is not an
Incentive Stock Option.

(xv) "Normal Retirement" means retirement from active employment with
the Company and any Subsidiary or Affiliate on or after age 65.

(xvi) "Option" means any option to purchase shares of Common Stock
granted pursuant to Section 5 below.

(xvii) "Plan" means this Sirrom Capital Corporation 1996 Incentive
Stock Option Plan, as amended from time to time in accordance herewith.

(xviii) "Retirement" means Normal Retirement or Early Retirement.

(xix) "Subsidiary" means any corporation (other than the Company) in an
unbroken chain of corporations beginning with the Company if each of the
corporations (other than the last corporation in the unbroken chain) owns stock
possessing 50% or more of the total combined voting power of all classes of
stock in one of the other corporations in the chain.

<PAGE> 23

SECTION 2. ADMINISTRATION.

(a) THE COMMITTEE. The Plan shall be administered by a special Stock
Option Committee (the "Committee") of not less than two Disinterested Persons,
who shall be appointed by the Board and who shall serve at the pleasure of the
Board. The functions of the Committee specified in the Plan may be exercised by
an existing Committee of the Board composed exclusively of Disinterested
Persons.

(b) AUTHORITY OF THE COMMITTEE. The Committee shall have the power,
subject to, and within, the limits of the express provisions of the Plan:

(i) To determine from time to time which of the
eligible persons shall be granted options under the Plan, the
term of each Option, and the number of shares for which each
Option shall be granted.

(ii)To determine the terms and conditions, not
inconsistent with the terms of the Plan, of any award granted
hereunder (including, but not limited to, the time or times
during the term of each Option within which all or portions of
each Option may be exercised and any restriction or
limitation, or any vesting, acceleration of vesting or waiver
of forfeiture restrictions regarding any Option, based in each
case on such factors as the Committee shall determine, in its
sole discretion) and to amend or waive any such terms and
conditions to the extent permitted by Section 6 hereof.

(iii) To construe and interpret the Plan and Options
granted under it, and to establish, amend and revoke rules and
regulations for its administration. The Committee, in the
exercise of this power, shall generally determine all
questions of policy and expediency that may arise and may
correct any defect, omission or inconsistency in the Plan or
in any option agreement in a manner and to the extent it shall
deem necessary or expedient to make the Plan fully effective.

(iv) Generally, to exercise such powers and to
perform such acts as are deemed necessary or expedient to
promote the best interests of the Company.

All decisions made by the Committee pursuant to the provisions of the
Plan shall be made in the Committee's sole discretion and shall be final and
binding on all persons, including the Company and Plan participants. No members
of the Committee or the Board shall be liable for any action or determination
made in good faith with respect to the Plan or any Option granted under it.

<PAGE> 24

SECTION 3. SHARES OF COMMON STOCK SUBJECT TO PLAN.

(a) SHARES OF COMMON STOCK RESERVED UNDER PLAN. The aggregate number of
shares of Common Stock reserved and available for distribution under the Plan
shall be 5,707,098 shares. Such shares of Common Stock may consist, in whole or
in part, of authorized and unissued shares or treasury shares.

If any Option expires or is forfeited without exercise, the shares of
Common Stock subject to such Option immediately prior to its expiration or
forfeiture shall again be available for distribution in connection with future
awards under the Plan.

(b) ADJUSTMENT UPON CHANGES IN STOCK. The number of shares of Common
Stock available for the granting of Options under the Plan and the number of
shares and price per share of Common Stock subject to outstanding Options
granted pursuant to the Plan may be adjusted by the Committee in an equitable
manner to reflect changes in the capitalization of the Company, including, but
not limited to, such changes as result from merger, consolidation,
reorganization, recapitalization, stock dividend, dividend in property other
than cash, stock split, liquidating dividend, combination of shares, exchange of
shares and change in corporate structure. If any adjustment under this Section
3(b) would create a fractional share of Common Stock or a right to acquire a
fractional share of Common Stock, such fractional share shall be disregarded and
the number of shares available under the Plan and the number covered under any
options granted pursuant to the Plan shall be the next lower number of shares,
rounding all fractions downward. In the event of any dispute as to any
substitution or adjustment made under this Section 3(b), the decision of the
Committee shall be final and binding on all persons, including the Company and
Plan participants.

