KBK CAPITAL CORP, S-2/A, 1998-10-23

KBK CAPITAL CORP
S-2/A, 1998-10-23
SHORT-TERM BUSINESS CREDIT INSTITUTIONS

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<PAGE> 1

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 23, 1998

REGISTRATION NO. 333-65041

REGISTRATION NO.
333-65041-01

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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
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Amendment No. 1

FORM S-2
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
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<TABLE>
<S> <C>
KBK CAPITAL CORPORATION KBK CAPITAL TRUST I
(Exact name of Registrant as specified in its charter) (Exact name of Co-Registrant as specified in its charter)
DELAWARE DELAWARE
(State or other jurisdiction of incorporation or (State or other jurisdiction of incorporation or
organization) organization)
75-2416103 75-6531908
(I.R.S. Employer Identification No.) (I.R.S. Employer Identification No.)
</TABLE>

301 COMMERCE STREET, SUITE 2200, FORT WORTH, TEXAS 76102 (817) 258-6000
(Address, including zip code, and telephone number, including area code, of
Registrant's and Co-Registrant's principal executive office)
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JAY K. TURNER
EXECUTIVE VICE PRESIDENT AND CHIEF FINANCIAL OFFICER
KBK CAPITAL CORPORATION
2200 CITY CENTER II
301 COMMERCE STREET
FORT WORTH, TEXAS 76102
(817) 258-6000
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
---------------------
WITH COPIES TO:

<TABLE>
<S> <C>
GENE G. LEWIS, ESQ. CATHERINE S. GALLAGHER, ESQ.
LAURA MCBURNETT, ESQ. JULIE N. PAPA, ESQ.
LIDDELL, SAPP, ZIVLEY, HILL & LABOON, L.L.P. ANDREWS & KURTH, L.L.P.
3400 CHASE TOWER 1701 PENNSYLVANIA AVENUE, N.W.
600 TRAVIS WASHINGTON, D.C. 20006
HOUSTON, TEXAS 77002 (713) 226-1200 (202) 662-2700
</TABLE>

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Approximate date of commencement of proposed sale to the public: As soon as
practicable after the effective date of this Registration Statement.
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [ ]
If the registrant elects to deliver its latest annual report to security
holders, or a complete and legible facsimile thereof, pursuant to Item 11(a)(1)
of this Form, check the following box. [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]

CALCULATION OF REGISTRATION FEE

<TABLE>
<S> <C> <C> <C>
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PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE AGGREGATE OFFERING
SECURITIES TO BE REGISTERED REGISTERED PER UNIT PRICE
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Trust Preferred Securities of KBK Capital Trust I... 1,150,000(1) $25.00 $28,750,000
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Subordinated Debentures of KBK Capital
Corporation....................................... (3) -- --
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Guarantee of KBK Capital Corporation with respect to
Trust Preferred Securities........................ (4) -- --
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<CAPTION>
<S> <C>
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TITLE OF EACH CLASS OF AMOUNT OF
SECURITIES TO BE REGISTERED REGISTRATION FEE
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Trust Preferred Securities of KBK Capital Trust I... $8,482(2)
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Subordinated Debentures of KBK Capital
Corporation....................................... --
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Guarantee of KBK Capital Corporation with respect to
Trust Preferred Securities........................ --
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</TABLE>

(1) Includes 150,000 Trust Preferred Securities which may be sold by KBK Capital
Trust I to cover over-allotments.

(2) $6,785 of this amount was paid with the initial filing of the Registration
Statement. The fee was calculated pursuant to Rule 457 under the Securities
Act of 1933.

(3) The Subordinated Debentures will be purchased by KBK Capital Trust I with
the proceeds of the sale of the Trust Preferred Securities. Such securities
may later be distributed for no additional consideration to the holders of
the Trust Preferred Securities of KBK Capital Trust I upon its dissolution
and the distribution of its assets.

(4) This Registration Statement is deemed to cover the rights of holders of the
Trust Preferred Securities under the Guarantee and back-up undertakings,
consisting of obligations by KBK Capital Corporation to provide certain
indemnities in respect of, and pay and be responsible for certain expenses,
costs, liabilities and debts of KBK Capital Trust I, as set forth in the
Declaration of Trust and the Subordinated Indenture, in each case as further
described in the Registration Statement. No separate consideration will be
received for the Guarantee or any back-up undertaking.

THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THE REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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<PAGE> 2

Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor
may offers to buy be accepted prior to the time the registration statement
becomes effective. This prospectus shall not constitute an offer to sell or
the solicitation of an offer to buy nor shall there be any sale of these
securities in any State in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the securities laws
of any such State.

SUBJECT TO COMPLETION, DATED OCTOBER 23, 1998

1,000,000 TRUST PREFERRED SECURITIES

KBK CAPITAL TRUST I
% TRUST PREFERRED SECURITIES

(LIQUIDATION AMOUNT $25 PER TRUST PREFERRED SECURITY)

GUARANTEED TO THE EXTENT SET FORTH HEREIN BY

KBK CAPITAL CORPORATION

The % Trust Preferred Securities (the "Trust Preferred Securities")
offered hereby represent preferred undivided beneficial ownership interests in
the assets of KBK Capital Trust I, a statutory business trust formed under the
laws of the State of Delaware (the "Trust"). KBK Capital Corporation, a Delaware
corporation (the "Company" or "KBK"), will own all of the common securities (the
"Trust Common Securities" and, together with the Trust Preferred Securities, the
"Trust Securities") representing subordinated undivided beneficial ownership
interests in the assets of the Trust. The Trust exists for the sole purpose of
issuing the Trust Securities, making distributions to the holders thereof and
investing the proceeds as described below and engaging in activities incidental
thereto. The proceeds from the sale of the Trust Preferred Securities (including
the proceeds, if any, from the exercise of the Underwriters' over-allotment
option) together with the proceeds from the issuance to KBK of the Trust Common
Securities will be used by the Trust to purchase % Subordinated Debentures of
KBK due 2028 (the "Debentures").

Application has been made to list the Trust Preferred Securities on the
American Stock Exchange under the symbol "KBK.Pr".

(continued on next page)
------------------------------------

SEE "RISK FACTORS" BEGINNING ON PAGE 13 FOR A DISCUSSION OF CERTAIN FACTORS
THAT SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE TRUST PREFERRED
SECURITIES.

------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

<TABLE>
<CAPTION>
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UNDERWRITING
PRICE TO DISCOUNTS AND PROCEEDS
PUBLIC(1) COMMISSIONS(2) TO TRUST(3)
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<S> <C> <C> <C>
Per Trust Preferred Security.................... $ (4) $
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Total(5)........................................ $ (4) $
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</TABLE>

(1) Plus accumulated distributions, if any, from November , 1998.

(2) The Trust and the Company have agreed to indemnify the several Underwriters
against certain liabilities, including liabilities under the Securities Act
of 1933, as amended. See "Underwriting."

(3) Before deducting expenses of the offering payable by the Company, estimated
at $537,500.

(4) In view of the fact that the proceeds of the sale of the Trust Preferred
Securities will be ultimately invested in investment instruments of the
Company, the Underwriting Agreement provides that the Company will pay to
the Underwriters, as compensation for their services, $ per Trust
Preferred Security (or $ in the aggregate) (the
"Underwriters' Compensation"). See "Underwriting."

(5) The Trust has granted the Underwriters an option for 30 days to purchase up
to an additional 150,000 Trust Preferred Securities at the price to public
solely to cover over-allotments. If such option is exercised in full, the
total price to public, aggregate Underwriters' Compensation and proceeds to
the Trust will be $ , $ and $ ,
respectively. See "Underwriting."

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

The Trust Preferred Securities offered hereby are offered severally by the
Underwriters, as specified herein, subject to receipt and acceptance by them and
subject to their right to reject any order in whole or in part. It is expected
that delivery of the Trust Preferred Securities will be made only in book-entry
form through the facilities of The Depository Trust Company ("DTC") on or about
November , 1998.

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

FRIEDMAN, BILLINGS, RAMSEY & CO., INC. J.J.B. HILLIARD, W.L. LYONS, INC.

NOVEMBER , 1998

<PAGE> 3

Holders of the Trust Preferred Securities will be entitled to receive
cumulative cash distributions accumulating from the closing of this offering and
payable quarterly in arrears on each February , May , August and November
, commencing February , 1999, at an annual rate of % of the liquidation
amount of $25 per Trust Preferred Security (equivalent to $ per Trust
Preferred Security per annum), if, as and when the Trust has funds legally
available for payment. See "Description of the Trust Preferred
Securities -- Distributions." Distributions not paid on the scheduled payment
date will accumulate and compound quarterly at a rate per annum equal to %
and, except to the extent the context otherwise requires, when used herein the
term "distributions" includes any such additional amounts. The distribution rate
and the distribution payment dates and other payment dates for the Trust
Preferred Securities will correspond to the interest rate and interest payment
dates and other payment dates for the Debentures, which will be the principal
assets of the Trust. The Debentures will provide that payments of interest may
be deferred at any time, and from time to time, by KBK for a period not
exceeding 20 consecutive quarters (referred to herein as an "Extension Period").
During any extension period, holders of Trust Preferred Securities will
recognize original issue discount ("OID"). See "Certain Federal Income Tax
Consequences -- Interest Income and Original Issue Discount."

The payment of distributions by the Trust and payments on liquidation of
the Trust or the redemption of Trust Preferred Securities, as described below,
are guaranteed on a subordinated basis by the Company (the "Guarantee") to the
extent the Trust has funds legally available therefor as described under
"Description of the Guarantee." The Company's obligation under the Guarantee is
subordinate and junior in right of payment to all other liabilities of the
Company (except for the guarantee of the Trust Common Securities (as defined
herein)) and ranks pari passu with the most senior preferred stock, if any,
issued from time to time by the Company. The Company's obligations under the
Debentures are subordinate and junior in right of payment to all Senior Debt (as
defined herein) of the Company. As of September 30, 1998, after giving effect to
this offering and the application of the net proceeds therefrom (assuming the
Underwriters' over-allotment option is not exercised), the Company would have
had approximately $14.2 million of Senior Debt outstanding. See "Risk
Factors -- Ranking of Subordinate Obligations under the Guarantee and the
Debentures." The term "Senior Debt" means any indebtedness of the Company,
except for trade credit and any such indebtedness that is by its terms
subordinated to or pari passu with the Debentures, as the case may be. See
"Description of the Debentures -- Subordination."

The Company has covenanted in the Guarantee that, if (a) for any
distribution period, full distributions on a cumulative basis on any Trust
Preferred Securities have not been paid or declared and set apart for payment,
(b) an event of default has occurred and is continuing under the indenture under
which the Debentures are issued (the "Subordinated Indenture"), (c) the Company
is in default of its obligations under the Guarantee or the guarantee of the
Trust Common Securities, or (d) the Company has given notice of its selection of
an Extension Period, then during such period, subject to certain exceptions, the
Company shall not (i) declare or pay dividends or distributions on, or redeem,
purchase, acquire or make a liquidation payment with respect to, any of its
capital stock nor (ii) make any payment of principal, interest or premium, if
any, on or repay, repurchase or redeem any debt securities of the Company that
rank pari passu with or junior to the Debentures. See "Description of the
Guarantee -- Certain Covenants of KBK."

Except as provided below, the Trust Preferred Securities may not be
redeemed by the Trust prior to November , 2001. The Trust Preferred Securities
are subject to mandatory redemption, in whole or in part, on or after such date,
at 100% of the liquidation amount thereof plus accrued and unpaid distributions,
if any, upon any permitted redemption by KBK of the Debentures. See "Description
of the Trust Preferred Securities -- Optional Redemption." In addition, the
Trust Preferred Securities are subject to mandatory redemption upon the
repayment at maturity or as a result of acceleration of the Debentures. See
"Description of the Trust Preferred Securities -- Mandatory Redemption."

Under certain circumstances following the occurrence of a Trust Special
Event (as defined herein), the Trust Preferred Securities are also subject to
exchange, at the option of the Trust in the manner described herein, for the
Debentures (see "Description of the Trust Preferred Securities -- Trust Special
Event Exchange"). At any time, KBK will have the right to terminate the Trust
and cause the Debentures to be

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<PAGE> 4

distributed to the holders of the Trust Preferred Securities in liquidation of
the Trust. See "Description of the Trust Preferred Securities -- Mandatory
Redemption" and " -- Distribution of Debentures."

In the event of any liquidation, dissolution, winding up or termination of
the Trust, the holders of the Trust Preferred Securities will be entitled to
receive (after payment by the Trust of all of its liabilities to the extent
required by applicable law) for each Trust Preferred Security a liquidation
amount of $25 plus accumulated and unpaid distributions thereon, unless the
Debentures are distributed in connection with such liquidation, dissolution,
winding up or termination of the Trust. Upon a default by the Company on any of
its obligations under the Guarantee or the Debentures, the holders of the Trust
Preferred Securities will have a preference over the holders of the Trust Common
Securities with respect to payments upon liquidation of the Trust. See
"Description of the Trust Preferred Securities -- Liquidation Distribution Upon
Dissolution."

CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE TRUST PREFERRED
SECURITIES. SUCH TRANSACTIONS MAY INCLUDE STABILIZING, THE PURCHASE OF TRUST
PREFERRED SECURITIES TO COVER SYNDICATE SHORT POSITIONS AND THE IMPOSITION OF
PENALTY BIDS. FOR A DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITING."

3
<PAGE> 5

AVAILABLE INFORMATION

KBK is subject to the informational requirements of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), and, in accordance therewith,
files reports, proxy statements and other information with the Securities and
Exchange Commission (the "Commission"). Such reports, proxy statements and other
information may be inspected and copied at the public reference facilities
maintained by the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549,
and at the following Regional Offices of the Commission: 7 World Trade Center,
Suite 1300, New York, New York 10048; and Northwestern Atrium, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661-2511. Copies of such material also
may be obtained at prescribed rates from the Public Reference Section of the
Commission, 450 Fifth Street, N.W., Washington, D.C. 20549. Such material also
may be accessed electronically by means of the Commission's home page on the
Internet at http://www.sec.gov. KBK's common stock, par value $.01 per share
(the "Common Stock"), is listed for trading on the American Stock Exchange and
the Pacific Stock Exchange under the trading symbol "KBK," and reports, proxy
statements and other information concerning KBK may be inspected at the offices
of the American Stock Exchange, 86 Trinity Place, New York, New York 10005 and
at the offices of the Pacific Stock Exchange, 301 Pine Street, San Francisco,
California 94104.

The Trust and the Company have filed a registration statement on Form S-2
(together with all amendments and exhibits thereto, the "Registration
Statement") under the Securities Act of 1933, as amended (the "Securities Act").
This Prospectus does not contain all of the information set forth in the
Registration Statement, certain parts of which are omitted in accordance with
the rules and regulations of the Commission. Reference is made to such
Registration Statement for further information with respect to KBK and the Trust
Preferred Securities offered hereby. Statements contained herein concerning the
provisions of documents are necessarily summaries of such documents, and each
statement is qualified in its entirety by reference to the copy of the
applicable document filed with the Commission.

The Company will provide Quarterly Reports containing unaudited financial
statements to the holders of Trust Preferred Securities if such reports are
furnished to the holders of the Company's Common Stock, and Annual Reports
containing financial statements audited by the Company's independent auditors.
The Company will also furnish Annual Reports on Form 10-KSB and Quarterly
Reports on Form 10-QSB free of charge to holders of Trust Preferred Securities
who so request in writing addressed to the Secretary of the Company.

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

The Company hereby incorporates by reference the following documents filed
with the Commission pursuant to the Exchange Act:

1. The Company's Annual Reports on Form 10-KSB for the years ended
December 31, 1997 and 1996.

2. The Company's Quarterly Reports on Form 10-QSB for the quarters ended
March 31, 1998, June 30, 1998, and September 30, 1998.

The Company will provide without charge to each person to whom a copy of
this Prospectus is delivered, upon their written or oral request, a copy of any
or all of the documents incorporated herein by reference. Written requests for
such copies should be addressed to Jay K. Turner, KBK Capital Corporation, 301
Commerce Street, 2200 City Center II, Fort Worth, Texas 76102, telephone (817)
258-6000.

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FORWARD-LOOKING STATEMENTS

This Prospectus contains forward-looking statements within the meaning of
Section 27A of the Securities Act and Section 21E of the Exchange Act. Where any
such forward-looking statement includes a statement of the assumptions or bases
underlying such forward-looking statement, KBK cautions that, while such
assumptions or bases are believed to be reasonable and are made in good faith,
assumed facts or bases almost always vary from the actual results, and the
differences between assumed facts or bases and actual results can be material,
depending upon the circumstances. Where, in any forward-looking statement, KBK,
including its subsidiaries, or its management expresses an expectation or belief
as to future results, such expectation or belief is expressed in good faith and
is believed to have a reasonable basis, but there can be no assurance that the
statement of expectation or belief will result or be achieved or accomplished.
The words "may," "will," "expects," "anticipates," "intends," "plans,"
"estimates," "should" and words of similar import may identify forward-looking
statements.

Important factors that could cause actual results to differ materially from
those in the forward-looking statements herein include industry conditions,
general economic conditions, interest rates, competition and the ability of the
Company to successfully manage its growth.

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<PAGE> 7

PROSPECTUS SUMMARY

The following summary is qualified in its entirety by, and should be read
in conjunction with, the more detailed information and financial statements,
including the notes thereto, appearing elsewhere in this Prospectus and
incorporated by reference herein. When the context requires, the terms "Company"
and "KBK" shall be deemed to mean KBK Capital Corporation and its wholly-owned
subsidiaries, including KBK Financial, Inc. ("KBK Financial") and KBK
Receivables Corporation ("KBK Receivables") and their predecessors. In addition,
the information in this Prospectus assumes that the Underwriters' over-allotment
option is not exercised. See "Underwriting."

THE COMPANY

KBK Capital Corporation is the holding company for KBK Financial, an
independent financial services company that provides a broad line of financial
products and services to middle market commercial businesses with credit needs
of less than $10 million. The Company was founded in 1962 as a factoring company
for energy-related receivables in Texas. Factoring has served as the cornerstone
of KBK's growth. In 1994, the Company began introducing new products in an
effort to expand its client base and to meet the needs of its existing clients
as their credit quality improves. These products include purchase revolvers,
working capital loans, term loans and mezzanine loans. Factoring, purchase
revolvers, working capital loans, and term and mezzanine loans represented
approximately 36%, 17%, 15%, and 32%, respectively, of the Company's earning
assets at September 30, 1998. "Earning assets" means owned and managed factoring
facilities, purchase revolvers, commercial loans and mezzanine loans.

KBK's client base consists primarily of businesses with annual revenues
ranging from $1 million to $50 million. The Company's clients typically have
rapidly expanding operations which drive their need for capital. KBK strives to
provide fast, flexible and creative solutions that are tailored to meet these
needs. This approach has provided KBK with a strong reputation in the middle
market and a well-diversified client base. The Company's clients are located in
eleven states and are engaged in a range of businesses, including energy-
related, manufacturing, wholesale and retail distribution, and other businesses.
As of September 30, 1998, only one client had amounts outstanding under its
facilities in excess of 10% of the Company's earning assets, constituting 11.3%
of earning assets.

The Company's long-term goal is to be a leader in providing financial
products and services to middle market businesses in the largest United States
markets. KBK's growth strategies include increasing market penetration and
expanding its market presence, extending its product line and opportunistically
pursuing strategic acquisitions and partnerships which will complement or
leverage the Company's product portfolio or client relationships.

The Company has consistently employed a disciplined credit approach which
has enabled it to increase earning assets, minimize credit losses and generate
36 consecutive years of profitability. The Company's earning assets have grown
from $23.0 million as of December 31, 1993 to $149.3 million as of September 30,
1998. The ratio of net charge-offs to average earning assets over the same
period has declined from 2.1% in 1993 to 1.0% for the twelve months ended
September 30, 1998. The Company has also maintained prudent credit reserves. As
of September 30, 1998, KBK's allowance for credit losses was $1.9 million, or
1.3% of total earning assets.

The Company's factoring facilities generally involve an on-going or
revolving agreement to purchase eligible new receivables. Factoring involves the
Company's purchase and the client's true sale of accounts receivable which
usually are individually ledgered, invoice-by-invoice, on the Company's books.
The Company offers a full range of factoring products and services, including
notification, non-notification, verification, non-verification and non-recourse
factoring as well as several other hybrid variations. See "The
Company -- Products." The obligors or "debtors" of the factored receivables
typically represent large, financially strong businesses, many of which are
ranked in Fortune Magazine's Fortune 1000 list. As of September 30, 1998, KBK's
portfolio of owned and managed receivables purchased under factoring facilities

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<PAGE> 8

totaled $52.2 million. The Company's yield on its factoring portfolio was 20.2%
in 1997 and 21.8% for the nine months ended September 30, 1998.

In addition to factoring or purchasing accounts receivable on a specific
"invoice-by-invoice" ledgered basis, the Company also purchases accounts
receivable as a revolving "pool." Under this arrangement, the client sells all
receivables as and when they are generated by the business and KBK makes
periodic advances upon a request by the client, in aggregate amounts up to the
client's maximum availability limit. The Company's yield on purchase revolvers
was 14.2% in 1997 and 13.1% for the nine months ended September 30, 1998.

KBK's commercial loan portfolio includes working capital and term loan
facilities that are typically secured by a first lien on accounts receivable,
inventory, equipment, owner-occupied real estate or other assets. The working
capital lines of credit have maturities of up to two years, while term loans are
structured with monthly payments and maturities which typically range from one
to five years. Most of the Company's commercial loan products are priced on a
floating rate basis over the Company's announced base rate. During 1997 and the
nine months ended September 30, 1998, the Company's yield on its commercial loan
portfolio was 12.1% and 12.8%, respectively.

The Company's mezzanine loan product, which was introduced in 1998, offers
an attractive financing alternative for customers whose growth has outpaced
their borrowing capacity from senior debt sources. The Company's strategy with
respect to mezzanine loans is to extend the duration of its current
relationships and offer the Company's traditional products to new customers. It
is anticipated that KBK's mezzanine financings will typically have fixed
interest rates as well as warrants to acquire equity in the borrower. Since
introducing the product in the first quarter of 1998, the Company has reviewed
approximately 145 transactions. To date, the Company has funded two loans for an
aggregate investment of $5.0 million.

In 1997, the Company established a secured credit facility through a
conduit commercial paper issuer to diversify its funding sources and reduce its
cost of capital. Under this arrangement, KBK sells certain receivables and
certain inventory loans to the conduit on a non-recourse basis; such assets are
pooled with similar types of assets acquired by the conduit from other
unaffiliated companies and serve as collateral for revolving commercial paper
issuances. KBK continues to manage and service the assets sold by KBK to the
conduit in exchange for a fee based on the balance of such assets. As of
December 31, 1997 and September 30, 1998, KBK had $67.0 million and $74.2
million, respectively, of receivables and inventory loans outstanding in the
conduit facility and during 1997 and the first nine months of 1998 the Company
had received approximately $6.3 million and $5.9 million, respectively, in fees
related to managing and servicing such assets. Currently, the Company has the
ability to fund up to $75.0 million through the conduit facility and expects
this limit to be increased to $100.0 million as the result of continued growth
in earning assets. The financing provided by this facility is off-balance sheet
and the Company realizes no gain on transfer of the assets to the conduit.
Servicing income is credited as received. The Company believes that the conduit
facility will enable it to significantly expand its owned and managed portfolio
while simultaneously minimizing its balance sheet leverage.

Over the past five years, the Company has posted strong growth in revenue
and consistent profitability within reasonable leverage levels. Revenues have
increased from $6.3 million for 1993 to $15.2 million for 1997 and $13.2 million
for the nine months ended September 30, 1998. This growth was largely attributed
to an increase in KBK's total earning assets, which rose from $23.0 million as
of December 31, 1993 to $149.3 million as of September 30, 1998. Net income
increased from $1.4 million in 1993 to $2.1 million in 1997 and $2.1 million for
the nine months ended September 30, 1998. The Company's ratio of earnings to
fixed charges was 3.9x at December 31, 1993 and 2.6x at September 30, 1998.

The Company is incorporated in the state of Delaware and its headquarters
are located at 301 Commerce Street, 2200 City Center II, Fort Worth, Texas
76102. The Company's general telephone number is (817) 258-6000. KBK maintains
six offices: three in Texas, and one in each of Louisiana, California and
Missouri.

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THE OFFERING

The Trust.................. KBK Capital Trust I, a Delaware statutory business
trust. The principal assets of the Trust will be
the % Subordinated Debentures of KBK due 2028.

Securities Offered......... 1,000,000 % Trust Preferred Securities (1,150,000
if the Underwriters' over-allotment option is
exercised in full).

Liquidation Amount......... $25 per Trust Preferred Security. See "Description
of the Trust Preferred Securities -- Liquidation
Distribution Upon Dissolution."

Distributions.............. Distributions on the Trust Preferred Securities
will accumulate from the closing of this offering
and will be payable at the annual rate of % of
the liquidation amount of $25 per Trust Preferred
Security (equivalent to $ per Trust Preferred
Security per annum) if, as and when the Trust has
funds legally available for payment. Distributions
will be payable quarterly in arrears on each
February , May , August and November ,
commencing February , 1999. Distributions not
made on the scheduled payment date will accumulate
and compound quarterly at a rate per annum equal to
%.

The ability of the Trust to pay distributions on
the Trust Preferred Securities is entirely
dependent on its receipt of payments with respect
to the Debentures held by the Trust. The Debentures
will provide that payments of interest may be
deferred at any time, and from time to time, by KBK
for a period not exceeding 20 consecutive quarters.
See "-- The Offering -- Debentures," "Risk
Factors -- Option to Extend Interest Payment
Period; Tax Consequences; Trading Price" and
"Description of the Trust Preferred
Securities -- Distributions."

Rights Upon Non-Payment of
Distributions and Certain
Defaults; Covenants of
the
Company.................. If, at any time, KBK or any successor is in default
on any of its obligations under the Guarantee, then
the Trust Guarantee Trustee (as defined herein), as
the holder of the Guarantee, shall have the right
to enforce such Guarantee, including the right to
enforce the covenant restricting certain payments
by KBK described below.

In the Guarantee, the Company has agreed that if
(a) for any distribution period, full distributions
on a cumulative basis on any Trust Preferred
Securities have not been paid, (b) an event of
default has occurred and is continuing under the
Subordinated Indenture (a "Debenture Event of
Default"), (c) the Company is in default of its
obligations under the Guarantee or the guarantee of
the Trust Common Securities (together with the
Guarantee, the "Guarantees") or (d) notice of an
Extension Period has been given and shall not have
been rescinded or such Extension Period is
continuing, then, during such period the Company
shall not (i) declare or pay dividends on, make
distributions with respect to, or redeem, purchase
or acquire, or make a liquidation payment with
respect to any of its capital stock (except for
dividends or distributions in shares of, or
options, warrants or rights to subscribe for or
purchase shares of, its capital stock and
conversions or exchanges of common stock of one
class into common stock of another class) or (ii)
make any payments of principal, interest or
premium, if

8
<PAGE> 10

any, on or repay, repurchase or redeem any debt
securities (including guarantees of indebtedness
for money borrowed) of the Company that rank pari
passu with or junior to the Debentures (other than
(v) any redemption, liquidation, interest,
principal or guarantee payment by the Company where
the payment is made by way of securities (including
capital stock) that rank pari passu with or junior
to the securities on which such redemption,
liquidation, interest, principal or guarantee
payment is being made, (w) payments under the
Guarantees, (x) purchases of Common Stock related
to the issuance of Common Stock under any of the
Company's benefit plans for its directors, officers
or employees, (y) as a result of a reclassification
of the Company's capital stock or the exchange or
conversion of one series or class of the Company's
capital stock for another series or class of the
Company's capital stock, and (z) the purchase of
fractional interests in shares of the Company's
capital stock pursuant to the conversion or
exchange provisions of such capital stock or the
security being converted or exchanged). See
"Description of the Guarantee -- Certain Covenants
of KBK."

Redemption................. The Trust Preferred Securities will be redeemable
for cash, at the option of the Trust, in whole or
in part, from time to time on or after November ,
2001 at a redemption price of $25 per Trust
Preferred Security together with accumulated and
unpaid distributions to the date of redemption. See
"Description of the Trust Preferred Securities --
Optional Redemption." The Trust Preferred
Securities will also be redeemable upon the
repayment either at maturity of the Debentures or
as a result of the acceleration of the Debentures
upon an event of default, at a redemption price of
$25 per Trust Preferred Security together with
accumulated and unpaid distributions thereon to the
date of redemption. See "Description of the Trust
Preferred Securities -- Mandatory Redemption."

Trust Special Event
Exchange................... Upon the occurrence of a Trust Tax Event (as
defined herein) or a Trust Investment Company Event
(as defined herein), the Administrative Trustees
(as defined herein) shall direct the Property
Trustee (as defined herein) to exchange all
outstanding Trust Preferred Securities for
Debentures and to dissolve the Trust, provided
that, in the case of a Trust Tax Event, KBK shall
have the right to direct that less than all, or
none, of the Trust Preferred Securities be so
exchanged if and for so long as KBK shall have
elected to pay Additional Sums (as defined herein)
such that the net amounts received by the holders
of Trust Preferred Securities that remain
outstanding are not reduced as a result of such
Trust Tax Event, and shall not have revoked any
such election or failed to make such payments. See
"Description of the Trust Preferred
Securities -- Trust Special Event Exchange."

Distribution of
Debentures................. At any time, KBK will have the right to dissolve
the Trust and, after satisfaction of the
liabilities of creditors of the Trust as provided
by applicable law, cause the Debentures to be
distributed to the holders of the Trust Preferred
Securities in liquidation of the Trust. See
"Description of the Trust Preferred
Securities -- Distribution of Debentures."

Guarantee.................. Pursuant to the Guarantee, the Company will
irrevocably guarantee, on a subordinated basis, the
payment in full of (i) any accumulated and unpaid
distributions on the Trust Preferred Securities to
the extent of funds of the Trust legally available
therefor, (ii) the amount payable

9
<PAGE> 11

upon redemption of the Trust Preferred Securities
to the extent of funds of the Trust legally
available therefor and (iii) generally, the
liquidation amount of the Trust Preferred
Securities to the extent of the assets of the Trust
legally available for distribution to holders of
Trust Preferred Securities. See "Description of the
Guarantee."

The Company's obligation under the Guarantee is
subordinate and junior in right of payment to all
other liabilities of the Company and ranks pari
passu with the most senior preferred stock, if any,
issued from time to time by the Company.

Voting Rights.............. Holders of Trust Preferred Securities will
generally have limited voting rights relating only
to the modification of the Trust Preferred
Securities. Holders of Trust Preferred Securities
will not be entitled to vote to appoint, remove or
replace the Regular Trustees (as defined herein) or
the Delaware Trustee (as defined herein), which
voting rights are vested exclusively in KBK as
holder of the Trust Common Securities. The holders
of a majority in aggregate liquidation amount of
the Trust Preferred Securities will, however, have
the right to direct the time, method and place of
conducting any proceeding for any remedy available
to the Property Trustee, or direct the exercise of
any power conferred upon the Property Trustee under
the Declaration, including the right to direct the
Property Trustee as holder of the Debentures (i) to
exercise the remedies available to it under the
Subordinated Indenture as holder of the Debentures
and (ii) to consent to any amendment, modification
or termination of the Subordinated Indenture or the
Debentures, where such consent shall be required.
See "Description of the Trust Preferred
Securities -- Voting Rights; Amendment of the
Declaration."

Debentures................. The Debentures will have a maturity of 30 years
from the date of original issuance and will bear
interest at the rate of % per annum payable
quarterly in arrears. KBK has the right from time
to time to select an interest payment period or
periods longer than one quarter (during which
period or periods interest will compound
quarterly), provided that no such Extension Period
will exceed 20 consecutive quarters and provided
further that no such deferral of interest payments
may extend beyond the stated maturity of the
Debentures.

Accordingly, distribution payments on the Trust
Preferred Securities may not be deferred beyond the
stated maturity of the Debentures. If KBK defers
interest payments longer than one quarter, subject
to certain exceptions, it will be prohibited from
paying dividends on any of its capital stock and
making certain other restricted payments until
quarterly interest payments are resumed and all
accumulated and unpaid interest on the Debentures
is brought current. SHOULD AN EXTENSION PERIOD
OCCUR, THE HOLDERS OF TRUST PREFERRED SECURITIES
WILL BE REQUIRED TO ACCRUE INTEREST INCOME IN THEIR
GROSS INCOME FOR UNITED STATES FEDERAL INCOME TAX
PURPOSES IN ADVANCE OF RECEIPT OF THE CASH
DISTRIBUTIONS WITH RESPECT TO SUCH DEFERRED
INTEREST PAYMENTS. See "Certain Federal Income Tax
Consequences -- Interest Income and Original Issue
Discount."

In addition, on and after November , 2001, the
Debentures are redeemable at the option of KBK at
any time, in whole or in part, at a redemption
price equal to 100% of the principal amount of
Debentures

10
<PAGE> 12

being redeemed together with accrued and unpaid
interest thereon to the date fixed for redemption.
See "Description of the Debentures -- Optional
Redemption."

The payment of the principal of and interest on the
Debentures will be subordinated in right of payment
to all Senior Debt of KBK. As of September 30,
1998, after giving effect to this offering of Trust
Preferred Securities and the application of the net
proceeds therefrom (assuming the Underwriters'
over-allotment option is not exercised), KBK would
have had outstanding approximately $14.2 million of
Senior Debt. See "Risk Factors -- Ranking of
Subordinate Obligations under the Guarantee and the
Debentures." While the Trust Preferred Securities
are outstanding, the Property Trustee will not have
the right to amend the Subordinated Indenture or
the terms of the Debentures in a way that adversely
affects the holders of the Trust Preferred
Securities or to waive a Debenture Event of Default
without the consent of holders of at least a
majority in aggregate liquidation amount of the
Trust Preferred Securities and, in certain cases,
the Trust Common Securities then outstanding. See
"Description of the Debentures -- Modification of
the Subordinated Indenture."

Use of Proceeds............ All of the proceeds from the sale of the Trust
Preferred Securities will be used by the Trust to
purchase the Debentures. The Company intends to use
the net proceeds from the sale of the Debentures to
repay approximately $23.4 million of short-term
indebtedness and for general corporate purposes.
See "Use of Proceeds."

Form of Trust Preferred
Securities............... The Trust Preferred Securities will be represented
by a global certificate or certificates registered
in the name of Cede & Co., as nominee for DTC.
Beneficial interests in the Trust Preferred
Securities will be evidenced by, and transfers
thereof will be effected only through, records
maintained by the participants in DTC. Except as
described herein, Trust Preferred Securities in
certificated form will not be issued in exchange
for the global certificate or certificates. See
"Description of the Trust Preferred
Securities -- Book-Entry Only Issuance -- The
Depository Trust Company."

Listing.................... Application has been made to list the Trust
Preferred Securities on the American Stock
Exchange.

Proposed Trading Symbol.... "KBK.Pr"

Risk Factors............... Prospective purchasers of Trust Preferred
Securities should carefully consider the specific
risk factors set forth under "Risk Factors."

11
<PAGE> 13

SUMMARY FINANCIAL AND OPERATING DATA

The following table sets forth summary historical consolidated financial
data of the Company and its subsidiaries as of the dates and for the periods
indicated. The summary historical consolidated financial data as of and for each
of the nine month periods ended September 30, 1998 and 1997 were derived from
the unaudited interim financial statements of the Company and in the opinion of
management include all adjustments (consisting only of normal recurring
adjustments) necessary to present fairly the information set forth therein. The
information presented below should be read in conjunction with the Company's
historical consolidated financial statements and notes thereto incorporated by
reference herein and "Management's Discussion and Analysis of Financial
Condition and Results of Operations."

<TABLE>
<CAPTION>
NINE MONTHS
ENDED
SEPTEMBER 30, YEAR ENDED DECEMBER 31,
------------------ ---------------------------------------------------
1998 1997 1997 1996 1995 1994 1993
------- ------- ------- ------- ------- ------- -------
(UNAUDITED)
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
OPERATING DATA:
Revenue:
Earned discount income................. $ 1,378 $ 3,263 $ 3,777 $ 9,778 $10,634 $ 6,625 $ 6,204
Interest income -- loans............... 3,371 2,369 3,119 1,369 144 70 115
Servicing fees......................... 5,897 4,022 6,314 -- -- -- --
Other income -- fees................... 2,586 1,429 1,981 1,054 166 201 --
------- ------- ------- ------- ------- ------- -------
Total revenue........................ 13,232 11,083 15,191 12,201 10,944 6,896 6,319
Interest expense......................... 2,004 2,206 2,666 2,590 1,652 806 762
------- ------- ------- ------- ------- ------- -------
Income after interest expense............ 11,228 8,877 12,525 9,611 9,292 6,090 5,557
Provision for credit losses.............. 1,100 575 875 245 600 65 588
------- ------- ------- ------- ------- ------- -------
Income after interest expense and
provision for credit losses............ 10,128 8,302 11,650 9,366 8,692 6,025 4,969
Operating expenses:
Salaries and employee benefits......... 3,722 3,247 4,431 3,545 2,997 1,960 1,569
Amortization of intangible assets...... 295 284 379 361 410 276 275
Occupancy and equipment................ 1,108 937 1,285 847 587 423 241
Professional fees...................... 285 189 251 344 584 181 159
Other.................................. 1,463 1,290 1,852 1,812 1,089 691 507
------- ------- ------- ------- ------- ------- -------
Total operating expenses............. 6,873 5,947 8,198 6,909 5,667 3,531 2,751
------- ------- ------- ------- ------- ------- -------
Income before income taxes............... 3,255 2,355 3,452 2,457 3,025 2,494 2,218
Income tax expense....................... 1,111 954 1,388 906 1,177 863 783
------- ------- ------- ------- ------- ------- -------
Net income............................... $ 2,144 $ 1,401 $ 2,064 $ 1,551 $ 1,848 $ 1,631 $ 1,435
======= ======= ======= ======= ======= ======= =======
BALANCE SHEET DATA (AT END OF PERIOD):
Total assets........................... $82,580 $51,767 $56,401 $89,747 $62,212 $61,080 $26,494
Long term debt......................... -- -- -- -- -- -- --
Short term debt........................ 41,080 17,500 21,000 58,000 33,000 29,926 11,993
Stockholders' equity................... 25,505 23,541 24,569 22,140 21,288 20,374 8,797
PROFITABILITY RATIOS:
Yield on average net earning assets.... 19.8% 20.8% 20.9% 24.0% 31.7% 29.2% 35.4%
Return on average assets under
management........................... 2.1(1) 1.9(1) 2.0 2.4 4.0 5.3 6.4
Return on average equity............... 11.6(1) 8.2(1) 8.9 7.1 8.9 11.2 17.8
ASSET QUALITY RATIOS:
Ratio of allowance for credit losses to
net charge-offs...................... 1.5x(2) 3.1x(2) 3.5x 4.4x 3.3x 3.9x 2.7x
Net charge-offs as a percentage of
average earning assets............... 1.0%(2) 0.7%(2) 0.6% 0.6% 1.3% 1.5% 2.1%
Ratio of earnings to fixed
charges(3)........................... 2.6x 2.1x 2.3x 1.9x 2.8x 4.1x 3.9x
</TABLE>

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

(1) Percentage shown has been annualized.

(2) For the twelve months ended September 30, 1998 and 1997.

(3) For purposes of calculating these ratios: (i) "fixed charges" represent
interest expense and (ii) "earnings" represent the aggregate of income
before income taxes and interest expense.

12
<PAGE> 14

RISK FACTORS

Before investing in the Trust Preferred Securities offered hereby,
prospective investors should give special consideration, in addition to the
information set forth elsewhere in this Prospectus, to the information set forth
below. The Company cautions the reader, however, that this list of factors may
not be exhaustive.

The risk factors set forth below and elsewhere in this Prospectus should be
read as accompanying all forward-looking statements made in this Prospectus.
These forward-looking statements can be identified by the use of forward-looking
terminology such as "may," "will," "expects," "anticipates," "intends," "plans,"
"estimates," "should" and words of similar import. The Company's actual results
could differ materially from those anticipated in such forward-looking
statements for the reasons set forth below and for other reasons.

RISK FACTORS RELATING TO THE TRUST PREFERRED SECURITIES

RANKING OF SUBORDINATE OBLIGATIONS UNDER THE GUARANTEE AND THE DEBENTURES

The obligations of KBK under the Guarantee issued by KBK for the benefit of
the holders of the Trust Preferred Securities are unsecured and rank subordinate
and junior in right of payment to all other liabilities of KBK and pari passu
with the most senior preferred stock, if any, issued from time to time by KBK.
The obligations of KBK under the Debentures are subordinate and junior in right
of payment to all present and future Senior Debt. As of September 30, 1998,
after giving effect to this offering and the application of the net proceeds
therefrom (assuming the Underwriters' over-allotment option is not exercised),
KBK would have had approximately $14.2 million of Senior Debt outstanding. The
ability of the Trust to pay amounts due on the Trust Preferred Securities is
solely dependent upon KBK making payments on the Debentures as and when
required. Because the Company is a holding company, the right of the Company to
participate in any distribution of assets of any subsidiary, including KBK
Financial, upon such subsidiary's liquidation or reorganization or otherwise
(and thus the ability of holders of the Trust Preferred Securities to benefit
indirectly from such distribution), is subject to the prior claims of creditors
of that subsidiary, except to the extent that the Company may itself be
recognized as a creditor of that subsidiary. Accordingly, the Debentures and the
Guarantee will be effectively subordinated to all existing and future
liabilities of the Company's subsidiaries, and holders of the Debentures should
look only to the assets of the Company for payments on the Debentures. None of
the Subordinated Indenture, the Guarantee or the Declaration places any
limitation on the amount of secured or unsecured debt, including Senior Debt,
that may be incurred by KBK. See "Description of the Guarantee -- Status of the
Guarantee" and "Description of the Debentures -- Subordination."

OPTION TO EXTEND INTEREST PAYMENT PERIOD; TAX CONSEQUENCES; TRADING PRICE

So long as there is no continuing event of default under the Debentures,
KBK has the right under the Subordinated Indenture to defer the payment of
interest on the Debentures beyond the regular quarterly period (the "Interest
Payment Period") at any time or from time to time for a period not exceeding 20
consecutive quarters, provided that no such Extension Period may extend beyond
the stated maturity of the Debentures. Upon the termination of any Extension
Period and the payment on the Interest Payment Date (as defined herein)
coinciding with or next following the end of such Extension Period (whichever is
earlier) of all amounts then due to the persons in whose names the Debentures
are registered at the close of business on the regular record date next
preceding such Interest Payment Date, KBK may select a new Extension Period and
terminate the payments of all amounts then due subject to the requirements
described herein. As a consequence of any such deferral, quarterly distributions
on the Trust Preferred Securities by the Trust will be deferred (and the amount
of distributions to which holders of the Trust Preferred Securities are entitled
will accumulate additional distributions) during any such Extension Period.

Should an Extension Period occur, a holder of Trust Preferred Securities
will continue to accrue income (in the form of OID) in respect of its pro rata
share of the deferred interest allowable to the Debentures held by the Trust for
United States federal income tax purposes. As a result, a holder of Trust
Preferred Securities will include such income in gross income for United States
federal income tax purposes in advance of the receipt of cash, and will not
receive the cash related to such income from the Trust if the holder disposes of

13
<PAGE> 15

the Trust Preferred Securities prior to the record date for the payment of
distributions. See "Certain Federal Income Tax Consequences -- Interest Income
and Original Issue Discount."

KBK has no current intention of invoking an Extension Period. Should KBK
elect to exercise such right in the future, however, the market price of the
Trust Preferred Securities is likely to be adversely affected. A holder that
disposes of its Trust Preferred Securities during an Extension Period,
therefore, might not receive the same return on its investment as a holder that
continues to hold its Trust Preferred Securities. In addition, as a result of
the existence of KBK's right to invoke an Extension Period, the market price of
the Trust Preferred Securities (which represent preferred undivided beneficial
interests in the Debentures) may be more volatile than the market prices of
other securities that are not subject to such deferrals.

TRUST SPECIAL EVENT EXCHANGE

Under certain circumstances following the occurrence and continuation of a
Trust Special Event (as defined herein), the Trust Preferred Securities are also
subject to exchange, in whole or in part, in the manner described herein, for
the Debentures, which exchange will result in termination of the Trust. See
"Description of the Trust Preferred Securities -- Trust Special Event Exchange."

There can be no assurance as to the market prices for Trust Preferred
Securities or Debentures that may be distributed in exchange for Trust Preferred
Securities if a liquidation of the Trust occurs or if the Trust Preferred
Securities are exchanged for Debentures in connection with a Trust Special
Event. Accordingly, the Trust Preferred Securities that an investor may
purchase, whether pursuant to the offer made hereby or in the secondary market,
or the Debentures that a holder of Trust Preferred Securities may receive on
liquidation of the Trust, may trade at a discount to the price that the investor
paid to purchase the Trust Preferred Securities offered hereby. Because holders
of Trust Preferred Securities may receive Debentures on dissolution of the Trust
or if the Trust Preferred Securities are exchanged for Debentures in connection
with a Trust Special Event, prospective purchasers of Trust Preferred Securities
are also making an investment decision with regard to the Debentures and should
carefully consider all of the information contained herein regarding the
Debentures. See "Description of the Trust Preferred Securities -- Trust Special
Event Exchange" and "Description of the Debentures -- General."

LIMITATIONS OF THE GUARANTEE

Pursuant to the Guarantee, KBK guarantees on a subordinated basis to the
holders of the Trust Preferred Securities the following payments, to the extent
not paid by the Trust: (i) any accumulated and unpaid distributions required to
be paid on the Trust Preferred Securities, to the extent that the Trust has
funds on hand legally available therefor at such time; (ii) the redemption price
with respect to any Trust Preferred Securities called for redemption, to the
extent that the Trust has funds on hand legally available therefor at such time;
and (iii) upon a voluntary or involuntary termination, dissolution, winding-up
or liquidation of the Trust (unless the Debentures are distributed to holders of
the Trust Preferred Securities), the lesser of (a) the aggregate of the
liquidation amount of the Trust Preferred Securities and all accumulated and
unpaid distributions thereon to the date of payment to the extent that the Trust
has funds on hand legally available therefor at such time and (b) the amount of
assets of the Trust remaining available for distribution to holders of the Trust
Preferred Securities in liquidation of the Trust.

Pursuant to the Guarantee, KBK agrees that it will honor all obligations
described therein relating to the exchange of the Trust Preferred Securities for
Debentures.

The holders of a majority in aggregate liquidation amount of the Trust
Preferred Securities have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Trust Guarantee
Trustee (as defined herein) in respect of the Guarantee or to direct the
exercise of any trust power conferred upon the Trust Guarantee Trustee under the
Guarantee. If the Trust Guarantee Trustee fails to enforce the Guarantee, any
holder of Trust Preferred Securities may institute a proceeding directly against
KBK to enforce its rights under the Guarantee without first instituting a
proceeding against the Trust, the Trust Guarantee Trustee or any other person or
entity. If KBK were to default on its obligation to pay amounts payable under
the Debentures, the Trust would lack funds for the payment of distributions or
amounts payable

14
<PAGE> 16

on redemption of the Trust Preferred Securities or otherwise, and, in such
event, holders of the Trust Preferred Securities would not be able to rely upon
the Guarantee for payment of such amount. Instead, in the event a Debenture
Event of Default shall have occurred and be continuing, a holder of Trust
Preferred Securities would be required to rely on enforcement by the Property
Trustee of its rights as registered holder of Debentures against KBK pursuant to
the terms of the Subordinated Indenture and the Debentures. If, however, such
event is attributable to the failure of KBK to pay interest on or principal of
the Debentures on the payment date on which such payment is due and payable,
then a holder of Trust Preferred Securities may directly institute a proceeding
against KBK for enforcement of payment to such holder of the interest on or
principal of such Debentures having a principal amount equal to the aggregate
liquidation amount of the Trust Preferred Securities of such holder (a "Legal
Action"). In connection with such Legal Action, KBK will be subrogated to the
rights of such holder of Trust Preferred Securities under the Declaration to the
extent of any payment made by KBK to such holder of Trust Preferred Securities
in such Legal Action. Except as set forth herein, holders of Trust Preferred
Securities will not be able to exercise directly any other remedy available to
the holders of Debentures or assert directly any other rights in respect of the
Debentures. See "Description of the Trust Preferred Securities -- Trust
Enforcement Events; Notice" and "-- Enforcement of Certain Rights by Holders of
Trust Preferred Securities" and "Description of the Guarantee" and "Description
of the Debentures -- Events of Default." The Declaration provides that each
holder of Trust Preferred Securities by acceptance thereof agrees to the
provisions of the Guarantee and the Subordinated Indenture.

