SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
Filed by the Registrant [ ]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss. 240.14a-11(c) or ss. 240.14a-12
KBK CAPITAL CORPORATION
(Name of Registrant as Specified in its Charter)
_____________________________________________________________________
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1. Title of each class of securities to which transaction applies:
2. Aggregate number of securities to which transaction applies:
3. Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
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>
KBK CAPITAL CORPORATION
ROBERT J. MCGEE 2200 CITY CENTER II
CHAIRMAN OF THE BOARD AND 301 COMMERCE STREET
CHIEF EXECUTIVE OFFICER FORT WORTH, TEXAS 76102
(817) 258-6000
April 7, 1997
Dear Fellow Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders
of KBK Capital Corporation at 10:00 a.m. on Wednesday, May 7, 1997. A formal
notice setting forth the business to come before the meeting and a proxy
statement are enclosed. The meeting will be held at the offices of the Company,
2200 City Center II, 301 Commerce Street, Fort Worth, Texas. Parking is
available in the Calhoun Street garage located adjacent to the City Center II
building.
At the meeting, you will be asked to elect three directors to serve for
a term of three years and to ratify the selection by the Board of Directors of
KPMG Peat Marwick LLP as independent accountants. These matters are described in
detail in the enclosed Proxy Statement. Your Board of Directors recommends that
you vote FOR each proposal.
I encourage you to attend the meeting in person. Whether or not you are
able to attend, please take a moment now to read the enclosed Proxy Statement
and then sign, date and mail the enclosed proxy in the postage-paid envelope so
that your vote may be counted. Regardless of the number of shares you own, it is
very important that you be represented at the Annual Meeting.
Thank you for your cooperation and continued support.
Sincerely,
Robert J. McGee
Chairman of the Board and
Chief Executive Officer
<PAGE>
KBK CAPITAL CORPORATION
301 Commerce Street, 2200 City Center II, Fort Worth, Texas 76102
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 7, 1997
To the Stockholders:
The 1997 Annual Meeting of Stockholders of KBK Capital Corporation will be
held at the offices of the Company, 2200 City Center II, 301 Commerce Street,
Fort Worth, Texas on Wednesday, May 7, 1997, at 10:00 a.m., local time, for the
following purposes:
1. To elect three directors to serve for a term of three years;
2. To ratify the selection by the Board of Directors of KPMG Peat Marwick
LLP as independent auditors for the year ending December 31, 1997; and
3. To consider and act upon any other business that may properly be
brought before the meeting.
The close of business on March 31, 1997 has been fixed as the record
date for determining the stockholders entitled to notice of and to vote at the
Annual Meeting or any adjournment thereof. A list of stockholders as of the
record date will be available for examination by any stockholder at the Annual
Meeting and at the principal executive offices of the Company for the ten days
prior to the Annual Meeting.
IT IS IMPORTANT THAT YOUR STOCK BE REPRESENTED AT THE ANNUAL MEETING, NO MATTER
HOW MANY SHARES YOU OWN. PLEASE PROMPTLY COMPLETE, SIGN AND MAIL THE ENCLOSED
PROXY OR VOTING INSTRUCTION CARD IN THE ACCOMPANYING ENVELOPE, WHETHER OR NOT
YOU INTEND TO BE PRESENT AT THE ANNUAL MEETING.
By Order of the Board of Directors
Michael D. Magill
Assistant Secretary
April 7, 1997
Fort Worth, Texas
KBK CAPITAL CORPORATION
301 COMMERCE
2200 CITY CENTER II
FORT WORTH, TEXAS 76102
- --------------------------------------------------------------------------------
PROXY STATEMENT
- --------------------------------------------------------------------------------
ANNUAL MEETING OF STOCKHOLDERS
MAY 7, 1997
PROXY SOLICITATION AND VOTING OF PROXIES
This Proxy Statement and the accompanying proxy card are being furnished
to the stockholders of KBK Capital Corporation, a Delaware corporation (the
"Company"), in connection with the solicitation on behalf of the Board of
Directors of the Company of proxies for use at the Annual Meeting of
Stockholders of the Company to be held on Wednesday, May 7, 1997 at 10:00 a.m.,
local time, at 301 Commerce Street, Suite 2200, Fort Worth, Texas, and at any
adjournment thereof. This Proxy Statement and the accompanying proxy card are
being first mailed to stockholders on or about April 7, 1997.