(c) ACCELERATION ON THE OCCURRENCE OF CERTAIN EVENTS. The Committee may
provide in the terms of an Option that, in the event of: (1) a dissolution or
liquidation of the Company; (2) a sale of all or substantially all of the assets
of the Company; (3) a merger or share exchange in which the Company is not the
surviving corporation; (4) other capital reorganization in which more than fifty
percent (50%) of the shares of the Company entitled to vote are exchanged; or
(5) such other corporate reorganization as may be described by the Committee,
any outstanding Options thereunder immediately shall be fully exercisable by an
optionee.

SECTION 4. ELIGIBILITY.

Officers and other key employees of the Company and its Subsidiaries
(but excluding members of the Committee and any person who serves only as a
director or who is an officer but not an employee of either the Company or one
of its Subsidiaries) who are responsible for or contribute to the management,
growth or profitability of the business of the Company and its Subsidiaries are
eligible to be granted Options under the Plan.

<PAGE> 25

SECTION 5. OPTIONS.

(a) ADMINISTRATION. Any Option granted under the Plan shall be in such
form as the Committee may from time to time approve and, except as otherwise
provided in Section 5(b)(xi) below, shall clearly indicate that such Option is
intended to qualify as an Incentive Stock Option under Section 422 of the Code.

(b) TERMS AND CONDITIONS. Options granted under the Plan shall be
subject to the following terms and conditions and shall contain such additional
terms and conditions, not inconsistent with the terms of the Plan, as the
Committee shall deem desirable. The provisions of Options need not be the same
with respect to each recipient or each award.

(i) Option Price. The option price per share of Common Stock
purchasable under an Option shall be determined by the Committee at the
time of grant but shall be not less than 100% (or, in the case of any
employee who owns stock possessing more than 10% of the total combined
voting power of all classes of stock of the Company or of any of its
subsidiary or parent corporations, not less than 110%) of the Current
Market Value of the Common Stock at grant. The day on which the
Committee approves the granting of an Option to a particular individual
shall be considered the date on which such Option is granted, except
that if an Option is granted to a prospective employee conditioned on
his or her acceptance of an offer of employment, the date the
employment relationship commences shall be deemed to be the date of
grant.

(ii) Option Term. The term of each Option shall be fixed by
the Committee, but no Option shall be exercisable more than ten years
(or, in the case of an employee who owns stock possessing more than 10%
of the total combined voting power of all classes of stock of the
Company or any of its subsidiary or parent corporations, more than five
years) after the date the Option is granted.

(iii) Exercisability. Options shall be exercisable at such
time or times and subject to such terms and conditions as shall be
determined by the Committee at or after grant. The Committee may
provide that an Option shall vest over a period of future service at a
rate specified at the time of grant, or that the Option is exercisable
only in installments. If the Committee provides, in its sole
discretion, that any Option is exercisable only in installments, the
Committee may waive such installment exercise provisions at any time at
or after grant in whole or in part, based on such factors as the
Committee shall determine, in its sole discretion. The Committee may
condition the exercise of any Option upon the attainment of specified
performance goals or other factors as the Committee may determine, in
its sole discretion. Unless specifically provided in the Option
agreement, any such conditional Option shall vest immediately prior to
its expiration if the conditions to exercise have not theretofore been
satisfied.

(iv) Method of Exercise. Subject to whatever installment or
other exercise restrictions apply under Section 5(b)(iii) hereof,
Options may be exercised in whole or in

<PAGE> 26

part at any time during the option period, by giving written notice of
exercise to the Company specifying the number of shares to be
purchased.