ENFORCEMENT OF CERTAIN RIGHTS BY HOLDERS OF TRUST PREFERRED SECURITIES

If a Debenture Event of Default occurs and is continuing, then the holders
of Trust Preferred Securities would rely on the enforcement by the Property
Trustee of its rights as the holder of the Debentures against KBK. In addition,
the holders of a majority in aggregate liquidation preference of the Trust
Preferred Securities will have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Property Trustee or to
direct the exercise of any trust or power conferred upon the Property Trustee
under the Declaration, including the right to direct the Property Trustee to
exercise the remedies available to it as holder of the Debentures. If the
Property Trustee fails to enforce its rights as holder of the Debentures after a
request therefor by a holder of Trust Preferred Securities, such holder may
proceed to enforce such rights directly against KBK. Notwithstanding the
foregoing, if a Debenture Event of Default occurs that results from the failure
of KBK to pay principal of or interest on the Debentures when due (or in the
case of a redemption, on the redemption date), during the continuance of such an
event of default a holder of Trust Preferred Securities may institute a Legal
Action against KBK to obtain payment to such holder of such principal or
interest on Debentures having a principal amount equal to the aggregate
liquidation amount of the Trust Preferred Securities owned of record by such
holder. See "Description of the Trust Preferred Securities -- Trust Enforcement
Events; Notice," "-- Enforcement of Certain Rights by Holders of Trust Preferred
Securities" and "-- Voting Rights; Amendment of the Declaration."

LIMITED VOTING RIGHTS

Holders of the Trust Preferred Securities will generally have limited
voting rights, primarily in connection with directing the activities of the
Property Trustee as the holder of the Debentures. Holders of the Trust Preferred
Securities will not be entitled to vote to appoint, remove or replace the
Property Trustee, which voting rights are vested exclusively in KBK as holder of
the Trust Common Securities, provided that, upon the occurrence and during the
continuance of a Trust Enforcement Event (as defined herein), the Property
Trustee may be removed and a successor appointed only by the holders of a
majority in liquidation amount of the Trust Preferred Securities. The holders of
a majority in liquidation amount of the Trust Preferred Securities will,
however, have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the Property Trustee, or direct the
exercise of any power conferred upon the Property Trustee including the right to
direct the Property Trustee as holder of the Debentures, (i) to exercise the
remedies available to it under the Subordinated Indenture as holder of the
Debentures and (ii) to consent to any amendment, modification or termination of
the Subordinated Indenture or the Debentures, where such consent shall be
required. See "Description of the Trust Preferred Securities -- Voting Rights;
Amendment of the Declaration."

15
<PAGE> 17

PROPOSED TAX LEGISLATION

As a part of President Clinton's Fiscal 1999 and 1998 Budget Proposals, the
Treasury Department proposed legislation (the "Proposed Legislation") that,
among other things, would have treated as equity for United States federal
income tax purposes certain debt instruments that are not shown as indebtedness
on the consolidated balance sheet of KBK, which Proposed Legislation has not
been enacted to date. No assurance can be given that the Proposed Legislation
will not ultimately be enacted in the future, that such future legislation would
not have a retroactive effective date and that such future legislation would not
prevent KBK from deducting interest on the Debentures. Such an event would
constitute a Trust Tax Event and would permit the Trust to exchange the Trust
Preferred Securities, in whole or in part, for the Debentures.

TRADING PRICE OF TRUST PREFERRED SECURITIES

The Trust Preferred Securities may trade at a price that does not fully
reflect the value of accrued but unpaid interest with respect to the underlying
Debentures. A holder disposing of Trust Preferred Securities between record
dates for payments of distributions thereon will be required for United States
federal income tax purposes to include accrued but unpaid interest on the
Debentures through the date of disposition in income as ordinary income (i.e.,
original issue discount), and to add such amount to the adjusted tax basis in
the holder's Trust Preferred Securities. To the extent the selling price is less
than the holder's adjusted tax basis (which will include, in the form of
original issue discount, all accrued but unpaid interest), a holder will
recognize a capital loss. Subject to certain limited exceptions, capital losses
cannot be applied to offset ordinary income for United States federal income tax
purposes. See "Certain Federal Income Tax Consequences -- Sales of Trust
Preferred Securities."

NO PRIOR MARKET FOR THE TRUST PREFERRED SECURITIES

The Trust Preferred Securities constitute a new issue of securities with no
established trading market. Application has been made to list the Trust
Preferred Securities on the American Stock Exchange. There can be no assurance
that an active market for the Trust Preferred Securities will develop or be
sustained in the future on the American Stock Exchange. No assurance can be
given as to the liquidity of, or trading markets for, the Trust Preferred
Securities.

RISK FACTORS RELATING TO THE COMPANY

CREDIT RISK

A primary risk facing the Company, and financial institutions in general,
is credit risk, that is the risk of losing principal, discount income and
interest due to a client's failure to perform according to the terms of such
client's loan or factoring agreement. The Company is exposed to the risk that
customers to whom it has made loans will be unable to repay those loans
according to their terms and that collateral securing such loans may not be
sufficient in value to assure repayment. The Company is also exposed to risk
from client fraud. The Company is exposed to similar credit risks with respect
to the account debtors on the accounts receivable purchased by the Company.
Credit losses could have a material adverse effect on the Company's operating
results. While management has taken measures intended to limit exposure to any
one client or account debtor, there can be no assurance that such measures will
be effective in avoiding undue credit risk. In addition, there can be no
assurance that the Company's allowance for credit losses is adequate to absorb
all future charge-offs arising from the Company's accounts and loans receivable.
At September 30, 1998, the Company's earning assets in each of the
energy-related, wholesale and retail sales, and transportation sectors
represented over 10% of the Company's total earning assets. A downturn in any of
these sectors could have a material adverse effect on the Company's operating
results.

COMPETITION

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<PAGE> 18

offered by the Company and the size of target clients, the Company competes with
a large number of local and regional sources of financing, as well as large
national competitors. Many of these competitors have significantly greater
financial and other resources than the Company and have access to capital at a
lower cost than the Company. See "The Company -- Competition."

EXPOSURE TO LOCAL ECONOMIC CONDITIONS

The success of the Company is dependent to a certain extent upon the
general economic conditions of the geographic markets it serves. Unlike larger
financial institutions which are more geographically diversified, the Company
provides financial services to clients located primarily in Texas, California
and the Gulf Coast. No assurance can be given concerning the economic conditions
which will exist in such markets.

CONCENTRATION OF OWNERSHIP

As of September 30, 1998, the Company's senior management and directors
beneficially owned approximately 39% of the outstanding shares of Common Stock.
Accordingly, these stockholders, if they vote together, will have significant
influence over matters requiring stockholder approval, including election of the
Company's directors and certain extraordinary transactions. The Company's
charter does not permit cumulative voting, which may adversely affect
stockholders' ability to elect a particular nominee to the board of directors of
the Company. Additionally, the Company's charter and bylaws contain provisions
which may make changes in management and control of the Company more difficult
than would be the case absent such provisions.

VOLATILITY OF RECEIVABLES PORTFOLIO AND OPERATING RESULTS

The size of the Company's receivables portfolio and the Company's aggregate
volume of receivables purchased can vary significantly during a year due to
differences in timing of collections and purchases of receivables and the volume
of receivables available to be purchased from clients. The Company's results of
operations can also vary significantly, and unpredictably, from quarter to
quarter.

REGULATORY RISKS

The financial industry is subject to compliance with state usury laws,
which generally limit the amount of interest that a creditor may contract for,
charge or receive in connection with the loan of money. Compliance with state
usury laws affects the operational profitability of the Company. In addition,
certain receivables purchased by or pledged to the Company in connection with
certain of its clients whose account debtors include the United States or
departments or agencies thereof (the "Federal Government") are subject to the
Federal Assignment of Claims Act ("FACA"). FACA is primarily intended to protect
the Federal Government, not shareholders or other creditors. Non-compliance with
FACA causes the Company to lose any right it may have to receive payments
directly from the Federal Government. Regulations affecting the financial
industry are undergoing continuous change, and the ultimate effect of such
changes cannot be predicted. Regulations and laws affecting the Company may be
modified at any time, and new legislation affecting financial institutions may
be proposed and enacted. There is no assurance that such modifications or new
laws will not materially and adversely affect the business, conditions, or
operations of the Company. See "The Company -- Government Regulation."

IMPACT OF INTEREST RATE CHANGES

The Company's results of operations are principally dependent on net
interest and discount income, calculated as the difference between interest
earned on loans and investments and discounts earned on accounts receivable
purchased and the interest expense paid on borrowings. Like other financial
institutions, the Company's interest and discount income and interest expense
are affected by general economic and financial conditions. While management has
taken measures intended to manage the risks of operating in a changing interest
rate environment, there can be no assurance that such measures will be effective
in avoiding undue interest rate risk.

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<PAGE> 19

DEPENDENCE ON KEY OFFICER

The success of the Company's business is dependent in significant part on
the efforts and abilities of its Chief Executive Officer, Robert J. McGee. The
loss of the services of Mr. McGee could have a material adverse effect on the
Company.

YEAR 2000

KBK is subject to risks associated with the year 2000 problem, a term which
refers to uncertainties about the ability of various data processing hardware
and software systems to interpret dates correctly after the beginning of the
year 2000. Although the Company has initiated a company-wide program to prepare
the Company's computer systems and applications for the year 2000 and believes
that its year 2000 conversion project will be completed by July 1, 1999, there
can be no guarantee that year 2000 compliance issues that may be created by
clients, debtors and financial institutions with whom the Company does business
will be resolved. Disruptions caused by system failure or miscalculation as a
result of year 2000 noncompliance could have a significant impact on the
Company's operations. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Impact of the Year 2000 Issue."

USE OF PROCEEDS

The proceeds to be received by the Trust from the sale of the Trust
Securities will be used by the Trust to purchase the Debentures. The Company
intends to use the net proceeds from the sale of such Debentures to repay
approximately $23.4 million of short-term indebtedness and for general corporate
purposes.

THE COMPANY

OVERVIEW

KBK Capital Corporation is the holding company for KBK Financial, Inc., an
independent financial services company that provides a broad line of financial
products and services to middle market commercial businesses with credit needs
of less than $10 million. The Company was founded in 1962 as a factoring company
for energy-related receivables in Texas. Factoring has served as the cornerstone
of KBK's growth. In 1994, the Company began introducing new products in an
effort to expand its client base and to meet the needs of its existing clients
as their credit quality improves. These products include purchase revolvers,
working capital loans, term loans and mezzanine loans. Factoring, purchase
revolvers, working capital loans, and term and mezzanine loans represented
approximately 36%, 17%, 15%, and 32%, respectively, of the Company's earning
assets at September 30, 1998. "Earning assets" means owned and managed factoring
facilities, purchase revolvers, commercial loans and mezzanine loans.

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<PAGE> 20

The Company's factoring facilities generally involve an on-going or
revolving agreement to purchase eligible new receivables. Factoring involves the
Company's purchase and the client's true sale of accounts receivable which
usually are individually ledgered, invoice-by-invoice on the Company's books.
The Company offers a full range of factoring products and services, including
notification, non-notification, verification, non-verification and non-recourse
factoring as well as several other hybrid variations. See "The Company --
Products." The obligors or "debtors" of the factored receivables typically
represent large, financially strong businesses, many of which are ranked in
Fortune Magazine's Fortune 1000 list. As of September 30, 1998, KBK's portfolio
of owned and managed receivables purchased under factoring facilities totaled
$52.2 million. The Company's yield on its factoring portfolio was 20.2% in 1997
and 21.8% for the nine months ended September 30, 1998.

In 1997, the Company established a secured credit facility through a
conduit commercial paper issuer to diversify its funding sources and reduce its
cost of capital. Under this arrangement, KBK sells certain receivables and
certain inventory loans to the conduit on a non-recourse basis; such assets are
pooled with similar types of assets acquired by the conduit from other
unaffiliated companies and serve as collateral for revolving commercial paper
issuances. KBK continues to manage and service the assets sold by KBK to the
conduit in exchange for a fee based on the balance of such assets. As of
December 31, 1997 and September 30, 1998, KBK had $67.0 and $74.2 million,
respectively, of receivables and inventory loans outstanding in the conduit
facility and during 1997 and the first nine months of 1998 the Company had
received approximately $6.3 million and $5.9 million, respectively, in fees
related to managing and servicing such assets. Currently, the Company has the
ability to fund up to $75.0 million through the conduit facility and expects
this limit to be increased to $100.0 million as the result of continued growth
in earning assets. The financing provided by this facility is off-balance sheet
and the Company realizes no gain on transfer of the assets to the conduit.
Servicing income is credited as received. The Company believes that the conduit
facility will enable it to significantly expand its owned and managed portfolio
while simultaneously minimizing its balance sheet leverage.

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<PAGE> 21

1997 and $2.1 million for the nine months ended September 30, 1998. The
Company's ratio of earnings to fixed charges was 3.9x at December 31, 1993 and
2.6x at September 30, 1998.

STRATEGY

The Company's long-term goal is to be a leader in providing financial
products and services to middle market businesses in the United States. By
serving the financial and capital needs of this growing segment, the Company
believes that it can achieve strong growth and generate a return on assets above
other financial institutions. The Company believes that it has been very
successful in achieving an appropriate balance between asset growth, asset
quality and profitability through strict adherence to proven systems for
origination, underwriting and monitoring. During the course of the past five
years, the Company has leveraged its existing market presence into new product
lines to enable its clients to transition into lower-priced financial products
and services as their business expanded and credit quality improved.
Additionally, the Company expanded its geographic presence in key metropolitan
markets through both new office openings and the development of relationships
with regional correspondent banks. The Company remains committed to focusing on
its core middle market commercial finance business. Going forward, KBK's growth
strategies include increasing market penetration, introducing additional
products and services, expanding market presence and pursuing strategic
acquisitions and partnerships.

Increase Market Penetration. A critical aspect of KBK's long-term growth
objective is to increase its earning asset base from existing markets. The
Company's strategy is to (i) continue improving the productivity of its
marketing force through extensive market planning and a compensation program
tied directly to targeted objectives, (ii) add additional marketing
professionals and (iii) train its marketing force to cross-sell existing and new
products. Each year, KBK's account officers are required to develop a marketing
plan with respect to existing customer business and new business prospects. This
active business development program is designed to enable KBK account officers
to identify an ample number of new high-quality business opportunities, thereby
improving selectivity and increasing market penetration. In order to meet their
objectives, account officers are provided with on-going training in the areas of
credit analysis, product application and relationship development and retention.

Expand Product Line. Another element of KBK's growth plan is the continued
introduction of new products and services. Since 1995, the Company has
introduced a variety of commercial finance products and services designed to
meet the needs of its core middle market client, broaden its client base and
diversify its portfolio mix. Many of these products enable KBK's former
factoring clients to transition to other financial products and services as
their credit quality improves and, accordingly, have allowed the Company to
lengthen the duration of its relationships. In addition, a growing component of
KBK's portfolio is comprised of conventional commercial loans extended to
clients with more than two years of tenure with the Company. The mezzanine
market has also generated a number of high quality conventional commercial loan
prospects. See " -- Products."

Expand Market Presence. Today, KBK maintains a significant presence in six
large metropolitan areas (Dallas/Fort Worth, Houston, Los Angeles, New Orleans,
San Antonio and St. Louis). KBK's goal is to have a physical presence in a
substantial number of the nation's largest markets. The Company has a two-step
approach that enables KBK to establish wholesale client relationships and an
asset base prior to committing to the overhead expenses associated with opening
a new office. Through its Correspondent Banker(TM) Program, KBK has established
a network of local or regional commercial banks to source deals in exchange for
a participation in the deal or an origination fee. Once an adequate portfolio
has been established to justify incremental costs, the Company may establish a
new marketing office.

The foundation of the Correspondent Banker(TM) Program is a computer-based
scanning and imaging system for factoring across the Internet. This system was
originally developed for use in the Company's own

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<PAGE> 22

marketing offices. However, in late 1996, the Company began prototyping the
system and filed a patent application covering the process in 1998. Under this
method, the bank identifies prospective factoring clients. Both KBK and the bank
underwrite each new client, and KBK also reviews and underwrites each individual
invoice. After the credit analysis and underwriting are performed, the bank
funds the invoice. KBK administers the collection process and the bank and KBK
split revenue and any losses. The Company's St. Louis area office, opened in
early 1998, is primarily focused on marketing this system to community banks
across the country. Currently, KBK has four banks operating under contracts for
the system.

Pursue Strategic Acquisitions and Partnerships. Also important to the
Company's strategy is the pursuit of opportunistic acquisitions and formation of
key partnerships. The Company focuses on acquisition candidates who can expand
KBK's origination capabilities, product line, cross-selling potential and market
penetration, as well as those which add to its asset base. Given current
conditions in the specialty finance market, the Company's management continually
evaluates potential acquisition opportunities. Accordingly, at any particular
time, the Company may be involved in negotiations (at various stages) to acquire
other companies.

In addition to acquisitions, KBK will continue to explore partnerships
which complement or leverage the Company's product portfolio or client
relationships. During the past several years, KBK has formed a number of
important partnerships. For example, KBK currently offers equipment lease
financing through third party equipment leasing companies. KBK also originates
real estate loans to its clients and may participate or sell such loans to an
unaffiliated real estate lender. KBK collects an origination or placement fee
from its client or the third party.

PRODUCTS

The Company currently offers factoring facilities; purchase revolver
facilities; commercial loans secured by accounts receivable, inventory,
equipment, owner-occupied real estate or other assets of the borrower; and
mezzanine loans. The Company intends to offer a broad line of financing products
to commercial businesses in the middle market in order to provide a single
source of financing for these businesses. The Company also sells third party
products to existing customers on a fee basis. KBK believes that this breadth of
financing services for middle market clients differentiates the Company from its
competitors and enables its clients to transition between products as their
businesses expand and credit quality improves. Factoring, purchase revolvers,
working capital loans, and term and mezzanine loans represented approximately
36%, 17%, 15% and 32%, respectively, of the Company's earning assets at
September 30, 1998. The Company's four main product categories are described
below.

Factoring

Management believes KBK operates the largest and oldest independent
commercial factoring portfolio in the southwestern region of the United States.
KBK offers a full range of factoring products and services from traditional
"old-line" notification factoring to non-recourse, non-notification and
non-verification factoring. The Company's factoring facilities generally involve
an on-going or revolving agreement to purchase eligible new receivables. These
agreements generally are cancelable by KBK upon 30 days notice and range between
$500,000 and $2 million in facility size. The facilities involve the purchase of
receivables and therefore qualify for off-balance sheet treatment on the
client's books and provide KBK with some insulation from consolidation and other
risks in the event of client bankruptcy.

Factored receivables are individually ledgered on an "invoice-by-invoice"
basis in the Company's proprietary data processing system and all collections
are matched and posted against the original invoice. This proprietary system
includes a management information system which tracks performance and risk
trends by customer or "client", by obligor or "debtor", as well as measures the
performance of the aggregate portfolio. The factoring system also allows KBK
account executives and senior management to select from a broad menu of reports
and analytical tools. Many of these system reports are also provided to the
Company's clients via the Internet. The Company's electronic client files track
purchase volume, customer concentrations, account agings, dilution and other key
data for each of the Company's clients and provides a trendline

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<PAGE> 23

perspective over the span of the client relationship. The Company's debtor files
include a data base with active files covering more than 20,000 U.S. businesses.
These files are regularly updated and include (a) financial information gathered
directly from the debtor, rating agencies, credit services and other public and
private data sources, (b) payment habits and patterns developed by profiling
KBK's historical experience with the particular debtor spanning across all
clients and time periods, which helps the Company identify when a particular
debtor begins stretching trade payables' and may be experiencing a deterioration
in financial capacity, and (c) reference checks with trade, industry sources as
well as other factoring companies. Perpetual maintenance of these debtor files
allows the Company to establish maximum debtor exposure limits prior to
receiving a specific purchase request from any particular client. Each debtor
exposure limit is refreshed periodically on a pre-determined schedule, allowing
spontaneous response to individual client requests.

The Company purchases individual accounts receivable for a negotiated price
which is less than the face amount, based upon the size, age and type of
accounts being purchased, the quality of client documentation and the Company's
knowledge of the payment history and judgment of the creditworthiness of the
account debtors. KBK generates revenue through a combination of discounts and
fees that are negotiated on a client-by-client basis.

The following describes the factoring products offered by the Company in
the course of its factoring business. These products are blended in various
combinations, on a case by case basis, to formulate the particular structure
most appropriate for a particular client's needs and risk profile.

Notification Factoring is most appropriate for small businesses that lack
the capacity to provide a lender with the financial information required to
evaluate their capacity to repay debt through cash flow. In this style of
factoring, the Company typically notifies or instructs the debtor to remit
payments directly to KBK. Notification can be accomplished by stamping a notice
of the assignment and remittance instructions on the face of the original
invoice transmitted to the debtor or by sending a separate letter, usually by
certified mail, to the debtor. Irrespective of the method of notification, once
properly notified of the assignment, the debtor is obligated to remit payment
for assigned receivables directly to KBK or risk liability for double payment.
The operational burden and expense incurred in this notification process is
greatly reduced by KBK's automated systems.

Non-notification Factoring is when the debtor of the accounts receivable is
not notified of the purchase. Instead, KBK purchases the receivables, relying
principally on documentation and representations provided by the client.
Although this reliance on client documentation and representations exposes the
Company to the possibility of conversion fraud by dishonest clients,
non-notification factoring is intended for higher quality clients. Such clients
view notification as potentially disruptive to sensitive customer relationships,
who may perceive such notification from a factor as an indicator of weakness in
their vendor. Consequently, clients seek to avoid this intrusion whenever
possible. Non-notification transactions have historically comprised the majority
of KBK's factoring portfolio and management believes this form of factoring
differentiates KBK's facilities from its competitors, allowing the Company to
build and retain a portfolio of higher quality clients. However, even in
non-notification transactions, KBK always reserves the right to place the debtor
on notice of the assignment. KBK's due diligence, reference checking, automated
risk management systems and frequent audits have allowed the Company to limit
its losses during the past 36 years.

Verification Factoring typically entails contacting the debtor prior to
purchase, and confirming that the individual invoices underlying the receivables
offered for sale are valid, due and payable at par without offset. Verification
is a labor intensive exercise, normally accomplished by phone conversation
directly with the debtor. However, written verification is occasionally
required. Most verification factoring accounts also require debtor notification
as a precedent to purchase. Verification factoring represents a small proportion
of KBK's portfolio, limited primarily to troubled higher risk clients. Even in
such accounts, KBK normally limits the verification process to a sampling of
large or unusual receivables.

Non-verification Factoring, like non-notification factoring, may subject
the Company to greater reliance on client documentation and representations and
consequently exposes the Company to the possibility of fraud by dishonest
clients. However, clients view the verification process at least as disruptive
to sensitive customer relationships as the notification process. Consequently,
KBK's willingness to forgo intrusive debtor verification

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<PAGE> 24

in exchange for upfront due diligence, reference checking and frequent audits
differentiates KBK's facilities from its competitors. Management believes this
form of factoring has allowed the Company to build and retain a portfolio of
higher quality clients. Just as non-notification transactions can be converted
to notification accounts at KBK's discretion, non-verification accounts can
become verification accounts as circumstances warrant. KBK typically engages in
non-verification factoring.

Recourse Factoring, which is commonly practiced across the factoring
industry, is not a prevalent aspect of KBK's factoring business. In recourse
transactions, the client is fully liable for repayment of all factoring advances
in the event of non-collection of an account. This style of factoring is
virtually indistinguishable from specific receivable lending. It is KBK's view
that full recourse to the client may substantially weaken defendability of the
transaction as a true sale, exposing the factor to the risk of consolidation,
and other risks, in the event of a client bankruptcy.

Non-recourse Factoring entails the purchase of receivables without recourse
to the seller for some or all elements of risk in the event of non-payment. This
transference of some element(s) of risk is generally the primary determinant in
distinguishing between a sale and a loan transaction. KBK's factoring
transactions are typically structured as non-recourse transactions, in which the
Company assumes the burden of credit risk for the debtor's inability to pay,
subject to the Company's right to offset any credit loss against any
pre-established client reserves. However, the risk of non-payment resulting from
the delivery of faulty merchandise or deficient services remains the
responsibility of the client, as well as any debtor offsets or reductions the
debtor may have from the original invoice amount. While KBK bears the full
burden of the debtor credit risk in such transactions, it is the Company's view
that assumption of this risk is controllable because KBK has the right to refuse
to purchase receivables payable by low quality, high risk debtors.

During 1997 and the first nine months of 1998, KBK purchased receivables
with a face-amount totaling approximately $426.4 million and $360.6 million,
respectively, from clients spanning a broad range of industries. In 1997 and for
the first nine months of 1998, KBK's yield on these factoring facilities was
20.2% and 21.8%, respectively.

Purchase Revolver Facilities

In addition to factoring or purchasing accounts receivable on a specific
invoice-by-invoice ledgered basis, the Company also purchases accounts
receivable as a revolving "pool." These purchases are sometimes referred to as
revolving purchase facilities, pooled purchase facilities or batch purchase
facilities and closely resemble a conduit financing structure in which the
client transfers ownership of all of its receivables to KBK and receives
off-balance sheet treatment for the transaction. Under this arrangement, the
client sells all receivables as and when they are generated by their business
and KBK makes periodic advances upon request by the client, in aggregate amounts
up to the client's maximum availability limit. The maximum availability limit
under these facilities is similar to a borrowing base availability limit and is
typically calculated at approximately 80% of eligible receivables, less the
current balance of prior advances. Generally these transactions are entered into
with clients who have greater financial stability, larger volumes of invoices,
and more sophisticated management information and reporting systems. When such
purchases are transacted, KBK does not perform an individual review of each
purchased invoice and associated documentation. Rather, the documentation is
held in trust by the client and the Company earns discounts on the amount paid
for purchased receivables. KBK's yield for revolving purchase facilities during
1997 and the first nine months of 1998 was 14.2% and 13.1%, respectively.

Commercial Finance

The Company offers a variety of financings that are similar to those
offered by commercial banking institutions and asset-based lenders. The
following describes these in further detail.

Working Capital Lines of Credit. KBK provides working capital for rapidly
growing companies through borrowing base lines of credit. The amount of the
financing is predicated on the current value of the underlying receivable and
inventory collateral. Generally, the Company advances up to 80% against its
clients' eligible accounts receivable and up to 50% on eligible inventory.
Typically, aggregate inventory advances cannot

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exceed aggregate advances against receivables. The monitoring frequency on lines
of credit varies from daily to monthly, depending upon the underlying financial
condition of each particular borrower. The term of these facilities generally
does not exceed two years for accounts receivable and one year for inventory,
and the interest rate is typically floating based upon a spread over the KBK
base rate and is payable monthly. The Company's average yield on this product
was approximately 13.0% in 1997 and 12.3% for the first nine months of 1998.

Term Loans. KBK provides term loans with variable rates and terms to
finance the purchase of equipment, machinery and other general corporate
purposes. These term loans generally have maturities of up to five years. KBK
provides capital expenditure lines, which are pre-approved commitments for new
equipment purchases, refinancing of existing equipment and other capital
expansion needs. Loan amounts and repayment terms are based on the type and
appraised value of the underlying collateral. All term loans are supported by
independent collateral appraisals and require monthly payments which are
direct-debited (through automatic clearinghouse debits) from each client's bank
account. The Company's yield on this product was 11.2% in 1997 and 13.0% for the
first nine months of 1998.

Letters of Credit. KBK provides stand-by and documentary letters of credit
("L/Cs") on behalf of its clients. These L/Cs generally support the client's
import or export activity and are fully secured by collateral acceptable to KBK.
Typically, KBK arranges the issuance of the letters of credit through one of
KBK's lenders. On occasion, however, KBK may issue the letter of credit directly
and have it confirmed, if required, by one of its lenders. Typically, KBK
charges a flat fee of between 2.0% and 3.0% for each L/C and pays 1.0% per annum
to the issuing or confirming bank.

Equipment Leasing. KBK offers equipment leases on negotiated terms based
on those available from the Company's leasing company correspondents. Currently,
KBK refers these opportunities to the equipment leasing companies in exchange
for an origination or referral fee.

Mezzanine Loans

KBK's new mezzanine product offers financing alternative for customers
whose growth has outpaced their borrowing capacity from traditional senior debt
sources. The Company's strategy for mezzanine loans is to extend the length and
depth of current relationships and provide the Company's traditional products to
new customers. KBK's mezzanine financings will generally not exceed $5.0 million
and will have fixed interest rates and bullet maturities. In addition to upfront
closing fees and a current coupon, KBK seeks to receive warrants to acquire
equity in the borrowers. KBK will consider participating as a lead or
co-investor in larger transactions, which tend to be expansion financings,
recapitalizations and divestitures, or leveraged and/or management buyouts.
Since introducing the product in the first quarter of 1998, the Company has
reviewed approximately 145 transactions. To date, the Company has funded two
mezzanine loans, representing an aggregate principal investment amount of $5.0
million.

EARNING ASSETS ANALYSIS

KBK has significantly expanded its portfolio over the past five years. As
of September 30, 1998, the Company's owned and managed portfolio was $149.3
million, comprised of $75.1 million of receivables owned and $74.2 million of
receivables under management.

From an asset management perspective, the Company does not differentiate
between its owned and managed portfolio. Although all receivables sold to the
conduit facility are non-recourse to KBK, the Company monitors concentration
limits and credit quality and determines credit losses on the combined amount of
owned and managed assets. This conservative approach enables the Company to
track the performance of its portfolio on a consistent basis year over year.

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The following chart summarizes the Company's owned and managed portfolio
over the past five years:

OWNED AND MANAGED ASSETS PORTFOLIO

(IN THOUSANDS)

<TABLE>
<CAPTION>
DECEMBER 31,
SEPTEMBER 30, ------------------------------------------------
1998 1997 1996 1995 1994 1993
------------- -------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Accounts Receivable(1)......... $ 76,679 $ 75,383 $53,926 $40,378 $51,739 $22,240
Loans Receivable and
Other(2)..................... 68,132 35,204 27,376 5,610 241 431
Non-Performing Assets.......... 4,486 2,176 1,658 496 460 377
-------- -------- ------- ------- ------- -------
Gross Owned and Managed
Assets....................... $149,297 $112,763 $82,960 $46,484 $52,440 $23,048
======== ======== ======= ======= ======= =======
</TABLE>

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

(1) Includes factoring and purchase revolvers; includes $66,991 and $72,250 of
managed assets sold to the conduit facility outstanding as of December 31,
1997 and September 30, 1998, respectively.

(2) Includes $12,130 and $14,921 of managed assets sold to the conduit facility
outstanding as of December 31, 1997 and September 30, 1998, respectively.

Diversification

The Company seeks to diversify its portfolio of earning assets so as to
limit exposure to any one specific industry. On the purchased accounts
receivable portfolio, the Company tracks concentration by the industry of the
account debtor as shown in the following table.

GROSS ACCOUNTS RECEIVABLE(1)

(MANAGED AND OWNED) BY INDUSTRY OF ACCOUNT DEBTORS

(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
OUTSTANDING AS OF PERCENTAGE OF OUTSTANDING AS OF PERCENTAGE OF
INDUSTRY OF ACCOUNT DEBTORS SEPTEMBER 30, 1998 TOTAL DECEMBER 31, 1997 TOTAL
--------------------------- ------------------ ------------- ----------------- -------------
<S> <C> <C> <C> <C>
Wholesale, Retail Sales........... $21,473 28.0% $17,860 23.7%
Energy Related.................... 9,131 11.9 10,365 13.8
Transportation.................... 7,971 10.4 5,298 7.0
Services.......................... 4,717 6.2 4,507 6.0
Manufacturing..................... 3,817 5.0 3,509 4.7
Engineering & Construction........ 2,076 2.7 3,286 4.3
Federal, State & Local Govt....... 1,027 1.3 1,332 1.8
Other............................. 829 1.1 3,304 4.4
Communications.................... 478 0.6 611 0.8
Environmental Services............ 411 0.5 805 1.0
Agriculture....................... 221 0.3 7 0.0
Pool Purchases.................... 24,528 32.0 24,499 32.5
------- ------ ------- -------
Total........................ $76,679 100.0% $75,383 100.0%
======= ====== ======= =======
</TABLE>

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

(1) Includes factoring and purchase revolvers, which represented 51.4% and
66.9%, respectively, of the Company's earning assets as of September 30,
1998 and December 31, 1997.

As of September 30, 1998, the Company's ten largest account debtors
represented 21.5% of total receivables purchases and 31.5% of the receivables
balance. No single debtor accounted for more than 8.9% of receivables under
management as of September 30, 1998.

25
<PAGE> 27

TEN LARGEST ACCOUNT DEBTORS

SEPTEMBER 30, 1998

(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
PERCENTAGE OF RECEIVABLE
TOTAL 1998 TOTAL BALANCE PERCENTAGE OF
RECEIVABLE RECEIVABLE SEPTEMBER 30, SEPTEMBER 30,
DEBTOR PURCHASES PURCHASES 1998 1998 BALANCE
------ ---------- ------------- ----------------- -------------
<S> <C> <C> <C> <C>
Ocean Marine Navigation Company......... $14,429 4.0% $ 4,630 8.9%
Otto Candies............................ 14,420 4.0 2,575 4.9
Home Depot Inc.......................... 8,107 2.3 1,050 2.0
Keystone Shipping Co.................... 7,470 2.0 1,793 3.4
Gulfmark Offshore....................... 6,570 1.8 2,190 4.2
RMIC/Republic Mortgage.................. 6,531 1.8 818 1.6
American Overseas Marine Corp........... 6,493 1.8 1,487 2.9
Lucent Technologies, Inc................ 5,740 1.6 770 1.5
PGS Exploration......................... 3,871 1.1 0 0.0
Petrozuata C.A.......................... 3,755 1.1 1,112 2.1
------- ---- ------- -----
Total.............................. $77,386 21.5% $16,425 31.5%
======= ==== ======= =====
</TABLE>

In the loans receivable portfolio, the Company tracks the concentration of
the borrowers, as shown in the following table.

GROSS LOANS RECEIVABLE(1)

(MANAGED AND OWNED) BY INDUSTRY OF CLIENTS

(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
OUTSTANDING AS OF PERCENTAGE OF OUTSTANDING AS OF PERCENTAGE OF
INDUSTRY OF CLIENTS SEPTEMBER 30, 1998 TOTAL DECEMBER 31, 1997 TOTAL
------------------- ------------------ ------------- ----------------- -------------
<S> <C> <C> <C> <C>
Manufacturing..................... $24,643 36.2% $11,734 33.3%
Energy Related.................... 17,886 26.3 12,793 36.3
Services.......................... 8,165 12.0 0 0.0
Engineering and Construction...... 6,716 9.9 7,111 20.2
Transportation.................... 5,000 7.3 0 0.0
Agriculture....................... 3,100 4.5 1,000 2.9
Wholesale and Retail Sales........ 2,050 3.0 1,006 2.9
Other............................. 572 0.8 1,560 4.4
------- ----- ------- -----
Total........................ $68,132 100.0% $35,204 100.0%
======= ===== ======= =====
</TABLE>

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

(1) Includes working capital, term and mezzanine loans, which represented 45.6%
and 31.2%, respectively, of the Company's earning assets as of September 30,
1998 and December 31, 1997.

Credit Quality

KBK's history of strong credit quality is a function of its stringent
underwriting standards and diligent administrative processes after funding. The
Company's underwriting procedures consist of a detailed credit analysis of the
client, the receivables and debtor bases (for a factoring facility) and the
collateral (for a loan), as well as extensive reference checks. Generally, the
proposed transactions with new clients must be reviewed by the Company's
centralized underwriting department and receive a majority vote by the
underwriting committee prior to approval. The multi-step approval process is
designed to ensure that all proposed transactions conform with KBK's credit and
collateral standards. See "-- Underwriting and Operations and Controls."

26
<PAGE> 28

After funding, the credit quality of the Company's portfolio is closely
monitored by KBK's asset quality committee. The committee regularly re-evaluates
the initial risk grade assigned to each client transaction. These ratings are
either reaffirmed or changed based upon the client's financial condition,
previous history or experience with the client, the quality of the underlying
collateral, as well as any other relevant factors.

Delinquencies and Charge-off Policies

The asset quality committee reviews all delinquent accounts on a weekly
basis. Any purchased account that is owned for more than 45 days requires the
appropriate credit officer to submit a full explanation of the circumstances
surrounding the delinquency and specific steps implemented to rectify the
problem. When the asset quality committee determines that an account is doubtful
as to its collection, including discount or interest income, the entire amount
of the account is placed on non-performing status. After an account is placed on
non-performing status, no income is accrued until circumstances indicate that
such income is collectible. Upon an asset becoming non-performing, the Company
commences aggressive collection efforts, including negotiated resolutions with
its clients and prompt liquidation of collateral or purchased accounts
receivable.

Accounts are charged off when the Company believes that it can reasonably
expect to incur a loss or if it expects to incur substantial collection or other
expenses to collect the amount due. Accounts are written down to the net
realizable value or charged-off completely when the Company believes that such
treatment is warranted. As a matter of policy, all accounts that are more than
120 days past-due are charged off, unless the Chief Credit Officer determines
that collection is in process and the balance has a reasonable probability of
collection. Historically, KBK has not experienced large concentrations of past
due accounts. As of September 30, 1998, past dues in excess of 90 days were 1.1%
of total receivables.

Allowance for Credit Losses

The allowance for credit losses is an amount which, in the judgment of
senior management, is adequate to absorb the estimated losses from KBK's
portfolio of earning assets. The amount of the provision for possible credit
loss charged to earnings is determined each quarter based on the adequacy of the
reserve relative to the quality and size of the portfolio.

The adequacy of KBK's allowance for credit losses is reviewed on a
quarterly basis by the Board of Directors' asset quality committee utilizing a
matrix approach. The matrix measures the Company's actual loss experience over
the past three, five and seven year periods and calculates an optimum required
reserve for each asset class based upon the greater of (i) the Company's actual
loss experience over any of the three time periods or (ii) the Board of
Directors' approved minimum reserve. In determining this minimum reserve the
Board of Directors considers the size of the portfolio, the level of
non-performing assets and any known portfolio loss exposures. The matrix also
performs stress test analyses on the allowance to discern the impact of various
growth scenarios. In addition to this matrix, the committee also takes into
account subjective factors, such as known and inherent risks in the portfolio,
adverse situations that may affect repayment, the potential for additional costs
to perfect title to collateral and current and prospective economic situations,
as well as such other factors as the Board of Directors may from time to time
deem appropriate. Management's goal is to maintain an allowance for credit
losses within the range of the calculated minimum and maximum optimum reserve;
however, from time to time, the reserve may be below or above the optimum band.

27
<PAGE> 29

ALLOWANCE FOR CREDIT LOSSES

(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
NINE MONTHS YEAR ENDED DECEMBER 31,
ENDED ------------------------------------------
SEPTEMBER 30, 1998 1997 1996 1995 1994 1993
------------------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Balance at beginning of period..... $ 1,929 $1,608 $1,729 $1,658 $1,161 $1,000
Provision for credit losses........ 1,100 875 245 600 65 588
Charge-offs........................ (1,088) (764) (404) (541) (470) (569)
Recoveries......................... 2 210 38 12 41 142
Reserve from acquisition........... -- -- -- -- 861 --
------- ------ ------ ------ ------ ------
Balance at end of period........... $ 1,943 $1,929 $1,608 $1,729 $1,658 $1,161
======= ====== ====== ====== ====== ======
Allowance for credit losses as a
percentage of owned receivables
at end of period................. 2.6%(1) 4.2%(1) 1.9% 3.7% 3.2% 5.0%
</TABLE>

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

(1) The allowance for credit losses as a percentage of owned and managed
accounts and loans receivable was 1.3% as of September 30, 1998 and 1.7% as
of December 31, 1997.

SALES AND MARKETING

KBK's sales and marketing efforts are conducted through six offices located
in Houston, Fort Worth, New Orleans, San Antonio, the Los Angeles area and the
St. Louis area. These offices allow the Company to establish and maintain close
personal relationships with each client and the network of referral sources.

The Company markets its services through direct solicitation of prospective
new clients, as well as the solicitation of referrals from providers of various
services to middle-market businesses, such as commercial bankers, lawyers and
accountants. Management believes these sources refer quality clients who are
likely to have the financial information and reporting systems necessary for the
Company to make a sound credit evaluation. In addition, due to the Company's
long-standing reputation in the business, the Company also receives referrals
from current and former clients and direct inquiries from potential clients. The
Company has also begun to develop a formal network of correspondent community
and regional banks throughout the United States that generate prospective client
opportunities for KBK. Such correspondent banks receive a fee, or participate in
the transaction.

UNDERWRITING AND OPERATIONS AND CONTROLS

Underwriting

In addition to marketing responsibilities, each account officer is
responsible for performing initial credit evaluations and submitting the
required documentation for underwriting committee approval. Generally, the
account officers are most familiar with an individual customer's business, the
accounts receivable/collateral to be used in the financing as well as local
economic conditions. The Company maintains control over the quality of its
portfolio by utilizing a uniform set of evaluation steps and standards in the
underwriting process and well-established control mechanisms and audits to
monitor the financings after funding.

The account officers rely on their own due diligence and in-depth credit
investigations, supplemented by the use of outside credit reporting firms which
provide credit reports on potential clients and their principals. Once such
preliminary information is gathered, the account officers then submit this
information to the Company's central underwriting department for independent
evaluation. Typically, the underwriting department focuses its evaluation on the
following items: (a) the client's financial condition; (b) the quality of the
client's debtor base; (c) the nature and enforceability of the client's sales
transactions; and (d) reference checks with major customers, vendors, attorneys,
accountants and other service providers.

For loan facilities, KBK's credit analysis focuses on (i) the prospective
client's past and anticipated ability to generate sufficient cash flow to
adequately service its debt in the ordinary course of business and (ii)

28
<PAGE> 30

the value of collateral pledged as a secondary source of repayment. For
factoring facilities, the credit evaluation focuses on an analysis of the (a)
debtor's capacity to pay, (b) the debtor's obligation to pay and (c) the
client's level of financial stress which might provide a motive for
misrepresentation of, or the unauthorized conversion of, factored receivables.
The debtor evaluation process principally consists of reference checks, review
of debtor debt ratings and a close analysis of the debtor's financial
statements, if available. In addition, the Company maintains online proprietary
information systems and active credit files covering the payment patterns of
more than 20,000 domestic and foreign debtors. The underwriting department
relies on these independent sources and typically does not contact or notify the
debtor during this process. Once the underwriting department feels comfortable
with the credit of the debtor, the focus is shifted to the client in order to
analyze the client's cash flows and financial statements. The client's accounts
receivable payment trends are also reviewed to determine the historical dilution
ratio of the client's receivable base. The final step in the credit evaluation
process is determining whether the client/debtor relationship is a good fit with
KBK's business focus. This subjective decision is based upon past customer
experience as well as the business and industry fit.

Once the review of the underwriting department's component evaluations are
satisfactorily completed, then an audit of the prospect is completed by KBK's
internal auditors. Upon review of the audit, the account officer prepares a
written presentation, summarizing the component evaluations and submits the
presentation to the underwriting committee for approval.

The voting members of the underwriting committee are comprised of senior
executive officers, and approval is based upon a majority vote of the committee
members. Client relationships in which KBK's aggregate commitment amount exceeds
$3.0 million require the approval of the designated members of the Board of
Directors in addition to the approval of the underwriting committee.

Operations and Controls

The operations and controls of the Company are centralized in Fort Worth,
Texas at the corporate headquarters. The responsibilities of the operational
area include reviewing all requests for advances under working capital lines of
credit and factoring facilities and supporting documents (invoices, purchase
orders, delivery evidence, sales journal, collection reports, etc.) and
monitoring the collateral and financial covenants. This unit of the Company is
segmented into two divisions, the funding division and the item processing
division.

For factoring facilities, extensive operational and control mechanisms are
required. In conjunction with the credit evaluation process, KBK's funding
division closely reviews all the potential receivables documentation, including
purchase orders, invoices, shipment notification and proof of sales and receipt
of goods. In addition, the funding division and the credit division must approve
all invoices prior to purchase. The funding division is responsible for
authenticating all documentation, and the credit division evaluates each
debtor's capacity to pay the invoice. Once advance approvals are granted by the
funding division and the credit division, an account executive from the credit
department must also approve each request prior to funding, and depending on the
client grade, management approval may also be required.

Once the funding occurs, the item processing division monitors and collects
the receivables through an established lock box system. The Company has a
proprietary sophisticated computer system to assist in this process. This system
tracks the incoming payment flows and generates daily reports such as agings,
collection, concentration, turnover, dilution and exception reporting.

When funding and monitoring a loan, the control process principally
involves evaluation and monitoring of the collateral pledged. When a client
desires funding on a working capital line of credit, an availability certificate
is completed by the client to verify accuracy. Based upon these results the
purchasing desk then calculates availability under the loan. Depending upon
availability, the client requests an advance, which must be approved by the
account executive prior to funding. Financial covenants are set for these
facilities and reviewed on a daily, weekly or monthly basis. All working capital
facilities are regularly audited for compliance.

29
<PAGE> 31

Prior to funding a term loan, an independent appraisal is received. Based
upon the valuation of the appraisal, the type of collateral financed and the
current and anticipated market for the collateral, an advance rate is
determined. The account officer and/or the audit department typically inspects
the equipment prior to funding. The client must show adequate current, past and
projected cash flow to service the debt. The maximum term for any term loan is
typically five years. Once approved by the underwriting committee, the term loan
is funded. All payments are collected through an automatic clearinghouse
transfer. The asset quality committee reviews all delinquent payments.

The Company also performs periodic on-site audits of all clients. The
auditing process is a diligent and detailed analysis similar to the credit
analysis performed prior to approval of the facility. The frequency of the audit
is dependent upon the risk rating of the client.

COMPETITION

The Company encounters significant competition from factoring companies,
asset based lenders, commercial banks and other financial institutions engaged
in secured lending. Due to the size of facilities offered by the Company and the
size of target clients, the Company competes with a large number of local and
regional sources of financing, as well as large national competitors. Many of
these competitors have significantly greater financial and other resources than
the Company and have access to capital at a lower cost than the Company.

The Company's larger competitors include Comerica Bank, Heller Financial,
CIT, Congress Financial, FINOVA, the Foothill Group, a subsidiary of Norwest,
and Fremont Financial. Smaller regional competitors vary broadly from market to
market. The competition for earning assets has had the effect of reducing yields
due to the competitive nature of the business and the increasing strength of
many clients in the current economic expansion.