A proxy card is enclosed for your use. YOU ARE REQUESTED BY THE BOARD OF
DIRECTORS TO SIGN, DATE AND RETURN THE PROXY CARD IN THE ACCOMPANYING ENVELOPE,
which is postage-paid if mailed in the United States.
You may revoke your proxy at any time before it is actually voted at the
Annual Meeting by delivering written notice of revocation to the Assistant
Secretary of the Company, by submitting a subsequently dated proxy, or by
attending the meeting and voting in person. Each properly executed unrevoked
proxy card will be voted as indicated thereon. Where specific instructions are
not indicated, the proxy will be voted FOR the approval of the election of three
directors to serve for a term of three years and FOR the ratification of the
selection of KPMG Peat Marwick LLP as independent auditors, and in the
discretion of the persons named as proxies with respect to any other matters
that may properly be brought before the meeting.
The Board of Directors has fixed the close of business on March 31, 1997
as the record date (the "Record Date") for determining holders of outstanding
shares of the Company's Common Stock entitled to notice of and to vote at the
Annual Meeting or any adjournment thereof. As of the Record Date, there were
outstanding 3,310,133 shares of the Company's Common Stock, each of which is
entitled to one vote. The Company's Common Stock is the only class of
outstanding securities of the Company entitled to notice of and to vote at the
Annual Meeting. The expense of preparing, printing and mailing this Proxy
Statement will be paid by the Company. Proxies may be solicited by personnel of
the Company in person, by telephone, or through other forms of communication.
The Company's personnel will not be compensated for such solicitation.
A copy of the Company's 1996 Annual Report, which includes the
consolidated financial statements of the Company for the year ended December 31,
1996, accompanies this Proxy Statement. The annual report does not constitute a
part of the proxy soliciting material.
<PAGE>
AGENDA ITEM 1:
ELECTION OF DIRECTORS
THE BOARD OF DIRECTORS OF THE COMPANY IS DIVIDED INTO THREE CLASSES
(CLASS I, CLASS II AND CLASS III). AT EACH ANNUAL MEETING OF STOCKHOLDERS,
DIRECTORS CONSTITUTING ONE CLASS ARE ELECTED FOR A THREE-YEAR TERM. THE BOARD OF
DIRECTORS CONSISTS OF NINE MEMBERS.
THREE DIRECTORS WILL BE ELECTED AT THE ANNUAL MEETING AS CLASS I
DIRECTORS. THE REMAINING SIX DIRECTORS NAMED BELOW ARE NOT REQUIRED TO STAND FOR
ELECTION AT THE ANNUAL MEETING BECAUSE THEIR PRESENT TERM EXPIRES IN EITHER 1998
OR 1999. THE BOARD OF DIRECTORS HAS NOMINATED THE FOLLOWING INDIVIDUALS, EACH OF
WHOM IS AN INCUMBENT DIRECTOR, TO SERVE AS CLASS I DIRECTORS UNTIL THE ANNUAL
MEETING OF SHAREHOLDERS IN 2000 AND UNTIL SUCH TIME AS THEIR RESPECTIVE
SUCCESSORS ARE ELECTED AND QUALIFY.
KENNETH H. JONES, JR. - CLASS I - THREE YEAR TERM
R. EARL COX, III - CLASS I - THREE YEAR TERM
MARTHA V. LEONARD - CLASS I - THREE YEAR TERM
A majority of the shares of Common Stock present or represented by
proxy and entitled to vote at the Annual Meeting is required for the election of
directors. Abstentions have the same effect as a vote against a director, while
broker non-votes have no effect on the election of directors. Shareholders may
not cumulate their votes in the election of directors. Although the Board of
Directors has no reason to believe that any of the nominees will be unable to
serve, should any of the nominees become unable to serve prior to the Annual
Meeting, the proxies will be voted for the election of such other persons, if
any, as may be nominated by the Board of Directors.
THE BOARD OF DIRECTORS RECOMMENDS YOU VOTE FOR THE ELECTION OF THE NOMINEES
LISTED ABOVE AND YOUR PROXY WILL BE SO VOTED UNLESS YOU SPECIFY OTHERWISE.
BOARD AND NOMINEE BIOGRAPHICAL INFORMATION
Set forth below is the name and certain information regarding each of the three
nominees for election as a director under Class I, as well as each of the other
directors of the Company:
CLASS I NOMINEES - TERM TO EXPIRE 2000:
KENNETH H. JONES, JR., 62, has served as Vice Chairman of the Company
and as a director since January 1995. Prior to his employment by the
Company, Mr. Jones was a partner at the Fort Worth law firm of Decker,
Jones, McMackin, McClane, Hall and Bates, P.C., where he remains of
counsel. Mr. Jones is a director of AmeriCredit Corporation, an
automobile finance company. Mr. Jones is also a director of Hallmark
Financial Services, Inc., an insurance premium finance and claims
adjusting company.