(v) Payment for Stock. Payment for shares subject to Options
granted under the Plan shall be made by the optionee in the form of
cash or by means of unrestricted shares of Common Stock already owned
by the optionee or any combination of cash and any such unrestricted
shares of Common Stock. Payment shall be made upon the exercise of the
Option. Payment in currency or by check, bank draft, cashier's check or
postal money order shall be considered payment in cash. In the event of
payment in Common Stock, the shares used in payment of the purchase
price shall be considered payment to the extent of their fair market
value on the date of exercise of the Option. Upon the exercise of any
Option, the Company may, at the request of the optionee and subject to
the approval of the Company's Board of Directors, lend to such
optionee, as of the date of exercise, an amount equal to the exercise
price of such Option, provided that such loan (a) has a term of not
more than ten years, (b) becomes due within sixty days after the
recipient of the loan ceases to be an employee of the Company, (c)
bears interest at a rate not less than the prevailing applicable
federal rate at the time the loan is made, and (d) is fully
collateralized at all times, which collateral may include securities
issued by the Company. Loan terms and conditions may be changed by the
Company's Board of Directors to comply with applicable regulations of
the Internal Revenue Service and the Commission.

(vi) Non-Transferability of Options. No Option shall be
transferable by the optionee otherwise than by will or by the laws of
descent and distribution, and all Options shall be exercisable, during
the optionee's lifetime, only by the optionee. 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.

(vii) Termination by Death. If an optionee's employment by the
Company terminates by reason of death, any Option held by such optionee
may thereafter be exercised, to the extent such Option was exercisable
at the time of death (or to any greater extent determined by the
Committee in its sole and absolute discretion), by the legal
representative of the estate or by the legatee of the optionee under
the will of the optionee, for a period of one year (or such shorter
period as the Committee may specify at grant) from the date of such
death or until the expiration of the stated term of such Option,
whichever period is the shorter.

(viii) Termination by Reason of Disability. If an optionee's
employment by the Company and any Subsidiary terminates by reason of
Disability, any Option held by such optionee may thereafter be
exercised by the optionee, to the extent it was exercisable at the time
of termination (or to any greater extent determined by the Committee in
its sole and absolute discretion), for a period of one year from the
date of termination of employment or until the expiration of the stated
term of such Option, whichever period is shorter.

<PAGE> 27

(ix) Termination by Reason of Retirement. Subject to Section
5(b)(xi)(C) hereof, if an optionee's employment by the Company
terminates by reason of Normal or Early Retirement, any Option held by
such optionee may thereafter be exercised by the optionee, to the
extent it was exercisable at the time of such Retirement (or to any
greater extent determined by the Committee in its sole and absolute
discretion), for a period of three months from the date of such
termination of employment or the expiration of the stated term of such
Option, whichever period is the shorter.

(x) Other Termination. Subject to Section 5(b)(xi)(C) hereof,
if an optionee's employment by the Company is involuntarily terminated
for any reason other than death, Disability or Normal or Early
Retirement, the Option shall thereupon terminate, except that such
Option may be exercised, to the extent otherwise then exercisable (or
to any greater extent determined by the Committee in its sole and
absolute discretion), for the lesser of three months or the balance of
such Option's term if the involuntary termination is without Cause. For
purposes of this Plan, "Cause" means (A) a felony conviction of a
participant or the failure of a participant to contest prosecution for
a felony, or (B) a participant's willful misconduct or dishonesty,
which is directly and materially harmful to the business or reputation
of the Company or any Subsidiary. If an optionee voluntarily terminates
employment with the Company (except for Disability, or Normal or Early
Retirement), the Option shall thereupon terminate; provided, however,
that the Committee at grant may extend the exercise period in this
situation for the lesser of three months or the balance of such
Option's term.

(xi) Qualification as Incentive Stock Options. Anything in the
Plan to the contrary notwithstanding, no term of this Plan relating to
Options shall be interpreted, amended or altered, nor shall any
discretion or authority granted under the Plan be so exercised, so as
to disqualify the Plan under Section 422 of the Code, or, without the
consent of the optionee(s) affected, to disqualify any Option under
such Section 422.

No Option shall be granted to any participant under the Plan
if such grant would cause the aggregate Current Market Value (as of the
date the Option is granted) of the shares of Common Stock with respect
to which all Options that are exercisable for the first time by such
optionee during any calendar year (under all such plans of the Company
and any Subsidiary) to exceed $100,000; provided, however, that the
Committee may grant such an Option if the optionee so consents and
acknowledges that such Option will not qualify as an Incentive Stock
Option under Section 422 of the Code.