GOVERNMENT REGULATION

Federal Assignment of Claims Act. In connection with certain of its
clients whose account debtors include the United States or departments or
agencies thereof, certain receivables sold or pledged to the Company are subject
to FACA. FACA provides that an assignment of a client's contractual claim for
monies due from the Federal Government will be enforceable against the Federal
Government by a third party assignee of such client only under very limited
circumstances. Certain aspects of the Company's purchased or pledged receivables
make compliance with FACA impractical or impossible, or make the protections
afforded by FACA unavailable to the Company. As a result, the Company does not
always comply with FACA when it purchases or receives a pledge of receivables
where the Federal Government is the account debtor, causing all assignments of
receivables purchased by the Company to which the Federal Government is the
account debtor to be unenforceable by the Company against the Federal
Government. Such failure to comply with FACA has no effect on the validity of
the assignment or pledge among the Company, the client and third parties other
than the Federal Government. Non-compliance with FACA causes the Company to lose
any right it may have to receive payments directly from the Federal Government
or cause the Federal Government to acknowledge the Company's claim in such
receivables. However, FACA does not limit the Company's ability to require its
clients to direct payments made by the Federal Government to a lockbox
controlled by the Company. The Federal Government also has significant rights of
setoff in connection with its contractual payments. Typically, the Company can
protect itself from certain rights of setoff by account debtors, either by
pursuing its rights against clients for breach of representation regarding the
absence of setoffs with respect to purchased receivables, or sending the account
debtors a notice of assignment pursuant to the Uniform Commercial Code. In cases
where the Federal Government is the account debtor, an assignee must comply with
FACA in order to protect itself from such setoffs, and thus the Company is
unable to avail itself of such protection (other than by pursuing its rights
against clients for breach of representations). The Federal Government has broad
setoff rights, including setoffs for unpaid taxes and setoffs arising from other
contracts between the client and the Federal Government. During 1997 and the
nine months ended September 30, 1998, respectively, the Federal Government
comprised 1.7% and 2.8% of the account debtors for the Company's total volume of
purchased

30
<PAGE> 32

receivables under management. The Company has not experienced a disproportionate
dilution rate with respect to such receivables compared to other of the
Company's receivables.

State Usury Laws. Usury laws generally limit the amount of interest that a
creditor may contract for, charge or receive in connection with the loan of
money. In the State of Texas (in which the Company's primary offices are
presently located), state law prohibits creditors from contracting for,
charging, reserving, taking or receiving interest at a rate in excess of a
varying index. For loans in which the interest rate is fixed, the usury ceiling
is equal to the index preceding the week in which the contract is entered into.
For varying rate loans, the index floats. Under the provisions of Texas law, the
index may never exceed 24% per year (or, in the case of business purpose loans
exceeding $250,000, 28% per year). If the index is less than 18% per year, the
creditor may, nevertheless, charge interest pursuant to a written agreement at
the rate of 18% per year. Because of the low interest rate environment, the
Texas usury ceiling has, since early in 1985, prohibited a business creditor
from contracting for, charging, reserving, taking or receiving interest at a
rate in excess of 18% per year. Section 339.004 of the Texas Finance Code
defines an "account purchase transaction" as an agreement in which a commercial
enterprise sells accounts receivable at a discount with or without a related
repurchase obligation. This law provides that the amount of any discount
associated with the purchase is not interest. Also, the law provides that the
parties' characterization of an account purchase transaction as a purchase is
conclusive that the transaction is not a loan.

EMPLOYEES

The Company had 72 full-time and two part-time employees at September 30,
1998, of whom six were employed in executive and administrative positions and 17
(including one executive officer) were employed in marketing. None of the
Company's employees is a party to any collective bargaining agreement, and the
Company considers its relations with employees to be satisfactory.

PROPERTIES

The Company leases its offices at each of its locations in Fort Worth,
Houston and San Antonio, Texas, New Orleans, Louisiana, the Los Angeles area and
the St. Louis area under lease agreements expiring at various dates through
2004. The Company believes that its facilities are adequate to meet the
Company's needs in these markets; however, office space may be expanded in the
Fort Worth office, and space will be required at the location of any new
marketing office opened by the Company.

LEGAL PROCEEDINGS

The Company is not a party to any litigation other than routine proceedings
incidental to its business, and the Company does not expect that these
proceedings will have a material adverse effect on the Company.

RATIO OF EARNINGS TO FIXED CHARGES

<TABLE>
<CAPTION>
NINE MONTHS ENDED YEAR ENDED DECEMBER 31,
SEPTEMBER 30, --------------------------------
1998(1) 1997 1996 1995 1994 1993
----------------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Ratio of Earnings to Fixed Charges(2)..... 2.6x 2.3x 1.9x 2.8x 4.1x 3.9x
</TABLE>

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

(1) The ratio for the nine month period may not necessarily be indicative of the
ratio that will result for the full year 1998.

(2) The ratio of earnings to combined fixed charges and preferred stock dividend
requirements for the periods presented is the same as the ratio of earnings
to fixed charges since KBK has no outstanding preferred stock and,
therefore, no dividend requirements.

For purposes of calculating these ratios: (i) "fixed charges" represent
interest expense and (ii) "earnings" represent the aggregate of income before
income taxes and interest expense.

31
<PAGE> 33

CAPITALIZATION

The following table sets forth the consolidated capitalization of KBK as of
September 30, 1998 and as adjusted to reflect the issuance and sale of the
1,000,000 Trust Preferred Securities offered hereby and the application by KBK
of the estimated net proceeds from the sale of the Debentures as described in
"Use of Proceeds." The table is unaudited and should be read in conjunction with
the financial statements and notes thereto incorporated by reference herein and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."

<TABLE>
<CAPTION>
SEPTEMBER 30, 1998
--------------------------
AS
ACTUAL ADJUSTED(a)
------- ---------------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Short-term debt............................................. $41,080 $17,680
Long-term debt.............................................. -- --
Company-obligated mandatorily redeemable preferred
securities of subsidiary.................................. -- 23,400(b)
------- -------
Stockholders' equity:
Common Stock, par value $.01 per share; authorized
10,000,000 shares; issued 3,548,600 shares (c)......... 35 35
Additional paid-in capital................................ 16,594 16,594
Retained earnings......................................... 11,445 11,445
Treasury stock............................................ (2,569) (2,569)
------- -------
Total stockholders' equity............................. 25,505 25,505
------- -------
Total capitalization................................... $66,585 $66,585
======= =======
</TABLE>

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

(a) Adjusted to reflect the application of $23.4 million of the estimated net
proceeds from the sale by KBK of the Debentures to the Trust.

(b) Gives effect to the issuance of 1,000,000 Trust Preferred Securities. The
principal assets of the Trust will be the Debentures having an outstanding
principal amount of $25,750,000 and, upon redemption or maturity of the
Debentures, the Trust Preferred Securities will be mandatorily redeemable.

(c) Does not include 524,000 shares of Common Stock issuable upon the exercise
of outstanding stock options granted to certain directors and employees of
the Company pursuant to the Company's stock option plans. Does not include
500,000 shares of Common Stock issuable upon the exercise of outstanding
warrants sold in connection with the formation of KBK to two former
directors and one current director.

32
<PAGE> 34

SELECTED FINANCIAL DATA

The following table sets forth selected historical consolidated financial
data of the Company and its subsidiaries. The historical financial data as of
December 31, 1997 and 1996 and for each of the three fiscal years in the period
ended December 31, 1997 are derived from the Company's audited financial
statements incorporated by reference herein. The financial data as of and for
each of the nine month periods ended September 30, 1998 and 1997 were derived
from the Company's unaudited interim financial statements and in the opinion of
management include all adjustments (consisting only of normal recurring
adjustments) necessary to present fairly the information set forth therein.

The information presented below should be read in conjunction with the
Company's historical financial statements and notes thereto incorporated by
reference herein and "Management's Discussion and Analysis of Financial
Condition and Results of Operations."

<TABLE>
<CAPTION>
NINE MONTHS
ENDED SEPTEMBER 30, YEAR ENDED DECEMBER 31,
------------------------- -----------------------------------------------------------
1998 1997 1997 1996 1995 1994 1993
--------- --------- --------- --------- --------- --------- -------
(UNAUDITED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C>
OPERATING DATA:
Revenue:
Earned discount income............ $ 1,378 $ 3,263 $ 3,777 $ 9,778 $ 10,634 $ 6,625 $ 6,204
Interest income -- loans.......... 3,371 2,369 3,119 1,369 144 70 115
Servicing fees.................... 5,897 4,022 6,314 -- -- -- --
Other income -- fees.............. 2,586 1,429 1,981 1,054 166 201 --
--------- --------- --------- --------- --------- --------- -------
Total revenue................... 13,232 11,083 15,191 12,201 10,944 6,896 6,319
Interest expense.................... 2,004 2,206 2,666 2,590 1,652 806 762
--------- --------- --------- --------- --------- --------- -------
Income after interest expense....... 11,228 8,877 12,525 9,611 9,292 6,090 5,557
Provision for credit losses......... 1,100 575 875 245 600 65 588
--------- --------- --------- --------- --------- --------- -------
Income after interest expense and
provision for credit losses....... 10,128 8,302 11,650 9,366 8,692 6,025 4,969
Operating expenses:
Salaries and employee benefits.... 3,722 3,247 4,431 3,545 2,997 1,960 1,569
Amortization of intangible
assets.......................... 295 284 379 361 410 276 275
Occupancy and equipment........... 1,108 937 1,285 847 587 423 241
Professional fees................. 285 189 251 344 584 181 159
Other............................. 1,463 1,290 1,852 1,812 1,089 691 507
--------- --------- --------- --------- --------- --------- -------
Total operating expenses........ 6,873 5,947 8,198 6,909 5,667 3,531 2,751
--------- --------- --------- --------- --------- --------- -------
Income before income taxes.......... 3,255 2,355 3,452 2,457 3,025 2,494 2,218
Income tax expense.................. 1,111 954 1,388 906 1,177 863 783
--------- --------- --------- --------- --------- --------- -------
Net income...................... $ 2,144 $ 1,401 $ 2,064 $ 1,551 $ 1,848 $ 1,631 $ 1,435
========= ========= ========= ========= ========= ========= =======
PER SHARE DATA:
Earnings per share -- basic....... $ 0.65 $ 0.42 $ 0.62 $ 0.47 $ 0.52 $ 0.61 N/A
Weighted-average common shares --
outstanding -- basic............ 3,286,000 3,310,000 3,309,000 3,334,000 3,526,000 2,672,000 N/A
Earnings per share -- diluted..... $ 0.57 $ 0.42 $ 0.60 $ 0.45 $ 0.51 $ 0.56 N/A
Weighted-average common shares --
outstanding -- diluted.......... 3,785,000 3,339,000 3,428,000 3,436,000 3,659,000 2,929,000 N/A
BALANCE SHEET DATA (AT END OF
PERIOD):
Total assets...................... $ 82,580 $ 51,767 $ 56,401 $ 89,747 $ 62,212 $ 61,080 $26,494
Long term debt.................... -- -- -- -- -- -- --
Short term debt................... 41,080 17,500 21,000 58,000 33,000 29,926 11,993
Stockholders' equity.............. 25,505 23,541 24,569 22,140 21,288 20,374 8,797
Book value per share.............. 7.86 7.11 7.35 6.69 6.27 5.74 N/A
PROFITABILITY RATIOS:
Yield on average net earning
assets............................ 19.8% 20.8% 20.9% 24.0% 31.7% 29.2% 35.4%
Return on average assets under
management........................ 2.1(1) 1.9(1) 2.0 2.4 4.0 5.3 6.4
Return on average equity............ 11.6(1) 8.2(1) 8.9 7.1 8.9 11.2 17.8
ASSET QUALITY RATIOS:
Ratio of allowance for credit losses
to net charge-offs................ 1.5x(2) 3.1x(2) 3.5x 4.4x 3.3x 3.9x 2.7x
Net charge-offs as a percentage of
average earning assets............ 1.0%(2) 0.7%(2) 0.6% 0.6% 1.3% 1.5% 2.1%
Ratio of earnings to fixed
charges(3)........................ 2.6x 2.1x 2.3x 1.9x 2.8x 4.1x 3.9x
</TABLE>

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

(1) Percentage shown has been annualized.

(2) For the twelve months ended September 30, 1998 and 1997.

(3) For purposes of calculating these ratios: (i) "fixed charges" represent
interest expense and (ii) "earnings" represent the aggregate of income
before income taxes and interest expense.

33
<PAGE> 35

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

RESULTS OF OPERATIONS

Nine Months Ended September 30, 1998 Compared to Nine Months Ended September 30,
1997

The following table sets forth the results of operations and certain other
data of the Company for the nine months ended September 30, 1998 and 1997.

<TABLE>
<CAPTION>
NINE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, 1998 SEPTEMBER 30, 1997
(UNAUDITED) (UNAUDITED)
------------------- ------------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Average Net Earning Assets
Managed and Owned.................................. $112,142 $82,088
Owned.............................................. 44,753 50,437
Total revenue........................................ $ 13,232 100.0% $11,083 100.0%
Interest expense..................................... 2,004 15.1 2,206 19.9
Provision for credit losses.......................... 1,100 8.3 575 5.2
Operating expenses................................... 6,873 52.0 5,947 53.7
Income taxes......................................... 1,111 8.4 954 8.6
-------- ----- ------- -----
Net income........................................... $ 2,144 16.2% $ 1,401 12.6%
======== ===== ======= =====
</TABLE>

Average net earning assets (managed and owned) increased 36.6% to $112.1
million for the nine months ended September 30, 1998 from $82.1 million for the
nine months ended September 30, 1997. Reflecting this increase in earning
assets, total revenue increased 19.4%, or $2.1 million, to $13.2 million for the
nine months ended September 30, 1998 compared to $11.1 million for the same
period in 1997. Although the growth in average net earning assets owned and
managed was $30.1 million, average net earning assets owned for the nine months
ended September 30, 1998 decreased by $5.7 million compared to the same period
in 1997, due to the assets sold into the conduit facility during the nine months
ended September 30, 1998.

Interest expense decreased 9.2% to $2.0 million for the nine months ended
September 30, 1998 from $2.2 million for the same period of 1997. This decrease
is primarily due to a $6.9 million decrease in the average outstanding balance
under the Credit Facility (as defined herein) to $28.1 million for the nine
months ended September 30, 1998 from $35.0 million for the same period in 1997
resulting from the sale of assets into the conduit facility beginning in April
1997.

A provision for credit losses of $1.1 million was recorded for the nine
months ended September 30, 1998, as compared to $575,000 for the same period of
1997. The increased provision resulted from the final resolution of several
nonperforming relationships which were charged off during 1998. During the nine
months ended September 30, 1998, the Company had net charge-offs of $1.1 million
compared to $340,000 of net charge-offs for the same period of 1997. The
allowance for credit losses at September 30, 1998 of $1.9 million represents
2.6% of total outstanding loans and accounts receivable and 4.3% of average net
earning assets owned for the nine months then ended. The allowance for credit
losses at September 30, 1997 of $1.8 million was 4.4% of total outstanding loans
and accounts receivable and 3.7% of average net earning assets owned for the
nine months then ended. Management believes the current allowance is adequate to
cover potential losses which might result from the purchased accounts receivable
and loan portfolio at September 30, 1998.

Operating expenses of $6.9 million for the nine months ended September 30,
1998 increased $926,000, or 15.6%, compared with $5.9 million for the same
period of 1997. Employment related expense increased $475,000 to $3.7 million
for the nine months ended September 30, 1998 compared to $3.2 million for the
same period of 1997. This increase is primarily attributable to the addition of
executive management and marketing staff during 1998. Occupancy expense
increased $171,000 to $1.1 million for the nine months ended September 30, 1998,
from $937,000 for the same period of 1997 resulting primarily from the increased

34
<PAGE> 36

depreciation for equipment and systems required in the Fort Worth office. Other
operating expenses increased $173,000 or 13.4% to $1.5 million for the nine
months ended September 30, 1998 from $1.3 million in the same period of 1997 due
to the increased marketing expenses related to the Company's growth. This growth
also generated a $97,000 increase in professional fees from $189,000 during the
nine months ended September 30, 1997 to $285,000 for the same period in 1998.

Income taxes of $1.1 million for the nine months ended September 30, 1998
were 16.5% more than the $954,000 of income taxes for the same period of 1997,
even though income before taxes for the nine months ended September 30, 1998
increased 38.2% compared to the nine months ended September 30, 1997. A 33.9%
increase in federal income taxes was offset by a 86.1% decrease in state income
taxes due primarily to a state tax adjustment recorded in the third quarter of
1998 relative to the tax effect of the sale of assets into the conduit facility.

As a result of the foregoing, net income of the Company for the nine months
ended September 30, 1998 increased $743,000, or 53.0%, to $2.1 million from $1.4
million for the same period in 1997.

Total assets increased 46% from $56.4 million at December 31, 1997 to $82.6
million at September 30, 1998. This increase is primarily related to the net
change in accounts receivable and loans receivable during the period from $43.9
million at December 31, 1997 to $73.2 million at September 30, 1998. This
increase in assets was funded by a $16.6 million increase in bank borrowings and
a $3.5 million increase in commercial paper during the first nine months of
1998. During the quarter ended September 30, 1998, a significant receivable
balance of the Company was deemed non-performing due to fraudulent invoices
being sold to KBK. To potentially offset the unsecured portion of the
receivables purchased balance, KBK was offered and accepted an ownership
interest in a newly formed entity. Accordingly, the $1,750,000 estimated value
of the ownership interest in this entity has been reclassed from non-performing
assets to other assets as an equity investment in the new entity.

Stockholders' equity increased $936,000, from $24.6 million at December 31,
1997 to $25.5 million at September 30, 1998, resulting from net income of $2.1
million and a reduction of $1.2 million for treasury stock purchases during the
nine months ended September 30, 1998. The Company paid no dividends on its
Common Stock for the nine months ended September 30, 1998.

Year Ended December 31, 1997 Compared to Year Ended December 31, 1996

The following table sets forth the results of operations and certain other
data of the Company for the years ended December 31, 1997 and December 31, 1996.

<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, 1997 DECEMBER 31, 1996
------------------ ------------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Average Net Earning Assets
Managed and Owned...................................... $85,621 $50,941
Owned.................................................. 46,582 50,941

Total revenue............................................ $15,191 100% $12,201 100%
Interest expense......................................... 2,666 17 2,590 21
Provision for credit losses.............................. 875 6 245 2
Operating expenses....................................... 8,198 54 6,909 57
Income taxes............................................. 1,388 9 906 7
------- --- ------- ---
Net income............................................... $ 2,064 14% $ 1,551 13%
======= === ======= ===
</TABLE>

Average net earning assets under management increased 68.1% to $85.6
million for the year ended December 31, 1997, from $50.9 million for the year
ended December 31, 1996. Reflecting the increase in assets, total revenue
increased 24.5%, or $3.0 million, to $15.2 million for the year ended December
31, 1997, from $12.2 million for the year ended December 31, 1996. Although
largely offset by $34.7 million growth in

35
<PAGE> 37

average assets owned and managed, average net earning assets owned for the year
ended December 31, 1997 decreased $4.4 million from the year ended December 31,
1996, due to the assets sold into the conduit facility. The sale of assets
resulted in a $9.0 million adjustment to interest income and a $2.7 million
adjustment to interest expense, which netted to $6.3 million in servicing spread
income during the year ended December 31, 1997.

Interest expense increased slightly to $2.7 million for the year ended
December 31, 1997 compared with $2.6 million for the year ended December 31,
1996. Although average funded debt decreased from $34.7 million in 1996 to $31.2
million in 1997 due to significant financing through the conduit facility,
rising interest rates during the year generated the increase in interest
expense. Interest expense improved to 17.5% of total revenue for 1997 from 21.2%
of total revenue for 1996.

The provision for credit losses was $875,000 for 1997 compared to $245,000
for 1996, representing a 257.1% increase. During 1997, the Company had
charge-offs of $765,000 while recovering $210,000. Net charge-offs for 1997 of
$555,000 and a provision of $875,000 for 1997 resulted in an allowance for
credit losses of $1.9 million or 4.2% of gross receivables outstanding as of
December 31, 1997 (3.4% of average receivables). During 1996, the Company had
charge-offs of $404,000 while recovering $38,000, resulting in net charge-offs
of $366,000. The Company's 1996 provision for credit losses of $245,000 brought
the allowance for credit losses to $1.6 million, or 1.9% of gross receivables
outstanding (2.7% of average receivables outstanding during December 31, 1996).

Operating expenses increased $1.3 million, or 18.7%, to $8.2 million or
54.0% of total revenue for 1997 compared with $6.9 million or 57.0% of total
revenue for 1996. This increase was primarily a result of increased salaries and
benefits and other employment expenses of $886,000, related to support staff and
management added in 1997 to support the Company's growth and increased business
activity. Occupancy expenses increased $196,000, resulting primarily from
increased lease expense associated with the expansion of the corporate offices.
Also related to this expansion was a $242,000 increase in amortization and
depreciation expense for 1997 due to the leasehold improvements and addition of
fixed assets.

Income taxes of $1.4 million for 1997 were 53.2% higher than the income
taxes of $906,000 for 1996 due to higher income before taxes.

As a result of the above, net income of the Company for 1997 increased
$513,000, or 33.1%, to $2.1 million or 13.6% of total revenue, from $1.6 million
or 12.7% of total revenue in 1996.

Total assets decreased 37% from December 31, 1996 to $56.4 million as of
December 31, 1997. This decrease was the result of the sale of $66.7 million in
assets into the conduit facility, which was partially offset by additional
fundings on accounts receivable and loans receivable during 1997.

Year Ended December 31, 1996 Compared to Year Ended December 31, 1995

The following table sets forth the results of operations and certain other
data of the Company for the years ended December 31, 1996 and 1995:

<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, 1996 DECEMBER 31, 1995
------------------ ------------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Average Net Earning Assets............................... $50,941 $33,973

Total revenue............................................ $12,201 100% $10,944 100%
Interest expense......................................... 2,590 21 1,652 15
Provision for credit losses.............................. 245 2 600 5
Operating expenses....................................... 6,909 57 5,667 52
Income taxes............................................. 906 7 1,177 11
------- --- ------- ---
Net income............................................... $ 1,551 13% $ 1,848 17%
======= === ======= ===
</TABLE>

36
<PAGE> 38

Receivables purchased in 1996 averaged $46.7 million, approximately $6.6
million, or 16.5%, over the 1995 average purchased receivables balance of $40.1
million. This growth in average receivables purchased in 1996 was primarily
attributable to growth in the Louisiana, California and Fort Worth receivables
portfolios. Revenue derived from earned discount income was $9.8 million in 1996
compared to $10.6 million in 1995, a 7% decrease. This percentage decreased
notwithstanding the increase in average receivables purchased because of lower
pricing on purchases from existing and new clients. These reduced yields were
due in part to the strengthening of the credit quality of the existing
portfolio, as well as competitive pressures.

In an effort to meet the financing needs of its clients and lengthen the
duration of the relationship, the Company continues to broaden the range of its
product line. Loans receivable increased $21.8 million to $27.4 million
outstanding at December 31, 1996 from $5.6 million outstanding at December 31,
1995. Revenue derived from these loans increased from $144,000 for 1995 to $1.4
million for 1996.

Interest expense increased $938,000, or 56.8%, to $2.6 million for 1996
compared with $1.7 million for 1995. Interest expense was 21.0% of total revenue
for 1996 and 15.0% of total revenue for 1995. The increase was due mainly to the
borrowings used to finance the higher levels of earning assets funded during
1996. During 1996, the Company had an average outstanding balance of bank debt
of $34.7 million at a weighted average interest rate of 7.5%. During 1995, the
Company had average outstanding balance of bank debts of $19.8 million at a
weighted average interest rate of 7.8%.

During 1996, the Company provided $245,000 for credit losses compared to
$600,000 for 1995, representing a 59.0% decrease. During 1996, the Company
recorded charge-offs of $404,000 while recovering $38,000. Net charge-offs for
1996 of $366,000 and a provision of $245,000 for 1996 resulted in an allowance
for credit losses of $1.6 million or 1.9% of gross receivables outstanding as of
December 31, 1996 (2.7% of average receivables). During 1995, the Company
recorded charge-offs of $542,000 while recovering $12,000, resulting in net
charge-offs of $530,000. The Company's 1995 provision for credit losses of
$600,000 brought the allowance for credit losses to $1.7 million, or 3.7% of
gross receivables outstanding (4.1% of average receivables outstanding at
December 31, 1995).

Operating expenses increased $1.2 million, or 21.0%, to $6.9 million, or
57.0% of total revenue for 1996 compared with $5.7 million or 52.0% of total
revenue for 1995. This increase was primarily a result of increased salaries and
benefits and other employment expenses of $783,000, of which $281,000 related to
the opening of offices in Irvine and Santa Clara, California and $502,000
related to support staff and management added in 1996 to support increased
business activity. Occupancy expenses increased $109,000, resulting from the
addition of the California offices and increased rental expense associated with
the corporate offices. Amortization and depreciation expense for 1996 increased
$102,000 due to the addition of fixed assets in Fort Worth and California. The
remaining increase in operating expenses of $206,000 is comprised of a $54,000
increase in direct marketing and marketing support expenses such as travel,
entertainment, telephone, and postage, a $65,000 increase in advertising, and an
$87,000 increase in general overhead such as insurance, office expenses and
directors fees.

Income taxes of $906,000 for 1996 were 24.5% lower than the income taxes of
$1.2 million for 1995 due to lower income before taxes.

As a result of the above, net income of the Company for 1996 decreased
$300,000, or 16.0%, to $1.6 million or 13.0% of total revenue, from $1.9 million
or 17.0% of total revenue in 1995.

Total assets increased 44% from December 31, 1995 to $89.7 million at
December 31, 1996. This growth was the result of the $14.7 million increase in
purchased receivables and the $21.8 million increase in loans receivable
outstanding at December 31, 1996 due to increased borrowings. Although average
assets increased 40% in 1996 over 1995, fluctuation of outstanding purchased
receivable balances decreased in 1996 due to the addition of loans receivable
which enhance the stability of the balance sheet and subject the Company to less
of the seasonality inherent in purchased accounts receivable.

The balance of the deferred tax asset (included in other assets) of
$427,000 at year-end 1996 decreased by 21.0% from the 1995 balance of $540,000
largely due to the decrease in the deferred tax asset related to the temporary
differences for book and tax purposes in the deductibility of provisions for
credit losses.

37
<PAGE> 39

LIQUIDITY AND CAPITAL RESOURCES

The Company's capital requirements generally increase proportionately to
the increase in earning assets. The method of funding the portfolio changed
significantly during 1997 with the implementation of the asset sale. As a result
of the assets sold into the conduit facility, total average net earning assets
owned decreased $5.6 million, from $50.4 million during the first nine months of
1997 to $44.8 million in the first nine months of 1998, while average net
earning assets managed and owned increased from $82.1 million to $112.1 million
during the same period.

KBK Financial maintains a $55.0 million, multi-bank line of credit ("Credit
Facility") which had $50.0 million committed and $37.6 million outstanding at
September 30, 1998, $16.6 million more than the $21.0 million outstanding at
December 31, 1997. The Credit Facility is comprised of a $40.0 million Revolving
Credit Facility ("Revolving Facility"), a $5.0 million Over Advance Facility
which allows for borrowing base availability to fund amounts in excess of client
concentration limits and a $5.0 million bridge facility for funding certain
mezzanine loans. Under the Credit Facility, KBK Financial is entitled to the
issuance of one or more letters of credit which in total shall not exceed the
lesser of $5.0 million or the remainder of the Revolving Facility borrowing
base, less all amounts outstanding on the Revolving Facility. As of September
30, 1998, there was $36.6 million outstanding under the Revolving Facility, $1.0
million outstanding under the Over Advance Facility, no balance outstanding
under the bridge facility, and $1.7 million in letters of credit outstanding
under the Revolving Facility. The Credit Facility provides for maximum
borrowings of the lesser of (i) $50.0 million or (ii) the amount of a borrowing
base (based on a percentage of eligible loans and accounts receivable, as
defined in the loan agreement governing the Credit Facility, net of excluded
amounts). There was $9.9 million in available credit under this line as of
September 30, 1998. Borrowings under the Revolving Facility portion of the
Credit Facility bear interest at the agent banks' prime rate or applicable LIBOR
plus 1.75%, at KBK Financial's election, and expire on May 31, 2000. Borrowings
under the bridge facility and the Over Advance Facility portion of the Credit
Facility bear interest at the agent banks' prime rate plus 1.25%. The bridge
facility expires on December 12, 1998. The Over Advance Facility expires on May
14, 1999; however, the lenders may terminate this portion of the facility at any
time upon 120 days prior written notice to KBK Financial.

Borrowings under the Credit Facility are secured by all accounts receivable
of KBK Financial (including all accounts receivable purchased by KBK Financial
from its clients) which are not sold to KBK Receivables, all notes receivable of
KBK Financial which are not sold to KBK Receivables, all inventory of KBK
Financial now owned or acquired, all instruments, chattel paper, documents and
general intangibles of KBK Financial now owned or acquired, an assignment of all
security interests, mortgages and liens securing the foregoing and all proceeds
of the foregoing. The Credit Facility provides that KBK Financial is permitted
to contribute and sell, free of liens, and grant security interests in,
accounts, chattel paper, instruments and general intangibles to KBK Receivables
pursuant to the purchase and sale agreement. The terms of the Credit Facility
require KBK Financial to comply with certain financial covenants and include the
maintenance of a certain tangible net worth, limitations on its debt to tangible
net worth, and an interest coverage ratio which requires that KBK Financial's
ratio of income before interest and taxes to interest expense, over the last
four quarters, be no less than 1.5 to 1. Additionally, the Credit Facility
restricts the payment of dividends in any fiscal year by KBK Financial to the
lesser of (i) KBK Financial's after tax income for such fiscal year or (ii)
50.0% of the amount by which KBK Financial's after tax income exceeds the
cumulative amount of dividends permitted to be paid under such tests, but not so
paid.

Thus, KBK Financial is effectively restricted in its ability to pay cash
dividends to the Company. The Company has not paid dividends on its Common Stock
and currently does not intend to pay cash dividends; rather, it intends to
retain its cash for the continued expansion of its business and the continuation
of the stock repurchase program initiated in November 1995.

Under the Company's stock repurchase program, the Company may buy back in
open market transactions, block trades or private transactions, up to 500,000
shares (15% of the outstanding shares at December 31, 1997) of Common Stock. At
September 30, 1998, 304,567 shares of Common Stock had been repurchased and
placed in the treasury at a cost of $2.6 million (net of 100,000 shares issued
to the former

38
<PAGE> 40

shareholders of Coastal Financial Resources, Inc., which was acquired by the
Company in 1994). All of such purchases have been funded out of the general
funds of the Company, which had the result of increasing the outstanding balance
under the Credit Facility.

In May 1998, the Company, through KBK Financial, reinstated its commercial
paper program ("CP Program"). During the 19 year period preceding mid-1994, KBK
used the proceeds from the private issuance of short-term, unrated commercial
paper to finance a portion of its portfolio. The CP Program was canceled by
management concurrent with the Company's June 1994 initial public offering of
Common Stock. Under the CP Program, certificates may be issued for tenures
ranging from 30 to 270 days at interest rates comparable to the Company's
alternative unsecured funding sources. The certificates are placed directly by
the Company; however, the Company reserves the right to name a placement agent
in the future. The certificates are not rated by any independent agency and the
Company does not maintain a back-up liquidity facility to support outstanding
certificates. During the second quarter of 1998, KBK Financial issued
certificates aggregating $3.5 million to qualified investors. Each certificate
carries a coupon rate of 10% per annum and currently mature on November 16 and
December 14, 1998.

Future sources of liquidity to fund growth in earning assets will come from
the sale of earning assets, the issuance of unsecured and secured corporate debt
obligations, preferred and common stock, as well as from traditional bank
financing.

EFFECTS OF RECENTLY ISSUED ACCOUNTING STANDARDS

In June of 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards (SFAS) 130 "Reporting Comprehensive Income,"
which is required to be adopted for fiscal years beginning after December 15,
1997. This statement establishes standards for reporting and display of
comprehensive income and its components in a full set of general-purpose
financial statements. The adoption of SFAS 130 did not have a material impact on
the Company's consolidated financial statements.

IMPACT OF THE YEAR 2000 ISSUE

The Company is currently working to resolve the potential impact of the
year 2000 on the processing of date-sensitive data by the Company's computerized
information systems. The year 2000 is critical to these systems as many computer
programs are written using two digits rather than four to define the applicable
year. As a result, any of the Company's computer applications that have
date-sensitive programs may recognize a date using "00" as the year 1900 rather
than the year 2000. This could result in a system failure or miscalculation
causing disruptions, including but not limited to a temporary inability to
process transactions, communicate with customers and financial institutions and
update internal accounting systems. If not corrected, such disruptions could
have a significant impact on the Company's operations.

The Company has initiated a Company-wide program to prepare the Company's
computer systems and applications for the year 2000. Based on present
information, the Company believes that it will be able to achieve year 2000
compliance through modification of some existing programs and the replacement of
other programs with new programs that are already year 2000 compliant. The
Company will utilize both internal and external resources to reprogram, or
replace, and test software for year 2000 compliance. The Company plans to
complete the year 2000 conversion project by July 1, 1999. The total project
costs are estimated to be immaterial and will be expensed as incurred.

The Company is taking steps to resolve year 2000 compliance issues that may
be created by clients, debtors and financial institutions with whom the Company
does business. However, there can be no guarantee that the systems of other
entities will be converted timely. A failure to convert by another entity could
have a significant adverse effect on the Company.

The costs of the year 2000 conversion project and the date on which the
Company plans to complete the project are based on management's best estimates,
which were derived using numerous assumptions of future events including the
continued availability of certain resources, third party modification plans and
other

39
<PAGE> 41

factors. There can be no guarantee that these estimates will be achieved and
actual results could vary significantly from current estimates.

The Company does not have a written contingency plan to address the issues
that could arise should the Company or any of its clients or debtors not be
prepared to accommodate year 2000 issues timely. The Company believes that in an
emergency it could revert to the use of manual systems that do not rely on
computers.

DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS

This Prospectus, including the documents incorporated by reference herein,
contains forward-looking statements within the meaning of Section 27A of the
Securities Act and Section 21E of the Exchange Act. These statements are
identified by words such as "may," "will," "expects," "anticipates," "intends,"
"plans," "estimates," "should" and words of similar import. Forward-looking
statements are inherently subject to risks and uncertainties, many of which
cannot be predicted with accuracy and some of which might not even be
anticipated. Future events and actual results, financial and otherwise, may
differ materially from the results discussed in the forward-looking statements.
Factors that might cause such a difference include, but are not limited to,
those discussed in this section and "Risk Factors."

MANAGEMENT

ROBERT J. MCGEE, 44, has served as Chairman of the Board, Director and Chief
Executive Officer of the Company since the Company acquired KBK Financial 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.

KENNETH H. JONES, JR., 63, 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.

J. DUGAN SMITH, 38, has served as President of KBK Financial since September
1997. He joined KBK Financial in May 1996 as Executive Vice President and Chief
Credit Officer of the Company. 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.

L. ALLEN JARBOE, 45, was named Executive Vice President and Chief Credit Officer
of the Company effective April, 1998. Prior to joining the Company, Mr. Jarboe
was with Barnett Bank in Jacksonville, Florida, NationsBank -- San Antonio and
First City Bank in Houston.

JACK R. ROPER, 44, has served as Executive Vice President of Servicing of the
Company since January 1994, and has been an executive of KBK Financial since
1989.

JAY K. TURNER, 44, joined the Company in February 1998 as Executive Vice
President and Chief Financial Officer. Prior to joining the Company, Mr. Turner
was Managing Director of Investment Banking with Rauscher Pierce Refsnes in
Dallas, Texas and prior to that served as Managing Director of Corporate Finance
for KPMG Peat Marwick in New York and Texas.

40
<PAGE> 42

The Board of Directors of the Company is divided into three classes. At
each annual meeting of the stockholders, directors constituting one class are
elected for a three-year term. The Board of Directors currently consists of
eight members. The following table sets forth certain information respecting
directors of the Company as of September 30, 1998:

<TABLE>
<CAPTION>
DIRECTOR YEAR TERM
NAME AGE SINCE EXPIRES PRESENT PRINCIPAL OCCUPATION
---- --- -------- --------- ---------------------------------
<S> <C> <C> <C> <C>
Robert J. McGee........................ 44 1992 1999 Chairman of the Board, Director
and Chief Executive Officer of
the Company
Kenneth H. Jones, Jr................... 63 1995 2000 Vice Chairman of the Company
Daniel R. Feehan....................... 47 1992 1999 President, Chief Operating
Officer and a Director of Cash
America International, Inc.
Thomas L. Healey....................... 64 1994 1999 Private investments
Martha V. Leonard...................... 61 1996 2000 Private investments
R. Earl Cox, III....................... 64 1996 2000 Chairman of Tandy Crafts, Inc.
Harris A. Kaffie....................... 48 1996 2001 Partner in Kaffie Brothers
Thomas M. Simmons...................... 45 1995 2001 Managing Director in Houston
Office of Spencer Stuart & Co.
</TABLE>

Approximately 39% of the Common Stock is beneficially owned by senior
management and directors with the remaining 61% held by institutional and other
public holders.

KBK CAPITAL TRUST I

KBK Capital Trust I (the "Trust") is a statutory business trust formed
under Delaware law pursuant to (i) an original declaration of trust, as amended
and restated (the "Declaration") executed by KBK, as sponsor of the Trust (the
"Sponsor"), the Delaware Trustee (as defined herein) and the Regular Trustees
(as defined herein) of the Trust and (ii) the filing of a certificate of trust
with the Secretary of State of the State of Delaware. Unless earlier terminated
pursuant to the Declaration, the Trust will terminate on December 31, 2048. The
Company will directly or indirectly acquire Trust Common Securities in an
aggregate liquidation amount equal to 3.0% of the aggregate liquidation amount
of the Trust Preferred Securities. The Trust Common Securities will rank pari
passu, and payment will be made thereon pro rata, with the Trust Preferred
Securities, except that, upon the occurrence and during the continuance of a
Debenture Event of Default or a default by KBK under the Guarantee, the rights
of the holders of the Trust Common Securities to payment in respect of
distributions and payments upon liquidation, redemption and otherwise will be
subordinated to the rights of the holders of the Trust Preferred Securities. The
assets of the Trust will consist principally of the Debentures. The Trust exists
for the sole purpose of (i) issuing the Trust Securities representing undivided
beneficial interests in the assets of the Trust, (ii) making distributions to
holders of Trust Securities, (iii) investing the gross proceeds of the issuance
of the Trust Securities in the Debentures, and (iv) engaging in only those other
activities necessary or incidental thereto.

The Trust initially will have five trustees. A majority of the trustees of
the Trust are individuals who are employees or officers of or who are affiliated
with KBK (the "Administrative Trustees"). Pursuant to the Declaration, the
number of Administrative Trustees initially is three. The fourth trustee is a
financial institution that is unaffiliated with KBK and that acts as property
trustee and indenture trustee (the "Property Trustee" and, together with the
Administrative Trustees, the "Regular Trustees") for purposes of the Trust
Indenture Act of 1939, as amended (the "Trust Indenture Act"). The fifth trustee
is an entity that maintains its principal place of business in the State of
Delaware (the "Delaware Trustee"). Initially, The First National Bank of
Chicago, a national banking association, is the Property Trustee and Wilmington
Trust Company, a Delaware banking corporation, is the Delaware Trustee until, in
each case, removed or replaced by the Administrative Trustees. The First
National Bank of Chicago will also act as indenture trustee under the

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Guarantee (the "Trust Guarantee Trustee") and under the Subordinated Indenture
(the "Subordinated Debt Trustee"). See "Description of the Guarantee" and
"Description of the Trust Preferred Securities."

The Property Trustee will hold title to the Debentures for the benefit of
the holders of the Trust Securities, and the Property Trustee will have the
power to exercise all rights, powers and privileges under the Subordinated
Indenture as the holder of the Debentures. In addition, the Property Trustee
will maintain exclusive control of a segregated non-interest bearing bank
account (the "Property Account") to hold all payments made in respect of the
Debentures for the benefit of the holders of Trust Securities. KBK, as the
direct or indirect holder of all of the Trust Common Securities, will have the
right to appoint, remove or replace any of the Regular Trustees and the Delaware
Trustee and to increase or decrease the number of Regular Trustees (except that
upon the occurrence and during the continuance of a Trust Enforcement Event, the
Property Trustee may be removed and a successor appointed only by the holders of
a majority in liquidation amount of the Trust Preferred Securities), provided
that the number of Regular Trustees shall be at least three, the majority of
which shall be Administrative Trustees. KBK will pay all fees and expenses
related to the Trust and this offering. See "Description of the Debentures."

The rights of the holders of the Trust Preferred Securities, including
economic rights, rights to information and voting rights, if any, are as set
forth in the Declaration and the Delaware Business Trust Act, as amended (the
"Trust Act"). See "Description of the Trust Preferred Securities." The
Declaration, the Subordinated Indenture and the Guarantee will be qualified
under and also incorporate by reference the terms of the Trust Indenture Act.
The Property Trustee will act as indenture trustee for the Debentures, the
Declaration and the Guarantee for purposes of complying with the Trust Indenture
Act.

The place of business and telephone number of the Trust are the principal
executive offices and telephone number of KBK. See "The Company."

DESCRIPTION OF THE TRUST PREFERRED SECURITIES

This summary of certain provisions of the Trust Preferred Securities and
the Declaration does not purport to be complete and is subject to, and is
qualified in its entirety by reference to, all the provisions of the Declaration
(a copy of which is filed as an exhibit to the registration statement of which
this Prospectus is a part, and a copy of which may be obtained from the
corporate trust office of the Property Trustee), the Trust Act and the Trust
Indenture Act which is incorporated by reference in the Declaration. Wherever
particular defined terms of the Declaration are referred to herein, such defined
terms are incorporated herein by reference.

GENERAL

Pursuant to the terms of the Declaration, the Administrative Trustees, on
behalf of the Trust, will issue the Trust Preferred Securities and the Trust
Common Securities. The Trust Preferred Securities will represent preferred
undivided beneficial interests in the assets of the Trust and the Trust Common
Securities will represent subordinated undivided beneficial interests in the
assets of the Trust. All of the Trust Common Securities will be owned by KBK.
The Trust Preferred Securities will rank pari passu, and payments will be made
thereon pro rata, with the Trust Common Securities except as described under the
caption "-- Subordination of Trust Common Securities." Legal title to the
Debentures will be held by the Property Trustee in trust for the benefit of the
holders of the Trust Securities. The Declaration does not permit the issuance by
the Trust of any securities other than the Trust Securities or the incurrence of
any indebtedness by the Trust. The payment of distributions out of money held by
the Trust, and payments upon redemption of the Trust Preferred Securities or
liquidation of the Trust, are guaranteed by KBK to the extent described under
"Description of the Guarantee." The Guarantee is held by The First National Bank
of Chicago, as the Trust Guarantee Trustee, for the benefit of the holders of
the Trust Preferred Securities. The Guarantee does not cover payment of
distributions when the Trust does not have sufficient and legally available
funds to pay such distributions. The remedy of a holder of Trust Preferred
Securities in such an event is as described under the captions "-- Trust
Enforcement Events; Notice," "-- Enforcement of Certain Rights by Holders of
Trust Preferred Securities" and "-- Voting Rights; Amendment of the Declaration"
below.

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DISTRIBUTIONS

Distributions on the Trust Preferred Securities will be payable at the
annual rate of % of the liquidation amount of $25 per Trust Preferred
Security. Distributions will accumulate from the date of the original issuance
of the Trust Preferred Securities and will be payable quarterly in arrears on
February , May , August , and November of each year to holders of record
on the applicable record date, commencing February , 1999 when, as and if
legally available for payment by the Property Trustee, except as otherwise
described below. Distributions to which holders of the Trust Preferred
Securities are entitled but are not paid on the scheduled payment date will
accumulate additional distributions thereon at % per annum, compounded
quarterly from the relevant Distribution Date. The amount of distributions
payable for any period will be computed on the basis of a 360-day year of twelve
30-day months, and for any period shorter than a full quarterly period, on the
basis of the actual number of days elapsed in a 90-day period. In the event that
any date on which distributions are payable on the Trust Preferred Securities is
not a Business Day, the payment of the distributions payable on such date will
be made on the next succeeding day that is a Business Day and without any
additional distributions or other payment in respect of any such delay, except
that, if such Business Day is in the next succeeding calendar year, such payment
shall be made on the immediately preceding Business Day, in each case with the
same force and effect as if made on such payment date (each date on which
distributions are payable in accordance with the foregoing, a "Distribution
Date"). A "Business Day" shall mean any day other than a Saturday or a Sunday,
or a day on which the corporate trust office of the Property Trustee or the
Subordinated Debt Trustee (as defined herein) is closed for business.

So long as no Debenture Event of Default has occurred and is continuing,
KBK has the right under the Subordinated Indenture to defer the payment of
interest on the Debentures at any time or from time to time for a period not
exceeding 20 consecutive quarters with respect to each Extension Period,
provided that no Extension Period may extend beyond the stated maturity of the
Debentures. As a consequence of any such election, quarterly distributions on
the Trust Preferred Securities will be deferred by the Trust during any such
Extension Period. Deferred distributions to which holders of the Trust Preferred
Securities are entitled will accumulate additional distributions thereon at %
per annum, compounded quarterly from the relevant Distribution Date. The term
"distributions" as used herein shall include any such additional distributions.
During any such Extension Period, KBK may not, and may not cause any of its
subsidiaries to, (i) declare or pay any dividends or distributions on, or
redeem, purchase or acquire, or make a liquidation payment with respect to, any
of KBK's capital stock (except for dividends or distributions in shares of, or
options, warrants or rights to subscribe for or purchase shares of, its capital
stock and conversions or exchanges of common stock of one class into common
stock of another class) or (ii) make any payment of principal, interest or
premium, if any, on or repay, repurchase or redeem any debt securities
(including guarantees of indebtedness for money borrowed) of KBK that rank pari
passu with or junior to the Debentures (other than (a) any redemption,
liquidation, interest, principal or guarantee payment by KBK where the payment
is made by way of securities (including capital stock) that rank pari passu with
or junior to the securities on which such, redemption, liquidation, interest,
principal or guarantee payment is being made; (b) payments under the Guarantee;
(c) purchases of Common Stock related to the issuance of Common Stock under any
of KBK's benefit plans for its directors, officers or employees; (d) as a result
of a reclassification of KBK's capital stock or the exchange or conversion of
one series or class of KBK's capital stock for another series or class of KBK's
capital stock; or (e) the purchase of fractional interests in shares of KBK's
capital stock pursuant to the conversion or exchange provisions of such capital
stock or the security being converted or exchanged). Prior to the termination of
any such Extension Period, KBK may further extend such Extension Period,
provided that no Extension Period may exceed 20 consecutive quarters or extend
beyond the stated maturity of the Debentures. Upon the termination of any such
Extension Period and the payment on the next Interest Payment Date coinciding
with or next following the end of such Extension Period (whichever is earliest)
of all amounts then due to the persons in whose names the Debentures are
registered at the close of business on the regular record date next preceding
such Interest Payment Date, KBK may elect to begin a new Extension Period. See
"Description of the Debentures -- Option to Extend Interest Payment Period" and
"Certain Federal Income Tax Consequences -- Original Issue Discount."

KBK has no current intention of invoking an Extension Period.

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Distributions with respect to the Trust Preferred Securities must be paid
on the dates payable to the extent that the Trust has funds legally available
for the payment of such distributions in the Property Account. The funds of the
Trust legally available for distribution to holders of the Trust Preferred
Securities will be limited to payments under the Debentures in which the Trust
will invest the proceeds from the issuance and sale of the Trust Securities. See
"Description of the Debentures." If KBK does not make interest payments on such
Debentures, the Property Trustee will not have funds legally available to pay
distributions on the Trust Preferred Securities. The payment of distributions
(if and to the extent the Trust has funds on hand legally available for the
payment of such distributions) is guaranteed by KBK as set forth herein under
the caption "Description of the Guarantee."

Distributions on the Trust Preferred Securities will be payable to the
holders thereof as they appear on the register of the Trust on the relevant
record dates, which shall be the day (whether or not a Business Day) of
the month of the relevant Distribution Date. As long as the Trust Preferred
Securities remain in book-entry form, subject to any applicable laws and
regulations and the provisions of the Declaration, each such payment will be
made as described under the caption "-- Book-Entry Only Issuance -- The
Depository Trust Company."