R. EARL COX, III, 63, has served as a Director of the Company since May
1996 and is Chairman and Chief Executive Officer of Tandy Crafts, Inc.,
a retail specialty chain headquartered in Fort Worth, Texas. Mr. Cox is
also a co-owner of Ofco Office Furniture Stores, Inc., a chain of
retail office furniture stores and President of R.E. Cox Realty
Company, a property management company. Mr. Cox is a director of
Miller's Insurance Group.
MARTHA V. LEONARD, 60, manages her private investment portfolio. Ms.
Leonard serves as a director on various museum, charitable and civic
boards.
2
<PAGE>
CLASS II DIRECTORS - TERM EXPIRES 1998:
MICHAEL D. MAGILL, 49, is currently Executive Vice President and Chief
Financial Officer of the Company and has been a Director since May
1996. Prior to joining the Company in January 1995, Mr. Magill was
Managing Director of Finance for MCorp, a multi-bank holding company
headquartered in Dallas, Texas. Mr. Magill held several positions
during his 18 year tenure with MCorp.
THOMAS M. SIMMONS, 43, has served as a Director since October 1995. Mr.
Simmons is a Director in the Houston office of SpencerStuart & Co., an
executive search firm. Prior to joining SpencerStuart, Mr. Simmons was
President and Chief Executive Officer of Transamerica Fund Management
Company with assets under management in excess of $3 billion.
HARRIS A. KAFFIE, 47, has served as a Director of the Company since May
1996 and is a partner in Kaffie Brothers, a private investment
partnership, and is a director of Blue Dolphin Energy Company, a
publicly-held company engaged in the exploration, acquisition,
development and operation of oil and gas properties and in oil and gas
transportation and marketing.
CLASS III DIRECTORS - TERM EXPIRES 1999:
ROBERT J. MCGEE, 42, has served as Chairman of the Board, Director and
Chief Executive Officer of the Company since he founded the Company in
February 1992 and was elected President in January 1994. Prior to his
association with the Company, Mr. McGee was Chairman of the Board of
Texas Commerce Bank, Fort Worth, National Association from September
1989 to April 1992.
DANIEL R. FEEHAN, 46, has served as a Director of the Company since
February 1992. Mr. Feehan is President and Chief Operating Officer and
a Director of Cash America International, Inc. and has served in such
capacities since January 1990. He has been associated with Cash America
International, Inc. since 1988.
THOMAS L. HEALEY, 63, was elected first as a Director of the Company in
April 1994. Mr. Healey retired from the law firm of Andrews & Kurth LLP
in 1993 after having been a partner or of counsel at such firm since
1974. Since his retirement from Andrews & Kurth, Mr. Healey has been a
private investor.
COMMITTEES
The Board of Directors has established the following standing
committees:
ASSET QUALITY COMMITTEE. The Asset Quality Committee, which is
currently comprised of Mr. Healey (Chairman), Mr. Cox, and Mr. Feehan,
is entitled to exercise all of the powers of the Board of Directors of
the Company with respect to the oversight and assessment of the credit
quality of the Company's earning asset portfolio conditions and the
review and monitoring of the adequacy of the Company's allowance for
possible credit losses for any and all classes of earning assets. This
committee is responsible for the review and approval of all financing,
purchase or loan commitments that exceed the Company's house or
concentration limits, as that limit stands from time to time as
established by the whole Board provided that in the exercise of such
powers such committee shall be limited by applicable law, the Restated
Certificate of Incorporation and Bylaws of the Company and as the full
Board may otherwise direct. The Asset Quality Committee held six
meetings during 1996.
AUDIT COMMITTEE. The Audit Committee, which is currently comprised of
Mr. Feehan (Chairman), Mr. Healey, and Mr. Simmons, meets separately
with representatives of the Company's independent
3
<PAGE>
auditors and with representatives of senior management in performing
its functions. The Audit Committee reviews the general scope of audit
coverages, the fees charged by the independent auditors, matters
relating to the Company's internal control systems and other matters
related to audit functions. During 1996, the Audit Committee held one
meeting.