To the extent permitted under Section 422 of the Code or the
applicable regulations thereunder or any applicable Internal Revenue
Service pronouncement:

(A) if the exercise of an Option is accelerated
pursuant to Section 3(c) hereof, any portion of such Option
that is not exercisable as an Incentive Stock Option under
Section 422 of the Code by reason of the $100,000 limitation

<PAGE> 28

contained in Section 422(d) of the Code shall be treated as a
Non-Qualified Stock Option;

(B) if for any other reason the portion of any Option
that is otherwise exercisable without regard to the $100,000
limitation contained in Section 422(d) of the Code, is greater
than the portion of such Option that is immediately
exercisable as an Incentive Stock Option under Section 422 of
the Code, such excess shall be treated as a Non-Qualified
Stock Option;

(C) if an Option cannot be exercised following
termination of employment (other than for Cause) as a result
of the provisions of Section 5(b)(ix) or Section 5(b)(x)
hereof, the Committee in its sole and absolute discretion
shall have the right to extend the exercisability of the
Option for a period of up to one year following termination of
employment, and the Option shall thereupon be treated as a
Non-Qualified Stock Option to the extent required under
Section 422 of the Code; and

(D) the Committee shall have the right, with the
consent of the optionee, to treat an Option that cannot be
exercised, for any other reason, as an "incentive stock
option" under Section 422 of the Code as a Non-Qualified Stock
Option.

(xii) Employment by a Subsidiary. For purposes of this Section
5, employment by a Subsidiary shall be deemed to be employment by the
Company and transfers of employment status between the Company and any
Subsidiary, or between two Subsidiaries, shall not be deemed to be a
termination of employment.

(c) NO PREJUDICE TO OTHER RIGHTS. The exercise of an option granted
under the Plan shall not affect the optionee's right or ability to exercise any
other option granted under the Plan or any other stock option plan of the
Company or its Subsidiaries.

(d) LIMITATIONS ON DISPOSITION. To obtain the tax benefits associated
with Incentive Stock Options, the optionee must make no disposition of shares
acquired pursuant to the exercise of an Incentive Stock Option within two years
from the granting of such Incentive Stock Option or within one year from the
date of the exercise of such Incentive Stock Option.

(e) HOLDING PERIOD. An optionee who is subject to Section 16(a) of the
Exchange Act must make no disposition of any shares acquired pursuant to the
exercise of the Option for a period of six months after the date of grant of
such option. The shares of Common Stock acquired pursuant to any Option that is
exercisable only upon the occurrence of certain conditions (other than the
passage of time or continued employment) shall not be transferable for a period
of six months after the date the Option first became exercisable.

<PAGE> 29

SECTION 6. AMENDMENTS.

The Board may amend, alter, or discontinue the Plan, but no amendment,
alteration, or discontinuation shall be made which would impair the rights of an
optionee under an Option, theretofore granted, without the optionee's consent
except as provided in Section 3(b) of the Plan. In addition, no amendment or
alteration shall be made without the approval of the Company's shareholders, if
such amendment or alteration would:

(a) except as provided in Section 3(b) of the Plan, increase
the total number of shares of Common Stock reserved for the purpose of
the Plan;

(b) change the exercise price at which Options may be granted;

(d) materially increase the benefits accruing to participants
under the Plan; or

(e) materially modify the requirements as to eligibility for
participation in the Plan.

The Committee may amend the terms of any Option or other award
theretofore granted, prospectively or retroactively, but, subject to Section
3(b) above, no such amendment shall impair the rights of any holder without the
holder's consent. The Committee may also substitute new Options for previously
granted Options (on a one for one or other basis), including previously granted
Options having higher Option exercise prices.

Subject to the above provisions, the Board shall have broad authority
to amend the Plan to take into account changes in applicable securities and tax
laws and accounting rules, as well as other developments.

SECTION 7. GENERAL PROVISIONS.

(a) SECURITIES LAW RESTRICTIONS. The Committee may require each person
purchasing shares of Common Stock pursuant to an Option under the Plan to
represent to and agree with the Company in writing that the optionee or is
acquiring the shares without a view to distribution thereof. The certificates
for such shares may include any legend which the Committee deems appropriate to
reflect any restrictions on transfer.