TRUST SPECIAL EVENT EXCHANGE

At any time following the occurrence and the continuation of a Trust Tax
Event or a Trust Investment Company Event (each as defined herein), the
Administrative Trustees shall direct the Property Trustee to exchange all
outstanding Trust Preferred Securities for Debentures having an unpaid principal
amount equal to the aggregate liquidation amount of the Trust Preferred
Securities to be exchanged and to dissolve the Trust, provided that, in the case
of a Trust Tax Event, KBK shall have the right to direct that less than all, or
none, of the Trust Preferred Securities be so exchanged if and for so long as
KBK shall have elected to pay any Additional Sums such that the net amounts
received by the holders of Trust Preferred Securities not so exchanged in
respect of distributions are not reduced as a result of such Trust Tax Event,
and shall not have revoked any such election or failed to make such payments.

A "Trust Special Event" means a Trust Tax Event or a Trust Investment
Company Event. A "Trust Tax Event" means the delivery to the Property Trustee,
on behalf of the Trust, of an opinion of counsel, rendered by a law firm having
a national tax and securities practice (which opinion shall not have been
rescinded by such law firm), to the effect that, as a result of any amendment
to, or change (including any announced prospective change) in, the laws (or any
regulations thereunder) of the United States or any political subdivision or
taxing authority thereof or therein affecting taxation, or as a result of any
official administrative pronouncement or judicial decision interpreting or
applying such laws or regulations, which amendment or change is effective or
such pronouncement or decision is announced on or after the date of the original
issuance of the Trust Preferred Securities, there is more than an insubstantial
risk in each case after the date hereof that (i) the Trust is, or will be within
90 days of the date thereof, subject to United States federal income tax with
respect to income received or accrued on the Debentures; (ii) the Trust is, or
will be within 90 days of the date thereof, subject to more than a de minimis
amount of other taxes, duties or other governmental charges; or (iii) interest
payable by KBK on such Debentures is not, or within 90 days of the date thereof
will not be, deductible by KBK, in whole or in part, for United States federal
income tax purposes. A "Trust Investment Company Event" means the delivery to
the Property Trustee, on behalf of the Trust, of an opinion of counsel, rendered
by a law firm having a recognized national tax and securities practice and
experienced in matters under the Investment Company Act of 1940, as amended (the
"Investment Company Act") (which opinion shall not have been rescinded by such
law firm), to the effect that, as a result of the occurrence of a change in law
or regulation or a change in interpretation or application of law or regulation
by any legislative body, court, governmental agency or regulatory authority (a
"Change in 1940 Act Law"), there is more than an insubstantial risk that the
Trust is, or will be within 90 days of the date thereof, considered an
"investment company" that is required to be registered under the Investment
Company Act, which Change in 1940 Act Law becomes effective on or after the date
of the original issuance of the Trust Preferred Securities.

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"Additional Sums" means the additional amounts (which shall constitute part
of the payments on the Debentures) as may be necessary in order that the amount
of distributions then due and payable by the Trust on the outstanding Trust
Securities shall not be reduced as a result of any additional taxes, duties and
other governmental charges to which the Trust has become subject as a result of
a Trust Tax Event.

Holders of Trust Preferred Securities, by purchasing such Trust Preferred
Securities, will be deemed to have agreed to be bound by these exchange
provisions in regard to the exchange of such Trust Preferred Securities for
Debentures on the terms described above. See "Risk Factors -- Special Event
Exchange or Redemption."

DISTRIBUTION OF DEBENTURES

At any time, KBK will have the right to dissolve the Trust and, after
satisfaction of the liabilities of creditors of the Trust as provided by
applicable law, cause the Debentures to be distributed to the holders of the
Trust Preferred Securities in liquidation of the Trust. There can be no
assurance as to the market price for the Debentures distributed to the holders
of the Trust Preferred Securities after such a termination of the Trust. Under
current United States federal income tax law and interpretations and assuming,
as expected, the Trust is treated as a grantor trust, a distribution of the
Debentures should not be a taxable event to the Trust and holders of the Trust
Preferred Securities. Should there be a change in law, a change in legal
interpretation, a Trust Special Event or other circumstances, however, the
distribution could be a taxable event to holders of the Trust Preferred
Securities. See "Certain Federal Income Tax Consequences -- Redemption of Trust
Preferred Securities for Debentures or Cash Upon Liquidation of the Trust."

After the liquidation date fixed for any distribution of Debentures for
Trust Preferred Securities (i) such Trust Preferred Securities will no longer be
deemed to be outstanding, (ii) DTC or its nominee, as the record holder of such
Trust Preferred Securities, will receive a registered Global Certificate or
certificates representing the Debentures to be delivered upon such distribution
and (iii) any certificates representing such Trust Preferred Securities not held
by DTC or its nominee will be deemed to represent the Debentures having a
principal amount equal to the liquidation amount of such Trust Preferred
Securities, and bearing accrued and unpaid interest in an amount equal to the
accrued and unpaid distributions on such Trust Preferred Securities until such
certificates are presented to the Property Trustee for transfer or reissuance.

OPTIONAL REDEMPTION

Except as provided under the caption "-- Mandatory Redemption" below, the
Trust Preferred Securities may not be redeemed by the Trust prior to November
, 2001.

On and after such date, upon any permitted redemption by KBK of Debentures,
the Trust Preferred Securities are subject to redemption, in whole or in part,
at 100% of the liquidation amount thereof plus accrued and unpaid distributions,
if any, to the date fixed for redemption.

The Trust may not redeem the Trust Preferred Securities in part unless all
accumulated and unpaid distributions have been paid in full on all outstanding
Trust Preferred Securities. If fewer than all the outstanding Trust Preferred
Securities are to be redeemed, the Trust Preferred Securities to be so redeemed
will be selected as described under the captions "-- Book-Entry Only
Issuance -- The Depository Trust Company" and "-- Redemption Procedures."

MANDATORY REDEMPTION

Upon repayment of the Debentures at maturity or as a result of the
acceleration of the Debentures upon the occurrence of a Debenture Event of
Default, the proceeds from such repayment will be applied to redeem Trust
Securities having an aggregate liquidation amount equal to the aggregate
principal amount of Debentures so repaid at a price equal to the respective
liquidation amount of the Trust Preferred Securities together with accumulated
and unpaid distributions on the Trust Securities to the date of redemption. In
the case of acceleration of the Debentures, the Trust Preferred Securities will
be redeemed only when the proceeds of repayment of the Debentures have actually
been received by the Trust. In addition, as described

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above under the caption "-- Trust Special Event Exchange," upon the occurrence
of a Trust Special Event, Trust Preferred Securities shall be exchanged for
Debentures unless, in the case of a Trust Tax Event, KBK shall have elected to
pay any Additional Sums such that the net amounts of distributions received by
the holders of any Trust Preferred Securities not so exchanged are not reduced
as a result of such Tax Event, and shall not have revoked any such election or
failed to make such payments.

REDEMPTION PROCEDURES

Trust Preferred Securities redeemed on the date fixed for redemption shall
be redeemed at the redemption price with the applicable proceeds from the
contemporaneous redemption of the Debentures. Redemptions of the Trust Preferred
Securities shall be made and the redemption price shall be payable on the
redemption date only to the extent that the Trust has funds on hand legally
available for the payment of such redemption price. See also "-- Subordination
of Trust Common Securities."

Notice of any redemption of Trust Preferred Securities (which notice will
be irrevocable) will be given by the Property Trustee to KBK and each record
holder of Trust Preferred Securities that are being redeemed not fewer than 30
nor more than 60 days prior to the redemption date. If the Property Trustee or
the organization then serving as the depository for the Trust Preferred
Securities (the "Clearing Agency") gives a notice of redemption in respect of
the Trust Preferred Securities and the Property Trustee has received for deposit
legally available funds sufficient for such redemption by 10:00 a.m., New York
City time, on the redemption date, then, by 12:00 noon, New York City time, on
the redemption date, to the extent funds are legally available, the Property
Trustee will deposit irrevocably with DTC or the Clearing Agency, as the case
may be, funds sufficient to pay the applicable redemption price and will give
DTC or the Clearing Agency, as the case may be, irrevocable instructions and
authority to pay the redemption price to the holders of such Trust Preferred
Securities. See "-- Book-Entry Only Issuance -- The Depository Trust Company."
If such Trust Preferred Securities are no longer in book-entry form, the
Property Trustee, to the extent funds are legally available, will irrevocably
deposit with the entity designated as paying agent (the "Paying Agent") funds
sufficient to pay the applicable redemption price and will give the Paying Agent
irrevocable instructions and authority to pay the redemption price to the
holders thereof upon surrender of their certificates evidencing such Trust
Preferred Securities. Notwithstanding the foregoing, distributions payable on or
prior to the redemption date for any Trust Preferred Securities called for
redemption shall be payable to the holders of such Trust Preferred Securities as
of the relevant record date for the related Distribution Date. If notice of
redemption shall have been given and funds deposited as required, then upon the
date of such deposit, all rights of the holders of such Trust Preferred
Securities so called for redemption will cease (including the accumulation of
distributions on the Trust Preferred Securities), except the right of the
holders of such Trust Preferred Securities to receive the redemption price, but
without interest on such redemption price, and such Trust Preferred Securities
will cease to be outstanding. In the event that any date fixed for redemption of
Trust Preferred Securities is not a Business Day, then payment of the redemption
price on such date will be made on the next succeeding day which is a Business
Day (and without any interest or other payment in respect of any such delay),
except that, if such Business Day falls in the next calendar year, such payment
will be made on the immediately preceding Business Day. In the event that
payment of the redemption price in respect of Trust Preferred Securities called
for redemption is improperly withheld or refused and not paid either by the
Trust or by KBK pursuant to the Guarantee as described under "Description of the
Guarantee" herein, distributions on such Trust Preferred Securities will
continue to accumulate at % per annum, from the redemption date originally
established by the Trust to the date such redemption price is actually paid, in
which case the actual payment date will be the date fixed for redemption for
purposes of calculating the redemption price.

Subject to applicable law (including, without limitation, United States
federal securities law), KBK, or its subsidiaries, may at any time and from time
to time purchase outstanding Trust Preferred Securities by tender, in the open
market or by private agreement.

Payment of the redemption price on the Trust Preferred Securities and any
distribution or exchange of Debentures to holders of Trust Preferred Securities
shall be made to the applicable record holders thereof as

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they appear on the register for such Trust Preferred Securities on the relevant
record date, which shall be the fifteenth day (whether or not a Business Day)
prior to the redemption date or liquidation date, as applicable.

If less than all of the Trust Securities are to be redeemed on a redemption
date, then the aggregate liquidation amount of such Trust Securities to be
redeemed shall be allocated pro rata among the Trust Securities. The particular
Trust Preferred Securities to be redeemed shall be selected not more than 60
days prior to the redemption date by the Property Trustee from the outstanding
Trust Preferred Securities not previously called for redemption, by lot or by
such method as the Property Trustee shall deem fair and appropriate and which
may provide for the selection for redemption of portions (equal to $25 or an
integral multiple of $25 in excess thereof) of the liquidation amount of the
Trust Preferred Securities. The Property Trustee shall promptly notify KBK and
the holders of the Trust Preferred Securities to be redeemed in writing of the
Trust Preferred Securities selected for redemption and, in the case of any Trust
Preferred Securities selected for partial redemption, the liquidation amount
thereof to be redeemed; it being understood that, in the case of Trust Preferred
Securities held by DTC (or any successor) or its nominee, the distribution of
the proceeds of such redemption will be made in accordance with the procedures
of DTC or its nominee. For all purposes of the Declaration, unless the context
otherwise requires, all provisions relating to the redemption of Trust Preferred
Securities shall relate, in the case of any Trust Preferred Securities redeemed
or to be redeemed only in part, to the portion of the aggregate liquidation
amount of Trust Preferred Securities which has been or is to be redeemed.

Notice of any redemption of Debentures will be mailed at least 30 days but
not more than 60 days before the redemption date to each holder of Debentures to
be redeemed at its registered address. Unless KBK defaults in payment of the
redemption price, on and after the redemption date interest ceases to accrue on
such Debentures or portions thereof called for redemption.

SUBORDINATION OF TRUST COMMON SECURITIES

Payment of distributions on, and the redemption price of, the Trust
Securities, as applicable, shall be made pro rata based on the liquidation
amount of such Trust Securities; provided, however, that if on any Distribution
Date or redemption date, a Debenture Event of Default or an event of default
under the Guarantee shall have occurred and be continuing, no payment of any
distribution on, or redemption price of, any of the Trust Common Securities, and
no other payment on account of the redemption, liquidation or other acquisition
of such Trust Common Securities, shall be made unless payment in full in cash of
all accumulated and unpaid distributions on all of the outstanding Trust
Preferred Securities for all distribution periods terminating on or prior
thereto, or in the case of payment of the redemption price the full amount of
such redemption price on all of the outstanding Trust Preferred Securities then
called for redemption, shall have been made or provided for, and all funds
available to the Property Trustee shall first be applied to the payment in full
in cash of all distributions on, or redemption price of, the Trust Preferred
Securities then due and payable.

LIQUIDATION DISTRIBUTION UPON DISSOLUTION

In the event of any voluntary or involuntary dissolution of the Trust
(each, a "Liquidation"), the holders of the Trust Preferred Securities at that
time will be entitled to receive out of the assets of the Trust, after
satisfaction of liabilities to creditors of the Trust as provided by applicable
law, distributions in an amount equal to the aggregate of the stated liquidation
amount of $25 per Trust Preferred Security plus accumulated and unpaid
distributions thereon to the date of payment (the "Liquidation Distribution"),
unless, in connection with such Liquidation, after satisfaction of liabilities
to creditors of the Trust as provided by applicable law, Debentures in an
aggregate unpaid principal amount equal to the aggregate stated liquidation
amount of, with an interest rate identical to the distribution rate of, and
accrued and unpaid interest equal to accumulated and unpaid distributions on,
the Trust Preferred Securities, have been distributed on a pro rata basis to the
holders of Trust Preferred Securities in exchange for such Trust Preferred
Securities. See "-- Distribution of Debentures."

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If such Liquidation Distribution can be paid only in part because the Trust
has insufficient assets legally available to pay in full the aggregate
Liquidation Distribution, then the amounts payable directly by the Trust on the
Trust Preferred Securities shall be paid on a pro rata basis. KBK, as holder of
the Trust Common Securities, will be entitled to receive Liquidation
Distributions upon any such liquidation pro rata with the holders of the Trust
Preferred Securities, except that if a Debenture Event of Default or an event of
default under the Guarantee has occurred and is continuing, the Trust Preferred
Securities shall have a priority over the Trust Common Securities.

Pursuant to the Declaration, the Trust shall automatically dissolve upon
expiration of its term and shall dissolve on the first to occur of: (i) certain
events of bankruptcy, dissolution or liquidation of KBK; (ii) upon the
distribution of the Debentures to the holders of the Trust Securities, if the
Sponsor has given written instructions to the Property Trustee to terminate the
Trust (which direction may be given in the sole discretion of KBK, as Sponsor);
(iii) the redemption, conversion or exchange of all of the Trust Securities;
(iv) the entry by a court of competent jurisdiction of an order for the
dissolution of the Trust; and (v) the occurrence of a Trust Special Event except
in the case of a Trust Tax Event following which KBK has elected to pay any
Additional Sums such that the net amount received by holders of Trust Preferred
Securities in respect of distributions is not reduced as a result of such Trust
Tax Event and KBK has not revoked any such election or failed to make such
payment.

TRUST ENFORCEMENT EVENTS; NOTICE

Within 90 days after the occurrence of any Trust Enforcement Event (that
is, the occurrence of a Debenture Event of Default) or a default by KBK in
respect of any of its obligations under the Guarantee actually known to the
Property Trustee, the Property Trustee shall transmit notice of such event to
the holders of the Trust Preferred Securities, the Administrative Trustees and
KBK, as Sponsor, unless such event shall have been cured or waived. KBK, as
Sponsor, and the Administrative Trustees, on behalf of the Trust, are required
to file annually with the Property Trustee a certificate as to whether or not
they are in compliance with all the conditions and covenants applicable to them
under the Declaration.

If a Debenture Event of Default or a default under the Guarantee has
occurred and is continuing, the Trust Preferred Securities shall have a
preference over the Trust Common Securities upon dissolution of the Trust as
described above. See "-- Liquidation Distribution Upon Dissolution." The
existence of a Debenture Event of Default does not entitle the holders of Trust
Preferred Securities to accelerate the maturity thereof except to the extent
described below under the caption "-- Enforcement of Certain Rights by Holders
of Trust Preferred Securities."

In the case of any Debenture Event of Default, KBK as holder of the Trust
Common Securities will be deemed to have waived any right to act with respect to
any such Debenture Event of Default until such Debenture Event of Default with
respect to the Trust Preferred Securities has been cured, waived or otherwise
eliminated. Until any such Debenture Event of Default with respect to the Trust
Preferred Securities has been so cured, waived or otherwise eliminated, the
Property Trustee shall act solely on behalf of the holders of the Trust
Preferred Securities and not on behalf of KBK as holder of the Trust Common
Securities, and only the holders of the Trust Preferred Securities will have the
right to direct the Property Trustee to act on their behalf.

ENFORCEMENT OF CERTAIN RIGHTS BY HOLDERS OF TRUST PREFERRED SECURITIES

If a Debenture Event of Default has occurred and is continuing, the
Property Trustee, as the sole holder of the Debentures, shall have the right
under the Subordinated Indenture to declare the principal of and interest on the
Debentures immediately due and payable, and, accordingly, the holders of Trust
Preferred Securities would rely on the enforcement by the Property Trustee of
its rights as a holder of the Debentures against KBK. In addition, the holders
of a majority in aggregate liquidation amount of the Trust Preferred Securities
will have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the Property Trustee or to direct the
exercise of any trust or power conferred upon the Property Trustee under the
Declaration, including the right to direct the Property Trustee to exercise the

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remedies available to it as a holder of the Debentures. If the Property Trustee
fails to enforce its rights as holder of the Debentures after a request therefor
by a holder of Trust Preferred Securities, such holder may proceed to enforce
such rights directly against KBK. Notwithstanding the foregoing, if a Debenture
Event of Default has occurred and is continuing and such event is attributable
to the failure of KBK to pay interest or principal on the Debentures on the date
such interest or principal is otherwise payable (or in the case of redemption,
on the redemption date), then a holder of Trust Preferred Securities may
directly institute a Legal Action against KBK for enforcement of payment to such
holder of the principal of or interest on the Debentures having a principal
amount equal to the aggregate liquidation amount of the Trust Preferred
Securities of such holder on or after the respective due date specified in the
Debentures. In connection with such Legal Action, KBK will be subrogated to the
rights of such holder of Trust Preferred Securities under the Declaration to the
extent of any payment made by KBK to such holder of Trust Preferred Securities
in such Legal Action. The holders of Trust Preferred Securities will not be able
to exercise directly against KBK any other remedy available to the Property
Trustee unless the Property Trustee first fails to do so.

MERGER OR CONSOLIDATION OF TRUSTEES

Any corporation into which the Property Trustee, Delaware Trustee or any
Administrative Trustee that is not a natural person may be merged or converted
or with which it may be consolidated, or any corporation resulting from any
merger, conversion or consolidation to which the Property Trustee, Delaware
Trustee or any Administrative Trustee shall be a party, or any corporation
succeeding to all or substantially all the corporate trust business of such
Trustee, shall be the successor of such Trustee under the Declaration, provided
such corporation shall be otherwise qualified and eligible.

MERGERS, CONSOLIDATIONS, AMALGAMATIONS OR REPLACEMENTS OF THE TRUST

The Trust may not merge with or into, consolidate, amalgamate or be
replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety to any corporation or other person, except as
described below. The Trust may, with the consent of the Administrative Trustees
and without the consent of the Property Trustee, the Delaware Trustee or the
holders of the Trust Preferred Securities, merge with or into, consolidate,
amalgamate, be replaced by or convey, transfer or lease its properties and
assets substantially as an entirety to a trust organized as such under the laws
of any state, provided that (i) if the Trust is not the survivor of such
transaction, such successor entity either (a) expressly assumes all of the
obligations of the Trust with respect to the Trust Securities or (b) substitutes
for the Trust Preferred Securities other securities having substantially the
same terms as the Trust Preferred Securities (the "Successor Securities") so
long as the Successor Securities rank the same as the Trust Preferred Securities
rank in priority with respect to distributions and payments upon liquidation,
redemption and otherwise; (ii) KBK expressly appoints a trustee of such
successor entity possessing the same powers and duties as the Property Trustee
as the holder of the Debentures; (iii) the Successor Securities are listed, or
any Successor Securities will be listed upon notification of issuance, on any
national securities exchange or other organization on which the Trust Preferred
Securities are then listed, if any; (iv) such merger, consolidation,
amalgamation, replacement, conveyance, transfer or lease does not cause the
Trust Preferred Securities (including any Successor Securities) to be downgraded
by any nationally recognized statistical rating organization; (v) such merger,
consolidation, amalgamation, replacement, conveyance, transfer or lease does not
adversely affect the rights, preferences and privileges of the holders of the
Trust Preferred Securities (including any Successor Securities) in any material
respect (other than with respect to any dilution of the holders' interest in the
new entity); (vi) such successor entity has a purpose identical to that of the
Trust; (vii) prior to such merger, consolidation, amalgamation, replacement,
conveyance, transfer or lease, KBK has received an opinion from nationally
recognized independent counsel to the Trust experienced in such matters to the
effect that (a) such merger, consolidation, amalgamation, replacement,
conveyance, transfer or lease will not adversely affect the rights, preferences
and privileges of the holders of the Trust Preferred Securities (including any
Successor Securities) in any material respect (other than with respect to any
dilution of the holders' interest in the new entity), (b) following such merger,
consolidation, amalgamation, replacement, conveyance, transfer or lease, neither
the Trust nor such successor entity will be required to register as an
investment company under the Investment Company Act, and (c) following such
merger, consolidation, amalgamation, replacement

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conveyance, transfer or lease, the Trust (or such successor entity) will not be
taxable as a corporation for United States federal income tax purposes; and
(viii) KBK or any permitted successor or assignee owns all of the trust common
securities of such successor entity and guarantees the obligations of such
successor entity under the Successor Securities at least to the extent provided
by the Guarantees. Notwithstanding the foregoing, the Trust shall not, except
with the consent of holders of 100% in aggregate liquidation amount of the Trust
Securities, consolidate, amalgamate, merge with or into, be replaced by or
convey, transfer or lease its properties and assets substantially as an entirety
to any other entity or permit any other entity to consolidate, amalgamate, merge
with or into, or replace it, if such consolidation, amalgamation, merger,
replacement, conveyance, transfer or lease would cause the Trust or the
successor entity to be taxable as a corporation for United States federal income
tax purposes.

VOTING RIGHTS; AMENDMENT OF THE DECLARATION

Except as provided below and under the caption "Description of the
Guarantee -- Amendments and Assignment" and as otherwise required by law and the
Declaration, the holders of the Trust Preferred Securities will have no voting
rights.

The Declaration may be amended from time to time by a majority of the
Administrative Trustees (and in certain circumstances, the Property Trustee and
the Delaware Trustee), without the consent of the holders of the Trust Preferred
Securities, (i) to cure any ambiguity or to correct or supplement any provisions
in the Declaration that may be defective or inconsistent with any other
provision, or to amend any other provisions with respect to matters or questions
arising under the Declaration that shall not be inconsistent with the other
provisions of the Declaration; (ii) to add to the covenants, restrictions or
obligations of KBK; (iii) to conform to any change in the Investment Company Act
or written change in interpretation or application of the rules and regulations
promulgated thereunder by any legislative body, court, government agency or
regulatory authority; (iv) to conform to any change in the Trust Indenture Act
or written change in interpretation or application of the rules and regulations
promulgated thereunder by any legislative body, court, government agency or
regulatory authority; or (v) to modify, eliminate or add to any provision of the
Declaration to such extent as may be necessary to ensure that the Trust will be
classified for United States federal income tax purposes as a grantor trust at
all times that any Trust Securities are outstanding or to ensure that the Trust
will not be treated as an "investment company" required to be registered under
the Investment Company Act; provided, however, that such amendments do not have
a material adverse effect on the rights, preferences or privileges of any holder
of Trust Securities, and any amendments of the Declaration shall become
effective when notice thereof is given to the holders of Trust Securities.
Notwithstanding the foregoing, if any proposed amendment provides for, or the
Administrative Trustees otherwise propose to effect, (i) any action that would
adversely affect the powers, preferences or special rights of the Trust
Securities, whether by way of amendment to the Declaration or otherwise, or (ii)
the dissolution, winding-up or termination of the Trust other than pursuant to
the terms of the Declaration, then the holders of the Trust Securities voting
together as a single class will be entitled to vote on such amendment or
proposal and such amendment or proposal shall not be effective except with the
approval of at least a majority in aggregate liquidation amount of the Trust
Securities affected thereby; provided that if any amendment or proposal referred
to in clause (i) above would adversely affect only the Trust Preferred
Securities or the Trust Common Securities, then only the affected class will be
entitled to vote on such amendment or proposal and such amendment or proposal
shall not be effective except with the approval of a majority in aggregate
liquidation amount of such class of the Trust Securities.

No amendment or modification may be made to the Declaration if such
amendment or modification would (i) cause the Trust to fail to be classified as
a grantor trust for United States federal income tax purposes, (ii) cause the
Trust to be taxable as a corporation for such purposes, (iii) reduce or
otherwise adversely affect the powers of the Property Trustee in contravention
of the Trust Indenture Act or (iv) cause the Trust to be deemed an "investment
company" which is required to be registered under the Investment Company Act.

Subject to the requirement of the Property Trustee receiving the opinion
described in the last sentence of this paragraph, the holders of a majority in
aggregate liquidation amount of Trust Preferred Securities will

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have the right to direct the time, method and place of conducting any proceeding
for any remedy available to the Property Trustee or to direct the exercise of
any trust or power conferred upon the Property Trustee under the Declaration,
including the right to direct the Property Trustee, as holder of the Debentures,
(i) to exercise the remedies available to it under the Subordinated Indenture as
holder of the Debentures and (ii) to consent to any amendment, modification, or
termination of the Subordinated Indenture or the Debentures where such consent
shall be required; provided, however, that where a consent or action under the
Subordinated Indenture would require the consent or act of the holders of more
than a majority of the aggregate principal amount of Debentures affected
thereby, only the holders of the percentage of the aggregate liquidation amount
of the Trust Preferred Securities which is at least equal to the percentage
required under the Subordinated Indenture may direct the Property Trustee to
give such consent or take such action on behalf of the Trust; provided, further,
however, that under certain circumstances the Property Trustee shall have the
right to decline to follow any such direction. The Property Trustee shall notify
all holders of the Trust Preferred Securities of any notice of any Trust
Enforcement Event received from KBK with respect to the Debentures. Except with
respect to directing the time, method and place of conducting a proceeding for a
remedy as described above, the Property Trustee shall not take any of the
actions described in clauses (i) or (ii) above unless the Property Trustee has
received an opinion of independent tax counsel to the effect that as a result of
such action, the Trust will not be taxable as a corporation for United States
federal income tax purposes and that after such action each holder of Trust
Securities will continue to be treated as owning an undivided beneficial
ownership interest in the Debentures.

A waiver of a Debenture Event of Default will constitute a waiver of the
corresponding Trust Enforcement Event. Any required approval or direction of
holders of Trust Preferred Securities may be given at a separate meeting of
holders of Trust Preferred Securities convened for such purpose, at a meeting of
all of the holders of Trust Securities or pursuant to written consent. The
Administrative Trustees will cause a notice of any meeting at which holders of
Trust Preferred Securities are entitled to vote, or of any matter upon which
action by written consent of such holders is to be taken, to be mailed to each
holder of record of Trust Preferred Securities. Each such notice will include a
statement setting forth the following information: (i) the date of such meeting
or the date by which such action is to be taken; (ii) a description of any
resolution proposed for adoption at such meeting on which such holders are
entitled to vote or of such matter upon which written consent is sought; and
(iii) instructions for the delivery of proxies or consents.

No vote or consent of the holders of Trust Preferred Securities will be
required for the Trust to redeem and cancel the Trust Preferred Securities in
accordance with the Declaration.

Notwithstanding that holders of Trust Preferred Securities are entitled to
vote or consent under any of the circumstances described above, any of the Trust
Preferred Securities that are beneficially owned at such time by KBK or any
entity directly or indirectly controlled by, or under direct or indirect common
control with, KBK shall not be entitled to vote or consent and shall, for
purposes of such vote or consent, be treated as if such Trust Preferred
Securities were not outstanding, except for Trust Preferred Securities purchased
or acquired by KBK or its affiliates in connection with transactions effected by
or for the account of customers of KBK or any of its subsidiaries or in
connection with the distribution or trading of such Trust Preferred Securities;
provided, however, that persons (other than affiliates of KBK) to whom KBK or
any of its subsidiaries have pledged Trust Preferred Securities may vote or
consent with respect to such pledged Trust Preferred Securities pursuant to the
terms of such pledge.

The procedures by which holders of Trust Preferred Securities may exercise
their voting rights are described below. See "-- Book-Entry Only Issuance -- The
Depository Trust Company."

Holders of the Trust Preferred Securities will have no rights to appoint or
remove the Regular Trustees or the Delaware Trustee, who may be appointed,
removed or replaced solely by KBK, as the holder of all the Trust Common
Securities, provided that, upon the occurrence and during the continuance of a
Trust Enforcement Event, the Property Trustee may be removed and a successor
appointed only by the holders of a majority in aggregate liquidation amount of
the Trust Preferred Securities.

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BOOK-ENTRY ONLY ISSUANCE -- THE DEPOSITORY TRUST COMPANY

The Depository Trust Company ("DTC") will act as securities depository (the
"Depository") for the Trust Preferred Securities. The Trust Preferred Securities
will be issued only as fully-registered securities registered in the name of
Cede & Co. (DTC's nominee). One or more fully-registered global Trust Preferred
Securities certificates ("Global Certificates"), representing the total
aggregate number of Trust Preferred Securities, will be issued and will be
deposited with DTC.

DTC is a limited-purpose trust company organized under the New York Banking
Law, a "banking organization" within the meaning of the New York Banking Law, a
member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code, and a "clearing agency"
registered pursuant to the provisions of section 17A of the Exchange Act. DTC
holds securities that its participants ("Participants") deposit with DTC. DTC
also facilitates the settlement among Participants of securities transactions,
such as transfers and pledges, in deposited securities through electronic
computerized book-entry changes in Participants' accounts, thereby eliminating
the need for physical movement of securities certificates. Participants in DTC
include securities brokers and dealers, banks, trust companies, clearing
corporations and certain other organizations. DTC is owned by a number of its
Participants and by the American Stock Exchange, the New York Stock Exchange,
and the National Association of Securities Dealers, Inc. Access to the DTC
system is also available to others such as securities brokers and dealers, banks
and trust companies that clear through or maintain a custodial relationship with
a Participant, either directly or indirectly ("Indirect Participants"). The
rules applicable to DTC and its Participants are on file with the Commission.

Purchases of Trust Preferred Securities within the DTC system must be made
by or through Participants, which will receive a credit for the Trust Preferred
Securities on DTC's records. The ownership interest of each actual purchaser of
Trust Preferred Securities ("Beneficial Owner") is in turn to be recorded on the
Participants' and Indirect Participants' records. Beneficial Owners will not
receive written confirmation from DTC of their purchases, but Beneficial Owners
are expected to receive written confirmations providing details of the
transactions, as well as periodic statements of their holdings, from the
Participants or Indirect Participants through which the Beneficial Owners
purchased Trust Preferred Securities. Transfers of ownership interests in the
Trust Preferred Securities are to be accomplished by entries made on the books
of Participants and Indirect Participants acting on behalf of Beneficial Owners.
Beneficial Owners will not receive certificates representing their ownership
interests in Trust Preferred Securities, except in the event that use of the
book-entry system for the Trust Preferred Securities is discontinued.

DTC has no knowledge of the actual Beneficial Owners of the Trust Preferred
Securities; DTC's records reflect only the identity of the Participants to whose
accounts such Trust Preferred Securities are credited, which may or may not be
the Beneficial Owners. The Participants and Indirect Participants will remain
responsible for keeping account of their holdings on behalf of their customers.

So long as DTC, or its nominee, is the registered owner or holder of a
Global Certificate, DTC or such nominee, as the case may be, will be considered
the sole owner or holder of the Trust Preferred Securities represented thereby
for all purposes under the Declaration and the Trust Preferred Securities. No
Beneficial Owner of an interest in a Global Certificate will be able to transfer
that interest except in accordance with DTC's applicable procedures, in addition
to those provided for under the Declaration.

DTC has advised the Company that it will take any action permitted to be
taken by a holder of Trust Preferred Securities (including the presentation of
Trust Preferred Securities for exchange as described below) only at the
direction of one or more Participants to whose account the DTC interests in the
Global Certificates are credited and only in respect of such portion of the
aggregate liquidation amount of Trust Preferred Securities as to which such
Participant or Participants has or have given such direction. Also, if there is
a Trust Enforcement Event under the Trust Preferred Securities, DTC will
exchange the Global Certificates for Certificated Securities, which it will
distribute to its Participants in accordance with its customary procedures.

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Conveyance of notices and other communications by DTC to Participants, by
Participants to Indirect Participants, and by Participants and Indirect
Participants to Beneficial Owners will be governed by arrangements among them,
subject to any statutory or regulatory requirements as may be in effect from
time to time.

Redemption notices in respect of the Trust Preferred Securities held in
book-entry form will be sent to Cede & Co. If less than all of the Trust
Preferred Securities are being redeemed, DTC will determine the amount of the
interest of each Participant to be redeemed in accordance with its procedures.

Although voting with respect to the Trust Preferred Securities is limited,
in those cases where a vote is required, neither DTC nor Cede & Co. will itself
consent or vote with respect to Trust Preferred Securities. Under its usual
procedures, DTC would mail an Omnibus Proxy to the Trust as soon as possible
after the record date. The Omnibus Proxy assigns Cede & Co.'s consenting or
voting rights to those Participants to whose accounts the Trust Preferred
Securities are allocated on the record date (identified in a listing attached to
the Omnibus Proxy).

Distributions on the Trust Preferred Securities held in book-entry form
will be made to DTC in immediately available funds. DTC's practice is to credit
Participants' accounts on the relevant payment date in accordance with their
respective holdings shown on DTC's records unless DTC has reason to believe that
it will not receive payments on such payment date. Payments by Participants and
Indirect Participants to Beneficial Owners will be governed by standing
instructions and customary practices and will be the responsibility of such
Participants and Indirect Participants and not of DTC, the Trust or the Company,
subject to any statutory or regulatory requirements as may be in effect from
time to time. Payment of any distributions to DTC is the responsibility of the
Trust, disbursement of such payments to Participants is the responsibility of
DTC, and disbursement of such payments to the Beneficial Owners is the
responsibility of Participants and Indirect Participants.

Except as described, a Beneficial Owner of an interest in a Global
Certificate will not be entitled to receive physical delivery of Trust Preferred
Securities. Accordingly, each Beneficial Owner must rely on the procedures of
DTC to exercise any rights under the Trust Preferred Securities.

Although DTC has agreed to the foregoing procedures in order to facilitate
transfers of interests in the Global Certificates among Participants of DTC, DTC
is under no obligation to perform or continue to perform such procedures, and
such procedures may be discontinued at any time. Neither the Company nor the
Trust will have any responsibility for the performance by DTC or its
Participants or Indirect Participants under the rules and procedures governing
DTC. DTC may discontinue providing its services as securities depository with
respect to the Trust Preferred Securities at any time by giving notice to the
Trust. Under such circumstances in the event that a successor securities
depository is not obtained, Trust Preferred Security certificates are required
to be printed and delivered to the Property Trustee. Additionally, the Trust
(with the consent of the Company) may decide to discontinue use of the system of
book-entry transfers through DTC or any successor depository. In that event,
certificates for the Trust Preferred Securities will be printed and delivered to
the Property Trustee. In each of the above circumstances, the Company will
appoint a Paying Agent with respect to the Trust Preferred Securities.

The laws of some jurisdictions require that certain purchasers of
securities take physical delivery of securities in definitive form. Such laws
may impair the ability to transfer beneficial interests in the global Trust
Preferred Securities as represented by a Global Certificate.

PAYMENT

Payments in respect of the Trust Preferred Securities represented by the
Global Certificates shall be made to DTC, which shall credit the relevant
accounts at DTC on the scheduled payment dates or, in the case of certificated
securities, if any, such payments shall be made by check mailed to the address
of the holder entitled thereto as such address shall appear on the books and
records of the Trust. The Paying Agent shall be permitted to resign as Paying
Agent upon 30 days written notice to the Administrative Trustees. In the event

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that The First National Bank of Chicago shall no longer be the Paying Agent, the
Administrative Trustees shall appoint a successor to act as Paying Agent (which
shall be a bank or trust company).

REGISTRAR, TRANSFER AGENT, AND PAYING AGENT

The Property Trustee will act as registrar, transfer agent and Paying Agent
for the Trust Preferred Securities.

Registration of transfers of Trust Preferred Securities will be effected
without charge by or on behalf of the Trust, but upon payment (with the giving
of such indemnity as the Trust may require) in respect of any tax or other
government charges which may be imposed in relation to it.

The Trust will not be required to register or cause to be registered the
transfer of Trust Preferred Securities after such Trust Preferred Securities
have been called for redemption.

INFORMATION CONCERNING THE PROPERTY TRUSTEE

The Property Trustee, prior to the occurrence of a default with respect to
the Trust Securities, undertakes to perform only such duties as are specifically
set forth in the Declaration and, after default, shall exercise the same degree
of care as a prudent individual would exercise in the conduct of his or her own
affairs. Subject to such provisions, the Property Trustee is under no obligation
to exercise any of the powers vested in it by the Declaration at the request of
any holder of Trust Preferred Securities, unless offered reasonable indemnity by
such holder against the costs, expenses and liabilities which might be incurred
thereby. The holders of Trust Preferred Securities will not be required to offer
such indemnity in the event such holders, by exercising their voting rights,
direct the Property Trustee to take any action following a Trust Enforcement
Event.

GOVERNING LAW

The Declaration and the Trust Preferred Securities will be governed by, and
construed in accordance with, the internal laws of the State of Delaware.

MISCELLANEOUS

The Regular Trustees are authorized and directed to conduct the affairs of
and to operate the Trust in such a way that the Trust will not be deemed to be
an "investment company" required to be registered under the 1940 Act or
characterized as other than a grantor trust for United States federal income tax
purposes. In this connection, the Regular Trustees are authorized to take any
action, not inconsistent with applicable law, the certificate of trust or the
Declaration that the Regular Trustees determine in their discretion to be
necessary or desirable for such purposes as long as such action does not
adversely affect the interests of the holders of the Trust Preferred Securities.

Holders of the Trust Preferred Securities have no preemptive rights.

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DESCRIPTION OF THE GUARANTEE

The Guarantee will be executed and delivered by KBK concurrently with the
issuance by the Trust of the Trust Preferred Securities for the benefit of the
holders from time to time of such Trust Preferred Securities. The First National
Bank of Chicago will act as trustee ("Trust Guarantee Trustee") under the
Guarantee. This summary of certain provisions of the Guarantee does not purport
to be complete and is subject to, and qualified in its entirety by reference to,
all of the provisions of the Guarantee (a copy of which is filed as an exhibit
to the registration statement of which this Prospectus is a part, and a copy of
which may be obtained from the Trust Guarantee Trustee). The Trust Guarantee
Trustee will hold the Guarantee for the benefit of the holders of the Trust
Preferred Securities.

GENERAL

KBK will irrevocably and unconditionally agree to pay in full on a
subordinated basis, to the extent set forth herein, the Guarantee Payments (as
defined herein) to the holders of the Trust Preferred Securities, as and when
due, regardless of any defense, right of set-off or counterclaim that the Trust
may have or assert other than the defense of payment. The following payments
with respect to the Trust Preferred Securities, to the extent not paid by or on
behalf of the Trust (the "Guarantee Payments"), will be subject to the
Guarantee: (i) any accumulated and unpaid distributions required to be paid on
the Trust Preferred Securities, to the extent that the Trust has funds on hand
legally available therefor at such time, (ii) the redemption price with respect
to any Trust Preferred Securities called for redemption to the extent that the
Trust has funds on hand legally available therefor at such time, or (iii) upon a
voluntary or involuntary dissolution, winding up or liquidation of the Trust
(unless the Debentures are distributed to holders of the Trust Preferred
Securities), the lesser of (a) the Liquidation Distribution, to the extent that
the Trust has funds on hand legally available therefor at such time, and (b) the
amount of assets of the Trust remaining legally available for distribution to
holders of Trust Preferred Securities. KBK's obligation to make a Guarantee
Payment may be satisfied by direct payment of the required amounts by KBK to the
holders of the Trust Preferred Securities or by causing the Trust to pay such
amounts to such holders.

The Guarantee will be an irrevocable guarantee on a subordinated basis of
the Trust's obligations under the Trust Preferred Securities, but will apply
only to the extent that the Trust has funds legally sufficient to make such
payments, and is not a guarantee of collection. If KBK does not make interest
payments on the Debentures held by the Trust, the Trust will not be able to pay
distributions on the Trust Preferred Securities and will not have funds legally
available therefor.

KBK has, through the Guarantee, the Declaration, the Debentures and the
Subordinated Indenture, taken together, fully, irrevocably and unconditionally
guaranteed all of the Trust's obligations under the Trust Preferred Securities.
No single document standing alone or operating in conjunction with fewer than
all of the other documents constitutes such guarantee. It is only the combined
operation of these documents that has the effect of providing a full,
irrevocable and unconditional guarantee of the Trust's obligations under the
Trust Preferred Securities. See "Relationship Among the Trust Preferred
Securities, the Debentures and the Guarantee."

The Company has also agreed separately to irrevocably and unconditionally
guarantee the obligations of the Trust with respect to the Trust Common
Securities to the same extent as the Guarantee, except that upon the occurrence
and during the continuation of a Trust Enforcement Event or a default under the
Guarantee, holders of Trust Preferred Securities shall have priority over
holders of Trust Common Securities with respect to distributions and payments on
liquidation, redemption or otherwise.

STATUS OF THE GUARANTEE

The Guarantee will constitute an unsecured obligation of KBK and will rank
subordinate and junior in right of payment to all other liabilities of KBK
(except the guarantee of the Trust Common Securities) and will rank pari passu
with the most senior preferred stock, if any, issued from time to time by KBK
and senior to the Common Stock of KBK. The terms of the Trust Preferred
Securities provide that each holder by acceptance thereof, consents and agrees
to the subordination and other provisions of the Guarantee.

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The Guarantee will constitute a guarantee of payment and not of collection
(i.e., the guaranteed party may institute a legal proceeding directly against
the Guarantor to enforce its rights under the Guarantee without first
instituting a legal proceeding against any other person or entity). The
Guarantee will be held for the benefit of the holders of the Trust Preferred
Securities. The Guarantee will not be discharged except by payment of the
Guarantee Payments in full to the extent not paid by the Trust or upon
distribution of the Debentures to the holders of the Trust Preferred Securities.
The Guarantee does not place a limitation on the amount of additional
indebtedness that may be incurred by KBK or any of its subsidiaries.

AMENDMENTS AND ASSIGNMENT

Except with respect to any changes which do not materially adversely affect
the rights of holders of the Trust Preferred Securities (in which case no vote
will be required), the Guarantee may not be amended without the prior approval
of the holders of not less than a majority in aggregate liquidation amount of
the outstanding Trust Preferred Securities. The manner of obtaining any such
approval will be as set forth under "Description of the Trust Preferred
Securities -- Voting Rights; Amendment of the Declaration." All guarantees and
agreements contained in the Guarantee shall bind the successors, assigns,
receivers, trustees and representatives of KBK and shall inure to the benefit of
the holders of the Trust Preferred Securities then outstanding.

CERTAIN COVENANTS OF KBK

KBK will covenant in the Guarantee that if and so long as (i) the Trust is
the holder of all the Debentures, (ii) a Trust Tax Event in respect of the Trust
has occurred and is continuing, and (iii) KBK has elected, and has not revoked
such election, to pay Additional Sums in respect of the Trust Securities, KBK
will pay to the Trust such Additional Sums. KBK will also covenant that it will
not, and it will not cause any of its subsidiaries to, (I) declare or pay any
dividends on, make distributions with respect to, or redeem, purchase or
acquire, or make a liquidation payment with respect to, any of KBK's capital
stock (except for dividends or distributions in shares of, or options, warrants
or rights to subscribe for or purchase shares of, its capital stock and
conversions or exchanges of common stock of one class into common stock of
another class) or (II) make any payments of principal, interest or premium, if
any, on or repay or repurchase or redeem any debt securities (including
guarantees of indebtedness for money borrowed) of KBK that rank pari passu with
or junior to the Debentures (other than (a) any redemption, liquidation,
interest, principal or guarantee payment by KBK where the payment is made by way
of securities (including capital stock) that rank pari passu with or junior to
the securities on which such redemption, interest, principal or guarantee
payment is being made; (b) payments under the Guarantees; (c) purchases of
Common Stock related to the issuance of Common Stock under any of KBK's benefit
plans for its directors, officers or employees; (d) as a result of a
reclassification of KBK's capital stock or the exchange or conversion of one
series or class of KBK's capital stock for another series or class of KBK's
capital stock; and (e) the purchase of fractional interests in shares of KBK's
capital stock pursuant to the conversion or exchange provisions of such capital
stock or the security being converted or exchanged), if at such time (i) for any
distribution period, full distributions on a cumulative basis on any Trust
Securities have not been paid, (ii) there shall have occurred and be continuing
any Debenture Event of Default or any event of which KBK has actual knowledge
that, with the giving of notice or the lapse of time, or both, would constitute
a Debenture Event of Default, (iii) KBK shall be in default of any obligations
under the Guarantees, or (iv) KBK shall have given notice of its selection of an
Extension Period as provided in the Subordinated Indenture and shall not have
rescinded such notice, or such Extension Period, or any extension thereof, shall
be continuing.

For so long as Trust Preferred Securities are outstanding, KBK will
covenant (i) to maintain directly or indirectly 100% ownership of the Trust
Common Securities, provided that certain successors which are permitted pursuant
to the Subordinated Indenture may succeed to KBK's ownership of the Trust Common
Securities and (ii) not to voluntarily terminate, wind-up or liquidate the
Trust, except in connection with (a) a distribution of the Debentures to the
holders of the Trust Securities in liquidation of the Trust, (b) the redemption
of all Trust Securities or (c) certain mergers, consolidations or amalgamations
permitted by the Declaration. KBK will also covenant to use its commercially
reasonable efforts, consistent with the terms and

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provisions of the Declaration, to cause the Trust to remain classified as a
grantor trust and not taxable as a corporation for United States federal income
tax purposes. As part of the Guarantee, KBK will agree that it will honor all
obligations described therein relating to the exchange of the Trust Securities
for Debentures.

GUARANTEE EVENTS OF DEFAULT

An event of default under the Guarantee will occur upon the failure of KBK
to perform any of its payment or other obligations thereunder. The holders of a
majority in aggregate liquidation amount of the Trust Preferred Securities have
the right (i) to waive any past default under the Guarantee and its consequences
and (ii) to direct the time, method and place of conducting any proceeding for
any remedy available to the Trust Guarantee Trustee in respect of the Guarantee
or exercising any trust or power conferred upon the Trust Guarantee Trustee
under the Guarantee.

If the Trust Guarantee Trustee fails to enforce the Guarantee, any holder
of the Trust Preferred Securities may institute a legal proceeding directly
against KBK to enforce its rights under the Guarantee without first instituting
a legal proceeding against the Trust, the Trust Guarantee Trustee or any other
person or entity. In addition, any record holder of Trust Preferred Securities
shall have the right, which is absolute and unconditional, to proceed directly
against KBK to obtain Guarantee Payments, without first waiting to determine if
the Trust Guarantee Trustee has enforced the Guarantee or instituting a legal
proceeding against the Trust, the Trust Guarantee Trustee or any other person or
entity. KBK has waived any right or remedy to require that any action be brought
first against the Trust, or any other person or entity, before proceeding
directly against KBK.

KBK, as guarantor, is required to file annually with the Trust Guarantee
Trustee a certificate as to whether or not KBK is in compliance with all the
conditions and covenants applicable to it under the Guarantee.