COMPENSATION COMMITTEE. The Compensation Committee, which is currently
comprised of Mr. Simmons (Chairman) and Mr. Feehan, administers the
Company's 1994 Stock Option Plan and has responsibility for making
recommendations to the Board of Directors with respect to the
compensation of the Company's Chief Executive Officer and its other
executive officers, and the establishment of policies dealing with
various compensation and employee benefit matters for the Company. The
Compensation Committee held two meetings during 1996.
EXECUTIVE COMMITTEE. The Executive Committee, which is currently
comprised of Mr. McGee (Chairman), Mr. Feehan, Mr. Simmons, Mr. Healey,
and Mr. Kaffie, is entitled to exercise all of the powers of the Board
of Directors of the Company in the management of the property, business
and affairs of the Company to the extent permitted by law, the Restated
Certificate of Incorporation and the Bylaws of the Company and such
limits as the full Board may otherwise direct. The Executive Committee
held four meetings during 1996.
MARKETS COMMITTEE. The Markets Committee, which is currently comprised
of Mr. Kaffie (Chairman), Ms. Leonard, and Mr. Cox, reviews and
approves new products, the establishment of geographic markets, new
offices, pricing and strategy relative to the marketing of the
Company's products, the maintenance and improvement of the Company's
competitive position in the financial services industry generally and
all matters incidental or relating to the foregoing. The Marketing
Committee held four meetings in 1996.
NOMINATING COMMITTEE. The Nominating Committee, which is currently
comprised of Mr. Simmons and Mr. McGee, provides recommendations to the
Board for nominees to serve as Directors of the Company. The Committee
did not meet during 1996.
ATTENDANCE AND FEES
The Company's Board of Directors held seven meetings in 1996. Each
director attended at least 75% of the total number of meetings of the Board of
Directors and the committees on which he served.
Each director who is not also an officer or employee of the Company
receives a fee of $1,500 per board meeting, $500 per committee meeting, and
reimbursement for out-of-pocket expenses incurred in connection with attendance
at meetings of the Board of Directors or committees thereof. In addition,
pursuant to the terms of the Company's 1994 Stock Option Plan, each non-employee
director automatically receives a ten-year option to purchase 5,000 shares of
Common Stock at fair market value at the date of grant each year upon election
or reelection as a director, which option vests six months after the date of
grant. Pursuant to the 1994 Stock Option Plan, each of, Mr. Feehan, Mr. Cox, Ms.
Leonard, Mr. Kaffie, Mr. Simmons and Mr. Healey received grants to purchase
5,000 shares of Common Stock during 1996 with an exercise price of $6.69 per
share.
4
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
In 1994, the Company adopted a program pursuant to which officers of
the Company and its subsidiary could, subject to certain limitations, borrow
funds from the Company's operating subsidiary to enable them to purchase Common
Stock in the open market, exercise stock options which loans are secured by
pledges of the Common Stock purchased, or for holding Common Stock of the
Company. The total amount of loans available under the program may not exceed
$499,000, and no more than $199,000 of loans may be extended during any calendar
quarter. Such loans bear interest at a published prime rate plus 1% (which
interest may be added to principal under certain circumstances), and are payable
prior to termination of employment under certain conditions, and in any event
must be repaid within 60 days after termination of employment. Pursuant to this
program, Robert J. McGee, the Chairman of the Board and Chief Executive Officer
of the Company, borrowed $150,000 during 1996. The maximum amount outstanding
under such program to Mr. McGee during 1996 was $248,767, and the amount
outstanding as of March 15, 1997 was $248,767.
SHARE OWNERSHIP OF DIRECTORS, EXECUTIVE OFFICERS
AND CERTAIN BENEFICIAL OWNERS
The following table sets forth the beneficial ownership of Common Stock
as of March 31, 1997 for each director and director nominee, each executive
officer named in the Summary Compensation Table included under the heading
"Information Concerning Executive Officers," all directors and executive
officers of the Company as a group and each person known by the Company to own
beneficially more than 5% of the Company's outstanding Common Stock. Except as
otherwise indicated, the persons listed below have sole voting and investment
power over the shares beneficially owned by them.