All certificates for shares of Common Stock or other securities
delivered under the Plan shall be subject to such stock-transfer orders and
other restrictions as the Committee may deem advisable under the rules,
regulations, and other requirements of the Commission, any stock exchange upon
which the Common Stock is then listed, and any applicable Federal or state
securities law, and the Committee may cause a legend or legends to be put on any
such certificates to make appropriate reference to such restrictions.

<PAGE> 30

(b) NO RIGHT TO CONTINUED EMPLOYMENT. The adoption of the Plan shall
not confer upon any employee of the Company or any Subsidiary any right to
continued employment with the Company or a Subsidiary, as the case may be, nor
shall it interfere in any way with the right of the Company or a Subsidiary to
terminate the employment of any of its employees at any time.

(c) WITHHOLDING. No later than the date as of which an amount first
becomes includible in the gross income of the participant for Federal income tax
purposes with respect to any Option under the Plan, the participant shall pay to
the Company, or make arrangements satisfactory to the Committee regarding the
payment of, any Federal, state, or local taxes of any kind required by law to be
withheld with respect to such amount. The obligations of the Company under the
Plan shall be conditional on such payment or arrangements and the Company and
its Subsidiaries shall, to the extent permitted by law, have the right to deduct
any such taxes from any payment of any kind otherwise due to the participant.

(d) GOVERNING LAW. The Plan and all awards made and actions taken
thereunder shall be governed by and construed in accordance with the laws of the
State of Tennessee, without regard to the principles of conflicts of law
thereof.

(e) LIABILITY AND INDEMNIFICATION OF BOARD AND COMMITTEE MEMBERS. The
members of the Committee and the Board shall not be liable to any employee or
other person with respect to any determination made hereunder in a manner that
is not inconsistent with their legal obligations as members of the Board. In
addition to such other rights of indemnification as they may have as directors
or as members of the Committee, the members of the Committee shall be
indemnified by the Company against the reasonable expenses, including attorneys'
fees actually and necessarily incurred in connection with the defense of any
action, suit or proceeding, or in connection with any appeal therein, to which
they or any of them may be a party by reason of any action taken or failure to
act under or in connection with the Plan or any Option granted thereunder, and
against all amounts paid by them in settlement thereof (provided such settlement
is approved by independent legal counsel selected by the Company) or paid by
them in satisfaction of a judgment in any such action, suit or proceeding,
except in relation to matters as to which it shall be adjudged in such action,
suit or proceeding that such Committee member is liable for negligence or
misconduct in the performance of his duties; provided that within 60 days after
institution of any such action, suit or proceeding, the Committee member shall
in writing offer the Company the opportunity, at its own expense, to handle and
defend the same.

(f) NO RIGHTS AS SHAREHOLDER. A participant in the Plan shall have no
rights as a shareholder with respect to any shares covered by an Option until
the date of the issuance of a stock certificate to such participant. No
adjustment shall be made for dividends (ordinary or extraordinary, whether in
cash, securities or other property) or distributions or other rights for which
the record date is prior to the date such stock certificate is issued, except as
otherwise provided in Section 3(b) hereof.

(g) TWENTY PERCENT LIMITATION. No Option may be issued if exercise of
all warrants, options and rights of the Company outstanding immediately after
issuance of such option would

<PAGE> 31

result in the issuance of voting securities in excess of twenty percent (20%) of
the Company's outstanding voting securities.

(h) INVESTMENT COMPANY ACT LIMITATION. No Option granted hereunder
shall violate the provisions of the Investment Company Act of 1940, as amended.

SECTION 9. TERMINATION

This Plan shall terminate ten years from the date on which the Board
adopts this Plan or the shareholders of the Company approve the Plan, whichever
is earlier, unless sooner terminated by action of the Board. No Option may be
granted hereunder after termination of the Plan, but such termination shall not
affect the validity of any Option then outstanding.

SECTION 10. SHAREHOLDER APPROVAL

This Plan shall become effective upon (a) adoption by the Board of
Directors, and (b) approval of the Plan by the shareholders of the Company.
Approval by the shareholders must occur during the period beginning 12 months
before and ending 12 months after the date of this Plan is adopted by the Board.