INFORMATION CONCERNING THE TRUST GUARANTEE TRUSTEE

The Trust Guarantee Trustee, other than during the occurrence and
continuance of a default by KBK in performance of the Guarantee, undertakes to
perform only such duties as are specifically set forth in the Guarantee and,
after default with respect to the Guarantee, must exercise the same degree of
care and skill as a prudent person would exercise or use under the circumstances
in the conduct of his or her own affairs. Subject to this provision, the Trust
Guarantee Trustee is under no obligation to exercise any of the powers vested in
it by the Guarantee at the request of any holder of Trust Preferred Securities
unless it is offered reasonable indemnity against the costs, expenses and
liabilities that might be incurred thereby.

TERMINATION OF THE GUARANTEE

The Guarantee will terminate and be of no further force and effect (i) upon
full payment of the redemption price of the Trust Preferred Securities, (ii)
upon distribution of Debentures to the holders of all of the Trust Preferred
Securities in exchange for all of the Trust Preferred Securities or (iii) upon
full payment of the amounts payable upon liquidation of the Trust. The Guarantee
will continue to be effective or will be reinstated, as the case may be, if at
any time any holder of Trust Preferred Securities must restore payment of any
sums under such Trust Preferred Securities or the Guarantee.

GOVERNING LAW

The Guarantee will be governed by and construed in accordance with the laws
of the State of New York.

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DESCRIPTION OF THE DEBENTURES

The Debentures are to be issued under a Subordinated Indenture (the
"Subordinated Indenture"), between KBK and The First National Bank of Chicago,
as trustee (the "Subordinated Debt Trustee"), a copy of which is filed as an
exhibit to the registration statement of which this Prospectus is a part, and
copies of which may be obtained from the Subordinated Debt Trustee at its
corporate trust office. The terms of the Debentures include those stated in the
Subordinated Indenture and made a part thereof by reference to the Trust
Indenture Act in effect on the date of the Subordinated Indenture. This summary
of certain terms of the Debentures and the Subordinated Indenture does not
purport to be complete and is subject to, and is qualified in its entirety by
reference to, the Subordinated Indenture, including the definitions of certain
terms therein, and the Trust Indenture Act. Capitalized terms used in this
section and not otherwise defined in this section have the respective meanings
assigned to them in the Subordinated Indenture.

GENERAL

The Debentures will be unsecured and will rank junior and be subordinate in
right of payment to all Senior Debt of KBK. The Debentures will be limited in
aggregate principal amount to $25,750,000 ($29,612,500 if the Underwriters'
over-allotment option is exercised in full), such amount being the sum of the
aggregate stated liquidation amount of the Trust Preferred Securities and
capital contributed by KBK in exchange for the Trust Common Securities. The
Subordinated Indenture does not limit the incurrence or issuance of other
secured or unsecured debt of KBK, whether under the Subordinated Indenture or
any existing or other indenture that KBK may enter into in the future or
otherwise. See "-- Subordination" below.

Concurrently with the issuance of the Trust Preferred Securities, the Trust
will invest the proceeds thereof and the consideration paid by KBK for the Trust
Common Securities in the Debentures. The Debentures will be in the principal
amount equal to the aggregate stated liquidation amount of the Trust.

The Debentures are not subject to any sinking fund provision. The entire
principal amount of the Debentures will mature, and become due and payable,
together with any accrued and unpaid interest thereon, on November , 2028.

INTEREST

The Debentures will bear interest at the annual rate of % per annum,
payable quarterly in arrears on February , May , August and November of
each year, commencing on February , 1999 (each, an "Interest Payment Date"),
to the person in whose name each Debenture is registered at the close of
business on the day (whether or not a Business Day) of the month of such
Interest Payment Date (the "Regular Record Date"), subject to certain
exceptions. It is anticipated that, until the Liquidation, if any, of the Trust,
each Debenture will be held in the name of the Property Trustee in trust for the
benefit of the holders of the Trust Securities. The amount of interest payable
for any period will be computed on the basis of a 360-day year of twelve 30-day
months. In the event that any date on which interest is payable on the
Debentures is not a Business Day, then payment of the interest payable on such
date will be made on the next succeeding day that is a Business Day (and without
any interest or other payment in respect of any such delay), except that if such
Business Day is in the next succeeding calendar year, then such payment shall be
made on the immediately preceding Business Day, in each case with the same force
and effect as if made on such Interest Payment Date. Accrued interest that is
not paid on the applicable Interest Payment Date will bear additional interest
on the amount thereof (to the extent permitted by law) at % per annum,
compounded quarterly. The term "interest" as used herein shall include quarterly
interest payments, interest on quarterly interest payments not paid on the
applicable Interest Payment Date and Additional Sums, as applicable.

GLOBAL SECURITIES

If distributed to holders of the Trust Preferred Securities in connection
with the involuntary or voluntary dissolution, winding-up or liquidation of the
Trust as a result of the occurrence of a Trust Special Event, the Debentures
will be issued in the same form as the Trust Preferred Securities that such
Debentures replace. Any Global Certificate will be replaced by one or more
global securities (each, a "Global Security")

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registered in the name of the depository or its nominee. Except under the
limited circumstances described below, the Debentures represented by the Global
Security will not be exchangeable for, and will not otherwise be issuable as,
Debentures in definitive form. The Global Securities described above may not be
transferred except by the depository to a nominee of the depository or by a
nominee of the depository to the depository or another nominee of the depository
or to a successor depository or its nominee.

Except as provided below, owners of beneficial interests in a Global
Security will not be entitled to receive physical delivery of Debentures in
definitive form and will not be considered the holders thereof for any purpose
under the Subordinated Indenture, and no Global Security representing Debentures
shall be exchangeable, except for another Global Security of like denomination
and tenor to be registered in the name of the depository or its nominee or to a
successor depository or its nominee. Accordingly, each beneficial owner of Trust
Preferred Securities must rely on the procedures of DTC, or if such person is
not a Participant, on the procedures of the Participant through which such
person owns its interest to exercise any rights of a holder under the
Subordinated Indenture.

If Debentures are distributed to holders of Trust Preferred Securities in
liquidation of such holders' interests in the Trust and a Global Security is
issued, DTC will act as securities depository for the Debentures represented by
such Global Security. For a description of DTC and the specific terms of the
depository arrangements, see "Description of the Trust Preferred
Securities -- Book-Entry Only Issuance -- The Depository Trust Company." As of
the date of this Prospectus, the description therein of DTC's book-entry system
and DTC's practices as they relate to purchases, transfers, notices and payments
with respect to the Trust Preferred Securities apply in all material respects to
any debt obligations represented by one or more Global Securities held by DTC.
KBK may appoint a successor to DTC or any successor depository in the event DTC
or such depository is unable or unwilling to continue as a depository for the
Global Securities.

None of KBK, the Subordinated Debt Trustee, any Paying Agent or the
Securities Registrar will have any responsibility or liability for any aspect of
the records relating to or payments made on account of beneficial ownership
interests of the Global Security representing such Debentures or for
maintaining, supervising or reviewing any records relating to such beneficial
ownership interests.

A Global Security shall be exchangeable for Debentures registered in the
names of persons other than DTC or its nominee only if (i) DTC notifies KBK that
it is unwilling or unable to continue as a depository for such Global Debenture
and no successor depository shall have been appointed by KBK within 90 days, or
if at any time DTC ceases to be a "clearing agency" registered under the
Exchange Act at a time when DTC is required to be so registered to act as such
depository and no such successor depository has been appointed within 90 days by
the Company, (ii) KBK in its sole discretion determines that such Global
Security shall be so exchangeable, or (iii) there shall have occurred and be
continuing an Event of Default with respect to such Global Security. Any Global
Security that is exchangeable pursuant to the preceding sentence shall be
exchangeable for definitive certificates registered in such names as DTC shall
direct. It is expected that such instructions will be based upon directions
received by DTC from its Participants with respect to ownership of beneficial
interests in such Global Security. In the event that Debentures are issued in
definitive form, such Debentures will be in denominations of $20 and integral
multiples thereof and may be transferred or exchanged at the offices described
in "-- Payment and Paying Agent" below.

PAYMENT AND PAYING AGENT

Payments on Debentures represented by a Global Security will be made to
DTC, as the depository for the Debentures. In the event Debentures are issued in
definitive form, principal of and any interest on Debentures will be payable,
the transfer of the Debentures will be registrable, and the Debentures will be
exchangeable for Debentures of other denominations of a like aggregate principal
amount at the corporate trust office of the Subordinated Debt Trustee or at the
office of such Paying Agent or Paying Agents as KBK may designate, except that
at the option of KBK payment of any interest may be made (i) by check mailed to
the address of

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the Person entitled thereto as such address shall appear in the Security
Register or (ii) by wire transfer to an account maintained by the Person
entitled thereto as specified in the Security Register, provided that proper
transfer instructions have been received by the Regular Record Date. Payment of
any interest on Debentures will be made to the Person in whose name such
Debentures are registered at the close of business on the Regular Record Date
for such interest, except in the case of Defaulted Interest. The Regular Record
Date for the interest payable on any Interest Payment Date shall be the
fifteenth day (whether or not a Business Day) of the month of such Interest
Payment Date. KBK may at any time designate additional Paying Agents or rescind
the designation of any Paying Agent.

Any monies deposited with the Subordinated Debt Trustee or any Paying
Agent, or then held by KBK in trust, for the payment of the principal of or
interest on any Debentures and remaining unclaimed for two years after such
principal or interest has become due and payable shall, at the request of KBK,
be repaid to KBK and the holder of such Debentures shall thereafter look, as a
general unsecured creditor, only to KBK for payment thereof.

OPTION TO EXTEND INTEREST PAYMENT PERIOD

During any such Extension Period, any default under either of the
Guarantees or any Debenture Event of Default (or there shall have occurred and
be continuing any event of which KBK has actual knowledge that, with the giving
of notice or lapse of time, or both, would constitute a Debenture Event of
Default), KBK shall not, and shall not permit any subsidiary to, (i) declare or
pay any dividends or distributions on, or redeem, purchase or acquire, or make a
liquidation payment with respect to, any of KBK's capital stock (except for
dividends or distributions in shares of, or options, warrants or rights to
subscribe for or purchase shares of, its capital stock and conversions or
exchanges of common stock of one class into common stock of another class) or
(ii) make any payment of principal, interest or premium, if any, on or repay,
repurchase or redeem any debt securities (including guarantees of indebtedness
for money borrowed) of KBK that rank pari passu with or junior to the Debentures
(other than (a) any redemption, liquidation, interest, principal or guarantee
payment by KBK where the payment is made by way of securities (including capital
stock) that rank pari passu with or junior to the securities on which such
dividend, redemption, interest, principal or guarantee payment is being made;
(b) payments under the Guarantees; (c) purchases of Common Stock related to the
issuance of Common Stock under any of KBK's benefit plans for its directors,
officers or employees; (d) as a result of a reclassification of KBK's capital
stock or the exchange or conversion of one series or class of KBK's capital
stock for another series or class of KBK's capital stock; or (e) the purchase of
fractional interests in shares of KBK's capital stock pursuant to the conversion
or exchange provisions of such capital stock or the security being converted or
exchanged).

Prior to the termination of any such Extension Period, KBK may further
extend the Interest Payment Period, provided that no Extension Period may exceed
20 consecutive quarters or extend beyond the stated maturity of the Debentures.
Upon the termination of any such Extension Period and the payment of all amounts
then due on any Interest Payment Date, KBK may elect to begin a new Extension
Period subject to

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the above requirements. No interest shall be due and payable during an Extension
Period, except at the end thereof. KBK shall give the Property Trustee and the
Subordinated Debt Trustee notice of its election to begin any Extension Period
at least one Business Day prior to the earlier of (i) the record date for the
date distributions on the Trust Preferred Securities would have been payable
(or, if no Trust Preferred Securities are outstanding, for the date interest on
the Debentures would have been payable) except for the election to begin such
Extension Period and (ii) the date the Property Trustee is (or, if no Trust
Preferred Securities are outstanding, the Subordinated Debt Trustee is) required
to give notice to the American Stock Exchange or other applicable
self-regulatory organization or to holders of such Trust Preferred Securities
(or, if no Trust Preferred Securities are outstanding, to the holders of such
Debentures) of such election. The Subordinated Debt Trustee and the Property
Trustee shall give notice of KBK's election to begin an Extension Period to the
holders of the Debentures and the Trust Preferred Securities, respectively.

MANDATORY REPAYMENT

Upon repayment of the Debentures at maturity or as a result of acceleration
upon the occurrence of a Debenture Event of Default, KBK will pay a price equal
to 100% of the principal amount of the Debentures, together with any accrued and
unpaid interest thereon. Any payment pursuant to this provision shall be made
prior to 12:00 noon, New York City time, on the date of maturity or acceleration
or at such other time on such earlier date as the parties thereto shall agree.
The Debentures are not entitled to the benefit of any sinking fund or, except as
set forth above or as a result of acceleration, any other provision for
mandatory prepayment.

OPTIONAL REDEMPTION

On and after November , 2001 and subject to the next succeeding sentence,
KBK will have the right, at any time and from time to time, to redeem the
Debentures, in whole or in part, upon notice given as provided below, at 100% of
the principal amount of the Debentures being redeemed, together with any accrued
but unpaid interest on the portion being redeemed.

For so long as the Trust is the holder of all the outstanding Debentures,
the proceeds of any such redemption will be used by the Trust to redeem Trust
Securities in accordance with their terms. KBK may not redeem the Debentures in
part unless all accrued and unpaid interest has been paid in full on all
outstanding Debentures. See "Description of the Trust Preferred
Securities -- Optional Redemption."

If, at the time of any optional redemption or mandatory repayment of the
Debentures, the Trust Securities remain outstanding, the redemption or repayment
proceeds shall be used to redeem the Trust Securities.

REDEMPTION PROCEDURES

Notices of any redemption of the Debentures and the procedures for such
redemption shall be as provided with respect to the Trust Preferred Securities
under the caption "Description of the Trust Preferred Securities -- Redemption
Procedures." Notice of any redemption will be mailed at least 30 days but not
more than 60 days before the redemption date to each holder of Debentures to be
redeemed at its registered address. Unless KBK defaults in payment of the
redemption price, on and after the redemption date interest ceases to accrue on
such Debentures or portions thereof called for redemption.

DISTRIBUTION OF DEBENTURES

At any time, KBK will have the right to dissolve the Trust and cause the
Debentures to be distributed to the holders of the Trust Preferred Securities in
liquidation of the Trust after satisfaction of liabilities to creditors of the
Trust as provided by applicable law. If distributed to holders of Trust
Preferred Securities in liquidation, the Debentures will initially be issued in
the form of one or more Global Securities and DTC, or any successor depository
for the Trust Preferred Securities, will act as depository for the Debentures.
It is anticipated that the depository arrangements for the Debentures would be
substantially identical to those in effect for the Trust Preferred Securities.
There can be no assurance as to the market price of any Debentures that may be
distributed to the holders of Trust Preferred Securities. For a description of
DTC and the terms of

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the depository arrangement, see "Description of the Trust Preferred
Securities -- Book-Entry Only Issuance -- The Depository Trust Company."

CERTAIN COVENANTS

For a description of certain covenants by KBK that apply if (a) a Debenture
Event of Default has occurred and is continuing (or there shall have occurred
and be continuing any event of which KBK has actual knowledge that, with the
giving of notice or lapse of time, or both, would constitute a Debenture Event
of Default), (b) KBK is in default of its obligations under the Guarantee or the
guarantee of the Trust Common Securities or (c) KBK shall have given notice of
its election to defer payments of interest on the Debentures by extending the
Interest Payment Period, see "-- Option to Extend Interest Payment Period."

So long as Trust Preferred Securities remain outstanding KBK will covenant
(i) to maintain directly or indirectly 100% ownership of the Trust Common
Securities, provided that certain successors which are permitted pursuant to the
Subordinated Indenture may succeed to KBK's ownership of the Trust Common
Securities; and (ii) not to voluntarily terminate, wind-up or liquidate the
Trust, except in connection with (A) a distribution of the Debentures to the
holders of Trust Securities in liquidation of the Trust, (B) the redemption of
all Trust Securities or (C) certain mergers, consolidations or amalgamations
permitted by the Declaration. KBK will also covenant to use its commercially
reasonable efforts, consistent with the terms and provisions of the Declaration,
to cause the Trust to remain classified as a grantor trust and not taxable as a
corporation for United States federal income tax purposes.

CONSOLIDATION, MERGER AND SALE OF ASSETS

The Subordinated Indenture provides that KBK may, without the consent of
the Subordinated Debt Trustee or the holders of any Debenture consolidate or
merge with, or sell, lease or transfer its properties and assets as, or
substantially as, an entirety to, any Person, provided that (i) either KBK is
the surviving entity or such successor Person expressly assumes or becomes a
co-obligor jointly and severally liable with respect to the due and punctual
payment of the principal of and interest on, the Debentures and the performance
or observance of every covenant and condition of the Subordinated Indenture on
the part of KBK to be performed or observed, (ii) immediately after giving
effect to the transaction, no Default or Event of Default exists, and (iii) KBK
has delivered the Officer's Certificate and Opinion of Counsel required by the
Subordinated Indenture. Any such successor Person shall succeed to and be
substituted for, and may exercise every right and power of, KBK under the
Subordinated Indenture with the same effect as if it had been named a party in
the Subordinated Indenture and KBK shall, except in the case of a lease, be
released and discharged from all its obligations under the Debentures and the
Subordinated Indenture. Notwithstanding the foregoing, the predecessor Person
may, in the alternative, elect not to be so released from such obligations,
provided that the predecessor Person and the successor Person shall agree,
pursuant to a supplemental Subordinated Indenture, to be co-obligors jointly and
severally with respect to all such obligations.

DEBENTURE EVENTS OF DEFAULT

An "Event of Default" will occur under the Subordinated Indenture with
respect to the Debentures upon: (a) default in the payment of the principal of
the Debentures at their maturity (whether or not prohibited by the subordination
provisions thereof); (b) default in the payment of any interest on the
Debentures when they become due and payable and continuance of such default for
a period of 30 days (whether or not prohibited by the subordination provisions
thereof); (c) default in the performance, or breach, of any term, covenant or
warranty contained in the Subordinated Indenture for a period of 60 days upon
giving written notice as provided in the Subordinated Indenture; (d) the
occurrence of certain events of bankruptcy; or (e) upon the voluntary or
involuntary dissolution, winding-up or termination of the Trust, except in
connection with the distribution of the Debentures to the holders of Trust
Securities in liquidation of the Trust, the redemption or exchange of all of the
Trust Securities, or certain mergers, consolidations or amalgamations, each as
permitted by the Declaration.

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The Subordinated Indenture provides that if an Event of Default with
respect to the Debentures shall have occurred and be continuing, either the
Subordinated Debt Trustee or the holders of not less than 25% in principal
amount of the Debentures then outstanding may declare the principal amount of
all the Debentures to be due and payable immediately upon giving written notice
as provided in the Subordinated Indenture. The Subordinated Indenture provides
that the holders of a majority in principal amount of the Debentures then
outstanding may rescind and annul such declaration and its consequences under
certain circumstances.

The holders of a majority in principal amount of the Debentures then
outstanding may waive past defaults under the Subordinated Indenture and its
consequences (except a continuing default in the payment of principal of or
interest on the Debentures or a default in respect of any covenant or provision
of the Subordinated Indenture which cannot be modified or amended by a
supplemental Subordinated Indenture without the consent of the holder of each
outstanding Debenture affected thereby).

Pursuant to the Subordinated Indenture, the holders of a majority in
aggregate principal amount of all the Debentures then outstanding may direct the
time, method, and place of conducting any proceeding for any remedy available to
the Subordinated Debt Trustee or exercising any trust or power conferred on the
Trustee, provided that such direction shall not be in conflict with any rule of
law or the Subordinated Indenture. Before proceeding to exercise any right or
power under the Subordinated Indenture at the direction of any holders, the
Subordinated Debt Trustee shall be entitled to receive from such holders
reasonable security or indemnity against the costs, expenses, and liabilities
which might be incurred by it in compliance with any such direction.

Under the terms of the Subordinated Indenture, KBK is required to furnish
to the Subordinated Debt Trustee annually an Officer's Certificate to the effect
that, to the best of such officer's knowledge, KBK is not in default in the
performance and observance of the terms, provisions and conditions of the
Subordinated Indenture or, if such officer has knowledge that KBK is in default,
specifying such default. The Subordinated Indenture requires the Subordinated
Debt Trustee to give to all holders of Debentures outstanding thereunder notice
of any Default by KBK in the manner provided in the Subordinated Indenture,
unless such Default shall have been cured or waived; however, except in the case
of a default in the payment of principal of or interest on any Debentures
outstanding thereunder, the Subordinated Debt Trustee is entitled to withhold
such notice in the event that the board of directors, the executive committee,
or a trust committee of directors or certain officers of the Subordinated Debt
Trustee in good faith determine that withholding such notice is in the interest
of the holders of such outstanding Debentures.

ENFORCEMENT OF CERTAIN RIGHTS BY HOLDERS OF TRUST PREFERRED SECURITIES

If a Debenture Event of Default has occurred and is continuing and such
event is attributable to the failure of KBK to pay principal or interest on the
Debentures on the date such principal or interest is otherwise payable, a holder
of Trust Preferred Securities may institute a Legal Action for payment after the
respective due date specified in the Debentures. KBK may not amend the
Subordinated Indenture to remove the foregoing right to bring a Legal Action
without the prior written consent of the holders of all of the Trust Preferred
Securities. Notwithstanding any payment made to such holder of Trust Preferred
Securities by KBK in connection with a Legal Action, KBK shall remain obligated
to pay the principal of or interest on the Debentures held by the Trust or the
Property Trustee and KBK shall be subrogated to the rights of the holder of such
Trust Preferred Securities with respect to payments on the Trust Preferred
Securities to the extent of any payments made by KBK to such holder in any Legal
Action.

SUBORDINATION

In the Subordinated Indenture, KBK has covenanted and agreed that any
Debentures issued thereunder will be subordinate and junior in right of payment
to all Senior Debt of KBK whether now existing or hereafter incurred. Upon any
payment or distribution of assets to creditors upon any liquidation,
dissolution, winding-up, reorganization, assignment for the benefit of
creditors, marshaling of assets or any bankruptcy, insolvency, debt
restructuring or similar proceedings in connection with any insolvency or
bankruptcy proceeding of KBK, the holders of Senior Debt will first be entitled
to receive payment in full of principal of and premium, if any, and interest, if
any, on such Senior Debt before the Property Trustee, on behalf of the holders
of the

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Debentures, will be entitled to receive or retain any payment in respect of the
principal of or interest on the Debentures.

In the event of the acceleration of the maturity of any Debentures, the
holders of all Senior Debt outstanding at the time of such acceleration will
first be entitled to receive payment in full of all amounts due thereon
(including any amounts due upon acceleration) before the holders of Debentures
will be entitled to receive or retain any payment in respect of the principal of
or interest on the Debentures.

No payment on account of principal or interest in respect of the Debentures
may be made if there shall have occurred and be continuing a default in any
payment with respect to Senior Debt, or an event of default with respect to any
Senior Debt resulting in the acceleration of the maturity thereof, or if any
judicial proceeding shall be pending with respect to any such default.

CHANGE IN CONTROL AND HIGHLY LEVERAGED TRANSACTIONS

The Subordinated Indenture contains no covenants or other provisions to
afford protection to holders of the Debentures in the event of a highly
leveraged transaction or a change in control of the Company.

MODIFICATION OF THE SUBORDINATED INDENTURE

The Subordinated Indenture provides that KBK and the Subordinated Debt
Trustee may enter into supplemental indentures without the consent of the
holders of Debentures to: (a) evidence the succession of another Person to KBK
under the Subordinated Indenture and the Debentures and the assumption by such
successor Person of the obligations of KBK thereunder; (b) evidence another
Person's becoming a co-obligor with respect to the obligations of KBK under the
Subordinated Indenture and the Debentures; (c) add covenants and Events of
Default for the benefit of the holders of all the Debentures or to surrender any
right or power conferred by the Subordinated Indenture upon KBK; (d) cure any
ambiguity or correct any inconsistency in the Subordinated Indenture; (e)
evidence the acceptance of appointment by a successor (including as a
co-obligor) Subordinated Debt Trustee; and (f) qualify the Subordinated
Indenture under the Trust Indenture Act.

The Subordinated Indenture also provides that KBK and the Subordinated Debt
Trustee, with the consent of the holders of a majority in aggregate principal
amount of all outstanding Debentures to modify the Subordinated Indenture or the
rights of the holders of the Debentures; provided that KBK and the Subordinated
Debt Trustee may not, without the consent of the holder of each outstanding
Debenture affected thereby: (a) change the stated maturity of the principal of
or any installment of interest on any Debenture, or reduce the principal amount
thereof or the rate of interest thereon, (b) reduce the percentage in principal
amount of Debentures required for any such supplemental Subordinated Indenture
or for any waiver provided for in the Subordinated Indenture, (c) change KBK's
obligation to maintain an office or agency for payment of Debentures and the
other matters specified therein, or (d) modify any of the provisions of the
Subordinated Indenture relating to the execution of supplemental indentures with
the consent of holders of Debentures which are discussed in this paragraph or
modify any provisions relating to the waiver by holders of past defaults and
certain covenants, except to increase any required percentage or to provide that
certain other provisions of the Subordinated Indenture cannot be modified or
waived without the consent of the holder of each outstanding Debenture.

SATISFACTION AND DISCHARGE; LEGAL AND COVENANT DEFEASANCE

Under the terms of the Subordinated Indenture, KBK may satisfy and
discharge certain obligations to holders of Debentures which have not already
been delivered to the Subordinated Debt Trustee for cancellation and which have
either become due and payable or are by their terms due and payable within one
year or are to be called for redemption within one year by (i) depositing or
causing to be deposited with the Subordinated Debt Trustee funds in an amount
sufficient to pay the principal and interest to the date of such deposit (in
case of Debentures which have become due and payable) or to the Stated Maturity
or Redemption Date, as the case may be, (ii) paying or causing to be paid all
other sums payable under the Subordinated

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Indenture with respect to such Debentures, and (iii) delivering to the
Subordinated Debt Trustee an Officer's Certificate and Opinion of Counsel
relating to such satisfaction and discharge.

The Subordinated Indenture also provides that KBK and any other obligor, if
any, will be discharged from any and all obligations in respect of the
Debentures issued thereunder (excluding, however, certain obligations, such as
the obligation to register the transfer or exchange of such outstanding
Debentures, to replace stolen, lost, mutilated or destroyed certificates, to pay
principal and interest on the original stated due dates or specified redemption
date, to make any sinking fund payments, and to maintain paying agencies) on the
91st day following the deposit referred to in the following clause (i), subject
to the following conditions: (i) the irrevocable deposit, in trust, of cash or
U.S. Government Obligations (or a combination thereof) which through the payment
of interest and principal thereof in accordance with their terms will provide
cash in an amount sufficient to pay the principal and interest on the
outstanding Debentures on the Stated Maturity of such payments in accordance
with the terms of the Subordinated Indenture and the outstanding Debentures or
on any Redemption Date established pursuant to clause (iii) below; (ii) KBK's
receipt of an Opinion of Counsel based on the fact that (A) KBK has received
from, or there has been published by, the Internal Revenue Service a ruling, or
(B) since the date of the Subordinated Indenture, there has been a change in the
applicable federal income tax law, in either case, to the effect that, and
confirming that, the holders of the Debentures will not recognize income, gain
or loss for federal income tax purposes as a result of such deposit and
defeasance and will be subject to federal income tax on the same amount and in
the same manner and at the same times, as would have been the case if such
deposit and defeasance had not occurred; (iii) if the Debentures are to be
redeemed prior to Stated Maturity, notice of such redemption shall have been
duly given pursuant to the Subordinated Indenture or provision therefor
satisfactory to the Subordinated Debt Trustee shall have been made; (iv) no
Event of Default or event which with notice or lapse of time or both would
become an Event of Default will have occurred and be continuing on the date of
such deposit; and (v) KBK's delivery to the Subordinated Debt Trustee of an
Officer's Certificate and an Opinion of Counsel, each stating that the
conditions precedent under the Subordinated Indenture have been complied with.

Under the Subordinated Indenture, KBK also may discharge its obligations
referred to above under the captions "-- Certain Covenants" and
"-- Consolidation, Merger and Sale of Assets" included in this Prospectus, as
well as certain of its obligations relating to reporting obligations under the
Subordinated Indenture in respect of the Debentures on the 91st day following
the deposit referred to in clause (i) in the immediately preceding paragraph,
subject to satisfaction of the conditions described in clauses (i), (iii), (iv)
and (v) in the immediately preceding paragraph with respect to the Debentures
and the delivery of an Opinion of Counsel confirming that the holders of the
Debentures will not recognize income, gain or loss for federal income tax
purposes as a result of such deposit and covenant defeasance and will be subject
to federal income tax on the same amount and in the same manner and at the same
times, as would have been the case if such deposit and covenant defeasance had
not occurred.

NO PERSONAL, LIABILITY OF OFFICERS, DIRECTORS, EMPLOYEES OR STOCKHOLDERS

No director, officer, employee or stockholder, as such, of KBK or any of
its affiliates shall have any personal liability in respect of the obligations
of KBK under the Subordinated Indenture or the Debentures by reason of his, her
or its status as such.

APPLICABLE LAW

The Subordinated Indenture is, and the Debentures offered hereby will be,
governed by, and construed in accordance with, the laws of the State of New
York.

CONCERNING THE SUBORDINATED DEBT TRUSTEE

The Subordinated Indenture provides that, except during the continuance of
an Event of Default, the Subordinated Debt Trustee will perform only such duties
as are specifically set forth in the Subordinated Indenture. If an Event of
Default has occurred and is continuing, the Subordinated Debt Trustee will use
the

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same degree of care and skill in its exercise of the rights and powers vested in
it by the Subordinated Indenture as a prudent person would exercise under the
circumstances in the conduct of such person's own affairs.

The Subordinated Indenture contains limitations on the rights of the
Subordinated Debt Trustee, should it become a creditor of KBK, to obtain payment
of claims in certain cases or to realize on certain property received by it in
respect of such claims, as security or otherwise. The Subordinated Debt Trustee
is permitted to engage in other transactions; provided, however, that if it
acquires any conflicting interest, it must eliminate such conflict or resign.

The First National Bank of Chicago, a national banking association, is the
Subordinated Debt Trustee under the Subordinated Indenture.

RELATIONSHIP AMONG THE TRUST PREFERRED SECURITIES,
THE DEBENTURES AND THE GUARANTEE

As long as KBK makes payments of interest and other payments when due on
the Debentures, such payments will be sufficient to cover distributions and
other payments due on the Trust Preferred Securities, primarily because (i) the
aggregate principal amount of the Debentures will be equal to the sum of the
aggregate stated liquidation preference of the Trust Preferred Securities; (ii)
the interest rate and interest and other payment dates of the Debentures will
match the distribution rate and distribution and other payment dates for the
Trust Preferred Securities; (iii) KBK shall pay for all and any costs, expenses
and liabilities of the Trust except the Trust's obligations to holders of the
Trust Preferred Securities; and (iv) the Declaration of the Trust further
provides that the Trust will not engage in any activity that is not consistent
with the limited purposes of the Trust.

Payments of distributions and other amounts due on the Trust Preferred
Securities (to the extent the Trust has funds available for the payment of such
distributions) are irrevocably guaranteed by KBK as and to the extent set forth
under "Description of the Guarantee." Taken together, KBK's obligations under
the Debentures, the Subordinated Indenture, the Declarations of the Trust and
the Trust Guarantees provide a full, irrevocable and unconditional guarantee of
payments of distributions and other amounts due on the Trust Preferred
Securities. No single document standing alone or operating in conjunction with
fewer than all of the other documents constitutes such guarantee. It is only the
combined operation of these documents that has the effect of providing a full,
irrevocable and unconditional guarantee of each of the Trust's obligations under
the Trust Preferred Securities. If and to the extent that KBK does not make
payments on the Debentures, the Trust will not pay distributions or other
amounts due on the Trust Preferred Securities. The Guarantee does not cover
payment of distributions when the Trust does not have legally sufficient funds
to pay such distributions. In such event, the remedies of a holder of the Trust
Preferred Securities of the Trust are described herein under "Description of the
Guarantee -- Guarantee Events of Default." The obligations of KBK under the
Guarantees are unsecured and are subordinate and junior in right of payment to
all other liabilities of KBK.

Notwithstanding anything to the contrary in the Subordinated Indenture and
to the extent set forth therein, KBK has the right to set-off any payment it is
otherwise required to make thereunder with and to the extent KBK has theretofore
made, or is concurrently on the date of such payment making, a payment under the
Guarantee.

A holder of Trust Preferred Securities may institute a legal proceeding
directly against KBK to enforce its rights under the Guarantee without first
instituting a legal proceeding against the Trust Guarantee Trustee, the Trust or
any other person or entity.

The Trust Preferred Securities evidence a beneficial interest in the Trust.
The Trust exists for the sole purpose of issuing the Trust Securities, making
distributions to holders of Trust Securities and investing the proceeds of the
issuance of the Trust Securities in the Debentures, and engaging in activities
incidental thereto. A principal difference between the rights of a holder of
Trust Preferred Securities and a holder of the Debentures is that a holder of
the Debentures is entitled to receive from KBK the principal amount of and
interest accrued on the Debentures held, while a holder of Trust Preferred
Securities is entitled to receive

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distributions from the Trust (or from KBK under the Guarantee) if and to the
extent the Trust has funds legally available for the payment of such
distributions.

Upon any voluntary or involuntary termination, winding-up or liquidation of
the Trust involving the liquidation of the Debentures, the holders of the Trust
Preferred Securities will be entitled to receive, out of assets held by the
Trust and after satisfaction of liabilities to creditors of the Trust as
provided by applicable law, the liquidation distribution in cash. See
"Description of Trust Preferred Securities." Upon any voluntary or involuntary
liquidation or bankruptcy of KBK, the Property Trustee, as holder of the
Debentures of such Trust, would be a subordinated creditor of KBK, subordinated
in right of payment to all Senior Debt of KBK, but entitled to receive payment
in full of principal and interest, before any shareholders of KBK receive
payments or distributions. Since KBK is the guarantor under the Guarantees and
has agreed to pay for all costs, expenses and liabilities of the Trust (other
than the Trust's obligations to the holders of the Trust Preferred Securities),
the positions of a holder of Trust Preferred Securities and a holder of the
Debentures relative to other creditors and to shareholders of KBK in the event
of liquidation or bankruptcy of KBK would be substantially the same.

A default or event of default under any Senior Debt of KBK will not
constitute a Default or Event of Default under the Subordinated Indenture.
However, in the event of payment defaults under, or acceleration of, Senior Debt
of KBK, the subordination provisions of the Subordinated Indenture provide that
no payments may be made in respect of the Debentures until Senior Debt has been
paid in full or any payment default thereunder has been cured or waived. Failure
to make required payments on the Debentures would constitute an Event of Default
under the Subordinated Indenture.

CERTAIN FEDERAL INCOME TAX CONSEQUENCES

The following is a summary of material United States federal income tax
consequences of the purchase, ownership and disposition of the Trust Preferred
Securities. Unless otherwise stated, this summary deals only with Trust
Preferred Securities held as capital assets by holders who purchase the Trust
Preferred Securities upon original issuance. It does not deal with special
classes of holders such as banks, thrifts, real estate investment trusts,
regulated investment companies, insurance companies, dealers in securities or
currencies, tax-exempt investors, foreign corporations and persons who are not
citizens or residents of the United States (except to the extent discussed under
the heading "-- Certain United States Tax Consequences to Non-United States
Holders") or persons that will hold the Trust Preferred Securities as a position
in a "straddle," as part of a "synthetic security" or "hedge," as part of a
"conversion transaction" or other integrated investment, or as other than a
capital asset. This summary also does not address the tax consequences to
persons that have a functional currency other than the United States Dollar or
the tax consequences to shareholders, partners or beneficiaries of a holder of
Trust Preferred Securities. Further, it does not include any description of any
alternative minimum tax consequences or the tax laws of any state or local
government or of any foreign government that may be applicable to the Trust
Preferred Securities. This summary is based on the Internal Revenue Code of
1986, as amended (the "Code"), Treasury regulations thereunder and
administrative and judicial interpretations thereof, as of the date hereof, all
of which are subject to change, possibly on a retroactive basis.

INVESTORS ARE ADVISED TO CONSULT THEIR TAX ADVISORS AS TO THE UNITED STATES
FEDERAL INCOME TAX CONSEQUENCES OF THE OWNERSHIP AND DISPOSITION OF TRUST
PREFERRED SECURITIES IN LIGHT OF THEIR PARTICULAR CIRCUMSTANCES, AS WELL AS THE
EFFECT OF ANY STATE, LOCAL, FOREIGN OR OTHER TAX LAWS AND OF POTENTIAL CHANGES
IN APPLICABLE TAX LAWS.

CLASSIFICATION OF THE DEBENTURES

KBK has taken the position that the Debentures will be classified for
United States federal income tax purposes as indebtedness of KBK under current
law and, by acceptance of Trust Preferred Securities, each holder covenants to
treat the Debentures as indebtedness and the Trust Preferred Securities as
evidence of an indirect beneficial ownership interest in the Debentures. No
assurance can be given, however, that such

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position of KBK will not be challenged by the Internal Revenue Service ("IRS")
or, if challenged, that such a challenge will not be successful. The remainder
of this discussion assumes that the Debentures will be classified as
indebtedness of KBK for United States federal income tax purposes.

CLASSIFICATION OF THE TRUST

In connection with the issuance of the Trust Preferred Securities, Liddell,
Sapp, Zivley, Hill & LaBoon, L.L.P., United States tax counsel to the Trust and
KBK, will render its opinion generally to the effect that, under then current
law and assuming full compliance with the terms of the Declaration and the
Subordinated Indenture (and certain other documents), based on certain facts and
assumptions contained in such opinion, the Trust will be classified for United
States federal income tax purposes as a grantor trust and not as an association
taxable as a corporation. Accordingly, for United States federal income tax
purposes, each holder of Trust Preferred Securities generally will be considered
the owner of an undivided interest in the Debentures, and each holder will be
required to include in its gross income any stated interest or original issue
discount (as noted below) with respect to its allocable share of those
Debentures.

INTEREST INCOME AND ORIGINAL ISSUE DISCOUNT

Except as described below, stated interest on the Debentures generally will
be taxable to a holder as ordinary income at the time it is accrued or paid in
accordance with the holder's regular method of tax accounting.

Under current Treasury regulations applicable to debt instruments issued on
or after August 13, 1996 (the "Regulations"), a "remote" contingency that stated
interest will not be timely paid will be ignored in determining whether such
stated interest is "qualified stated interest" and whether a debt instrument is
issued with OID. The Company believes that the likelihood of its exercising its
option to defer payments of interest is remote. Based on the foregoing, the
Company believes that stated interest on the Debentures will constitute
qualified stated interest and that the Debentures will not be considered to be
issued with OID at the time of their original issuance and, accordingly, a
holder should include in gross income such holder's allocable share of stated
interest on the Debentures in accordance with such holder's regular method of
tax accounting.

Under the Regulations, if the Company exercised its option to defer any
payment of interest, the Debentures would at that time be treated as having been
reissued with OID, and all stated interest on the Debentures would thereafter be
treated as OID as long as the Debentures remained outstanding. In such event,
all of a holder's interest income with respect to the Debentures would be
accounted for as OID on an economic accrual basis regardless of such holder's
method of tax accounting, and actual distributions of stated interest would not
be reported as income. Consequently, a holder would be required to include
stated interest on the Debentures in gross income, as OID, even though the
Company would not make any actual cash payments with respect to such interest
during an Extension Period.

The Regulations specific to such treatment have not been addressed in any
rulings or other interpretations by the IRS, and it is possible that the IRS
could take a position contrary to the interpretation herein.

Subsequent use of the term "interest" in this summary includes income in
the form of OID.

Because income on the Debentures will constitute interest or original issue
discount, corporate holders will not be entitled to a dividends-received
deduction with respect to any income recognized with respect to the Debentures.

REDEMPTION OF TRUST PREFERRED SECURITIES

FOR DEBENTURES OR CASH UPON LIQUIDATION OF THE TRUST

Under certain circumstances, the Debentures may be distributed to holders
in exchange for the Trust Preferred Securities. Under current law, such a
distribution to holders, for United States federal income tax purposes, would be
treated as a nontaxable event to each holder, and each holder would receive an
aggregate tax basis in the Debentures distributed equal to such holder's
aggregate tax basis in its Trust Preferred Securities exchanged therefor. A
holder's holding period in the Debentures so received would include the

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period during which the Trust Preferred Securities were held by such holder. If,
however, the exchange is caused by a Trust Tax Event which results in the Trust
being treated as an association taxable as a corporation, the distribution would
likely constitute a taxable event to the Trust and holders of the Trust
Preferred Securities.

Under certain circumstances described herein (see "Description of the Trust
Preferred Securities -- Trust Special Event Exchange or Redemption"), the
Debentures may be redeemed for cash and the proceeds of such redemption
distributed to holders in redemption of their Trust Preferred Securities. Under
current law, such a redemption would, for United States federal income tax
purposes, constitute a taxable disposition of the redeemed Trust Preferred
Securities, and a holder would recognize gain or loss in the same manner as if
it sold such redeemed Trust Preferred Securities for cash. See "-- Sales of
Trust Preferred Securities" below.

SALES OF TRUST PREFERRED SECURITIES

A holder that sells Trust Preferred Securities will recognize gain or loss
equal to the difference between the amount realized on the sale of the Trust
Preferred Securities and the holder's adjusted tax basis in such Trust Preferred
Securities. A holder's adjusted tax basis in the Trust Preferred Securities
generally will be its initial purchase price increased by any original issue
discount previously includible in such holder's gross income to the date of
disposition and decreased by payments other than qualified stated interest
received on the Trust Preferred Securities to the date of disposition. In
general, such gain or loss will be a capital gain or loss. Any capital gain will
be (a) long-term capital gain if the holder held the Trust Preferred Securities
for more than 12 months or (b) short-term capital gain if the holder held the
Trust Preferred Securities for 12 months or less as of the effective date of the
Merger. Long-term capital gain of individuals currently is taxed at a maximum
rate of 20%. Short-term capital gain of individuals is taxed as ordinary income.
Ordinary income of individuals is currently taxed at a maximum rate of 39.6%.

The Trust Preferred Securities may trade at a price that does not
accurately reflect the value of accrued but unpaid interest with respect to the
underlying Debentures. A holder who disposes of his Trust Preferred Securities
between record dates for payments of distributions thereon will be required to
include accrued but unpaid interest on the Debenture through the date of
disposition in income as ordinary income, and to add such amount to his adjusted
tax basis in his pro rata share of the underlying Debentures deemed disposed of.
To the extent the selling price is less than the holder's adjusted tax basis
(which basis will include, in the form of original issue discount, all accrued
but unpaid interest), a holder will recognize a capital loss. Subject to certain
limited exceptions, capital losses cannot be applied to offset ordinary income
for United States federal income tax purposes.

MARKET DISCOUNT AND BOND PREMIUM

Holders that purchase the Trust Preferred Securities at a price that is
greater or less than the adjusted issue price of such holder's proportionate
share of the Debentures (which generally should approximate the face amount plus
accrued but unpaid interest on the Debentures) may be considered to have
acquired their undivided interests in the Debentures with market discount or
acquisition premium as such phrases are defined for United States federal income
tax purposes. Such holders are advised to consult their tax advisors as to the
income tax consequences of the ownership and disposition of the Trust Preferred
Securities.

INFORMATION REPORTING TO HOLDERS

The Trust will report the original issue discount, if any, that accrued
during the year with respect to the Debentures, and any gross proceeds received
by the Trust from the retirement or redemption of the Debentures, annually to
the holders of record of the Trust Preferred Securities and the IRS. The Trust
currently intends to deliver such reports to holders of record prior to January
31, following each calendar year. It is anticipated that persons who hold Trust
Preferred Securities as nominees for Beneficial Owners will report the required
tax information to Beneficial Owners on Form 1099.

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BACKUP WITHHOLDING

Payments made on, and proceeds from the sale of, Trust Preferred Securities
may be subject to a "backup" withholding tax of 31% unless the holder complies
with certain identification requirements. Any withheld amounts will generally be
allowed as a credit against the holder's federal income tax provided the
required information is timely filed with the IRS.

POSSIBLE TAX LEGISLATION

As a part of President Clinton's Fiscal 1999 and 1998 Budget Proposals, the
Treasury Department proposed legislation that, among other things, would have
treated as equity for United States federal income tax purposes certain debt
instruments that are not shown as indebtedness on the consolidated balance sheet
of KBK, which proposed legislation has not been enacted to date. No assurance
can be given that the Proposed Legislation will not ultimately be enacted in the
future, that such future legislation will not have a retroactive effective date
and that such future legislation will not prevent KBK from deducting interest on
the Debentures. Such an event would constitute a Trust Tax Event and would
permit the Trust to exchange the Trust Preferred Securities, in whole or in
part, for the Debentures or redeem, in whole or in part, the Trust Preferred
Securities and corresponding Debentures.

CERTAIN UNITED STATES TAX CONSEQUENCES TO NON-UNITED STATES HOLDERS

General. The following is a general discussion of certain United States
federal income and estate tax consequences of the ownership and disposition of
Trust Preferred Securities by a "Non-United States Holder" and does not deal
with tax consequences arising under the laws of any foreign, state, or local
jurisdiction. As used herein, a "Non- United States Holder" is a person or
entity that, for United States federal income tax purposes, is not a citizen or
resident of the United States, a corporation, partnership, or other entity
created or organized under the laws of the United States or a political
subdivision thereof, or an estate or trust, the income of which is subject to
United States federal income taxation regardless of its source, or that
otherwise is subject to United States federal income taxation on a net basis in
respect of the Trust Preferred Securities. The tax treatment of the holders of
the Trust Preferred Securities may vary depending upon their particular
situations. Certain holders (including insurance companies, tax exempt
organizations, financial institutions and broker-dealers) may be subject to
special rules not discussed below. Prospective investors who are Non-United
States Holders are urged to consult their tax advisors regarding the United
States federal tax consequences of owning and disposing of Trust Preferred
Securities, as well as any tax consequences that may arise under the laws of any
foreign, state, local or other taxing jurisdiction.

Interest. Interest (including original issue discount) received or accrued
by a Non-United States Holder of Trust Preferred Securities will not be subject
to United States federal income or withholding tax if such interest is not
effectively connected with the conduct of a trade or business within the United
States by such Non-United States Holder and (i) the Non-United States Holder
does not actually or constructively own 10% or more of the total voting power of
all voting stock of KBK and is not a controlled foreign corporation with respect
to which KBK is a "related person" within the meaning of the Code and (ii) the
beneficial owner of the Trust Preferred Securities certifies, under penalty of
perjury, that the beneficial owner is not a United States person and provide the
beneficial owner's name and address.

Gain on Disposition of Trust Preferred Securities. A Non-United States
Holder will generally not be subject to United States federal income tax on gain
recognized on a sale, redemption or other disposition of a Trust Preferred
Security unless (i) the gain is effectively connected with the conduct of a
trade or business within the United States by the Non-United States Holder and
(ii) in the case of a Non-United States Holder who is a nonresident alien
individual and holds the Trust Preferred Security as a capital asset, such
holder is present in the United States for 183 or more days in the taxable year
and certain other requirements are met.

Federal Estate Taxes. A Trust Preferred Security beneficially owned by an
individual who is a Non-United States Holder at the time of his or her death
generally will not be subject to United States federal estate tax as a result of
such individual's death, provided that (i) such individual does not actually or
constructively own 10% or more of the total combined voting power of all classes
of stock of KBK entitled to

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vote within the meaning of section 871(h)(3) of the Code, and (ii) interest
payments (including payments of original issue discount) with respect to the
Debentures would not have been, if received at the time of such individual's
death, effectively connected with the conduct of a U.S. trade or business within
the United States by such individual.