SHARES OWNED BENEFICIALLY
NAME PERCENT NUMBER
- ---- --------- --------
Robert J. McGee (1) (2) 807,100 24.4%
Jack R. Roper (2) 24,900 *
Michael D. Magill(2) 6,500 *
Daniel R. Feehan (2) (3) 200,000 6.0%
J. Dugan Smith (2) 10,000 *
Thomas L. Healey (2) 15,000 *
Kenneth H. Jones, Jr.(2) (4) 139,500 4.2%
Thomas M. Simmons (2) 12,900 *
R. Earl Cox, III (2) 5,000 *
Harris A. Kaffie (2) (5) 125,000 3.8%
Martha V. Leonard (2) 10,000 *
All directors and executive officers
as a group (10 persons) (1) (2) (3) (4) (5) 1,355,900 41.1%
Orbis Pension Trustee Limited (6) 280,000 8.5%
Derby Trust plc (6) 120,000 3.6%
Wellington Management Co. (7) 285,000 8.6%
* Less than one percent
- ----------
1. Includes 100,000 shares owned by trusts for the benefit of Mr. McGee's
children, as to which shares Mr. McGee disclaims beneficial ownership. Mr.
McGee's address is 301 Commerce Street, 2200 City Center II, Fort Worth,
Texas 76102.
5
<PAGE>
2. Includes shares issuable upon exercise of stock options exercisable within 60
days as follows: Mr. McGee - 4,000; Mr. Roper - 24,800; Mr. Magill - 6,000;
Mr. Smith - 5,000; Mr. Feehan - 20,000; Mr. Healey - 15,000; Mr. Jones -
60,000; Mr. Simmons - 5,000; Mr. Cox - 5,000; Mr. Kaffie - 5,000; Ms. Leonard
- 5,000; all directors and executive officers as a group - 154,800.
3. 180,000 of the shares shown are issuable upon exercise of warrants (including
40,000 shares issuable upon exercise of warrants owned by trusts for the
benefit of Mr. Feehan's children). Mr. Feehan's address is 1600 W. 7th
Street, Suite 900, Fort Worth, Texas 76102.
4. 60,000 of the shares shown are issuable upon exercise of warrants owned by
trusts for the benefit of Mr. Jack Daugherty's children of which Mr. Jones is
trustee as to which Mr. Jones disclaims beneficial ownership. Mr. Daugherty
was previously a director of the Company.
5. 10,000 of such shares are owned by a trust for the benefit of Mr. Kaffie's
child of which Mr. Kaffie is trustee and as to which Mr. Kaffie disclaims
beneficial ownership.
6. The address of the Orbis Pension Trustees Limited and Derby Trust plc is 1
Connaught Place, London, W22DY. Orbis Pension Trustees Limited and Derby
Trust plc are managed by Chatsworth Management Services Limited, at the same
address, and may, for the purposes of the rules and regulations of the
Securities and Exchange Commission, be deemed to beneficially own these
shares.
7. The address of Wellington Management Co. is 75 State Street, Boston,
Massachusetts 02109.
Pursuant to an agreement with certain former holders of the capital stock of
Coastal Financial Resources, Inc. under which the Company acquired such holders'
capital stock of Coastal Financial Resources, Inc. and issued in connection
therewith, 450,000 shares of Common Stock of the Company, each such holder has
agreed for a ten-year period commencing December 30, 1994 to vote all Common
Stock beneficially owned by such holder, with respect to each matter submitted
to the stockholders of the Company, in the same proportion as the stockholders
of the Company (other than such holders) vote their shares of Common Stock. As a
result, approximately 14% of the outstanding Common Stock of the Company will be
voted at the Annual Meeting with respect to each matter in the same proportion
as the stockholders of the Company (other than such holders) vote their shares.
INFORMATION CONCERNLNG EXECUTIVE OFFICERS
EXECUTIVE OFFICERS
The following table sets forth certain information about the executive
officers of the Company:
NAME AGE POSITION
Robert J. McGee 42 Director, Chairman of the
Board and President
Kenneth H. Jones, Jr. 62 Director and Vice Chairman
Michael D. Magill 49 Director, Executive Vice
President and Chief Financial
Officer
Jack R. Roper 43 Executive Vice President of
Servicing
J. Dugan Smith 37 Executive Vice President and
Chief Credit Officer
6
<PAGE>
ROBERT J. MCGEE - see "ELECTION OF DIRECTORS" above.
KENNETH H. JONES, JR. - see "ELECTION OF DIRECTORS" above.
MICHAEL D. MAGILL - see "ELECTION OF DIRECTORS" above.
JACK R. ROPER has served as Executive Vice President of Servicing of the
Company since January 1994, and has been an executive officer of the
Company's operating subsidiary since 1989.