11
<PAGE> 32
SIRROM CAPITAL CORPORATION

AMENDED AND RESTATED

1995 STOCK OPTION PLAN FOR NON-EMPLOYEE DIRECTORS

1. PURPOSE

The purposes of this Plan are to advance the interests of the Company
and its shareholders by attracting and retaining the highest quality of
experienced persons as Outside Directors and to align the interests of the
Outside Directors more closely with the interests of the Company's shareholders.

2. DEFINITIONS

For purposes of this Plan, the following terms shall have the meanings
indicated below:

(a) "Board" shall mean the Board of Directors of the Company.

(b) "Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time, and any successor thereto.

(d) "Company" shall mean Sirrom Capital Corporation, a corporation
organized under the laws of the State of Tennessee, or any
successor corporation.

(e) "Disability" means permanent and total disability within the
meaning of Section 22(e)(3) of the Code, as determined by the
Committee.

(f) "Exercise Date" shall mean the date on which the Company
receives the notice of exercise of an Option from an Optionee
as set forth in Section 7(b).

(g) Current Market Value" shall mean, as of a given date, (i) the
average of the bid and asked prices for the Stock at closing
on The Nasdaq Stock Market's National Market for the last
preceding date on which there was a sale of the Stock, or (ii)
if the Stock is no longer authorized for quotation on The
Nasdaq Stock Market's National Market, the then current net
asset value of a share of Stock as determined by the Committee
in good faith.

<PAGE> 33

(h) "Option" shall mean an option granted to an Outside Director
pursuant to this Plan.

(i) "Optionee" shall mean an Outside Director who has been granted
an Option pursuant to this Plan.

(j) "Outside Director" shall mean any member of the Board who has
not served as an employee of the Company at any time during
the two-year period preceding the date on which an Option is
granted to such Optionee.

(k) "Plan" shall mean this Amended and Restated Sirrom Capital
Corporation 1995 Stock Option Plan for Non-Employee Directors,
as adopted by the Board (subject to the approvals described in
Section 10) on December 19, 1997.

(l) "Stock" shall mean the Common Stock, no par value, of the
Company.

3. ADMINISTRATION

This Plan shall be administered by the Committee. The Committee is
authorized to interpret this Plan and may from time to time adopt such rules and
regulations, not inconsistent with the provisions of this Plan, as it may deem
advisable to carry out this Plan; provided, however, that the Committee shall
have no discretion with respect to designating the recipient of an Option, the
number of shares of Stock that are subject to an Option or the per share
exercise price for an Option. All decisions made by the Committee in construing
the provisions of this Plan shall be final.

The Company intends that this Plan shall comply with the requirements
of Rule 16b-3 of the Securities Exchange Act of 1934. Should any provision of
this Plan not comply with the requirements of such Rule (as the same may be
amended), the Board may amend this Plan to add to or modify the provisions of
this Plan accordingly.

4. ELIGIBILITY

Each Outside Director shall be eligible to participate in this Plan.

5. STOCK SUBJECT TO THIS PLAN

Subject to adjustment as provided in Section 9, not more than 246,000
shares of Stock may be issued with respect to the Options granted under this
Plan. Such shares that are reserved for issuance under this Plan are authorized
but unissued shares of Stock. Shares of Stock subject to an Option shall, upon
the expiration or termination of any such Option to the extent unexercised,
again be available for grant under this Plan.

<PAGE> 34

6. GRANT OF OPTIONS

(a) Initial Grants

Except for John A. Morris, Jr., M.D., each director who is an Outside
Director as of April 19, 1996 (the "Initial Effective Date"), shall
automatically, as of the Initial Effective Date, be granted an award of Options
under this Plan as follows: (i) each Outside Director who was elected to the
Company's Board of Directors before December 1, 1994 shall automatically receive
an Option grant for the purchase of 18,000 shares of Stock (subject to
adjustment as provided in Section 9); and (ii) each Outside Director who was
elected to the Company's Board of Directors after December 1, 1994, but prior to
the date of adoption of this Plan by the Board, shall automatically receive an
Option grant for the purchase of 12,000 shares of Stock (subject to adjustment
as provided in Section 9). Each Outside Director elected after the Initial
Effective Date shall automatically receive as of the date of his or her election
to the Board of Directors an Option grant for the purchase of 6,000 shares of
Stock (subject to adjustment as provided in Section 9).