Information Reporting and Backup Withholding. KBK must report annually to
the IRS and to each Non-United States Holder the amount of interest paid to such
holder and the amount of any tax withheld. These information reporting
requirements apply regardless of whether withholding is required. Copies of the
information returns reporting such interest and withholding may also be made
available to the tax authorities in the country in which the Non-United States
Holder resides under the provisions of an applicable income tax treaty.

In the case of payments of interest to Non-United States Holders, temporary
Treasury regulations provide that the 31% backup withholding tax and certain
information reporting will not apply to such payments with respect to which
either the requisite certification, as described above, has been received or an
exemption has otherwise been established; provided that neither KBK nor its
payment agent has actual knowledge that the holder is a United States person or
that the conditions of any other exemption are not in fact satisfied. Under
temporary Treasury regulations, these information reporting and backup
withholding requirements will apply, however, to the gross proceeds paid to a
Non-United States Holder on the disposition of the Trust Preferred Securities by
or through a United States office of a United States or foreign broker, unless
the holder certifies to the broker under penalty of perjury as to its name,
address and status as a foreign person or the holder otherwise establishes an
exemption. Information reporting requirements, but not backup withholding, will
also apply to a payment of the proceeds of a disposition of the Trust Preferred
Securities by or through a foreign office of a United States broker or foreign
brokers with certain types of relationships to the United States. Neither
information reporting nor backup withholding generally will apply to a payment
of the proceeds of a disposition of the Trust Preferred Securities by or through
a foreign office or foreign broker not subject to the preceding sentence.

Backup withholding is not an additional tax. Any amounts withheld under the
backup withholding rules may be refunded or credited against the Non-United
States Holder's United States federal income tax liability, provided that the
required information is furnished to the IRS.

Recently published final Treasury regulations (the "Final Withholding
Regulations") make a number of important changes to the procedures for income
tax withholding and certification of eligibility for the portfolio interest
exemption or for a reduced rate of income tax withholding based on an applicable
income tax treaty. In general, the Final Withholding Regulations do not
significantly alter substantive withholding requirements, but unify
certification procedures and clarify reliance standards. The Final Withholding
Regulations are scheduled to be effective for payments made on or after January
1, 2000, subject to certain transition rules. The Final Withholding Regulations
are quite complex. Non-United States Holders are strongly urged to consult their
own tax advisors regarding potential application of the Final Withholding
Regulations to payments on the Trust Preferred Securities in light of their
particular circumstances.

ERISA CONSIDERATIONS

The Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
imposes certain requirements on pension, profit-sharing and other employee
benefit plans to which it applies (the "Plans") and on those persons who are
fiduciaries with respect to such Plans.

A fiduciary of a Plan should consider the fiduciary standards of ERISA in
the context of the Plan's particular circumstances before authorizing an
investment in the Trust Preferred Securities. Among other factors, such
fiduciary should consider (i) whether the investment satisfies the prudence
requirements of Section 404(a)(1)(B) of ERISA, (ii) whether the investment
satisfies the diversification requirements of Section 404(a)(1)(C) of ERISA and
(iii) whether the investment is in accordance with the documents and instruments
governing the Plan as required by Section 404(a)(1)(D) of ERISA.

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A fiduciary of a Plan must also consider whether the acquisition of Trust
Preferred Securities and/or the operation of the Trust might result in direct or
indirect prohibited transactions under Section 406 of ERISA and Section 4975 of
the Code. In order to determine whether there are such prohibited transactions,
a fiduciary must determine the "plan assets" involved in the transaction. The
Department of Labor has promulgated regulations (the "DOL Regulations")
concerning whether or not a Plan's assets would be deemed to include an interest
in the underlying assets of an entity for purposes of ERISA if the Plan acquires
an "equity interest" in such entity (such as by acquiring Trust Preferred
Securities). The DOL Regulations provide a number of exceptions to these "plan
asset" rules. One exception states that the underlying assets of an entity such
as the Trust will not be considered "plan assets" if the Trust Preferred
Securities are publicly offered. For this purpose, the Trust Preferred
Securities are "publicly offered" if they are part of a class of securities that
is (1) widely held, (2) freely transferable, and (3) registered under Section
12(b) or 12(g) of the Exchange Act. It is expected that all of these
requirements will be satisfied with respect to the Trust Preferred Securities
offered hereunder and that the Trust Preferred Securities will not be subject to
the DOL Regulation's "plan asset" rules. There can be no assurance, however,
that such expectations will prove to be true. Due to the complexity of these
rules and the penalties imposed upon persons involved in prohibited
transactions, it is particularly important that potential Plan investors consult
with their counsel regarding the consequences under ERISA of their acquisition
and ownership of Trust Preferred Securities.

UNDERWRITING

Subject to the terms and conditions set forth in the Underwriting Agreement
relating to the Trust Preferred Securities, the Trust has agreed to sell to each
of the underwriters named below (the "Underwriters"), and each of the
Underwriters, for whom Friedman, Billings, Ramsey & Co., Inc. and J.J.B.
Hilliard, W.L. Lyons, Inc. are acting as representatives (the
"Representatives"), has severally agreed to purchase, the number of Trust
Preferred Securities offered hereby set forth opposite its name:

<TABLE>
<CAPTION>
NUMBER OF TRUST
PREFERRED
UNDERWRITER SECURITIES
----------- ---------------
<S> <C>
Friedman, Billings, Ramsey & Co., Inc.......................
J.J.B. Hilliard, W.L. Lyons, Inc............................

---------
Total.................................................. 1,000,000
=========
</TABLE>

The Underwriting Agreement provides that the obligations of the several
Underwriters to pay for and accept delivery of the Trust Preferred Securities
offered hereby are subject to the approval of certain legal matters by counsel
and to certain other conditions. If any of the Trust Preferred Securities are
purchased by the Underwriters pursuant to the Underwriting Agreement, all such
Trust Preferred Securities (other than the Trust Preferred Securities covered by
the over-allotment option described below) must be so purchased.

The Company has been advised that the Underwriters propose to offer the
Trust Preferred Securities to the public initially at the price to the public
set forth on the cover page of this Prospectus and to certain dealers (who may
include the Underwriters) at such price less a concession not to exceed $ per
Trust Preferred Security. The Underwriters may allow, and such dealers may
reallow, a discount not in excess of $ per Trust Preferred Security to any
other Underwriter and certain other dealers. After the completion of the
offering, the offering price and other selling terms may be changed by the
Underwriters.

In view of the fact that the proceeds of the sale of the Trust Preferred
Securities will ultimately be used to purchase the Debentures of the Company,
the Underwriting Agreement provides that the Company will pay as Underwriters'
Compensation to the Underwriters, an amount in immediately available funds of
$ per Trust Preferred Security (or $ in the aggregate) for the accounts of
the several Underwriters.

72
<PAGE> 74

The Trust has granted to the Underwriters an option to purchase up to
150,000 additional Trust Preferred Securities at the public offering price set
forth on the cover page hereof solely to cover over-allotments for which the
Underwriters will receive additional Underwriters' Compensation as described
above. Such option may be exercised once at any time until 30 days after the
date of this Prospectus. To the extent that the Underwriters exercise such
option, each of the Underwriters will be committed, subject to certain
conditions, to purchase a number of option shares proportionate to such
Underwriter's initial commitment as indicated in the preceding table.

The Company has agreed to reimburse the Representatives for the
out-of-pocket expenses incurred by the Representatives in connection with the
offering. In addition, the Company has agreed to reimburse the Representatives
for $30,000 of the fees and expenses of the Underwriters' legal counsel.

The Company and the Trust have agreed to indemnify the Underwriters against
certain liabilities, including liabilities under the Securities Act, or to
contribute to payments that the Underwriters may be required to make in respect
thereof. Such indemnification provisions would require the Company and the Trust
to hold the Underwriters harmless from and against any and all losses, claims,
damages, liabilities and judgments caused by any untrue statement contained in
this Prospectus or by any omission to state a material fact herein, except for
untrue statements or omissions based upon information relating to any
Underwriter furnished in writing to the Company and the Trust by such
Underwriter expressly for use in this Prospectus and subject to certain other
limitations.

The Representatives have advised the Company that the Underwriters will not
confirm sales of Trust Preferred Securities to accounts over which they exercise
discretionary authority.

In connection with this offering, the Underwriters may engage in
transactions that stabilize, maintain or otherwise affect the price of the Trust
Preferred Securities. Specifically, the Underwriters may bid for and purchase
Trust Preferred Securities in the open market to cover syndicate short
positions. In addition, the Underwriters may bid for and purchase Trust
Preferred Securities in the open market to stabilize the price of the Trust
Preferred Securities. These activities may stabilize or maintain the market
price of the Trust Preferred Securities above independent market levels. The
Underwriters are not required to engage in these activities and may end these
activities at any time.

Prior to this offering, there has been no public market for the Trust
Preferred Securities. Therefore, no assurance can be given as to the liquidity
of the trading market for the Trust Preferred Securities or that an active
public market will develop.

Application has been made to list the Trust Preferred Securities on the
American Stock Exchange under the symbol "KBK.Pr".

LEGAL MATTERS

Certain matters of Delaware law relating to the legality of the Trust
Preferred Securities, the validity of the Declaration, the formation of the
Trust and the legality under state law of the Trust Preferred Securities are
being passed upon by Potter Anderson & Corroon LLP, Wilmington, Delaware,
special Delaware counsel to the Trust and KBK. The legality under state law of
the Trust Guarantee and the Debentures will be passed upon on behalf of the
Trust and KBK by Liddell, Sapp, Zivley, Hill & LaBoon, L.L.P., Houston, Texas.
Certain United States federal income taxation matters will be passed upon on
behalf of the Trust and KBK by Liddell, Sapp, Zivley, Hill & LaBoon, L.L.P.
Certain legal matters will be passed upon on behalf of the Underwriters by
Andrews & Kurth L.L.P., Washington, D.C., counsel to the Underwriters.

73
<PAGE> 75

EXPERTS

The consolidated financial statements of the Company and its subsidiaries
as of December 31, 1997, 1996 and 1995, and for each of the years in the
three-year period ended December 31, 1997, have been incorporated by reference
herein in reliance upon the reports of KPMG Peat Marwick LLP, independent
certified public accountants, incorporated by reference herein, and upon the
authority of said firm as experts in accounting and auditing.

74
<PAGE> 76

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

NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED IN CONNECTION
WITH THE OFFERING MADE HEREBY TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY, THE TRUST OR ANY OF THE UNDERWRITERS. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE
SECURITIES OFFERED HEREBY TO ANY PERSON OR BY ANYONE IN ANY JURISDICTION IN
WHICH IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF
THIS PROSPECTUS NOR ANY OFFER OR SALE MADE HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS
CORRECT AS OF ANY DATE SUBSEQUENT TO THE DATE HEREOF.

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

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information.................. 4
Incorporation of Certain Documents by
Reference............................ 4
Forward-Looking Statements............. 5
Prospectus Summary..................... 6
Risk Factors........................... 13
Use of Proceeds........................ 18
The Company............................ 18
Ratio of Earnings to Fixed Charges..... 31
Capitalization......................... 32
Selected Financial Data................ 33
Management's Discussion and Analysis of
Financial Condition and Results of
Operations........................... 34
Management............................. 40
KBK Capital Trust I.................... 41
Description of the Trust Preferred
Securities........................... 42
Description of the Guarantee........... 55
Description of the Debentures.......... 58
Relationship Among the Trust Preferred
Securities, the Debentures and the
Guarantee............................ 66
Certain Federal Income Tax
Consequences......................... 67
ERISA Considerations................... 71
Underwriting........................... 72
Legal Matters.......................... 73
Experts................................ 74
</TABLE>

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

1,000,000 TRUST PREFERRED SECURITIES

KBK CAPITAL TRUST I

% TRUST PREFERRED SECURITIES

(LIQUIDATION AMOUNT

$25 PER TRUST PREFERRED SECURITY)

GUARANTEED TO THE EXTENT
SET FORTH HEREIN BY

KBK CAPITAL CORPORATION

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

PROSPECTUS

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

FRIEDMAN, BILLINGS, RAMSEY
& CO., INC.

J.J.B. HILLIARD,
W.L. LYONS, INC.

NOVEMBER , 1998

------------------------------------------------------
------------------------------------------------------
<PAGE> 77

PART II
INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

<TABLE>
<S> <C>
SEC Registration Fee........................................ $ 8,482
NASD Filing Fee............................................. 3,375
American Stock Exchange Listing Fee......................... 10,000
Blue Sky Qualification Fees and Expenses.................... 5,000
Accounting Fees and Expenses................................ 125,000
Legal Fees and Expenses..................................... 175,000
Underwriters' expenses...................................... 80,000
Trustees' Fees and Expenses................................. 15,000
Printing and Engraving Expenses............................. 100,000
Miscellaneous............................................... 15,643
--------
Total.................................................. $537,500
========
</TABLE>

ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

Section 145 of the Delaware General Corporation Law provides that a
corporation may indemnify directors and officers as well as other employees and
individuals against expenses (including attorneys' fees), judgments, fines, and
amounts paid in settlement in connection with specified actions, rules, or
proceedings, whether civil, criminal, administrative, or investigative (other
than action by or in the right of the corporation -- a "derivative action"), if
they acted in good faith and in a manner they reasonably believed to be in or
not opposed to the best interests of the corporation and, with respect to any
criminal action or proceeding, had no reasonable cause to believe their conduct
was unlawful. A similar standard is applicable in the case of derivative
actions, except that indemnification only extends to expenses (including
attorneys' fees) incurred in connection with the defense or settlement of such
action, and the statute requires court approval before there can be any
indemnification where the person seeking indemnification has been found liable
to the corporation. The statute provides that it is not exclusive of other
indemnification that may be granted by a corporation's charter, by-laws,
disinterested director vote, stockholder vote, agreement, or otherwise.

Article VI of KBK's Bylaws provide that each person who was or is made a
party or is threatened to be made a party to or is involved in any proceeding by
reason of the fact that he or she is or was or has agreed to become an officer
or director of the Company or is or was serving or has agreed to serve at the
request of the Company as a director, officer, employee or agent of another
enterprise, shall be indemnified and held harmless by the Company to the fullest
extent authorized by the Delaware General Corporation Law, as from time to time
in effect, against all expense, liability and loss reasonably incurred or
suffered by such person in connection therewith. The Bylaws of KBK also provide
that the Company may, by action of its Board of Directors, provide
indemnification to employees and agents of the Company with the same scope and
effect as the indemnification of directors and officers.

Section 102(b)(7) of the Delaware General Corporation Law permits a
corporation to provide in its certificate of incorporation that a director of
the corporation shall not be personally liable to the corporation or its
stockholders for monetary damages for breach of fiduciary duty as a director,
except for liability for (i) any breach of the director's duty of loyalty to the
corporation or its stockholders, (ii) acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (iii)
payment of unlawful dividends or unlawful stock purchases or redemptions, or
(iv) any transaction from which the director derived an improper personal
benefit.

Article 7 of KBK's Restated Certificate of Incorporation, as amended,
provides that to the fullest extent that the Delaware General Corporation Law,
as it now exists or may hereafter be amended, permits the limitation or
elimination of the liability of directors, a director of the Company shall not
be personally liable to

II-1
<PAGE> 78

the Company or its stockholders for monetary damages for breach of fiduciary
duty as a director except for liability (i) for any breach of the director's
duty of loyalty to the Company or its stockholders, (ii) for acts or omissions
not in good faith or which involve intentional misconduct or a knowing violation
of law, (iii) under Section 174 of the Delaware General Corporation Law, or (iv)
for any transaction from which the director derived an improper personal
benefit. Any amendment to or repeal of such Article 7 shall not adversely affect
any right or protection of a director of KBK for or with respect to any acts or
omissions of such director occurring prior to such amendment or repeal.

KBK maintains directors' and officers' liability insurance which provides
for payment, on behalf of the directors and officers of KBK and its
subsidiaries, of certain losses of such persons (other than matters uninsurable
under law) arising from claims, including claims arising under the Securities
Act, for acts or omissions by such persons while acting as directors or officers
of KBK and/or its subsidiaries, as the case may be.

The Company has entered into written indemnification agreements with each
of its directors. Pursuant to such agreements, the Company will indemnify each
director when he or she was or is involved in any manner or is threatened to be
made so involved in any actual or threatened proceeding by reason of the fact
that he or she is or was or had agreed to become a director, officer, employee
or agent of the Company, or is or was serving at the request of the Company as a
director, officer, employee or agent of another enterprise, against any and all
costs, charges, and expenses, judgments, fines and amounts paid in settlement
actually and reasonably incurred by him or her in connection with such
proceeding. In addition, the Company will indemnify such persons when he or she
was or is involved in any manner in any proceeding by or in the right of the
Company to procure a judgment in its favor against any and all costs, charges
and expenses actually and reasonably incurred by him or her in connection with
the defense or settlement of such proceeding.

Reference is made to Exhibit 1.1 hereto which contains provisions for
indemnification of KBK, and its directors, officers, and any controlling
persons, against certain liabilities for information furnished by the
underwriters expressly for use in the Prospectus.

Pursuant to the Declaration filed as Exhibit 4.4 hereto, (i) any
Administrative Trustee; (ii) any officers, directors, shareholders, members,
partners, employees, representatives, agents or affiliates of any Administrative
Trustee; or (iii) any officer, director, shareholder, member, partner, employee,
representative or agent of the Trust or its affiliates shall be indemnified by
KBK in a manner substantially similar to that which KBK is obligated to
indemnify its officers or directors under the Delaware General Corporation Law
and KBK's Bylaws.

ITEM 16. EXHIBITS.

II-2
<PAGE> 79

<TABLE>
<CAPTION>
EXHIBIT NO. EXHIBIT
- ----------- -------
<C> <S>
10.1 1992 Key Employee Stock Option Plan of the Company
(terminated), and forms of stock option agreements and
amendments thereto (incorporated by reference to Exhibit
10.1 to the Registrant's Registration Statement on Form
SB-2, Registration No. 33-77378-D)
10.2 1993 Non-Employee Director Stock Option Plan of the Company
(terminated), and form of stock option agreement
(incorporated by reference to Exhibit 10.2 to the
Registrant's Registration Statement on Form SB-2,
Registration No. 33-77378-D)
10.3 1994 Stock Option Plan of the Company, and forms of stock
option agreements (incorporated by reference to Exhibit 10.3
to the Registrant's Registration Statement on Form SB-2,
Registration No. 33-77378-D)
10.4 Form of Indemnification Agreement between the Company and
each of its directors (incorporated by reference to Exhibit
10.4 to the Registrant's Registration Statement on Form
SB-2, Registration No. 33-77378-D)
10.5 Stock Purchase Agreement dated as of April 2, 1992 among the
Company, KBK, Inc. and R. Doyle Kelley (incorporated by
reference to Exhibit 10.5 to the Registrant's Registration
Statement on Form SB-2, Registration No. 33-77378-D)
10.6 Employment and Non-Competition Agreement dated April 7, 1992
between the Company and R. Doyle Kelley (incorporated by
reference to Exhibit 10.6 to the Registrant's Registration
Statement on Form SB-2, Registration No. 33-77378-D)
10.7 Documents (incorporated by reference to Exhibit 10.7 to the
Registrant's Registration Statement on Form SB-2,
Registration No. 33-77378-D)
10.8 Form of Warrants of the Company (incorporated by reference
to Exhibit 10.8 to the Registrant's Registration Statement
on Form SB-2, Registration No. 33-77378-D)
10.9 Stock Exchange Agreement among KBK Capital Corporation and
Coastal, Inc. and the Owners of the outstanding capital
stock of Coastal Financial Resources, Inc. dated as of
December 30, 1994 (incorporated by reference to Exhibit 10.9
to the Registrant's Annual Report on Form 10-KSB for the
year ended December 31, 1994)
10.10 Third Amended and Restated Loan Agreement dated as of August
21, 1997 among KBK Financial, Inc., as borrower, and KBK
Capital Corporation, as guarantor, and the Banks listed on
the signature pages thereof and Bank One, Texas, N.A. as
Agent (incorporated by reference to Exhibit 10.10 to the
Registrant's Annual Report on Form 10-KSB for the year ended
December 31, 1997)
10.11 Amendment to Third Amended and Restated Loan Agreement dated
May 15, 1998 among KBK Financial, Inc., as borrower, and KBK
Capital Corporation, as guarantor, and the Banks listed on
the signature pages thereof
10.12 Receivables Purchase Agreement dated April 11, 1997 among
KBK Receivables Corporation as Seller and KBK Financial,
Inc. as initial Servicer and XYZ Corporation as Purchaser
and ABC Corporation as Administrator and Bank as
Relationship Bank (incorporated by reference to Exhibit 10.1
of the Registrant's Quarterly Report on Form 10-QSB for the
quarter ended March 31, 1998)
10.13 Purchase and Sale Agreement dated as of April 11, 1997
between KBK Financial, Inc. individually and as the initial
Servicer, and KBK Receivables Corporation as the Initial
Purchaser (incorporated by reference to Exhibit 10.2 of the
Registrant's Quarterly Report on Form 10-QSB for the quarter
ended March 31, 1998)
11.1 Statement regarding computation of per share earnings
12.1 Computation of Ratio of Earnings to Fixed Charges
13.1 Annual Report of KBK Capital Corporation on Form 10-KSB for
the year ended December 31, 1996, as filed on March 28, 1997
</TABLE>

II-3
<PAGE> 80

<TABLE>
<CAPTION>
EXHIBIT NO. EXHIBIT
- ----------- -------
<C> <S>
13.2 Annual Report of KBK Capital Corporation on Form 10-KSB for
the year ended December 31, 1997, as filed on March 27, 1998
13.3 Quarterly Report of KBK Capital Corporation on Form 10-QSB
for the quarter ended March 31, 1998, as filed on May 14,
1998
13.4 Quarterly Report of KBK Capital Corporation on Form 10-QSB
for the quarter ended June 30, 1998, as filed on August 13,
1998
13.5 Quarterly Report of KBK Capital Corporation on Form 10-QSB
for quarter ended September 30, 1998, as filed on October
23, 1998
23.1 Consent of KPMG Peat Marwick LLP
23.2 Consent of Liddell, Sapp, Zivley, Hill & LaBoon, L.L.P.
(included in Exhibits 5.1 and 8.1)
23.3 Consent of Potter Anderson & Corroon LLP (included in
Exhibit 5.2)
24.1 Powers of Attorney*
25.1 Form T-1 Statement of Eligibility of The First National Bank
of Chicago (Subordinated Debenture and Guarantee)
25.2 Form T-1 Statement of Eligibility of The First National Bank
of Chicago (Trust Preferred Securities)
</TABLE>

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

* Previously filed

ITEM 17. UNDERTAKINGS.

(a) The undersigned registrant hereby undertakes to deliver or cause to be
delivered with the prospectus, to each person to whom the prospectus is sent or
given, the latest annual report to security holders that is incorporated by
reference in the prospectus and furnished pursuant to and meeting the
requirements of Rule 14a-3 or Rule 14c-3 under the Securities Exchange Act of
1934; and, where interim financial information required to be presented by
Article 3 of Regulation S-X is not set forth in the prospectus, to deliver, or
cause to be delivered to each person to whom the prospectus is sent or given,
the latest quarterly report that is specifically incorporated by reference in
the prospectus to provide such interim financial information.

(b) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers, and controlling persons of the
Registrant pursuant to the provisions described in Item 15 above, or otherwise,
the Registrant has been advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer, or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer, or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.

(c) For purposes of determining any liability under the Securities Act, the
information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Securities Act shall be deemed to be part of this registration
statement as of the time it was declared effective.

(d) For the purpose of determining any liability under the Securities Act,
each post-effective amendment that contains a form of prospectus shall be deemed
to be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.

II-4
<PAGE> 81

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, as amended, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-2 and has duly caused this Amendment
No. 1 to Registration Statement Nos. 333-65041 and 333-65041-01 to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City of Fort
Worth, State of Texas, on October 23, 1998.

KBK CAPITAL CORPORATION

By: /s/ JAY K. TURNER
------------------------------------
Jay K. Turner, Executive Vice
President
and Chief Financial Officer

Pursuant to the requirements of the Securities Act of 1933, as amended,
this Amendment Nos. 1 to Registration Statement Nos. 333-65041 and 333-65041-01
has been signed below by the following persons in the capacities and on the
dates as indicated.

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
* Chairman and Chief Executive October 23, 1998
- --------------------------------------------- Officer
Robert J. McGee

/s/ JAY K. TURNER Executive Vice President and October 23, 1998
- --------------------------------------------- Chief Financial Officer
Jay K. Turner (principal financial officer)

/s/ DEBORAH B. WILKINSON Vice President and Controller October 23, 1998
- --------------------------------------------- (principal accounting officer)
Deborah B. Wilkinson

* Vice Chairman and Director October 23, 1998
- ---------------------------------------------
Kenneth H. Jones, Jr.

* Director October 23, 1998
- ---------------------------------------------
Thomas M. Simmons

* Director October 23, 1998
- ---------------------------------------------
Daniel R. Feehan

* Director October 23, 1998
- ---------------------------------------------
Thomas L. Healey

* Director October 23, 1998
- ---------------------------------------------
Martha V. Leonard

* Director October 23, 1998
- ---------------------------------------------
R. Earl Cox, III

* Director October 23, 1998
- ---------------------------------------------
Harris A. Kaffie
</TABLE>

*By: /s/ JAY K. TURNER

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

Jay K. Turner

Attorney-in-fact

II-5
<PAGE> 82

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, as amended, KBK
Capital Trust I certifies that it has reasonable grounds to believe that it
meets the requirements for filing on Form S-2 and has duly caused this Amendment
Nos. 1 to Registration Statement Nos. 333-65041 and 333-65041-01 to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City of Fort
Worth, State of Texas, on October 23, 1998.

KBK CAPITAL TRUST I

By: /s/ JAY K. TURNER
------------------------------------

Jay K. Turner, as Administrative
Trustee

By: /s/ DEBORAH B. WILKINSON

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

Deborah B. Wilkinson, as
Administrative Trustee

II-6
<PAGE> 83

LIST OF EXHIBITS

<TABLE>
<CAPTION>
EXHIBIT NO. EXHIBIT
- ----------- -------
<C> <S>
1.1 Form of Underwriting Agreement
4.1 Form of Subordinated Indenture between KBK and The First
National Bank of Chicago, as Trustee (including form of
Debentures)
4.2 Certificate of Trust of KBK Capital Trust I
4.3 Declaration of Trust of KBK Capital Trust I, dated as of
September 29, 1998
4.4 Amended and Restated Declaration of Trust (including form of
Trust Preferred Security)
4.5 Form of Trust Preferred Securities Guarantee Agreement to be
issued by KBK
5.1 Opinion of Liddell, Sapp, Zivley, Hill & LaBoon, L.L.P. as
to the legality of the Debentures and the Guarantee
5.2 Opinion of Potter Anderson & Corroon LLP as to the legality
of the Trust Preferred Securities
8.1 Opinion of Liddell, Sapp, Zivley, Hill & LaBoon, L.L.P. as
to certain federal income tax matters
10.1 1992 Key Employee Stock Option Plan of the Company
(terminated), and forms of stock option agreements and
amendments thereto (incorporated by reference to Exhibit
10.1 to the Registrant's Registration Statement on Form
SB-2, Registration No. 33-77378-D)
10.2 1993 Non-Employee Director Stock Option Plan of the Company
(terminated), and form of stock option agreement
(incorporated by reference to Exhibit 10.2 to the
Registrant's Registration Statement on Form SB-2,
Registration No. 33-77378-D)
10.3 1994 Stock Option Plan of the Company, and forms of stock
option agreements (incorporated by reference to Exhibit 10.3
to the Registrant's Registration Statement on Form SB-2,
Registration No. 33-77378-D)
10.4 Form of Indemnification Agreement between the Company and
each of its directors (incorporated by reference to Exhibit
10.4 to the Registrant's Registration Statement on Form
SB-2, Registration No. 33-77378-D)
10.5 Stock Purchase Agreement dated as of April 2, 1992 among the
Company, KBK, Inc. and R. Doyle Kelley (incorporated by
reference to Exhibit 10.5 to the Registrant's Registration
Statement on Form SB-2, Registration No. 33-77378-D)
10.6 Employment and Non-Competition Agreement dated April 7, 1992
between the Company and R. Doyle Kelley (incorporated by
reference to Exhibit 10.6 to the Registrant's Registration
Statement on Form SB-2, Registration No. 33-77378-D)
10.7 Documents (incorporated by reference to Exhibit 10.7 to the
Registrant's Registration Statement on Form SB-2,
Registration No. 33-77378-D)
10.8 Form of Warrants of the Company (incorporated by reference
to Exhibit 10.8 to the Registrant's Registration Statement
on Form SB-2, Registration No. 33-77378-D)
10.9 Stock Exchange Agreement among KBK Capital Corporation and
Coastal, Inc. and the Owners of the outstanding capital
stock of Coastal Financial Resources, Inc. dated as of
December 30, 1994 (incorporated by reference to Exhibit 10.9
to the Registrant's Annual Report on Form 10-KSB for the
year ended December 31, 1994)
10.10 Third Amended and Restated Loan Agreement dated as of August
21, 1997 among KBK Financial, Inc., as borrower, and KBK
Capital Corporation, as guarantor, and the Banks listed on
the signature pages thereof and Bank One, Texas, N.A. as
Agent (incorporated by reference to Exhibit 10.10 to the
Registrant's Annual Report on Form 10-KSB for the year ended
December 31, 1997)
</TABLE>

<PAGE> 84

<TABLE>
<CAPTION>
EXHIBIT NO. EXHIBIT
- ----------- -------
<C> <S>
10.11 Amendment to Third Amended and Restated Loan Agreement dated
May 15, 1998 among KBK Financial, Inc., as borrower, and KBK
Capital Corporation, as guarantor, and the Banks listed on
the signature pages thereof
10.12 Receivables Purchase Agreement dated April 11, 1997 among
KBK Receivables Corporation as Seller and KBK Financial,
Inc. as initial Servicer and XYZ Corporation as Purchaser
and ABC Corporation as Administrator and Bank as
Relationship Bank (incorporated by reference to Exhibit 10.1
of the Registrant's Quarterly Report on Form 10-QSB for the
quarter ended March 31, 1998)
10.13 Purchase and Sale Agreement dated as of April 11, 1997
between KBK Financial, Inc. individually and as the initial
Servicer, and KBK Receivables Corporation as the Initial
Purchaser (incorporated by reference to Exhibit 10.2 of the
Registrant's Quarterly Report on Form 10-QSB for the quarter
ended March 31, 1998)
11.1 Statement regarding computation of per share earnings
12.1 Computation of Ratio of Earnings to Fixed Charges
13.1 Annual Report of KBK Capital Corporation on Form 10-KSB for
the year ended December 31, 1996, as filed on March 28, 1997
13.2 Annual Report of KBK Capital Corporation on Form 10-KSB for
the year ended December 31, 1997, as filed on March 27, 1998
13.3 Quarterly Report of KBK Capital Corporation on Form 10-QSB
for the quarter ended March 31, 1998, as filed on May 14,
1998
13.4 Quarterly Report of KBK Capital Corporation on Form 10-QSB
for the quarter ended June 30, 1998, as filed on August 13,
1998
13.5 Quarterly Report of KBK Capital Corporation on Form 10-QSB
for quarter ended September 30, 1998, as filed on October
23, 1998
23.1 Consent of KPMG Peat Marwick LLP
23.2 Consent of Liddell, Sapp, Zivley, Hill & LaBoon, L.L.P.
(included in Exhibits 5.1 and 8.1)
23.3 Consent of Potter Anderson & Corroon LLP (included in
Exhibit 5.2)
24.1 Powers of Attorney*
25.1 Form T-1 Statement of Eligibility of The First National Bank
of Chicago (Subordinated Debenture and Guarantee)
25.2 Form T-1 Statement of Eligibility of The First National Bank
of Chicago (Trust Preferred Securities)
</TABLE>

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

* Previously filed

<PAGE> 1
EXHIBIT 1.1
A&K Draft 10/23/98

1,000,000 TRUST PREFERRED SECURITIES(1)
KBK CAPITAL TRUST I
(LIQUIDATION AMOUNT $25 PER TRUST PREFERRED SECURITY)
GUARANTEED TO THE EXTENT SET FORTH HEREIN BY

KBK CAPITAL CORPORATION

UNDERWRITING AGREEMENT

November ___, 1998

FRIEDMAN, BILLINGS, RAMSEY & CO., INC.
J.J.B. HILLIARD, W.L. LYONS, INC.
as Representatives of the several Underwriters named in Schedule I hereto
c/o Friedman, Billings, Ramsey & Co., Inc.
1001 19th Street North
Arlington, Virginia 22209

Dear Sirs:

KBK Capital Trust I, a statutory business trust formed under the laws
of the State of Delaware (the "Trust"), and KBK Capital Corporation, a Delaware
corporation (the "Company"), each confirms its agreement with each of the
Underwriters listed on Schedule I hereto (collectively, the "Underwriters"),
for whom Friedman, Billings, Ramsey & Co., Inc. and J.J.B. Hilliard, W.L.
Lyons, Inc. are acting as representatives (in such capacity, the
"Representatives"), with respect to (i) the sale by the Trust of 1,000,000 of
its % Trust Preferred Securities (liquidation amount $25 per Trust
Preferred Security) (the "Initial Securities"), representing preferred
undivided beneficial interests in the assets of the Trust, guaranteed on a
subordinated basis by the Company as to the payment of distributions, and as to
payments on liquidation and redemption, to the extent set forth in a guarantee
agreement (the "Preferred Guarantee") between the Company and The First
National Bank of Chicago, as guarantee trustee (the "Guarantee Trustee"), and
the purchase by the Underwriters, acting severally and not jointly, of the
respective number of Trust Preferred Securities set forth opposite the names of
the Underwriters in Schedule I hereto, and (ii) the grant of the option
described in Section 1(b) hereof to purchase all or any part of an additional
150,000 Trust Preferred Securities to cover over- allotments (the "Option
Securities"), if any, from the Trust to the Underwriters, acting severally and
not jointly. The 1,000,000 Trust Preferred Securities to be

- ----------

(1) Plus an option from the Trust and the Company to purchase up to an
additional 150,000 Trust Preferred Securities.
<PAGE> 2
purchased by the Underwriters and all or any part of the 150,000 Trust
Preferred Securities subject to the option described in Section l(b) hereof are
hereinafter called, collectively, the "Securities". The Trust will purchase,
with the proceeds of the sale of the Securities and 30,000 (or 34,500 assuming
full exercise by the Underwriters of the over- allotment option described
herein) of its % Trust Common Securities (liquidation amount $25 per
Trust Common Security) (the "Common Securities"), $25,750,000 aggregate
principal amount (or $29,612,500 aggregate principal amount assuming full
exercise by the Underwriters of the over-allotment option described herein) of
% Subordinated Debentures due 2028 (the "Debentures") of the Company, to be
issued pursuant to an Indenture to be dated as of November ___, 1998 (the
"Indenture") between the Company and The First National Bank of Chicago, as
trustee (the "Indenture Trustee").

Immediately after the Closing Time (as defined below), the Company will
be the holder of all of the Common Securities. The Common Securities will
represent subordinated undivided beneficial interests in the assets of the
Trust, guaranteed on a subordinated basis by the Company as to the payment of
distributions, and as to payments on liquidation and redemption, to the extent
set forth in a guarantee agreement (the "Common Guarantee," and together with
the Preferred Guarantee, the "Guarantees") between the Company and The First
National Bank of Chicago. The Trust will be subject to the provisions of an
Amended and Restated Declaration of Trust (the "Declaration") to be dated as of
November ___, 1998 among the Company, as sponsor of the Trust, The First
National Bank of Chicago, as property trustee (the "Property Trustee"),
Wilmington Trust Company, as Delaware trustee (the "Delaware Trustee"), and
three individual trustees who are officers of the Company (the "Administrative
Trustees"). The Property Trustee, the Delaware Trustee and the Administrative
Trustees are collectively referred to herein as the "Trustees."

The Trust and the Company understand that the Underwriters propose to
make a public offering of the Securities as soon as the Underwriters deem
advisable after this Agreement has been executed and delivered.

The Trust and the Company have filed with the Securities and Exchange
Commission (the "Commission"), a registration statement on Form S-2 (Nos.
333-65041 and 333-65041-01), and a related preliminary prospectus for the
registration of the Securities, the Debentures and the Preferred Guarantee under
the Securities Act of 1933, as amended (the "Securities Act"), and the rules and
regulations thereunder (the "Securities Act Regulations"). The Trust and the
Company have prepared and filed such amendments thereto, if any, and such
amended preliminary prospectuses, if any, as may have been required to the date
hereof, and will file such additional amendments thereto and such amended
prospectuses as may hereafter be required. The registration statement has been
declared effective under the Securities Act by the Commission. The registration
statement as amended at the time it became effective (including all information
deemed (whether by incorporation by reference or otherwise) to be a part of the
registration statement at the time it became effective pursuant to Rule 430A(b)
of the Securities Act Regulations) is hereinafter called the "Registration
Statement," except that, if the Trust and the Company file a post-effective
amendment to such registration statement which becomes effective prior to the
Closing Time, "Registration Statement" shall refer to such registration
statement as so amended. Any registration

2
<PAGE> 3
statement filed pursuant to Rule 462(b) of the Securities Act Regulations is
hereinafter called the "Rule 462(b) Registration Statement," and after such
filing the term "Registration Statement" shall include the 462(b) Registration
Statement. Each prospectus included in the Registration Statement, or
amendments thereof or supplements thereto, before it became effective under the
Securities Act and any prospectus filed with the Commission by the Trust and
the Company with the consent of the Underwriters pursuant to Rule 424(a) of the
Securities Act Regulations is hereinafter called the "Preliminary Prospectus."
The term "'Prospectus" means the final prospectus, as first filed with the
Commission pursuant to paragraph (1) or (4) of Rule 424(b) of the Securities
Act Regulations, and any amendments thereof or supplements thereto. The
Commission has not issued any order preventing or suspending the use of any
Preliminary Prospectus.

The Trust, the Company and the Underwriters agree as follows:

SECTION 1. Sale and Purchase.

(a) Initial Securities. Upon the basis of the warranties and
representations and other terms and conditions herein set forth, at the purchase
price per Trust Preferred Security of $25.00, the Trust and the Company agree
that the Trust shall sell to each of the Underwriters the Initial Securities and
each of the Underwriters agrees, severally and not jointly, to purchase from the
Trust the number of Initial Securities set forth in Schedule I opposite such
Underwriter's name, plus any additional number of Initial Securities which such
Underwriter may become obligated to purchase pursuant to the provisions of
Section 8 hereof, subject in each case, to such adjustments among the
Underwriters as the Representatives in their sole discretion shall make to
eliminate any sales or purchases of fractional Trust Preferred Securities.

(b) Option Securities. In addition, upon the basis of the warranties
and representations and other terms and conditions herein set forth, at the
purchase price per Trust Preferred Security set forth in paragraph (a), the
Trust hereby grants an option to purchase to the Underwriters, acting severally
and not jointly, up to an additional 150,000 Trust Preferred Securities. The
option hereby granted will expire 30 days after the date hereof and may be
exercised in whole or in part from time to time only for the purpose of covering
over-allotments which may be made in connection with the offering and
distribution of the Initial Securities upon notice by the Representatives to the
Trust and the Company setting forth the number of Option Securities as to which
the several Underwriters are then exercising the option and the time and date of
payment and delivery for such Option Securities. Any such time and date of
delivery (a "Date of Delivery") shall be determined by the Representatives, but
shall not be later than three full business days (or earlier, without the
consent of the Company, than two full business days) after the exercise of said
option, nor in any event prior to the Closing Time, as hereinafter defined. If
the option is exercised as to all or any portion of the Option Securities, each
of the Underwriters, acting severally and not jointly, will purchase that
proportion of the total number of Option Securities then being purchased which
the number of Initial Securities set forth in Schedule I opposite the name of
such Underwriter bears to the total number of Initial Securities, subject in
each case to such adjustments among the Underwriters as the Representatives in
their sole discretion shall make to eliminate any sales or purchases of
fractional

3
<PAGE> 4
Trust Preferred Securities. The Underwriters may from time to time increase or
decrease the public offering price of the Option Securities after the initial
public offering to such extent as the Underwriters may determine.

(c) Underwriting Compensation. As compensation to the Underwriters for
their commitments hereunder, and in view of the fact that the proceeds of the
sale of the Securities will be used by the Trust to purchase the Debentures of
the Company, the Company at the Closing Time or any Date of Delivery (as
hereinafter defined) shall pay to Friedman, Billings, Ramsey & Co., Inc., for
the respective accounts of the several Underwriters, an amount equal to $_______
per Trust Preferred Security for the Securities delivered by the Trust pursuant
hereto at the Closing Time or any Date of Delivery.

SECTION 2. Payment and Delivery. The Securities shall be represented by
one or more definitive global securities in book-entry form which will be
deposited by or on behalf of the Trust with The Depository Trust Company ("DTC")
or its designated custodian. The Trust shall deliver the Securities, with any
transfer taxes thereon duly paid by the Trust, to Friedman, Billings, Ramsey &
Co., Inc. through the facilities of DTC for the respective accounts of the
several Underwriters, against payment to the Trust of the purchase price
therefor by wire transfer of immediately available funds or certified or
official bank check payable in federal (same-day) funds. Such payment and
delivery with respect to the Initial Securities shall be made at 9:30 a.m., New
York City time, on the third (fourth, if pricing occurs after 4:30 p.m., New
York City time) business day after the date hereof (unless another time, not
later than ten business days after such date, shall be agreed to by the
Representatives and the Company). The time at which such payment and delivery
are actually made is hereinafter sometimes called the "Closing Time." In
addition, in the event that the Underwriters have exercised their option, if
any, to purchase any or all of the Option Securities, payment of the purchase
price for, and delivery of such Option Securities, shall be made at the place as
shall be agreed upon by the Representatives and the Company, on the relevant
Date of Delivery determined pursuant to Section 1(b) and as specified in the
notice from the Representatives to the Company. The global certificates
representing the Securities shall be made available to the Representatives for
examination at least one full business day preceding the Closing Time or Date of
Delivery, as the case may be, at the office of DTC or its designated custodian
(the "Designated Office").

The documents to be delivered at Closing Time or any Date of Delivery
on behalf of the parties hereto pursuant to Section 6 of this Agreement, shall
be delivered at the offices of [Andrews & Kurth L.L.P., 1701 Pennsylvania Ave.,
N.W., Washington, D.C. 20006], and the Securities will be delivered at the
Designated Office, all at Closing Time or such Date of Delivery, as the case may
be.

SECTION 3. Representations and Warranties of the Trust and the Company.

(a) The Trust and the Company, jointly and severally, represent and
warrant to the Underwriters that:

4
<PAGE> 5
(i) The Trust and the Company meet the requirements for use of Form S-2
under the Securities Act. Each of the Registration Statement and any Rule 462(b)
Registration Statement has become effective under the Securities Act and no stop
order suspending the effectiveness of the Registration Statement or any Rule
462(b) Registration Statement has been issued under the Securities Act and no
proceedings for that purpose have been instituted or are pending or, to the
knowledge of the Trust or the Company, are threatened by the Commission, and any
request on the part of the Commission for additional information has been
complied with.

(ii) The Preliminary Prospectus and the Registration Statement comply
and the Prospectus and any further amendments or supplements thereto will, when
they have become effective or are filed with the Commission, as the case may be,
comply in all material respects with the requirements of the Securities Act and
the Securities Act Regulations; the Registration Statement did not, and any
amendment thereto will not, in each case as of the applicable effective date,
contain an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading. At the date of the Prospectus, at the Closing Time and at each Date
of Delivery, if any, the Prospectus and any amendments and supplements thereto
did not and will not include an untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading.

(iii) The Preliminary Prospectus was and the Prospectus delivered to
the Underwriters for use in connection with the offering of the Securities will,
at the time of such delivery, be identical to the electronically transmitted
copies thereof filed with the Commission pursuant to the Electronic Data
Gathering Analysis and Retrieval System ("EDGAR"), except to the extent
permitted by Regulation S-T.

(iv) The documents incorporated or deemed to be incorporated by
reference in the Registration Statement and the Prospectus, at the time they
were filed with the Commission complied in all material respects with the
requirements of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and the rules and regulations of the Commission thereunder (the "Exchange
Act Regulations") and, when read together with the other information in the
Prospectus, at the date of the Prospectus, at the Closing Time and at each Date
of Delivery, if any, did not include an untrue statement of a material fact or
omit to state a material fact necessary to make the statements therein, in the
light of the circumstances in which they were made, not misleading.

(v) KPMG Peat Marwick LLP, who certified the consolidated financial
statements of the Company and its subsidiaries included or incorporated by
reference in the Registration Statement and Prospectus, are independent public
accountants as required by the Securities Act and the Securities Act
Regulations.

(vi) The financial statements, including the related schedules and
notes, included or incorporated by reference in the Registration Statement and
the Prospectus present fairly the consolidated financial position of Company and
its subsidiaries as of the dates indicated and the

5
<PAGE> 6
consolidated results of operations and stockholders' equity and cash flows of
the Company and its subsidiaries for the periods specified. Such financial
statements have been prepared in conformity with generally accepted accounting
principles ("GAAP") applied on a consistent basis during the periods involved.
The supporting schedules included or incorporated by reference in the
Registration Statement and the Prospectus present fairly in accordance with
GAAP the information required to be stated therein. The selected financial
data and the summary financial information included in the Prospectus fairly
present the information shown therein and have been compiled on a basis
consistent with that of the audited financial statements included in the
Registration Statement and the Prospectus.

(vii) Subsequent to the respective dates as of which information is
given in the Registration Statement and the Prospectus, and except as may be
otherwise stated therein, there has not been (A) any material adverse change in
the assets, business, operations, earnings, prospects, properties or condition
(financial or otherwise), of the Company and its subsidiaries taken as a whole,
whether or not arising in the ordinary course of business, (B) any transaction,
not in the ordinary course of business, which is material to the Company and
its subsidiaries taken as a whole, entered into by the Company or any of its
subsidiaries, (C) any obligation, contingent or otherwise, directly or
indirectly incurred by the Company or any of its subsidiaries, which is
material to the Company and its subsidiaries taken as a whole or (D) any
dividend or distribution of any kind declared, paid or made by the Company on
any class of its capital stock.

(viii) The Company has been duly incorporated and is validly existing
as a corporation in good standing under the laws of the State of Delaware with
full corporate power and authority to own, lease and operate its properties and
to conduct its business as described in the Registration Statement and
Prospectus and to execute and deliver this Agreement, the Guarantees, the
Declaration and the Indenture and to consummate the transactions contemplated
hereby and thereby.

(ix) KBK Financial Corporation, Inc., a Delaware corporation, and KBK
Receivables Corporation, a Delaware corporation (together, the "Subsidiaries"),
are the only subsidiaries of the Company and each such Subsidiary has been duly
incorporated and is validly existing as a corporation in good standing under the
laws of the State of Delaware with full corporate power and authority to own,
lease and operate its properties and to conduct its business as described in the
Registration Statement and Prospectus.

(x) The Company and the Subsidiaries are duly qualified or licensed by
each jurisdiction in which they conduct their respective businesses and in which
the failure, individually or in the aggregate, to be so qualified or licensed
could have a material adverse effect on the assets, business, operations,
earnings, prospects, properties or condition (financial or otherwise) of the
Company and the Subsidiaries taken as a whole, and the Company and the
Subsidiaries are duly qualified, and are in good standing, in each jurisdiction
in which they own or lease real property or maintain an office and in which such
qualification is necessary, except where the failure to be so qualified and in
good standing would not have a material adverse effect on the assets, business,
operations, earnings, prospects, properties or condition (financial or
otherwise) of the Company and the Subsidiaries

6
<PAGE> 7
taken as a whole. Except as disclosed in the Prospectus, neither Subsidiary is
prohibited or restricted, directly or indirectly, from paying dividends to the
Company, or from making any other distribution with respect to such
Subsidiary's capital stock or from repaying to the Company or any other
Subsidiary any amounts which may from time to time become due under any loans
or advances to such Subsidiary from the Company or such other Subsidiary, or
from transferring any such Subsidiary's property or assets to the Company or to
the other Subsidiary. Other than as disclosed in the Prospectus, the Company
does not own, directly or indirectly, any capital stock or other equity
securities of any other corporation or any ownership interest in any
partnership, joint venture or other association which would constitute a
"significant subsidiary" as defined by Rule 102 of Regulation S-X.