J. DUGAN SMITH joined the Company's operating subsidiary in May 1996 and
has served as Executive Vice President and Chief Credit Officer of the
Company since that time. Prior to joining the Company, Mr. Smith was
Executive Vice President and Senior Credit Officer for Victoria Bank &
Trust Company in Victoria, Texas, from 1987 to May 1996 and prior
thereto was employed by Texas Commerce Bancshares in Houston for almost
10 years.
The Company's executive officers are elected annually by, and serve at
the discretion of, the Board of Directors.
COMPENSATION OF EXECUTIVE OFFICERS
The table below sets forth the compensation paid or accrued for services
rendered in all capacities to the Company during the last three fiscal years to
the Company's Chief Executive Officer and each of the Company's most highly
compensated executive officers (the "Named Executives") who earned more than
$100,000 in combined salary and bonus in 1996.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION AWARDS
ANNUAL COMPENSATION ---------------------
------------------------------------------ SECURITIES UNDERLYING
OTHER ANNUAL STOCK OPTIONS
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION (NUMBER OF SHARES)
- --------------------------- ---- -------- --------- ------------
<S> <C> <C> <C> <C> <C>
Robert J. McGee ........... 1996 $224,000 $50,000(3) * 20,000
Chairman of the Board, .. 1995 $200,000 -- * --
President and Chief ..... 1994 $176,809 -- $18,205(4) --
Executive Officer
Michael D. Magill (1) ..... 1996 $168,000 $50,000(3) * 20,000
Executive Vice President
and Chief Financial Officer 1995 $150,000 $50,000(5) 5,000
Jack R. Roper ............. 1996 $106,000 $ 8,000 $15,000 10,000
Executive Vice President 1995 $105,071 -- * 20,000
of Servicing ............ 1994 $ 81,610 * 20,000
J. Dugan Smith (2) ........ 1996 $103,125 * 25,000
Executive Vice President
and Chief Credit Officer
</TABLE>
- ---------------
*Less than 10% of combined salary and bonus.
7
<PAGE>
(1) Mr. Magill joined the Company in January 1995.
(2) Mr. Smith joined the Company in May 1996.
(3) Mr. McGee and Mr. Magill were awarded 1995 annual bonuses contingent upon
achieving a certain level of net income in the first quarter of 1996, which
was met. These bonus payments had no financial impact to the Company in
1996.
(4) Includes $9,600 annual housing allowance.
(5) Mr. Magill received a signing bonus upon his employment with the Company.
STOCK OPTION GRANTS IN 1996
The following table contains certain information concerning stock
options granted to the Named Executives in 1996. All of the stock options were
granted in January and May, 1996.
Individual Grants
-------------------------------------------------------------------------
Number of Percent of
Securities Total Options
Underlying Granted to Exercise
Options Employees in Price (Per Expiration
Name Granted Fiscal Year Share) Date
--------------- -------------- --------------- ------------- -------------
Robert J. McGee 20,000 10.6% $6.94 1/15/06
Michael D.
Magill 20,000 10.6% $6.94 1/15/06
Jack R. Roper 10,000 5.3% $6.94 1/15/06
J. Dugan Smith 25,000 13.3% $7.00 5/15/06
STOCK OPTION EXERCISES IN 1996; VALUE OF UNEXERCISED STOCK OPTIONS
The following table contains certain information concerning the value
of unexercised options at December 31, 1996. No stock options were exercised by
the Named Executive Officers in 1996.
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
OPTIONS AT YEAR-END AT YEAR-END (1)
EXERCISABLE/ EXERCISABLE/
NAME UNEXERCISABLE UNEXERCISABLE
- ---- ------------- -------------
Robert J. McGee 0/20,000 0/0
Michael D. Magill 1,000/25,000 0/0
Jack R. Roper 22,800/42,000 0/0
J. Dugan Smith 0/25,000 0/0
1. Based upon the difference between the closing price of the Company's Common
Stock of $4.375 on December 31, 1996 (the last trading day of 1996) and the
exercise price.