(b) Grants Upon Re-election

Except for John A. Morris, Jr., M.D., (i) each Outside Director who was
re-elected to the Company's Board of Directors on April 4, 1997 shall
automatically receive on the Effective Date (as defined in Section 10) an Option
grant for the purchase of 2,000 shares of Stock (subject to adjustment as
provided in Section 9); and (ii) each Outside Director who is re-elected to the
Company's Board of Directors in the future, commencing with the annual meeting
of shareholders of the Company in 1998, shall automatically receive, as of the
date of his or her re-election to the Board of Directors, an Option grant for
the purchase of 2,000 shares of Stock (subject to adjustment, as provided in
Section 9).

The exercise price of each Option granted under this Plan shall be the
Current Market Value on the date of grant.

7. TERMS AND CONDITIONS OF OPTIONS

(a) Term

Subject to the provisions hereof, options shall vest on the
first anniversary of the date of grant and shall be
exercisable in whole or part at any time upon fulfillment of
the vesting period. In no event may an Option be exercised
after ten years from the date of grant.

In the event of the death or Disability of an Optionee during
his service as a director, all his unexercised Options shall
immediately become exercisable and may be exercised (by his
personal representative in the event of such death) for a

<PAGE> 35

period of three years following the date of such death or one
year following the date of such Disability, but in no event
after the respective expiration dates of such Options. In the
event of the termination of an Optionee's service as a
director for cause, any Options held by him under this Plan
not theretofore exercised shall terminate immediately upon
such termination of service as a director and may not be
exercised thereafter, unless otherwise determined by the
Committee. The Committee in its sole discretion may determine
that an Optionee's service as a director was terminated for
cause, if it finds that the Optionee willfully violated any of
the Company's policies on ethical business conduct or engaged
in any activity or conduct during his service as a director
which was inimical to the best interests of the Company. If an
Optionee's service as a director is terminated for any reason
other than by his death or Disability or by the Company for
cause, his Options, to the extent then exercisable, may be
exercised within one year immediately following the date of
termination, but in no event after the respective expiration
dates of such Options.

(b) Exercise of Options

An Option shall be exercised by delivering to the Corporate
Secretary of the Company a written notice of exercise in the
form prescribed by the Corporate Secretary for use from time
to time. Such notice of exercise shall indicate the number of
shares for which the Option is to be exercised and shall be
accompanied by the full exercise price for the portion of the
Option to be exercised.

The exercise price may be paid in cash (including certified or
cashier's check, bank draft or money order), Stock which is
free and clear of all liens, claims or other encumbrances by
third parties, or a combination of Stock and cash. The Stock
so delivered shall be valued at the Current Market Value as of
the Exercise Date. No shares of Stock shall be issued or
delivered until full payment therefor has been made.

(d) Non-Transferability

No Option shall be assignable or transferable by the Optionee,
except by will or pursuant to applicable laws of descent and
distribution. During the life of an Optionee, an Option shall
be exercisable only by such Optionee or such Optionee's legal
representative.

(e) No Rights as Shareholders

Neither an Optionee nor an Optionee's legal representative
shall have any rights as shareholders of the Stock unless and
until certificates for shares of Stock are registered in his
or her name in satisfaction of a duly exercised Option.

<PAGE> 36

8. WITHHOLDING TAXES

Whenever the Company grants, issues or transfers shares of Stock under
this Plan, the Company shall have the right to require the Optionee to remit to
the Company an amount sufficient to satisfy any federal, state and local
withholding tax requirements prior to the delivery of any certificate for such
shares. The Company shall have the right to retain sufficient shares of Stock to
cover the amount of any tax required by any government to be withheld or
otherwise deducted or paid with respect to the exercise of the Options. The
Stock so retained shall be valued at the Current Market Value as of the date of
such retention.