(xi) The Trust has been duly created and is validly existing as a
statutory business trust in good standing under the Business Trust Act of the
State of Delaware (the "Delaware Business Trust Act") with the trust power and
authority to own property and conduct its business as described in the
Registration Statement and Prospectus, and has conducted and will conduct no
business other than the transactions contemplated by this Agreement and
described in the Registration Statement and the Prospectus. The Trust is not a
party to or bound by any agreement or instrument other than this Agreement, the
Declaration and the agreements and instruments contemplated by the Declaration
and described in the Prospectus. Based on expected operations and current law,
the Trust will be classified for United States federal income tax purposes as a
grantor trust and will not be taxable as a corporation. The Trust is not a party
to or subject to any action, suit or proceeding of any nature.

(xii) The authorized, issued and outstanding shares of capital stock of
the Company is as set forth in the Prospectus under the caption "Capitalization"
under the column entitled "Actual." Such shares of capital stock of the Company
have been duly authorized and validly issued and are fully paid and
non-assessable, and none of such shares of capital stock was issued in violation
of preemptive or other similar rights of any securityholder of the Company.
Except as disclosed in the Prospectus, there are no outstanding (i) securities
or obligations of the Company convertible into or exchangeable for any capital
stock of the Company, (ii) warrants, rights or options to subscribe for or
purchase from the Company any such capital stock or any such convertible or
exchangeable securities or obligations, or (iii) obligations of the Company to
issue any shares of capital stock, any such convertible or exchangeable
securities or obligations, or any such warrants, rights or options.

(xiii) The outstanding shares of capital stock of the Subsidiaries have
been duly authorized and validly issued and are fully paid and non-assessable,
and none of such shares of capital stock was issued in violation of preemptive
or other similar rights of any security holder of any Subsidiary. There are no
(i) securities or obligations of any of the Subsidiaries convertible into or
exchangeable for any capital stock of any Subsidiary, (ii) warrants, rights or
options to subscribe for or purchase from any of the Subsidiaries any such
capital stock or any such convertible or exchangeable securities or obligations,
or (iii) obligations of any of the Subsidiaries to issue any shares of capital
stock, any such obligations, or any warrants, rights or options. All of the
issued and outstanding

7
<PAGE> 8
capital stock of each Subsidiary is owned by the Company, free and clear of any
security interest, mortgage, pledge, lien, encumbrance, claim or equity.

(xiv) This Agreement has been duly authorized, executed and delivered
by the Trust and the Company and is a legal, valid and binding agreement of the
Trust and the Company enforceable in accordance with its terms, except as may be
limited by bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting creditors' rights generally, and by general principles of equity, and
except to the extent that the indemnification and contribution provisions of
Section 9 hereof may be limited by federal or state securities laws and public
policy considerations in respect thereof.

(xv) The Securities have been duly and validly authorized by the Trust,
and, when issued and delivered to the Underwriters against payment therefor as
provided herein, will be duly and validly issued and fully paid and
non-assessable undivided preferred beneficial interests in the assets of the
Trust and will conform in all material respects to the description thereof
contained in the Prospectus. The issuance of the Securities is not subject to
preemptive or other similar rights. The Securities will have the rights set
forth in the Declaration, and the terms of the Securities are valid and binding
on the Trust. The holders of the Securities will be entitled to the same
limitation of personal liability extended to the stockholders of private
corporations for profit organized under the General Corporation Law of the State
of Delaware.

(xvi) The Common Securities have been duly and validly authorized by
the Trust and upon delivery by the Trust to the Company against payment therefor
as described in the Prospectus, will be duly and validly issued undivided
subordinated beneficial interests in the assets of the Trust and will conform in
all material respects to the description thereof contained in the Prospectus;
the issuance of the Common Securities is not subject to preemptive or other
similar rights; and at the Closing Time and each Date of Delivery, if any, all
of the issued and outstanding Common Securities of the Trust will be directly
owned by the Company free and clear of any security interest, claim, lien,
encumbrance or adverse interest of any nature, other than rights of the Company
arising under the Declaration to redeem the Common Securities; and the Common
Securities and the Securities are the only interests authorized to be issued by
the Trust.

(xvii) Each of the Guarantees, the Declaration and the Indenture
(collectively, the "Guarantor Agreements") has been duly authorized and when
validly executed and delivered by the Company and, in the case of the Guarantee,
by the Guarantee Trustee and, in the case of the Debentures, when validly
authenticated and delivered by the Debenture Trustee and, in the case of the
Guarantee, upon due execution, authentication and delivery of the Debentures and
upon payment therefor, will constitute valid and legally binding obligations of
the Company, enforceable in accordance with their respective terms, except as
the enforcement thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' rights generally
and general principles of equity. Each of the Preferred Guarantee, the
Declaration and the Indenture has been duly qualified under the Trust Indenture
Act of 1939, as amended.

8
<PAGE> 9
(xviii) The Debentures have been duly authorized and at Closing Time
and on each Date of Delivery, if any, will have been validly executed and
delivered by the Company. When the Debentures have been executed and
authenticated in accordance with the provisions of the Indenture and delivered
to and paid for by the Trust in accordance with the terms of this Agreement and
as described in the Prospectus, the Debentures will be entitled to the benefits
of the Indenture and will be valid and binding obligations of the Company,
enforceable in accordance with the their terms except as the enforcement thereof
may be limited by bankruptcy, insolvency, reorganization, moratorium, or similar
laws affecting creditors' rights generally and general principles of equity.

(xix) Neither the Company nor either of the Subsidiaries is (A) in
violation of the Declaration or its charter or bylaws or (B) in breach or
default (nor has any event occurred which with notice, lapse of time, or both
would constitute a breach of, or default), in the performance or observance of
any obligation, agreement, covenant or condition contained in any contract,
license, indenture, mortgage, deed of trust, note, loan or credit agreement or
other agreement or instrument to which the Company or either of the Subsidiaries
is a party or by which any of them is bound or to which any of the property or
assets of the Trust, the Company or the Subsidiaries is subject, except for such
breaches or defaults which would not have a material adverse effect on the
assets, business, operations, earnings, prospects, properties or condition
(financial or otherwise) of the Company and its Subsidiaries taken as a whole.

(xx) The execution, delivery and performance of this Agreement by the
Trust, the compliance by the Trust with all the provisions hereof and the
consummation of the transactions contemplated hereby and by the Declaration,
including the issuance and sale of the Securities and the Common Securities by
the Trust, the purchase of the Debentures by the Trust and the distribution of
the Debentures by the Trust in the circumstances contemplated by the Declaration
will not (A) require any consent, approval, authorization or other order of, or
qualification with, any court or governmental body or agency (except such as may
be required under the securities or Blue Sky laws of the various states), (B)
constitute a breach of any of the terms or provisions of, or a default under,
the charter or by-laws of the Company or either Subsidiary or any indenture,
loan agreement, mortgage, lease or other agreement or instrument that is
material to the Company and the Subsidiaries taken as a whole to which the
Company or either Subsidiary is a party or by which the Company or either
Subsidiary or their respective property is bound, (C) violate any applicable law
or any rule, regulation, judgment, order or decree of any court or any
governmental body or agency having jurisdiction over the Company, any Subsidiary
or their respective property, or (D) result in the imposition or creation of (or
the obligation to create or impose) a security interest, claim, lien,
encumbrance or adverse interest of any nature (each a "Lien"), under any
agreement or instrument to which the Company or either Subsidiary is a party or
by which the Company or either Subsidiary or their respective property is bound.

(xxi) The execution, delivery and performance of this Agreement, the
Debentures and the Guarantor Agreements by the Company, the compliance by the
Company with all the provisions hereof and thereof and the consummation of the
transactions contemplated hereby and thereby

9
<PAGE> 10
including the issuance and sale of the Securities and the Common Securities by
the Trust, the sale of the Debentures by the Company to the Trust, the
distribution of the Debentures by the Trust in the circumstance contemplated by
the Declaration and the issuance by the Company of the Guarantees will not (A)
require any consent, approval, authorization or other order of, or
qualification with, any court or governmental body or agency (except such as
have been made or received and except such as may be required under the
securities or Blue Sky laws of the various states), (B) constitute a breach of
any of the terms or provisions of, or a default under, the charter or by-laws
of the Company or either Subsidiary or any indenture, loan agreement, mortgage,
lease or other agreement or instrument that is material to the Company and the
Subsidiaries taken as a whole to which the Company or either Subsidiary is a
party or by which the Company or either Subsidiary or their respective property
is bound, (C) violate any applicable law or any rule, regulation, judgment,
order or decree of any court or any governmental body or agency having
jurisdiction over the Company, either Subsidiary or their respective property
or (D) result in the imposition or creation of (or the obligation to create or
impose) a Lien (excluding any right of redemption of the Company arising under
the Declaration, the Indenture or the Debentures) under any agreement or
instrument to which the Company or either Subsidiary is a party or by which the
Company or either Subsidiary or their respective property is bound.

(xxii) There are no existing or, to the knowledge of the Company,
threatened labor disputes with the employees of the Company or either of the
Subsidiaries which are likely to have individually or in the aggregate a
material adverse effect on assets, business, operations, earnings, prospects,
properties or condition (financial or otherwise) of the Company and the
Subsidiaries taken as a whole.

(xxiii) There are no actions, suits, proceedings, inquiries or
investigations pending or, to the knowledge of the Company, threatened against
the Company or either of the Subsidiaries or any of their respective officers
and directors or to which the properties, assets or rights of any such entity
are subject, at law or in equity, before or by any federal, state, local or
foreign governmental or regulatory commission, board, body, authority, arbitral
panel or agency which are required to be disclosed in the Registration Statement
and the Prospectus, or which might be reasonably expected to result in a
judgment, decree, award or order having a material adverse effect on the assets,
business, operations, earnings, prospects, properties or condition (financial or
otherwise) of the Company and its Subsidiaries taken as a whole.

(xxiv) The descriptions in the Registration Statement and the
Prospectus of the contracts and other legal documents therein described present
fairly the information required to be shown, and there are no contracts or
documents which are required to be described in the Registration Statement, the
Prospectus or the documents incorporated by reference therein or to be filed as
exhibits to the Registration Statement which have not been so described and
filed as required.

(xxv) No filing with, or authorization, approval, consent, license,
order registration, qualification or decree of, any court or governmental
authority or agency, domestic or foreign, is necessary or required for the
performance by the Trust or the Company of their respective

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obligations under this Agreement, the Guarantee, the Declaration or the
Indenture or in connection with the transactions contemplated under this
Agreement, the Guarantee, the Declaration and the Indenture, except such as
have been already obtained or as may be required under state securities laws.

(xxvi) The Company and the Subsidiaries own or possess adequate
patents, licenses or other rights to use all patents, trademarks, service marks,
trade names, copyrights, software and design licenses, trade secrets,
manufacturing processes, other intangible property rights and know-how
(collectively "Intangibles") necessary to entitle the Company and each
Subsidiary to conduct its business as described in the Prospectus, and neither
the Company, nor either Subsidiary, has received notice of infringement of or
conflict with (and the Company knows of no such infringement of or conflict
with) asserted rights of others with respect to any Intangibles which could
materially and adversely affect the business, prospects, properties, assets,
results of operations or condition (financial or otherwise) of the Company and
the Subsidiaries, taken as a whole.

(xxvii) Each of the Company and the Subsidiaries possesses such
permits, licenses, accreditations, certifications, authorizations, consents and
approvals and has made all necessary filings required under any federal, state
or local law, regulation or rule, and has obtained all such permits,
authorizations, consents and approvals from other persons, necessary to conduct
their respective businesses as described in the Prospectus, except to the extent
that any failure to have any such permits, licenses, authorizations, consents or
approvals, to make any such filings or to obtain any such authorizations,
consents or approvals would not, individually or in the aggregate, have a
material adverse effect on the assets, business, operations, earnings,
prospects, properties or condition (financial or otherwise) of the Company and
the Subsidiaries taken as a whole. Neither the Company nor either of the
Subsidiaries is in violation of, in default under, or has received any notice
regarding a possible violation, default or revocation of any such permit,
license, authorization, consent or approval or any federal, state, local or
foreign law, regulation or rule or any decree, order or judgment applicable to
the Company or either of the Subsidiaries the effect of which could be material
and adverse to the assets, business, operations, earnings, prospects, properties
or condition (financial or otherwise) of the Company and the Subsidiaries taken
as a whole; and no such permit, license, authorization, consent or approval
contains a materially burdensome restriction that is not adequately disclosed in
the Registration Statement and the Prospectus.

(xxviii) The Company and the Subsidiaries have good and marketable
title in fee simple to all real property and good title to all other property
owned by them, in each case free and clear of all liens, security interests,
pledges, claims, charges, restrictions, encumbrances, mortgages and defects of
any kind, except such as are disclosed in the Prospectus or such as do not
materially and adversely affect the value of such property and do not interfere
with the use made or proposed to be made of such property by the Company or
either of the Subsidiaries. All of the leases and subleases material to the
business of the Company and the Subsidiaries are in full force and effect, and
neither the Company nor either of the Subsidiaries has received any notice of
any material claim of any sort that has been asserted by anyone adverse to the
rights of the Company or either of the Subsidiaries under any of the leases or
subleases mentioned above, or affecting or questioning the

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<PAGE> 12
rights of the Company or such Subsidiary of the continued possession of the
leased or subleased premises.

(xxix) The Company and each of the Subsidiaries maintains a system of
internal accounting controls sufficient to provide reasonable assurance that (A)
transactions are executed in accordance with management's general or specific
authorizations; (B) transactions are recorded as necessary to permit preparation
of financial statements in conformity with GAAP and to maintain asset
accountability; (C) access to assets is permitted only in accordance with
management's general or specific authorization; and (D) the recorded
accountability for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any differences.

(xxx) Each of the Company and the Subsidiaries has filed on a timely
basis all necessary federal, state, local and foreign income and franchise tax
returns required to be filed through the date hereof and has paid all taxes
shown as due thereon; and no tax deficiency has been asserted against the
Company or either of the Subsidiaries, nor does the Company or either of the
Subsidiaries know of any tax deficiency which is likely to be asserted against
it which if determined adversely, could materially adversely affect the
business, prospects, properties, assets, results of operations or condition
(financial or otherwise) of the Company and its Subsidiaries taken as a whole.
All tax liabilities are adequately provided for on the respective books of the
Company and its Subsidiaries.

(xxxi) Each of the Company and the Subsidiaries maintain insurance
(issued by insurers of recognized financial responsibility) of the types and in
the amounts generally deemed adequate for their respective businesses and
consistent with insurance coverage maintained by similar companies in similar
businesses, all of which insurance is in full force and effect.

(xxxii) The Company is not, and after giving effect to the offering and
sale of the Securities and the application of the proceeds thereof as described
in the Prospectus, will not be, an "investment company" or an entity
"controlled" by an "investment company", as such terms are defined in the
Investment Company Act of 1940, as amended (the "Investment Company Act").

(xxxiii) Except as otherwise stated in the Registration Statement and
the Prospectus and except as would not, singly or in the aggregate, materially
adversely affect the business prospects, properties, assets, results of
operations or condition (financial or otherwise) of the Company and the
Subsidiaries, taken as a whole (A) neither the Company nor either of the
Subsidiaries is in violation of any federal, state, local or foreign statute,
law, rule, regulation, ordinance, code, policy or rule of common law or any
judicial or administrative interpretation thereof including any judicial or
administrative order, consent, decree or judgment, relating to pollution or
protection of human health, the environment (including, without limitation,
ambient air, surface water, groundwater, land surface or subsurface strata) or
wildlife, including, without limitation, laws and regulations relating to the
release or threatened release of chemicals, pollutants, contaminants, wastes,
toxic substances, hazardous substances, petroleum or petroleum products
(collectively, "Hazardous Materials") or to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
Hazardous Materials (collectively,

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<PAGE> 13
"Environmental Laws"), (B) the Company and the Subsidiaries have all permits,
authorizations and approvals required under any applicable Environmental Laws
and are each in compliance with their requirements, (C) there are no pending or
threatened administrative, regulatory or judicial actions, suits, demands,
demand letters, claims, liens, notices of noncompliance or violation,
investigation or proceedings relating to any Environmental Law against the
Company or either of the Subsidiaries and (D) there are no events or
circumstances that might reasonably be expected to form the basis of an order
for clean-up or remediation, or an action, suit or proceeding by any private
party or governmental body or agency, against or affecting the Company or
either of its Subsidiaries relating to Hazardous Materials or any Environmental
Laws.

(xxxiv) The Securities, the Debentures and the Indenture conform in all
material respects to the statements relating thereto contained in the Prospectus
and are in substantially the form filed as an exhibit to the Registration
Statement.

(xxxv) Neither the Trust, the Company nor any of their affiliates (i)
is required to register as a "broker" or "dealer" in accordance with the
provisions of the Exchange Act or the Exchange Act Rules and Regulations, or
(ii) directly, or indirectly through one or more intermediaries, controls or has
any other association with (within the meaning of Article I of the By-laws of
the NASD) any member firm of the NASD.

(xxxvi) Neither the Company nor either of the Subsidiaries nor any
officer or director purporting to act on behalf of the Company or either of the
Subsidiaries has at any time; (A) made any contributions to any candidate for
political office, or failed to disclose fully any such contributions, in
violation of law, (B) made any payment to any state, federal or foreign
governmental officer or official, or other person charged with similar public or
quasi-public duties, other than payments required or allowed by applicable law,
(C) made any payment outside the ordinary course of business to any investment
officer or loan broker or person charged with similar duties of any entity to
which the Company or either of the Subsidiaries sells or from which the Company
or either of the Subsidiaries buys loans or servicing arrangements for the
purpose of influencing such agent, officer, broker or person to buy loans or
servicing arrangements from or sell loans to the Company or either of the
Subsidiaries, or (D) engaged in any transactions, maintained any bank account or
used any corporate funds except for transactions, bank accounts and funds which
have been and are reflected in the normally maintained books and records of the
Company and the Subsidiaries.

(xxxvii) Except as otherwise disclosed in the Prospectus, there are no
material outstanding loans or advances or material guarantees of indebtedness by
the Company or either of the Subsidiaries to or for the benefit of any of the
officers or directors of the Company or either of the Subsidiaries or any of the
members of the families of any of them.

(xxxviii) Neither the Company nor either of the Subsidiaries nor, to
the knowledge of the Company, any employee or agent of the Company or either of
the Subsidiaries, has made any

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<PAGE> 14
payment of funds of the Company or of any Subsidiary or received or retained
any funds in violation of any law, rule or regulation or of a character
required to be disclosed in the Prospectus.

(xxxix) All securities issued by the Company, either of the
Subsidiaries or any trusts established by the Company or any Subsidiary, have
been issued and sold in compliance with (A) all applicable federal and state
securities laws, (B) the laws of the applicable jurisdiction of incorporation of
the issuing entity and, (C) to the extent applicable to the issuing entity, the
requirements of the American Stock Exchange and the Pacific Stock Exchange.

(xl) Neither the Company nor either of the Subsidiaries or affiliates
does business with the government of Cuba or with any person or affiliate
located in Cuba.

(xli) The Company has not incurred any liability for any finder's fees
or similar payments in connection with the transactions herein contemplated.

(b) Any certificate signed by any officer of the Trust or the Company
or either Subsidiary delivered to the Representatives or to counsel for the
Underwriters pursuant to or in connection with this Agreement shall be deemed a
representation and warranty by the Trust or the Company, as the case may be, to
each Underwriter as to the matters covered thereby.

SECTION 4. Certain Covenants.

The Company and the Trust covenant with each Underwriter as follows:

(a) To furnish such information as may be required and otherwise to
cooperate in qualifying the Securities for offering and sale under the
securities or blue sky laws of such states as the Representatives may designate
and to maintain such qualifications in effect as long as required for the
distribution of the Securities, provided that, Company shall not be required in
connection therewith to qualify as a foreign corporation or to consent to the
service of process under the laws of any such state (except service of process
with respect to the offering and sale of the Securities).

(b) To prepare the Prospectus in a form approved by the Underwriters
and file such Prospectus with the Commission pursuant to Rule 424(b) not later
than the day following the execution and delivery of this Agreement and to
furnish promptly (and with respect to the initial delivery of such Prospectus,
not later than 10:00 a.m. (New York City time) on the day following the
execution and delivery of this Agreement) to the Underwriters as many copies of
the Prospectus (or of the Prospectus as amended or supplemented if the Trust and
the Company shall have made any amendments or supplements thereto after the
effective date of the Registration Statement) and any documents incorporated
therein by reference as the Underwriters may reasonably request for the purposes
contemplated by the Securities Act Regulations, which Prospectus and any
amendments or supplements thereto and any documents incorporated therein by
reference furnished to the Underwriters will be identical to any electronically
transmitted copies thereof filed with the Commission pursuant to EDGAR, except
to the extent permitted by Regulation S-T.

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<PAGE> 15
(c) To comply with the requirements of Rule 430A of the 1933 Act
Regulations, if and as applicable, and to advise the Representatives promptly
and (if requested by the Representatives) to confirm such advice in writing,
when the Registration Statement has become effective and when any post-effective
amendment thereto becomes effective under the Securities Act Regulations.

(d) To advise the Representatives immediately, confirming such advice
in writing, of (i) the receipt of any comments from, or any request by, the
Commission for amendments or supplements to the Registration Statement or
Prospectus or for additional information with respect thereto, or (ii) the
issuance by the Commission of any stop order suspending the effectiveness of the
Registration Statement or of any order preventing or suspending the use of any
Preliminary Prospectus or the Prospectus, or of the suspension of the
qualification of the Securities for offering or sale in any jurisdiction, or of
the initiation or threatening of any proceedings for any of such purposes and,
if the Commission or any other government agency or authority should issue any
such order, to make every reasonable effort to obtain the lifting or removal of
such order as soon as possible; to advise the Representatives promptly of any
proposal to amend or supplement the Registration Statement or Prospectus and to
file no such amendment or supplement to which the Representatives shall
reasonably object in writing.

(e) To furnish to the Underwriters for a period of five years from the
date of this Agreement (i) as soon as available, copies of all annual, quarterly
and current reports or other communications supplied to holders of the
Securities, (ii) as soon as practicable after the filing thereof, copies of all
reports filed by the Trust or the Company with the Commission, the NASD or any
securities exchange and (iii) such other information as the Underwriters may
reasonably request regarding the Trust, the Company and the Subsidiaries.

(f) To advise the Underwriters promptly of the happening of any event
known to the Trust or the Company within the time during which a Prospectus
relating to the Securities is required to be delivered under the Securities Act
Regulations which, in the judgment of the Company, would require the making of
any change in the Prospectus then being used so that the Prospectus would not
include an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading, and,
during such time, to prepare and furnish, at the Company's expense, to the
Underwriters promptly such amendments or supplements to such Prospectus as may
be necessary to reflect any such change and to furnish to the Underwriters a
copy of such proposed amendment or supplement before filing any such amendment
or supplement with the Commission.

(g) To furnish promptly to each Representative and counsel for the
Underwriters, without charge, a signed copy of the Registration Statement, as
originally filed with the Commission, and of each amendment or supplement
thereto (including all exhibits filed therewith or incorporated by reference
therein and documents incorporated or deemed to be incorporated by reference
therein) and such number of conformed copies of the foregoing as the
Representatives may reasonably request.

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<PAGE> 16
(h) To furnish to each Representative, not less than one business day
before filing with the Commission subsequent to the effective date of the
Prospectus and during the period referred to in paragraph (f) above, a copy of
any document proposed to be filed with the Commission pursuant to Section 13,
14, or 15(d) of the Exchange Act.

(i) To apply the net proceeds of the sale of the Securities in the
manner specified in the Prospectus under "Use of Proceeds".

(j) To make generally available to their security holders as soon as
practicable, but in any event not later than the end of the fiscal quarter first
occurring after the first anniversary of the effective date of the Registration
Statement an earnings statement complying with the provisions of Section 11(a)
of the Securities Act (in form complying with the provisions of Rule 158 of the
Securities Act Regulations,) covering a period of 12 months beginning after the
effective date of the Registration Statement.

(k) To use its best efforts to effect and maintain the quotation of the
Securities on the American Stock Exchange or another national securities
exchange or automatic quotation system and to maintain the listing of the
Securities on the American Stock Exchange or such other national securities
exchange or automatic quotation system so long as the Securities are
outstanding.

(l) To not and to use its best efforts to cause their respective
Trustees, officers, directors and affiliates not to, (i) take, directly or
indirectly prior to termination of the underwriting syndicate contemplated by
this Agreement, any action designed to stabilize or manipulate the price of any
security of the Trust or the Company, or action which may cause or result in, or
which might in the future reasonably be expected to cause or result in, the
stabilization or manipulation of the price of any security of the Company, to
facilitate the sale or resale of any of the Securities, (ii) sell, bid for,
purchase or pay anyone any compensation for soliciting purchases of the
Securities or (iii) pay or agree to pay to any person any compensation for
soliciting any order to purchase any other securities of the Trust or the
Company.

(m) Not to voluntarily claim and to actively resist any attempts to
claim the benefit of any usury laws against the holders of the Securities.

(n) If at any time during the 30-day period after the Registration
Statement becomes effective, any rumor, publication or event relating to or
affecting the Trust or the Company or the Subsidiaries shall occur as a result
of which in the reasonable opinion of the Representatives the market price of
the Securities has been or is likely to be materially affected (regardless of
whether such rumor, publication or event necessitates a supplement to or
amendment of the Prospectus) and after written notice from the Representatives
advising the Trust and the Company to the effect set forth above, to consult
with the Representatives concerning the substance of such rumor, publication or
event.

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<PAGE> 17
SECTION 5. Payment of Expenses.

(a) The Company agrees to pay all costs and expenses incident to the
performance of obligations of the Company and the Trust under this Agreement,
whether or not the transactions contemplated hereunder are consummated or this
Agreement is terminated, including expenses, fees and taxes in connection with
(i) the preparation and filing of the Registration Statement, each Preliminary
Prospectus, the Prospectus, and any amendments or supplements thereto, and the
printing and furnishing of copies of each thereof to the Underwriters and to
dealers (including costs of mailing and shipment), (ii) the preparation,
issuance and delivery of the certificates for the Securities to the
Underwriters, including any transfer taxes or duties payable upon the sale of
the Securities to the Underwriters, (iii) the printing of this Agreement and any
dealer agreements and furnishing of copies of each to the Underwriters and to
dealers (including costs of mailing and shipment), (iv) the registration or
qualification of the Securities for offering and sale under state laws that the
Company and the Representatives have mutually agreed are appropriate and the
determination of their eligibility for investment under state law as aforesaid
(including the legal fees and filing fees and other disbursements of counsel for
the Underwriters), and the printing and furnishing of copies of any blue sky
surveys or legal investment surveys to the Underwriters and to dealers, (v)
filing for review of the public offering of the Securities by the NASD
(including the filing fees and other disbursements of counsel for the
Underwriters relating thereto), (vi) the fees and expenses of any transfer
agent, registrar and/or depository (including DTC) for the Securities and
miscellaneous expenses referred to in the Registration Statement, (vii) all fees
and expenses in connection with preparation and filing of the Registration
Statement on Form 8-A relating to the Securities and all the fees and expenses
incurred in connection with the inclusion of the Securities in the American
Stock Exchange, (viii) the fees and expenses of the Trustees, the Guarantee
Trustee and the Indenture Trustee and their counsel in connection with the
Declaration, the Guarantee, the Indenture and the Securities, (ix) making road
show presentations with respect to the offering of the Securities, (x) preparing
and distributing copies of transaction documents for the Representatives and
their legal counsel and (xi) the performance of the Trust and the Company's
other obligations hereunder. Upon the request of the Representatives, the
Company will provide funds in advance for filing fees.

(b) The Company agrees to reimburse the Representatives for the
out-of-pocket expenses incurred by the Representatives in connection with the
performance of their activities under this Agreement, including, but not limited
to, costs such as printing, facsimile, courier service, direct computer
expenses, accommodations and travel. In addition, the Company agrees to
reimburse the Representatives for $30,000 of the fees and expenses of the
Underwriters' outside legal counsel (other than the fees and expenses of such
counsel with respect to state securities or blue sky laws, which shall be
reimbursed by the Company pursuant to the provisions of subsection (a) above) if
the transactions contemplated by this Agreement are consummated, or in the
alternative, all fees and disbursements of the Underwriters' legal counsel if
the transactions contemplated by this Agreement are not consummated.

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<PAGE> 18
SECTION 6. Conditions of the Underwriters' Obligations. The obligations
of the Underwriters to purchase and pay for the Securities at the Closing Time
or on the Date of Delivery, if any, as applicable, are subject to the accuracy
of the representations and warranties of the Trust and the Company in all
material respects on the date hereof and at the Closing Time and on each Date of
Delivery, as applicable, the performance by the Trust and the Company of their
respective obligations hereunder in all material respects and to the
satisfaction of the following further conditions at the Closing Time or on each
Date of Delivery, if any, as applicable.

(a) At the Closing Time and on each Date of Delivery, the Underwriters
shall have received an opinion of Liddell, Sapp, Zivley, Hill & LaBoon, L.L.P.,
counsel for the Company, addressed to the Underwriters and dated the Closing
Time and each Date of Delivery and in form and substance satisfactory to Andrews
& Kurth L.L.P., counsel for the Underwriters, as to the matters set forth in
Exhibit A.

(b) At the Closing time and on each Date of Delivery, the Underwriters
shall have received an opinion of Jeffrey P. Kassing, General Counsel for the
Company, addressed to the Underwriters and dated the Closing Time and each Date
of Delivery, in form and substance satisfactory to Andrews & Kurth L.L.P.,
counsel for the Underwriters, as to the matters set forth in Exhibit B.

(c) At the Closing Time and on each Date of Delivery, the Underwriters
shall have received an opinion of Potter Anderson & Corroon LLP, special
Delaware counsel for the Trust, addressed to the Underwriters and dated the
Closing Time and each Date of Delivery and in form and substance satisfactory to
Andrews & Kurth L.L.P., as to the matters set forth in Exhibit C.

(d) The Representatives shall have received from KPMG Peat Marwick LLP
a letter, dated as of the date of this Agreement in form and substance
satisfactory to the Representatives, relating to the consolidated financial
statements of the Company and the Subsidiaries, and such other matters
customarily covered by comfort letters issued in connection with registered
public offerings.

(e) At the Closing Time and at each Date of Delivery, if any, the
Representatives shall have received from KPMG Peat Marwick LLP a letter, dated
as of the Closing Time or Date of Delivery, as applicable, to the effect that
they reaffirm the statements made in the letter furnished pursuant to subsection
(c) of this Section 6.

(f) The Representatives shall have received at the Closing Time and on
each Date of Delivery, if any, the favorable opinion of Andrews & Kurth L.L.P.,
dated the Closing Time or such Date of Delivery, addressed to the
Representatives and in form and substance satisfactory to the Representatives.

(g) No amendment or supplement to the Registration Statement or
Prospectus shall have been filed to which the Underwriters shall have objected
in writing.

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<PAGE> 19
(h) The Registration Statement, including any Rule 462(b) Registration
Statement, shall have become effective under the Securities Act and no stop
order suspending the effectiveness of the Registration Statement shall have been
issued under the Securities Act and no proceedings for that purpose shall have
been initiated or be pending or threatened by the Commission, and any request on
the part of the Commission for additional information shall have been complied
with to the reasonable satisfaction of counsel to the Underwriters. A prospectus
containing information relating to the description of the Securities, the
specific method of distribution and similar matters shall have been filed with
the Commission in accordance with Rule 424(b) (or any required post-effective
amendment providing such information shall have been filed and declared
effective in accordance with the requirements of Rule 430A).

(i) Between the time of execution of this Agreement and the Closing
Time or the relevant Date of Delivery no material and unfavorable change in the
assets, business, operations, earnings, prospects, properties or condition
(financial or otherwise) of the Company and the Subsidiaries, taken as a whole,
shall occur or become known (whether or not arising in the ordinary course of
business) and no transaction which is material and unfavorable to the Company
and the Subsidiaries, taken as a whole, shall have been entered into by the
Company or either of the Subsidiaries, and the Representatives shall have
received a certificate of the Chairman of the Board and Chief Executive Officer
of the Company and the Executive Vice President and Chief Financial Officer of
the Company, in such capacities, dated as of the Closing Time or the Date of
Delivery, as the case may be, to the effect that (i) there has been no such
material adverse change and no such transactions entered into, (ii) the
representations and warranties of the Company and the Trust set forth in
Section 3 of this Agreement are true and correct (iii) the Company and the
Trust have complied with all agreements and satisfied all conditions on their
part to be performed or satisfied at or prior to the Closing Time, and (iv) no
stop order suspending the effectiveness of the Registration Statement has been
issued and no proceedings for that purpose have been initiated or threatened by
the Commission.

(j) The Securities shall have been approved for listing on the American
Stock Exchange.

(k) The NASD shall not have raised any objection with respect to the
fairness and reasonableness of the underwriting terms and arrangements.

(l) The Underwriters shall have received executed copies of each of the
Guarantor Documents which shall have been entered into by the Company and the
other parties thereto.

(m) The Trust and the Company shall have furnished to the Underwriters
such other documents and certificates as to the accuracy and completeness of any
statement in the Registration Statement and the Prospectus, the representations,
warranties and statements of the Company and the Trust contained herein, the
performance by the Trust and the Company of their respective covenants contained
herein, and the fulfillment of any conditions contained herein, as of the
Closing Time or any Date of Delivery, as the Underwriters may reasonably
request.

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<PAGE> 20
(n) The Trust and the Company shall have performed such of their
respective obligations under this Agreement as are to be performed by the terms
hereof at or before the Closing Time or the relevant Date of Delivery.

SECTION 7. Termination. The obligations of the several Underwriters
hereunder shall be subject to termination in the absolute discretion of the
Representatives, at any time prior to the Closing Time or any Date of Delivery,
(i) if any of the conditions specified in Section 6 shall not have been
fulfilled when and as required by this Agreement to be fulfilled, or (ii) if
there has been since the respective dates as of which information is given in
the Registration Statement, any material adverse change, or any development
involving a prospective material adverse change, in or affecting the assets,
business, operations, earnings, prospects, properties, condition (financial or
otherwise) or management of the Company and the Subsidiaries, taken as a whole,
whether or not arising in the ordinary course of business, or (iii) if there has
occurred any outbreak or escalation of hostilities or other national or
international calamity or crisis or change in economic, political or other
conditions the effect of which on the financial markets of the United States is
such as to make it, in the judgment of the Representatives, impracticable to
market the Securities or enforce contracts for the sale of the Securities, or
(iv) if trading in any securities of the Company has been suspended by the
Commission or by the American Stock Exchange or the Pacific Stock Exchange, or
if trading generally on the American Stock Exchange, Pacific Stock Exchange, New
York Stock Exchange or in the Nasdaq over-the-counter market has been suspended
(including automatic halt in trading pursuant to market-decline triggers other
than those in which solely program trading is temporarily halted), or
limitations on prices for trading (other than limitations on hours or numbers of
days of trading) have been fixed, or maximum ranges for prices for securities
have been required, by such exchanges or the NASD or Nasdaq or by order of the
Commission or any other governmental authority, or (v) any federal or state
statute, regulation, rule or order of any court or other governmental authority
has been enacted, published, decreed or otherwise promulgated which in the
reasonable opinion of the Representatives materially adversely affects or will
materially adversely affect the business or operations of the Company and the
Subsidiaries, taken as a whole, or (vi) any action has been taken by any
federal, state or local government or agency in respect of its monetary or
fiscal affairs which in the reasonable opinion of the Representatives has a
material adverse effect on the securities markets in the United States.

If the Representatives elect to terminate this Agreement as provided in
this Section 7, the Trust, the Company and the Underwriters shall be notified
promptly by telephone, promptly confirmed by facsimile.

If the sale to the Underwriters of the Securities, as contemplated by
this Agreement, is not carried out by the Underwriters for any reason permitted
under this Agreement or if such sale is not carried out because the Company and
the Trust shall be unable to comply in all material respects with any of the
terms of this Agreement, the Company shall not be under any obligation or
liability under this Agreement (except to the extent provided in Sections 5 and
9 hereof) and the Underwriters shall be under no obligation or liability to the
Company under this Agreement (except to the extent provided in Section 9 hereof)
or to one another hereunder.

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SECTION 8. Increase in Underwriters' Commitments. If any Underwriter
shall default at the Closing Time or on a Date of Delivery in its obligation to
take up and pay for the Securities to be purchased by it under this Agreement on
such date, the Representatives shall have the right, within 36 hours after such
default, to make arrangements for one or more of the non-defaulting
Underwriters, or any other underwriters, to purchase all, but not less than all,
of the Securities which such Underwriter shall have agreed but failed to take up
and pay for (the "Defaulted Securities"). Absent the completion of such
arrangements within such 36-hour period, (i) if the total number of Defaulted
Securities does not exceed 10% of the total number of Securities to be purchased
on such date, each non-defaulting Underwriter shall take up and pay for (in
addition to the number of Securities which it is otherwise obligated to purchase
on such date pursuant to this Agreement) the portion of the total number of
Securities agreed to be purchased by the defaulting Underwriter on such date in
the proportion that its underwriting obligation hereunder bears to the
underwriting obligations of all non-defaulting Underwriters; and (ii) if the
total number of Defaulted Securities exceeds 10% of such total, the
Representatives may terminate this Agreement by notice to the Company, without
liability to any non- defaulting Underwriter.

Without relieving any defaulting Underwriter from its obligations
hereunder, the Trust and the Company agree with the non-defaulting Underwriters
that the Trust will not sell any Securities hereunder on such date unless all of
the Securities to be purchased on such date are purchased on such date by the
Underwriters (or by substituted Underwriters selected by the Representatives
with the approval of the Company or selected by the Company with the approval of
the Representatives).

If a new Underwriter or Underwriters are substituted for a defaulting
Underwriter in accordance with the foregoing provision, the Company or the
non-defaulting Underwriters shall have the right to postpone the Closing Time or
the relevant Date of Delivery for a period not exceeding five business days in
order that any necessary changes in the Registration Statement and Prospectus
and other documents may be effected.

The term Underwriter as used in this Agreement shall refer to and
include any Underwriter substituted under this Section 8 with the like effect as
if such substituted Underwriter had originally been named in this Agreement.

SECTION 9. Indemnity and Contribution by the Trust, the Company and the
Underwriters.

(a) The Trust and the Company, jointly and severally, agree to
indemnify, defend and hold harmless each Underwriter and any person who controls
any Underwriter within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act, from and against any loss, expense, liability,
damage or claim (including the reasonable cost of investigation) which, jointly
or severally, any such Underwriter or controlling person may incur under the
Securities Act, the Exchange Act or otherwise, insofar as such loss, expense,
liability, damage or claim arises out of or is based upon any untrue statement
or alleged untrue statement of a material fact contained in the Registration
Statement (or in the Registration Statement as amended by any post-effective
amendment thereof by the Trust and the Company) or in a Prospectus (the term
Prospectus for the

21
<PAGE> 22
purpose of this Section 9 being deemed to include any Preliminary Prospectus,
the Prospectus and the Prospectus as amended or supplemented by the Trust and
the Company), or arises out of or is based upon any omission or alleged
omission to state a material fact required to be stated in either such
Registration Statement or Prospectus or necessary to make the statements made
therein, in the light of the circumstances under which they were made, not
misleading, except insofar as any such loss, expense, liability, damage or
claim arises out of or is based upon any untrue statement or alleged untrue
statement or omission or alleged omission of a material fact contained in and
in conformity with information furnished in writing by the Underwriters through
the Representatives to the Trust and the Company expressly for use in such
Registration Statement or such Prospectus, provided, however, that the
indemnity agreement contained in this subsection (9)(a) with respect to the
Preliminary Prospectus or the Prospectus shall not inure to the benefit of an
Underwriter (or to the benefit of any person controlling such Underwriter) with
respect to any person asserting any such loss, expense, liability, damage or
claim which is the subject thereof if the Prospectus or any supplement thereto
prepared with the consent of the Representatives and furnished to the
Underwriters prior to the Closing Time corrected any such alleged untrue
statement or omission and if such Underwriter failed to send or give a copy of
the Prospectus or supplement thereto to such person at or prior to the written
confirmation of the sale of Securities to such person.

If any action is brought against an Underwriter or controlling person
in respect of which indemnity may be sought against the Trust or the Company
pursuant to subsection (a) above, such Underwriter shall promptly notify the
Company in writing of the institution of such action, and the Company shall
assume the defense of such action, including the employment of counsel and
payment of expenses, provided, however, that any failure or delay to so notify
the Company will not relieve the Trust or the Company of any obligation
hereunder, except to the extent that its ability to defend is actually impaired
by such failure or delay. Such Underwriter or controlling person shall have the
right to employ its or their own counsel in any such case, but the fees and
expenses of such counsel shall be at the expense of such Underwriter or such
controlling person unless the employment of such counsel shall have been
authorized in writing by the Company in connection with the defense of such
action, or the Company shall not have employed counsel to have charge of the
defense of such action within a reasonable time or such indemnified party or
parties shall have reasonably concluded (based on the advice of counsel) that
there may be defenses available to it or them which are different from or
additional to those available to the Company (in which case the Company shall
not have the right to direct the defense of such action on behalf of the
indemnified party or parties), in any of which events such fees and expenses
shall be borne by the Company and paid as incurred (it being understood,
however, that the Company shall not be liable for the expenses of more than one
separate firm of attorneys for the Underwriters or controlling persons in any
one action or series of related actions in the same jurisdiction (other than
local counsel in any such jurisdiction) representing the indemnified parties who
are parties to such action). Anything in this paragraph to the contrary
notwithstanding, neither the Trust nor the Company shall be liable for any
settlement of any such claim or action effected without the written consent of
the Company.

(b) Each Underwriter agrees, severally and not jointly, to indemnify,
defend and hold harmless the Trust, the Trustees, the Company, the Company's
directors, the Company's officers that

22
<PAGE> 23
signed the Registration Statement, and any person who controls the Trust, the
Trustees or the Company within the meaning of Section 15 of the Securities Act
or Section 20 of the Exchange Act, from and against any loss, expense,
liability, damage or claim (including the reasonable cost of investigation)
which, jointly or severally, the Trust, the Company, or any such person may
incur under the Securities Act, the Exchange Act or otherwise, but only insofar
as such loss, expense, liability, damage or claim arises out of or is based
upon any untrue statement or alleged untrue statement of a material fact
contained in and in conformity with information furnished in writing by such
Underwriter through the Representatives to the Company expressly for use in the
Registration Statement (or in the Registration Statement as amended by any
post-effective amendment thereof by the Trust and the Company) or in a
Prospectus, or arises out of or is based upon any omission or alleged omission
to state a material fact in connection with such information required to be
stated either in such Registration Statement or Prospectus or necessary to make
such information, in the light of the circumstances under which they were made,
not misleading. The statements set forth (i) in the last paragraph on the
cover page and (ii) the third paragraph under the caption "Underwriting" in the
Preliminary Prospectus and the Prospectus (to the extent such statements relate
to the Underwriters) constitute the only information furnished by or on behalf
of any Underwriter through the Representatives to the Company for purposes of
this Section 9.

If any action is brought against the Trust, the Company or any such
person in respect of which indemnity may be sought against any Underwriter
pursuant to the foregoing paragraph, the Trust, the Company or such person shall
promptly notify the Representatives in writing of the institution of such action
and the Representatives, on behalf of the Underwriters, shall assume the defense
of such action, including the employment of counsel and payment of expenses. The
Trust, the Company or such person shall have the right to employ its own counsel
in any such case, but the fees and expenses of such counsel shall be at the
expense of the Trust, the Company, or such person unless the employment of such
counsel shall have been authorized in writing by the Representatives in
connection with the defense of such action or the Representatives shall not have
employed counsel to have charge of the defense of such action within a
reasonable time or such indemnified party or parties shall have reasonably
concluded (based on the advice of counsel) that there may be defenses available
to it or them which are different from or additional to those available to the
Underwriters (in which case the Representatives shall not have the right to
direct the defense of such action on behalf of the indemnified party or
parties), in any of which events such fees and expenses shall be borne by such
Underwriter and paid as incurred (it being understood, however, that the
Underwriters shall not be liable for the expenses of more than one separate firm
of attorneys in any one action or series of related actions in the same
jurisdiction (other than local counsel in any such jurisdiction) representing
the indemnified parties who are parties to such action). Anything in this
paragraph to the contrary notwithstanding, no Underwriter shall be liable for
any settlement of any such claim or action effected without the written consent
of the Representatives.

(c) If the indemnification provided for in this Section 9 is
unavailable to an indemnified party under subsections (a) and (b) of this
Section 9 in respect of any losses, expenses, liabilities, damages or claims
referred to therein, then each applicable indemnifying party, in lieu of
indemnifying such indemnified party, shall contribute to the amount paid or
payable by such

23
<PAGE> 24
indemnified party as a result of such losses, expenses, liabilities, damages or
claims (i) in such proportion as is appropriate to reflect the relative
benefits received by the Trust and the Company, on the one hand, and the
Underwriters, on the other hand, from the offering of the Securities or (ii) if
(but only if) the allocation provided by clause (i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above but also the relative fault
of the Trust and the Company, on the one hand, and of the Underwriters, on the
other hand, in connection with the statements or omissions which resulted in
such losses, expenses, liabilities, damages or claims, as well as any other
relevant equitable considerations. The relative benefits received by the Trust
and the Company, on the one hand, and the Underwriters, on the other hand, in
connection with the offering of the Securities shall be deemed to be in the
same proportion as, the total proceeds from the offering (net of Underwriters'
compensation but before deducting expenses) received by the Trust and the
Company bear to the Underwriters' compensation received by the Underwriters.
The relative fault of the Trust or the Company, on the one hand, and of the
Underwriters, on the other hand, shall be determined by reference to, among
other things, whether the untrue statement or alleged untrue statement of a
material fact or omission or alleged omission relates to information supplied
by the Trust and the Company, or by the Underwriters and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission. The amount paid or payable by a party as a result
of the losses, claims, damages and liabilities referred to above shall be
deemed to include any legal or other fees or expenses reasonably incurred by
such party in connection with investigating or defending any claim or action.

(d) The Trust, the Company and the Underwriters agree that it would not
be just and equitable if contribution pursuant to this Section 9 were determined
by pro rata allocation (even if the Underwriters were treated as one entity for
such purpose) or by any other method of allocation which does not take account
of the equitable considerations referred to in subsection (c)(i) and, if
applicable, (ii), above. Notwithstanding the provisions of this Section 9, no
Underwriter shall be required to contribute any amount in excess of the
Underwriters' compensation, applicable to the Securities purchased by such
Underwriter. No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations to contribute pursuant to this
Section 9 are several in proportion to their respective underwriting commitments
and not joint.

SECTION 10. Survival. The indemnity and contribution agreements
contained in Section 9 and the covenants, warranties and representations of the
Trust and the Company contained in Sections 3, 4 and 5 of this Agreement shall
remain in full force and effect regardless of any investigation made by or on
behalf of any Underwriter, or any person who controls any Underwriter within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act,
or by or on behalf of the Trust, the Trustees, the Company, its directors and
officers or any person who controls the Trust, the Trustees or the Company
within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act, and shall survive any termination of this Agreement or the sale
and delivery of the Securities. Each of the Trust and the Company, and each
Underwriter agree

24
<PAGE> 25
promptly to notify the others of the commencement of any litigation or
proceeding against it and, in the case of the Trust and the Company, against
any of the Trustees or the Company's officers and directors, in connection with
the sale and delivery of the Securities, or in connection with the Registration
Statement or Prospectus.