CHANGE OF CONTROL EMPLOYMENT AGREEMENTS
The Company has entered into Change of Control Employment Agreements
with four of its executive officers, Messrs. McGee, Magill, Roper, and Smith,
which provide that from and after a Change of Control (as
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<PAGE>
defined therein) until the second anniversary of the Effective Date of the
Change of Control, if (i) the Company terminates employment of the executive for
any reason other than for Cause (as defined therein), death or disability, (ii)
the executive terminates employment for Good Reason (as defined therein), or
(iii) the executive terminates employment after the first anniversary for any
reason or no reason, such executive will be entitled to a payment equal to two
years' base salary, continued health coverage for one year from the date of
termination or through the end of the second anniversary of the Effective Date
of the Change of Control, whichever is longer, and the extension of certain
rights under the Consolidated Omnibus Budget Reconciliation Act of 1985, as
amended ("COBRA"). For purposes of the Change of Control Employment Agreements,
a Change of Control occurs if (i) the Company is not the surviving entity in any
merger or consolidation (or survives only as a subsidiary of an entity other
than a previously wholly-owned subsidiary of the Company), (ii) the Company
sells, leases or exchanges or agrees to sell, lease or exchange all or
substantially all of its assets to any other person or entity (other than a
wholly-owned subsidiary of the Company), (iii) the Company is to be dissolved
and liquidated, (iv) any person or entity, including a group as contemplated by
Section 13(d)(3) of the Securities Exchange Act of 1934, as amended, acquires or
gains ownership or control (including, without limitation, power to vote) of
more than 50% of the outstanding shares of capital stock of the Company, or (v)
as a result of or in connection with any cash tender or exchange offer, merger
or other business combination,, sale of assets or a contested election for the
Board of Directors, or any combination of the foregoing transactions (a
"Transaction"), the persons who were directors of the Company before such
Transaction shall cease to constitute a majority of the Board.
AGENDA ITEM 2:
RATIFICATION OF THE SELECTION OF INDEPENDENT AUDITORS
The stockholders are asked to ratify the Board of Directors' appointment
of KPMG Peat Marwick LLP ("KPMG"), an independent certified public accounting
firm, to audit the consolidated financial statements of the Company for 1997.
KPMG has audited the books of the Company since its inception in 1992 and has
audited the books of the Company's operating subsidiary since 1962.
Representatives of KPMG are expected to be at the Annual Meeting with the
opportunity to make a statement if they desire, and will also be available to
answer appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE RATIFICATION OF
THE SELECTION OF KPMG PEAT MARWICK LLP AS THE INDEPENDENT AUDITORS AND YOUR
PROXY WILL BE SO VOTED UNLESS YOU SPECIFY OTHERWISE.
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STOCKHOLDER PROPOSALS AND DIRECTOR NOMINATIONS
Stockholders may propose matters to be presented at stockholders'
meetings and may also nominate persons to be directors, subject to the formal
procedures that have been established by the Company and by the rules of the
Securities and Exchange Commission.
PROPOSALS FOR THE 1998 ANNUAL MEETING
Pursuant to rules promulgated by the Securities and Exchange Commission,
any proposals of holders of the Company's Common Stock intended to be presented
at the Annual Meeting of Stockholders of the Company to be held in 1998 and
included in the Company's proxy statement and form of proxy relating to that
meeting must be received by the Company, addressed to Michael D. Magill,
Executive Vice President and Chief Financial Officer, 301 Commerce Street, 2200
City Center II Fort Worth, Texas 76102, no later than November 27, 1997. Such
proposals must be in conformity with all applicable legal provisions, including
Rule 14a-8 of the General Rules and Regulations under the Securities Exchange
Act of 1934, as amended.
In addition to the Securities and Exchange Commission rules described in
the preceding paragraph, the Company's bylaws provide that, at any annual
meeting of stockholders, only such business shall be conducted as shall have
been properly brought before the annual meeting. To be properly brought before
an annual meeting, business must be (i) specified in the notice of meeting (or
any supplement thereto) given by or at the direction of the Board of Directors,
(ii) otherwise properly brought before the meeting by or at the direction of the
Board of Directors, or (iii) otherwise properly brought before the meeting by a
stockholder of the Company who is a stockholder of record at the time of giving
of the required notice described below, who shall be entitled to vote at such
meeting and who complies with the following notice procedures. For business to
be properly brought before an annual meeting by a stockholder, the stockholder,
in addition to any other applicable requirements, must have given timely notice
thereof in writing to the Secretary of the Company. TO BE TIMELY FOR THE 1998
ANNUAL MEETING, A STOCKHOLDER'S NOTICE MUST BE DELIVERED TO OR MAILED AND
RECEIVED AT THE PRINCIPAL EXECUTIVE OFFICES OF THE COMPANY AT 301 COMMERCE
STREET, 2200 CITY CENTER II, FORT WORTH, TEXAS 76102 ON OR BEFORE JANUARY 31,
1998. A stockholder's notice to the Secretary shall set forth as to each matter
the stockholder proposes to bring before the annual meeting: (a) a brief
description of the business desired to be brought before the annual meeting and
the reasons for conducting such business at the annual meeting, (b) the name and
address, as they appear on the Company's books, of the stockholder proposing
such business, (c) the class and number of shares of voting stock of the Company
which are beneficially owned by the stockholder, (d) a representation that the
stockholder intends to appear in person or by proxy at the meeting to bring the
proposed business before the annual meeting, and (e) a description of any
material interest of the stockholder in such business. A stockholder must also
comply with all applicable requirements of the Securities Exchange Act of 1934,
as amended, and the rules and regulations thereunder with respect to any such
proposal.