9. CAPITAL ADJUSTMENTS AND CORPORATE REORGANIZATIONS

In the event of any change in the outstanding shares of Stock by reason
of a stock dividend, split or combination, or recapitalization or
reclassification, or reorganization, merger or consolidation, in which the
Company is the surviving corporation, or other similar change affecting the
Stock, the number of shares then subject to Options and for which Options may
thereafter be granted and the price per share of Stock payable upon exercise or
surrender of such Options shall be appropriately adjusted by the Committee to
reflect such change. No fractional shares shall be issued as a result of such
adjustment. In the event of a dissolution of the Company or a reorganization,
merger or consolidation in which the Company is not the surviving corporation,
the Company by action of its Board shall either (i) terminate outstanding and
unexercised Options as of the effective date of such dissolution, merger or
consolidation by giving notice to each Optionee of its intention to do so and
permitting the exercise, during the period prior to such effective date to be
specified by the Board, of all outstanding and unexercised Options or portions
thereof (provided, however, that no Option shall become exercisable hereunder
either after the expiration date thereof or prior to six (6) months from the
date of grant thereof), or (ii) in the case of such reorganization, merger or
consolidation, arrange for an appropriate substitution of shares or other
securities of the corporation with which the Company is reorganized, merged or
consolidated in lieu of the shares which are subject to any outstanding and
unexercised Options.

10. EFFECTIVE DATE AND TERM OF THIS PLAN

The Plan shall be effective as of the later of (a) the date of approval
of the amendments reflected in this Plan, which were approved by the Board on
December 19, 1997 (the "Amendments") by the shareholders of the Company, and (b)
the date of the approval of the Amendments by order of the Securities and
Exchange Commission (the "Effective Date"). Subject to Section 11 hereof, the
Board in its discretion may terminate this Plan at any time with respect to any
shares for which Options have not theretofore been granted. Except with respect
to Options then outstanding, if not sooner forfeited or terminated, this Plan
shall terminate upon, and no Options shall be granted after, ten years from the
Effective Date.

<PAGE> 37

11. AMENDMENTS

The Board shall have the right to alter or amend this Plan or any part
thereof from time to time provided that:

(a) no change in any Option theretofore granted may be made which
would impair the rights of an Optionee without the consent of
such Optionee;

(b) Plan provisions may not be amended more than once every (6)
six months, other than to comport with changes in the Code,
the Employee Retirement Income Security Act, or the rules
thereunder; and

(c) the Board may not make any alteration or amendment which would
materially increase the benefits accruing to participants
under this Plan, increase the aggregate number of shares of
Stock which may be issued pursuant to provisions of this Plan
or extend the terms of this Plan, without the approval of the
shareholders of the Company.

6
<PAGE> 38
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
17, 1998.

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 Loews Vanderbilt Plaza Hotel, 2100
West End Avenue, Nashville, Tennessee, on Friday, April 17, 1998, at 7:30 a.m.,
local time, and any adjournment thereof.

<TABLE>
<S> <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
John A. Morris, Jr. Raymond A. Pirtle, Jr. Keith M. Thompson

Robert A. McCabe, Jr. George M. Miller,
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.

</TABLE>
(2) Approval of the Employment Plan Amendment:
[ ] FOR [ ] AGAINST [ ] ABSTAIN

(3) Approval of the Director Plan Amendment:
[ ] FOR [ ] AGAINST [ ] ABSTAIN

(4) Approval of the Charter Amendment:
[ ] FOR [ ] AGAINST [ ] ABSTAIN

(5) Approval of the Fundamental Investment Policies Amendment:
[ ] FOR [ ] AGAINST [ ] ABSTAIN

(6) Ratification of appointment of accountants:
[ ] FOR [ ] AGAINST [ ] ABSTAIN

(7) 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.)

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 the Employee Plan Amendment, FOR the approval of the Director Plan
Amendment, FOR the approval of the Charter Amendment, FOR the approval of the
Fundamental Investment Policies Amendment and FOR the ratification of
accountants.

PLEASE SIGN HERE AND RETURN
PROMPTLY

-------------------------------

Date: ___________________, 1998

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.