NOMINATIONS FOR THE 1998 ANNUAL MEETING AND SPECIAL MEETINGS
Pursuant to the Company's bylaws, only persons who are nominated in
accordance with the procedures set forth in the bylaws and who are less than 70
years of age at the time of nomination or election are eligible for election as
directors. Nominations of persons for election to the Board of Directors of the
Company may be made at a meeting of stockholders (a) by or at the direction of
the Board of Directors or (b) by any stockholder of the Company who is a
stockholder of record at the time of giving of notice described below, who shall
be entitled to vote for the election of directors at the meeting and who
complies with the notice procedures described below. Such nominations, other
than those made by or at the direction of the Board of Directors, shall be made
pursuant to timely notice in writing to the Secretary of the Company. TO BE
TIMELY, A STOCKHOLDER'S NOTICE SHALL BE DELIVERED TO OR MAILED AND RECEIVED AT
THE PRINCIPAL EXECUTIVE OFFICES OF THE COMPANY AT 301 COMMERCE STREET, 2200 CITY
CENTER II, FORT WORTH, TEXAS 76102 (I) WITH RESPECT TO AN ELECTION TO BE HELD AT
THE 1998 ANNUAL MEETING OF THE STOCKHOLDERS OF THE COMPANY, ON OR BEFORE JANUARY
31, 1998, and (ii) with respect to an election to be held at a special meeting
of stockholders of the Company for the election of directors not later than the
close of business on the tenth (l0th) day following the day on which notice of
the date of the special meeting was mailed to stockholders of the Company or
public disclosure of the date
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of the special meeting was made, whichever first occurs. Such stockholder's
notice to the Secretary shall set forth (x) as to each person whom the
stockholder proposes to nominate for election or re-election as a director, all
information relating to such person that is required to be disclosed in
solicitations of proxies for election of directors, or is otherwise required,
pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended
(including such person's written consent to being named in the proxy statement
as a nominee and to serve as a director, if elected), and (y) as to the
stockholder giving the notice (i) the name and address, as they appear on the
Company's books, of such stockholder and (ii) the class and number of shares of
voting stock of the Company which are beneficially owned by such stockholder. At
the request of the Board of Directors, any person nominated by the Board of
Directors for election as a director shall furnish to the Secretary of the
Company that information required to be set forth in a stockholder's notice of
nomination which pertains to the nominee. A stockholder must also comply with
all applicable requirements of the Securities Exchange Act of 1934, as amended,
and the rules and regulations thereunder with respect to nominations of
directors.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires the Company's executive officers and directors, and persons who own
more than 10% of the Common Stock of the Company, to file with the Securities
and Exchange Commission initial reports of ownership and reports of changes in
ownership of Common Stock and other equity securities of the Company. Such
persons are required also to furnish to the Company copies of all such forms
filed. To the Company's knowledge, based solely on review of the copies of such
reports furnished to the Company and written representations that two form 5
reports were required to be filed by certain of such persons with respect to
1996, all of the Company's executive officers, directors and more than 10%
stockholders timely made all required filing under Section 16(a) of the
Securities Exchange Act of 1934, as amended, except that one report, covering
one transaction, was filed late by each of J.
Dugan Smith and Jack R. Roper.
GENERAL
The Board of Directors knows of no other matters to be brought before
the Annual Meeting. However, if other matters should properly be brought before
the Annual Meeting, the persons named in the accompanying proxy will vote such
proxy in accordance with their judgment on such matters. A copy of the Company's
Form 10-KSB as filed with the Securities and Exchange Commission may be obtained
without charge (except for exhibits to the report) by written request made to
the Corporate Secretary, KBK Capital Corporation, 301 Commerce Street, 2200 City
Center II, Fort Worth, Texas 76102.
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