SECTION 11. Notices. Except as otherwise herein provided, all
statements, requests, notices and agreements shall be in writing or by telegram
and, if to the Underwriters, shall be sufficient in all respects if delivered to
Friedman, Billings, Ramsey & Co., Inc., 1001 19th Street North, Arlington,
Virginia 22209, Attention: Syndicate Department; if to the Company or the Trust,
shall be sufficient in all respects if delivered to the Company or the Trust at
the offices of the Company at 2200 City Center II, 301 Commerce Street, Fort
Worth, Texas 76102.

SECTION 12. Governing Law; Headings. THIS AGREEMENT SHALL BE GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE COMMONWEALTH OF VIRGINIA,
WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES. The section headings in this
Agreement have been inserted as a matter of convenience of reference and are not
a part of this Agreement.

SECTION 13. Parties at Interest. The Agreement herein set forth has
been and is made solely for the benefit of the Underwriters, the Trust, the
Company, and the controlling persons, the Trustees, directors and officers
referred to in Sections 9 and 10 hereof, and their respective successors,
assigns, executors and administrators. No other person, partnership, association
or corporation (including a purchaser, as such purchaser, from any of the
Underwriters) shall acquire or have any right under or by virtue of this
Agreement.

SECTION 14. Counterparts and Facsimile Signatures. This Agreement may
be signed by the parties in counterparts which together shall constitute one and
the same agreement among the parties. A facsimile signature shall constitute an
original signature for all purposes.

25
<PAGE> 26
If the foregoing correctly sets forth the understanding among the
Trust, the Company and the Underwriters, please so indicate in the space
provided below for the purpose, whereupon this Agreement shall constitute a
binding agreement among the Trust, the Company and the Underwriters.

Very truly yours,

KBK CAPITAL CORPORATION

By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------

KBK CAPITAL TRUST I

By:
----------------------------------
Name:
--------------------------------
Administrative Trustee

Accepted and agreed to as
of the date first above written:

FRIEDMAN, BILLINGS, RAMSEY & CO., INC.

By:
---------------------------------------------
Title:
------------------------------------------

J.J.B. HILLIARD, W.L. LYONS, INC.

By:
---------------------------------------------
Title:
------------------------------------------

For themselves and as Representatives of the other
Underwriters named on Schedule I hereto.

26
<PAGE> 27
SCHEDULE I

<TABLE>
<CAPTION>
Number of Initial
Securities
Underwriter to be Purchased
----------- -----------------
<S> <C>
Friedman, Billings, Ramsey & Co., Inc. . . . . . . . . . . . . . . . . . . .

J.J.B. Hilliard, W.L. Lyons, Inc. . . . . . . . . . . . . . . . . . . . . . .

---------
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,000,000
=========
</TABLE>

S-1
<PAGE> 28
EXHIBIT A
OPINION OF LIDDELL, SAPP, ZIVLEY, HILL & LABOON, L.L.P.

(i) The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Delaware.

(ii) The Company has full corporate power and authority to own, lease
and operate its properties and to conduct its business as described in the
Registration Statement and Prospectus and to execute and deliver the
Underwriting Agreement, the Guarantees, the Declaration and the Indenture and to
consummate the transactions contemplated thereby.

(iii) Each Subsidiary has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State of
Delaware with full corporate power and authority to own, lease and operate its
properties and to conduct its business as described in the Registration
Statement and Prospectus.

(iv) This Agreement has been duly authorized, executed and delivered by
the Trust and the Company.

(v) Each of the Guarantees, the Declaration and the Indenture
(collectively, the "Guarantor Agreements") has been duly authorized, executed
and delivered by the Company and constitutes a valid and legally binding
obligation of the Company, enforceable in accordance with their respective
terms, except as the enforcement thereof may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors'
rights generally and general principles of equity. Each of the
Preferred Guarantee, the Declaration and the Indenture has been duly qualified
under the Trust Indenture Act of 1939, as amended.

(vi) The Debentures have been duly authorized and when executed and
authenticated in accordance with the provisions of the Indenture will be
entitled to the benefits of the Indenture and will be valid and binding
obligations of the Company, enforceable in accordance with their terms, except
as the enforcement thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' rights generally
and general principles of equity.

(vii) The Securities, the Debentures and the Indenture conform in all
material respects as to legal matters to the description thereof contained in
the Prospectus.

(viii) To the best of our knowledge, there are no actions, suits,
proceedings, inquiries or investigations pending or threatened against the
Company or either of the Subsidiaries or any of their respective officers and
directors or to which the properties, assets or rights of any such entity are
subject, at law or in equity, before or by any federal, state, local or foreign

A-1
<PAGE> 29
governmental or regulatory commission, board, body, authority, arbitral panel
or agency which are required to be disclosed in the Registration Statement and
the Prospectus, or which might be reasonably expected to result in a judgment,
decree, award or order having a material adverse effect on the assets,
business, operations, earnings, prospects, properties or condition (financial
or otherwise) of the Company and the Subsidiaries, taken as a whole.

(ix) No filing with, or authorization, approval, consent, license,
order registration, qualification or decree of, any court or governmental
authority or agency, domestic or foreign, is necessary or required for the
performance by the Trust or the Company of their respective obligations under
this Agreement, the Guarantees, the Declaration or the Indenture or in
connection with the transactions contemplated under this Agreement, the
Guarantee, the Declaration and the Indenture, except such as have been already
obtained or as may be required under state securities laws.

(x) The Registration Statement has been declared effective under the
Securities Act. Any required filing of the Prospectus pursuant to Rule 424(b)
has been made in the manner and within the time period required by Rule 424(b).
To the best of our knowledge, no stop order suspending the effectiveness of the
Registration Statement has been issued under the Securities Act and no
proceedings for that purpose have been initiated or are pending or threatened by
the Commission.

(xi) The Registration Statement and the Prospectus, excluding the
documents incorporated by reference therein, as of their respective effective or
issue dates (other than the financial statements and supporting schedules
included therein or omitted therefrom and the Trustee's Statement of Eligibility
on Form T-1 as to which we express no opinion) complied as to form in all
material respects with the requirements of the Securities Act and the Securities
Act Regulations.

(xii) The Company is not and, after giving effect to the offering and
sale of the Securities and the application of the proceeds thereof as described
in the Prospectus, will not be, an "investment company" or an entity
"controlled" by an "investment company", as such terms are defined in the
Investment Company Act of 1940, as amended.

(xiii) The statements (A) in the Prospectus under the captions
"Description of the Trust Preferred Securities," "Description of the Guarantee,"
"Description of the Debentures," "Relationship Among the Trust Preferred
Securities, the Debentures and the Guarantee," "Certain Federal Income Tax
Consequences" and "ERISA Considerations" and (B) in the Registration Statement
under Item 15, and (C) in the Company's most recent Annual Report in Form 10-KSB
under the caption "Item 3-Legal Proceedings," insofar as such statements
constitute a summary of the legal matters or documents referred to therein,
constitute accurate summaries thereof in all material respects.

A-2
<PAGE> 30
(xiv) In addition, such counsel shall state that they have participated
in conferences with officers and other representatives of the Company,
independent public accountants of the Company and the Representatives, at which
the contents of the Registration Statement and Prospectus were discussed and,
although such counsel is not passing upon and does not assume responsibility for
the accuracy, completeness or fairness of the statements contained in the
Registration Statement or Prospectus (except as and to the extent stated in
subparagraphs (vii) and (xiii) above), they have no reason to believe that the
Registration Statement at the time it became effective, contained or contains an
untrue statement of a material fact or omitted or omits to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading or that the Prospectus at the time the Registration Statement was
declared effective and at the date hereof, contained or contains any untrue
statement of a material fact or omitted or omits to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading (it being understood
that, in each case, such counsel need express no view with respect to the
financial statements and other financial and statistical data included or
incorporated by reference in the Registration Statement, or the Prospectus).

A-3
<PAGE> 31
EXHIBIT B
OPINION OF JEFFREY P. KASSING

(i) The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Delaware.

(iv) The Company and the Subsidiaries are duly qualified or licensed by
each jurisdiction in which they conduct their respective businesses and in which
the failure, individually or in the aggregate, to be so qualified or licensed
could have a material adverse effect on the assets, business, operations,
earnings, prospects, properties or condition (financial or otherwise) of the
Company and the Subsidiaries taken as a whole, and the Company and the
Subsidiaries are duly qualified, and are in good standing, in each jurisdiction
in which they own or lease real property or maintain an office and in which such
qualification is necessary, except where the failure to be so qualified and in
good standing would not have a material adverse effect on the assets, business,
operations, earnings, prospects, properties or condition (financial or
otherwise) of the Company and the Subsidiaries taken as a whole.

(v) The authorized, issued and outstanding shares of capital stock of
the Company is as set forth in the Prospectus under the caption "Capitalization"
under the column entitled "Actual." Such shares of capital stock of the Company
have been duly authorized and validly issued and are fully paid and
non-assessable, and none of such shares of capital stock was issued in violation
of preemptive or other similar rights of any security holder of the Company.
Except as disclosed in the Prospectus, there are no outstanding (i) securities
or obligations of the Company convertible into or exchangeable for any capital
stock of the Company, (ii) warrants, rights or options to subscribe for or
purchase from the Company any such capital stock or any such convertible or
exchangeable securities or obligations, or (iii) obligations of the Company to
issue any shares of capital stock, any such convertible or exchangeable
securities or obligations, or any such warrants, rights or options.

(vi) The outstanding shares of capital stock of the Subsidiaries have
been duly authorized and validly issued and are fully paid and non-assessable,
and none of such shares of capital stock was issued in violation of preemptive
or other similar rights of any security holder of any Subsidiary. There are no
(i) securities or obligations of any of the Subsidiaries

B-1
<PAGE> 32
convertible into or exchangeable for any capital stock of any Subsidiary, (ii)
warrants, rights or options to subscribe for or purchase from any of the
Subsidiaries any such capital stock or any such convertible or exchangeable
securities or obligations, or (iii) obligations of any of the Subsidiaries to
issue any shares of capital stock, any such obligations, or any warrants,
rights or options. All of the issued and outstanding capital stock of each
Subsidiary is owned by the Company, free and clear of any security interest,
mortgage, pledge, lien, encumbrance, claim or equity.

(vii) Neither the Company nor either of the Subsidiaries is (A) in
violation of the Declaration or its charter or bylaws or (B) in breach or
default (nor has any event occurred which with notice, lapse of time, or both
would constitute a breach of, or default), in the performance or observance of
any obligation, agreement, covenant or condition contained in any contract,
license, indenture, mortgage, deed of trust, note, loan or credit agreement or
other agreement or instrument to which the Company or either of the Subsidiaries
is a party or by which any of them properties is bound or to which any of the
property or assets of the Trust, the Company or the Subsidiaries is subject,
except for such breaches or defaults which would not have a material adverse
effect on the assets, business, operations, earnings, prospects, properties or
condition (financial or otherwise) of the Company and its Subsidiaries taken as
a whole.

(viii) The execution, delivery and performance of the Agreement by the
Trust , the compliance by the Trust with all the provisions thereof and the
consummation of the transactions contemplated thereby and by the Declaration,
including the issuance and sale of the Securities and the Common Securities by
the Trust, the purchase of the Debentures by the Trust and the distribution of
the Debentures by the Trust in the circumstances contemplated by the Declaration
will not (A) require any consent, approval, authorization or other order of, or
qualification with, any court or governmental body or agency (except such as may
be required under the securities or Blue Sky laws of the various states), (B)
constitute a breach of any of the terms or provisions of, or a default under,
the charter or by- laws of the Company or either Subsidiary or any indenture,
loan agreement, mortgage, lease or other agreement or instrument that is
material to the Company and the Subsidiaries taken as a whole to which the
Company or either Subsidiary is a party or by which the Company or either
Subsidiary or their respective property is bound, (C) violate any applicable law
or any rule, regulation, judgment, order or decree of any court or any
governmental body or agency having jurisdiction over the Company, either
Subsidiary or their respective property, or (D) result in the imposition or
creation of (or the obligation to create or impose) a security interest, claim,
lien, encumbrance or adverse interest of any nature (each a "Lien"), under any
agreement or instrument to which the Company or either Subsidiary is a party or
by which the Company or either Subsidiary or their respective property is bound.

(ix) The execution, delivery and performance of the Agreement, the
Debentures and the Guarantor Agreements by the Company, the compliance by the
Company with all the provisions thereof and the consummation of the transactions
contemplated thereby including the issuance and sale of the Securities and the
Common Securities by the Trust, the sale of the Debentures by the Company to the
Trust, the distribution of the Debentures by the Trust in the

B-2
<PAGE> 33
circumstance contemplated by the Declaration and the issuance by the Company of
the Guarantees will not (A) require any consent, approval, authorization or
other order of, or qualification with, any court or governmental body or agency
(except such as have been made or received and except such as may be required
under the securities or Blue Sky laws of the various states), (B) constitute a
breach of any of the terms or provisions of, or a default under, the charter or
by-laws of the Company or either Subsidiary or any indenture, loan agreement,
mortgage, lease or other agreement or instrument that is material to the
Company and the Subsidiaries taken as a whole to which the Company or either
Subsidiary is a party or by which the Company or either Subsidiary or their
respective property is bound, (C) violate any applicable law or any rule,
regulation, judgment, order or decree of any court or any governmental body or
agency having jurisdiction over the Company, either Subsidiary or their
respective property or (D) result in the imposition or creation of (or the
obligation to create or impose) a Lien (excluding any right of redemption of
the Company arising under the Declaration, the Indenture or the Debentures)
under any agreement or instrument to which the Company or either Subsidiary is
a party or by which the Company or either Subsidiary or their respective
property is bound.

(x) To the best of our knowledge, there are no actions, suits,
proceedings, inquiries or investigations pending or threatened against the
Company or either of the Subsidiaries or any of their respective officers and
directors or to which the properties, assets or rights of any such entity are
subject, at law or in equity, before or by any federal, state, local or foreign
governmental or regulatory commission, board, body, authority, arbitral panel or
agency which are required to be disclosed in the Registration Statement and the
Prospectus, or which might be reasonably expected to result in a judgment,
decree, award or order having a material adverse effect on the assets, business,
operations, earnings, prospects, properties or condition (financial or
otherwise) of the Company and the Subsidiaries taken as a whole.

(xi) The descriptions in the Registration Statement and the Prospectus
of the contracts and other documents therein described present fairly the
information required to be shown, and there are no contracts or documents which
are required to be described in the Registration Statement, the Prospectus or
the documents incorporated by reference therein or to be filed as exhibits
thereto which have not been so described and filed as required.

(xii) The documents incorporated by reference in the Registration
Statement and the Prospectus, at the time they were filed with the Commission,
complied in all material respects with the requirements of the Exchange Act and
the Exchange Act Regulations.

(xiii) The Company and the Subsidiaries own or possess adequate
patents, license or other rights to use all patents, trademarks, service marks,
trade names, copyrights, software and design licenses, trade secrets,
manufacturing processes, other intangible property rights and know-how
(collectively "Intangibles") necessary to entitle the Company and each
Subsidiary to conduct its business as described in the Prospectus, and neither
the Company, nor any Subsidiary, has received notice of infringement of or
conflict with (and the Company knows of no such infringement of or conflict
with) asserted rights of others with respect to any Intangibles

B-3
<PAGE> 34
which could materially and adversely affect the business, prospects,
properties, assets, results of operations or condition (financial or otherwise)
of the Company and the Subsidiaries, taken as a whole.

(xiv) In addition, such counsel shall state that they have participated
in conferences with officers and other representatives of the Company,
independent public accountants of the Company, representatives of the
Representatives, at which the contents of the Registration Statement and
Prospectus were discussed and, although such counsel is not passing upon and
does not assume responsibility for the accuracy, completeness or fairness of the
statements contained in the Registration Statement or Prospectus (except as and
to the extent stated in subparagraph (xi) above), they have no reason to believe
that the Registration Statement at the time it became effective, contained or
contains an untrue statement of a material fact or omitted or omits to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading or that the Prospectus at the time the Registration
Statement was declared effective and at the date hereof, contained or contains
any untrue statement of a material fact or omitted or omits to state a material
fact necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading (it being understood
that, in each case, such counsel need express no view with respect to the
financial statements and other financial and statistical data included or
incorporated by reference in the Registration Statement, or the Prospectus).

B-4
<PAGE> 35
EXHIBIT C
OPINION OF POTTER ANDERSON & CORROON LLP
SPECIAL DELAWARE COUNSEL FOR THE TRUST

(i) The Trust has been duly created and is validly existing in good
standing as a business trust under the Delaware Business Trust Act.

(ii) Under the Delaware Business Trust Act and the Declaration, the
Trust has the power and authority (a) to own its properties (including, without
limitation, the Debentures) and conduct its business, (b) to execute and
deliver, and to perform its obligations under and to consummate the transactions
contemplated by, the agreements to which it is a party and (c) to issue and
sell, and to perform its obligations under Trust Preferred Securities and the
Trust Common Securities, all as described in the Registration Statement and the
Prospectus.

(iii) The Declaration constitutes a valid and binding obligation of the
Sponsor and the Trustees, enforceable against the Sponsor and the Trustees,
respectively, in accordance with its terms.

(iv) The execution and delivery by the Trust of the Underwriting
Agreement has been duly authorized by all necessary trust action on the part of
the Trust.

(v) The Trust Preferred Securities have been duly authorized by
the Declaration, and are validly issued, and subject to the qualifications set
forth in Paragraph (viii) below, fully paid and nonassessable undivided
beneficial interests in the assets of the Trust.

(vi) Once duly and validly issued in accordance with the Declaration,
the Trust Preferred Securities will entitle the holders of the Trust Preferred
Securities to the benefits of the Declaration.

(vii) The Trust Common Securities have been duly authorized by the
Declaration, and are validly issued.

(viii) The holders of the Trust Preferred Securities, as beneficial
owners of Trust Preferred Securities of the Trust, will be entitled to the same
limitation of personal liability extended to stockholders of private
corporations for profit organized under the General Corporation Law of the State
of Delaware except that the holders of Trust Preferred Securities may be
obligated to provide (a) indemnity or security in connection with, and pay taxes
or governmental charges arising from, transfers or exchanges of Trust Preferred
Securities certificates and the issuance of replacement Trust Preferred
Securities certificates and (b) security and indemnity in connection with
requests of or directions to the Property Trustee to exercise its rights and
powers under the Declaration.

C-1
<PAGE> 36
(ix) Under the Delaware Business Trust Act and the Declaration, the
issuance of the Trust Preferred Securities is not subject to preemptive rights.

(x) No authorization, approval or consent of any governmental authority
or regulatory body of the State of Delaware is required for the consummation by
the Trust of the transactions contemplated by the agreements to which it is a
party and performance by the Trust of its obligations thereunder or under the
Trust Securities, except such as may be required by the securities or Blue Sky
laws of the State of Delaware in connection with the offer and sale of the Trust
Securities.

(xi) The (a) issuance and sale by the Trust of the Trust Securities and
(b) the execution, delivery and performance by the Trust of the Agreements to
which it is a party and the consummation by the Trust of the transactions
contemplated thereunder and the compliance by the Trust with its obligations
thereunder, will not contravene or result in a breach or violation of any of the
terms or provisions of the Certificate of Trust, the Declaration or any statute,
rule or regulation of the State of Delaware known by us to be applicable to the
Trust.

C-2

<PAGE> 1
EXHIBIT 4.1

================================================================================

KBK CAPITAL CORPORATION

THE FIRST NATIONAL BANK OF CHICAGO
TRUSTEE

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

INDENTURE

DATED AS OF NOVEMBER __, 1998

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

______% SUBORDINATED DEBENTURES DUE 2028

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

================================================================================
<PAGE> 2
KBK CAPITAL CORPORATION

CERTAIN SECTIONS OF THIS INDENTURE RELATING TO
SECTIONS 310 THROUGH 318, INCLUSIVE, OF THE
TRUST INDENTURE ACT OF 1939:
<TABLE>
<CAPTION>
Trust Indenture
Act Section Indenture Section
<S> <C>
Section 310 (a)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.9
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.9
(a)(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
(a)(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.8; 6.10
Section 311 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.13
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.13
Section 312 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.1; 7.2
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.2
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.2
Section 313 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.3
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.3
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.3
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.3
Section 314 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.4
(a)(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.4; 10.4
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
(c)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.1
(c)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.1; 1.2
(c)(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.2
Section 315 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.1
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.2
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.1
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.1
(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.14
Section 316 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.1
(a)(1)(A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.2; 5.12
(a)(1)(B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.13
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.8
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.4
Section 317 (a)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.3
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.4
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.3
Section 318 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.7
</TABLE>

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

NOTE: This reconciliation and tie shall not, for any purpose, be deemed to be
a part of the Indenture.
<PAGE> 3
TABLE OF CONTENTS

<TABLE>
<S> <C>
ARTICLE I

DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.2 Compliance Certificates and Opinions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 1.3 Form of Documents Delivered to Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 1.4 Acts of Holders; Record Dates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 1.5 Notices, Etc., to Trustee and Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 1.6 Notice to Holders; Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 1.7 Conflict with Trust Indenture Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 1.8 Effect of Headings and Table of Contents . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 1.9 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 1.10 Separability Clause . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 1.11 Benefits of Indenture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 1.12 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 1.13 Legal Holidays . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 1.14 Language of Notices, Etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 1.15 Incorporators, Stockholders, Officers and Directors of the Company Exempt from Individual
Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

ARTICLE II

DEBENTURE FORM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 2.1 Forms Generally . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 2.2 Global Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 2.3 Form of Trustee's Certificate of Authentication . . . . . . . . . . . . . . . . . . . . . . . . . 16

ARTICLE III

GENERAL TERMS AND CONDITIONS OF THE DEBENTURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 3.1 Designation, Title and Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 3.2 Execution, Authentication, Delivery and Dating . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 3.3 Temporary Debentures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 3.4 Registration, Registration of Transfer and Exchange . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 3.5 Mutilated, Destroyed, Lost and Stolen Debentures . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 3.6 Payment of Interest; Interest Rights Preserved . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 3.7 Persons Deemed Owners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 3.8 Cancellation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 3.9 CUSIP Numbers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
</TABLE>
<PAGE> 4
<TABLE>
<S> <C>
ARTICLE IV

SATISFACTION AND DISCHARGE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 4.1 Satisfaction and Discharge of Indenture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 4.2 Application of Trust Money . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25

ARTICLE V

REMEDIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 5.1 Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 5.2 Acceleration of Maturity; Rescission and Annulment . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 5.3 Collection of Indebtedness and Suits for Enforcement by Trustee . . . . . . . . . . . . . . . . . 28
SECTION 5.4 Trustee May File Proofs of Claim . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 5.5 Trustee May Enforce Claims Without Possession of Debentures . . . . . . . . . . . . . . . . . . . 29
SECTION 5.6 Application of Money Collected . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 5.7 Limitation on Suits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 5.8 Unconditional Right of Holders to Receive Principal and Interest . . . . . . . . . . . . . . . . 30
SECTION 5.9 Restoration of Rights and Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 5.10 Rights and Remedies Cumulative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 5.11 Delay or Omission Not Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 5.12 Control by Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 5.13 Waiver of Past Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 5.14 Undertaking for Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 5.15 Waiver of Usury, Stay or Extension Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32

ARTICLE VI

THE TRUSTEE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 6.1 Certain Duties and Responsibilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 6.2 Notice of Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 6.3 Certain Rights of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 6.4 Not Responsible for Recitals or Issuance of Debentures . . . . . . . . . . . . . . . . . . . . . 34
SECTION 6.5 May Hold Debentures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 6.6 Money Held in Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 6.7 Compensation and Reimbursement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 6.8 Disqualification; Conflicting Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 6.9 Corporate Trustee Required; Eligibility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 6.10 Resignation and Removal; Appointment of Successor . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 6.11 Acceptance of Appointment by Successor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 6.12 Merger, Conversion, Consolidation or Succession to Business . . . . . . . . . . . . . . . . . . . 38
SECTION 6.13 Preferential Collection of Claims Against Company . . . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 6.14 Appointment of Authenticating Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
</TABLE>

ii
<PAGE> 5
<TABLE>
<S> <C>
ARTICLE VII

HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 7.1 Company to Furnish Trustee Names and Addresses of Holders . . . . . . . . . . . . . . . . . . . . 40
SECTION 7.2 Preservation of Information; Communications to Holders . . . . . . . . . . . . . . . . . . . . . 40
SECTION 7.3 Reports by Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 7.4 Reports by Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41

ARTICLE VIII

CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 8.1 Company May Consolidate, Etc, Only on Certain Terms . . . . . . . . . . . . . . . . . . . . . . . 42

ARTICLE IX

SUPPLEMENTAL INDENTURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 9.1 Supplemental Indentures Without Consent of Holders . . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 9.2 Supplemental Indentures with Consent of Holders . . . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 9.3 Execution of Supplemental Indentures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
SECTION 9.4 Effect of Supplemental Indentures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
SECTION 9.5 Conformity with Trust Indenture Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
SECTION 9.6 Reference in Debentures to Supplemental Indentures . . . . . . . . . . . . . . . . . . . . . . . 45

ARTICLE X

COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
SECTION 10.1 Payment of Principal and Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
SECTION 10.2 Maintenance of Office or Agency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
SECTION 10.3 Money for Debenture Payments to Be Held in Trust . . . . . . . . . . . . . . . . . . . . . . . . 46
SECTION 10.4 Statement by Officers as to Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
SECTION 10.5 Existence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
SECTION 10.6 Waiver of Certain Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48

ARTICLE XI

REDEMPTION AND EXCHANGE OF DEBENTURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
SECTION 11.1 Optional Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
SECTION 11.2 Election to Redeem; Notice to Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
SECTION 11.3 Selection by Trustee of Debentures to Be Redeemed . . . . . . . . . . . . . . . . . . . . . . . . 49
SECTION 11.4 Notice of Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
SECTION 11.5 Deposit of Redemption Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 11.6 Debentures Payable on Redemption Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 11.7 Debentures Redeemed in Part . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
</TABLE>

iii
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<TABLE>
<S> <C>
SECTION 11.8 Exchange of Trust Securities for Debentures. . . . . . . . . . . . . . . . . . . . . . . . . . . 51
SECTION 11.9 No Sinking Fund. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51

ARTICLE XII

EXTENSION OF INTEREST PAYMENT PERIOD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
SECTION 12.1 Extension of Interest Payment Period. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
SECTION 12.2 Additional Sums. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51

ARTICLE XIII

DEFEASANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
SECTION 13.1 Legal Defeasance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
SECTION 13.2 Covenant Defeasance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
SECTION 13.3 Application by Trustee of Funds Deposited for Payment of
Debentures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
SECTION 13.4 Repayment to Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55

ARTICLE XIV

SUBORDINATION OF DEBENTURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
SECTION 14.1 Agreement to Subordinate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
SECTION 14.2 Distribution on Dissolution, Liquidation and Reorganization; Subrogation of Debentures . . . . . 55
SECTION 14.3 No Payment on Debentures in Event of Default on Senior Debt . . . . . . . . . . . . . . . . . . . 57
SECTION 14.4 Payments on Debentures Permitted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
SECTION 14.5 Authorization of Holders of Debentures to Trustee to Effect Subordination . . . . . . . . . . . . 57
SECTION 14.6 Notices to Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
SECTION 14.7 Trustee as Holder of Senior Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
SECTION 14.8 Modification of Terms of Senior Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59

ARTICLE XV

LIMITATION OF TRANSACTIONS; COVENANTS AS TO TRUST . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
SECTION 15.1 Limitation of Transactions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
SECTION 15.2 Covenants As To Trust. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
</TABLE>

iv
<PAGE> 7
INDENTURE dated as of November 1, 1998, between KBK CAPITAL
CORPORATION, a corporation duly organized and existing under the laws of
Delaware (the "Company"), having its principal office at 2200 City Center II,
301 Commerce Street, Fort Worth, Texas 76102, and THE FIRST NATIONAL BANK OF
CHICAGO, a national banking association, as Trustee (the "Trustee").

RECITALS OF THE COMPANY

The Company has duly authorized the execution and delivery of this
Indenture to provide for the issuance of its % Subordinated Debentures Due 2028
(the "Debentures"), a specimen copy of which is attached hereto as Exhibit A, on
the terms set forth in this Indenture and in the Debentures.

All things necessary to make this Indenture a valid agreement of the
Company and the Trustee, in accordance with its terms, have been done.

This Indenture is subject to the provisions of the Trust Indenture Act
that are required to be a part of this Indenture and, to the extent applicable,
shall be governed by such provisions.

NOW, THEREFORE, THIS INDENTURE WITNESSETH:

For and in consideration of the premises and the purchase of the
Debentures by the Holders thereof, it is mutually agreed, for the equal and
proportionate benefit of all Holders of the Debentures as follows:

ARTICLE I

DEFINITIONS AND OTHER PROVISIONS OF GENERAL
APPLICATION

SECTION 1.1 Definitions.

For all purposes of this Indenture, except as otherwise expressly
provided or unless the context otherwise requires:

(a) the terms defined in this Article have the meanings
assigned to them in this Article and include the plural as well as the
singular;

(b) all other terms used herein which are defined in the
Trust Indenture Act, either directly, or by reference therein, have the
meanings assigned to them therein;

(c) all accounting terms not otherwise defined herein
have the meanings assigned to them in accordance with generally accepted
accounting principles, and, except as otherwise herein expressly provided, the
term "generally accepted accounting principles" with respect to any
<PAGE> 8
computation required or permitted hereunder shall mean such accounting
principles as are generally accepted in the United States at the date of such
computation;

(d) the words "herein", "hereof" and "hereunder" and
other words of similar import refer to this Indenture as a whole and not to any
particular Article, Section or other subdivision;

(e) the words "Article" and "Section" refer to an Article
and Section, respectively, of this Indenture unless otherwise specified;

(f) headings are for convenience of reference only and do
not affect interpretation; and

(g) the following terms have the meanings given to them
in the Declaration: (i) Additional Amounts; (ii) Administrative Trustee; (iii)
Distributions; (iv) Trust Common Securities Guarantee; and (v) Trust Preferred
Securities Guarantee.

"Act", when used with respect to any Holder, has the meaning specified
in Section 1.4.

"Additional Interest" means the interest, if any, that shall accrue on
any interest on the Debentures that is in arrears for one or more quarterly
interest payment periods or not paid during any Extension Period, which in
either case shall accrue at the stated rate per annum specified or determined
as specified in such Debenture and compounded quarterly.

"Additional Sums" means, with respect to the Trust Securities, the
additional amounts as may be necessary in order that the amount of
Distributions then due and payable by the Trust on the outstanding Trust
Preferred Securities and Trust Common Securities shall not be reduced as a
result of any additional taxes, duties and governmental charges to which the
Trust has become subject.

"Affiliate" has the same meaning as given to that term in Rule 405
under the Securities Act of 1933, as amended, or any successor rule thereunder;
provided, however, that an Affiliate of the Company shall not be deemed to
include the Trust.

"Authenticating Agent" means any Person authorized by the Trustee
pursuant to Section 6.14 to act on behalf of the Trustee to authenticate
Debentures.

"Authorized Newspaper" means a newspaper, in the English language or
in an official language of the country of publication, customarily published on
each Business Day, whether or not published on Saturdays, Sundays or holidays,
and of general circulation in the place in connection with which the term is
used or in the financial community of such place.

"Bankruptcy Law," means Title 11, U.S. Code, or any similar federal or
state law for the relief of debtors.

2
<PAGE> 9
"Board of Directors" means the board of directors of the Company, or
the executive or any other committee of that board duly authorized to act in
respect thereof.

"Board Resolution" means a copy of a resolution certified by the
Corporate Secretary or an Assistant Secretary of the Company, the principal
financial officer of the Company or any other authorized officer of the Company
or a person duly authorized by any of them, to have been duly adopted by the
Board of Directors and to be in full force and effect on the date of such
certification, and delivered to the Trustee.

"Business Day" means any day other than a day on which banking
institutions in The City of New York are authorized or required by law or
executive order to close.

"Capital Stock" means, with respect to any Person, any and all shares,
interests, participations, rights in or other equivalents (however designated)
of such Person's capital stock, and any rights (other than debt securities
convertible into capital stock), warrants or options exchangeable for or
convertible into such capital stock.

"Change in 1940 Act Law" means, as a result of the occurrence on or
after the date of the original issuance of the Trust Preferred Securities of a
change in law or regulation or a change in interpretation or application of law
or regulation by any legislative body, court, governmental agency or regulatory
authority, the Trust is or will be considered an "investment company" which is
required to be registered under the 1940 Act.

"Commission" means the United States Securities and Exchange
Commission, as from time to time constituted, created under the Exchange Act
or, if at any time after the execution of this instrument such Commission is
not existing and performing the duties now assigned to it under the Trust
Indenture Act, then the body performing such duties at such time.

"Common Stock" includes any stock of any class of Capital Stock of any
Person which has no preference in respect of dividends or of amounts payable in
the event of any voluntary or involuntary liquidation, dissolution or
winding-up of such Person and which is not subject to redemption by such
Person.

"Company" means the Person named as the "Company" in the first
paragraph of this instrument until a successor Person shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Company" shall mean such successor Person.

"Company Request" or "Company Order" means a written request or order
signed in the name of the Company by its Chairman of the Board, its Chief
Executive Officer, its President, any of its Vice Presidents or any other
authorized officer of the Company or a person duly authorized by any of them,
and delivered to the Trustee.

3
<PAGE> 10
"Corporate Trust Office" means the principal office of the Trustee at
which at any particular time its corporate trust business shall be principally
administered, which at the date hereof is One First National Plaza, Suite 0126,
Chicago, Illinois 60670-0126.

"corporation" includes corporations, associations, partnerships,
limited liability companies, joint-stock companies and business trusts.

"covenant defeasance" has the meaning specified in Section 13.2.

"Custodian" means any receiver, trustee, assignee, liquidator or
similar official under any Bankruptcy Law.

"Debentures" means the Company's % Subordinated Debentures
Due 2028.

"Debt" means any obligation created or assumed by any Person for the
repayment of money borrowed and any purchase money obligation created or
assumed by such Person.

"Declaration" means the Amended and Restated Declaration of Trust of
the Trust, dated as of November __, 1998, as the same may be modified, amended
or supplemented in accordance with the applicable provisions thereof, including
all exhibits thereto, including, for all purposes of the Declaration, any such
modification, amendment or supplement, and the provisions of the Trust
Indenture Act that are deemed to be a part of and govern the Declaration.

"Default" means, any event which is, or after notice or lapse of time
or both would become, an Event of Default with respect to the Debentures.

"Defaulted Interest" has the meaning specified in Section 3.6.

"defeasance" has the meaning specified in Section 13.1.

"Definitive Debenture" means a Debenture other than a Debenture in the
form of a Global Security or a temporary Debenture.

"Depository" means, with respect to Debentures issuable in whole or in
part in the form of one or more Global Securities, a clearing agency registered
under the Exchange Act that is designated to act as Depository for such
Debentures until a successor Depository shall have become such pursuant to the
applicable provisions of this Indenture, and thereafter shall mean or include
each Person which is then a Depository hereunder, and if at any time there is
more than one such Person, shall be a collective reference to such Persons.

"Dollar" or "$" means the coin or currency of the United States of
America as at the time of payment is legal tender for the payment of public and
private debts.

4
<PAGE> 11
"Event of Default" has the meaning specified in Section 5.1.

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

"Extension Period" has the meaning set forth in the form of Debenture
attached as Exhibit A hereto.

"Global Security" means a Debenture in global form that evidences all
or part of the Debentures and is authenticated and delivered to, and registered
in the name of, the Depository for such Debentures or a nominee thereof.

"Holder" means a Person in whose name a Debenture is registered in the
Security Register.

"Indenture" means this instrument as originally executed or as it may
from time to time be supplemented or amended by one or more indentures
supplemental hereto entered into pursuant to the applicable provisions hereof,
including, for all purposes of this instrument, and any such supplemental
indenture, the provisions of the Trust Indenture Act that are deemed to be a
part of and govern this instrument and any such supplemental indenture,
respectively. The term "Indenture" also shall include the terms of the
Debentures.

"Interest Payment Date" means the Stated Maturity of an installment of
interest on the Debentures.

"Lien" means any mortgage, pledge, security interest, charge, lien or
other encumbrance of any kind, whether or not filed, recorded or perfected
under applicable law.

"Liquidation Amount" means an amount with respect to the assets of the
Trust equal to $25 per Trust Security.

"Maturity" means the date on which the principal of the Debentures
becomes due and payable as therein or herein provided, whether at the Stated
Maturity or by declaration of acceleration, call for redemption or otherwise.

"1940 Act" means the Investment Company Act of 1940, as amended from
time to time, or any successor legislation.

"Notice of Default" means a written notice of the kind specified in
Section 5.1(c).

5
<PAGE> 12
signing and Officer's Certificate given pursuant to Section 10.4 shall be the
principal executive, financial or accounting officer of the Company.

"Opinion of Counsel" means a written opinion of legal counsel, who may
be an employee of or counsel for the Company who shall be reasonably acceptable
to the Trustee.

"Outstanding", when used with respect to Debentures, means, as of the
date of determination, all Debentures theretofore authenticated and delivered
under this Indenture, except:

(a) Debentures theretofore canceled by the Trustee or delivered to
the Trustee for cancellation;

(b) Debentures for whose payment or redemption money in the
necessary amount has been theretofore deposited with the Trustee or any Paying
Agent (other than the Company) in trust or set aside and segregated in trust by
the Company (if the Company shall act as its own Paying Agent) for the Holders
of such Debentures; provided, however, that, if such Debentures are to be
redeemed, notice of such redemption has been duly given pursuant to this
Indenture or provision therefor satisfactory to the Trustee has been made;

(c) Debentures which have been paid pursuant to Section 3.5 or in
exchange for or in lieu of which other Debentures have been authenticated and
delivered pursuant to this Indenture, other than any such Debentures in respect
of which there shall have been presented to the Trustee proof satisfactory to
it that such Debentures are held by a bona fide purchaser in whose hands such
Debentures are valid obligations of the Company; and

(d) Debentures, except to the extent provided in Sections 13.1 and
13.2, with respect to which the Company has effected defeasance or covenant
defeasance as provided in Article XIII.

provided, however, that in determining whether the Holders of the requisite
principal amount of the Outstanding Debentures have given any request, demand,
authorization, direction, notice, consent or waiver hereunder, Debentures owned
by the Company or any other obligor upon the Debentures or any Affiliate of the
Company or of such other obligor shall be disregarded and deemed not to be
Outstanding, except that, in determining whether the Trustee shall be protected
in relying upon any such request, demand, authorization, direction, notice,
consent or waiver, only Debentures which the Trustee knows to be so owned shall
be so disregarded. Debentures so owned which have been pledged in good faith
may be regarded as Outstanding if the pledgee establishes to the satisfaction
of the Trustee the pledgee's right so to act with respect to such Debentures
and that the pledgee is not the Company or any other obligor upon the
Debentures or any Affiliate of the Company or of such other obligor.

"Paying Agent" means any Person authorized by the Company to pay the
principal of or interest on any Debentures on behalf of the Company.

6
<PAGE> 13
"Person" means a legal person, including any individual, corporation,
estate, partnership, joint venture, association, joint stock company, limited
liability company, trust, unincorporated association, or government or any
agency or political subdivision thereof or any other entity of whatever nature.

"Place of Payment" means the office or agency of the Company in The
City of New York and such other place or places where, subject to the
provisions of Section 10.2, the principal of and interest on the Debentures are
payable.

"Predecessor Debenture" of any particular Debenture means every
previous Debenture evidencing all or a portion of the same debt as that
evidenced by such particular Debenture; and, for the purposes of this
definition, any Debenture authenticated and delivered under Section 3.5 in
exchange for or in lieu of a mutilated, destroyed, lost or stolen Debenture
shall be deemed to evidence the same debt as the mutilated, destroyed, lost or
stolen Debenture.

"Property Trustee" means the property trustee of the Trust appointed
pursuant to Section 6.3 of the Declaration.

"Redemption Date", when used with respect to any Debenture to be
redeemed, means the date fixed for such redemption pursuant to Article XI.

"Redemption Price", when used with respect to any Debenture to be
redeemed, means the price at which it is to be redeemed pursuant to Article XI.

"Regular Record Date" for the interest payable on any Interest Payment
Date on the Debentures means the date specified for that purpose in Section
3.1.

"Responsible Officer", when used with respect to the Trustee, means
any officer of the Trustee assigned to administer corporate trust matters, and
also means, with respect to a particular corporate trust matter, any other
officer to whom such matter is referred because of his or her knowledge of and
familiarity with the particular subject.

"Security Register" and "Security Registrar" have the respective
meanings specified in Section 3.4.

"Senior Debt" means any Debt of the Company, except for trade credit
and any such Debt that is by its terms subordinated to or pari passu with the
Debentures.

"Special Record Date" for the payment of any Defaulted Interest means
a date fixed by the Trustee pursuant to Section 3.6.

7
<PAGE> 14
"Stated Maturity", when used with respect to any Debenture or any
installment of principal thereof or interest thereon, means the date specified
in such Debenture as the fixed date on which the principal of such Debenture or
such installment of principal or interest is due and payable.

"Subsidiary" means a corporation more than 50% of the outstanding
voting stock of which is owned, directly or indirectly, by the Company or by
one or more other Subsidiaries, or by the Company and one or more other
Subsidiaries. For the purposes of this definition, "voting stock" means stock
which ordinarily has voting power for the election of directors, whether at all
times or only so long as no senior class of stock has such voting power by
reason of any contingency.

"Tax Action" means (a) an amendment to, change in or announced
proposed change in the laws (or any regulations thereunder) of the United
States or any political subdivision or taxing authority thereof of therein, (b)
a judicial decision interpreting, applying or clarifying such laws or
regulations, (c) an administrative pronouncement or action that represents an
official position (including a clarification of an official position) of the
governmental authority or regulatory body making such administrative
pronouncement or taking such action, or (d) a threatened challenge asserted in
connection with an audit of the Company or any of its subsidiaries, or the
Trust, or a threatened challenge asserted in writing against any other taxpayer
that has raised capital through the issuance of securities that are
substantially similar to the Debentures or the Trust Preferred Securities,
which amendment or change is adopted or which decision, pronouncement or
proposed change is announced or which action, clarification or challenge occurs
on or after the date of the prospectus related to the issuance of the Trust
Preferred Securities.

"Trust" means KBK Capital Trust I, a Delaware business trust and an
Affiliate of the Company, and any successor to such trust in accordance with
the Declaration.

"Trust Common Security" means the common securities representing
undivided subordinated beneficial ownership interests in the assets of the
Trust with a Liquidation Amount of $25 per Trust Common Security, issued by the
Trust.

"Trust Indenture Act" means the Trust Indenture Act of 1939 as in
force at the date as of which this instrument was executed, except as otherwise
provided in Section 9.5, provided, however, that if the Trust Indenture Act of
1939 is amended after such date, "Trust Indenture Act" means, to the extent
required by any such amendment, the Trust Indenture Act of 1939 as so amended.

"Trust Investment Company Event" means that the Company shall have
requested and received and shall have delivered to the Property Trustee an
Opinion of Counsel (as defined in the Declaration) from a firm having a
national tax and securities practice and that is experienced in 1940 Act
matters (which Opinion of Counsel shall not have been rescinded by such law
firm) to the effect that as a result of a Change in 1940 Act Law, there is more
than an insubstantial risk that the Trust is or, within 90 days after such
date, will be considered an "investment company" which is required to be
registered under the 1940 Act.

8
<PAGE> 15
"Trust Preferred Securities" means the preferred undivided beneficial
ownership interests in the assets of the Trust with a Liquidation Amount of $25
per Trust Preferred Security, issued by the Trust.

"Trust Securities" means the Trust Common Securities and the Trust
Preferred Securities.

"Trust Special Event" means a Trust Tax Event or a Trust Investment
Company Event.

"Trust Tax Event" means that the Company shall have requested and
received and shall have delivered to the Property Trustee an Opinion of Counsel
(as defined in the Declaration) from a firm having a national tax and
securities practice (which Opinion of Counsel shall not have been rescinded by
such law firm) that there has been a Tax Action which relates to any of the
items described in (i) through (iii) below, and that there is more than an
insubstantial risk that (i) the Trust is or, within 90 days after such date,
will be subject to United States federal income tax with respect to income
accrued or received on the Debentures, (ii) the Trust is or, within 90 days
after such date, will be subject to more than a de minimis amount of other
taxes, duties, assessments or other governmental charges or (iii) interest
payable by the Company on the Debentures is not or, within 90 days after such
date, will not be deductible by the Company for United States federal income
tax purposes.

"Trustee" means the Person named as the "Trustee" in the first
paragraph of this instrument until a successor Trustee shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Trustee" shall mean or include each Person who is then a Trustee hereunder.

"Underwriters" with respect to the Trust Preferred Securities, means
Friedman, Billings, Ramsey & Co., Inc. and J.J.B. Hilliard, W.L. Lyons, Inc.
and the other underwriters named in the Underwriting Agreement.

"Underwriting Agreement" means the underwriting agreement with respect
to the Trust Preferred Securities, dated November __, 1998, among the Company,
the Trust and the Underwriters.

"U.S. Government Obligations" means securities which are (i) direct
obligations of the United States for the payment of which its full faith and
credit is pledged, or (ii) obligations of a Person controlled or supervised by
and acting as an agency or instrumentality of the United States, the payment of
which is unconditionally guaranteed as a full faith and credit obligation by
the United States, each of which are not callable or redeemable at the option
of the issuer thereof.

"Vice President", when used with respect to the Company or Trustee,
means any vice president, whether or not designated by a number or a word or
words added before or after the title "vice president".

9
<PAGE> 16
SECTION 1.2 Compliance Certificates and Opinions.

Upon any application or request by the Company to the Trustee to take
any action under any provision of this Indenture, the Company shall furnish to
the Trustee such certificates or opinions as may be required under the Trust
Indenture Act. Each such certificate or opinion shall be given in the form of
an Officer's Certificate, if to be given by an officer of the Company, or an
Opinion of Counsel, if to be given by counsel, and shall comply with the
requirements of the Trust Indenture Act and any other requirements set forth in
this Indenture.

Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture (except for certificates
provided for in Section 10.4) shall include:

(a) a statement that each individual signing such
certificate or opinion has read such covenant or condition and the definitions
herein relating thereto;

(b) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions contained in
such certificate or opinion are based;

(c) a statement that, in the opinion of each such
individual, he has made such examination or investigation as is necessary to
enable him to express an informed opinion as to whether or not such covenant or
condition has been complied with; and

(d) a statement as to whether, in the opinion of each
such individual, such condition or covenant has been complied with.

SECTION 1.3 Form of Documents Delivered to Trustee.

In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.

Any certificate or opinion of an officer of the Company may be based,
insofar as it relates to legal matters, upon a certificate or opinion of, or
representations by, counsel, unless such officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to the matters upon which his certificate or opinion is based are
erroneous. Any such certificate or opinion of counsel may be based, insofar as
it relates to factual matters, upon a certificate or opinion of, or
representations by, an officer or officers of the Company stating that the
information with respect to such factual matters is in the possession of the
Company, unless such counsel knows, or in the exercise of reasonable care
should know, that the certificate or opinion or representations with respect to
such matters are erroneous.

10
<PAGE> 17
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.

SECTION 1.4 Acts of Holders; Record Dates.

Any request, demand, authorization, direction, notice, consent, waiver
or other action provided or permitted by this Indenture to be given or taken by
Holders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed (either physically or by means of a
facsimile or an electronic transmission, provided that such electronic
transmission is transmitted through the facilities of a Depository) by such
Holders in person or by agent duly appointed in writing; and, except as herein
otherwise expressly provided, such action shall become effective when such
instrument or instruments are delivered (either physically or by means of a
facsimile or an electronic transmission, provided that such electronic
transmission is transmitted through the facilities of a Depository) to the
Trustee and, where it is hereby expressly required, to the Company. Such
instrument or instruments (and the action embodied therein and evidenced
thereby) are herein sometimes referred to as the "Act" of the Holders signing
such instrument or instruments. Proof of execution of any such instrument or
of a writing appointing any such agent shall be sufficient for any purpose of
this Indenture and (subject to Section 315 of the Trust Indenture Act)
conclusive in favor of the Trustee and the Company, if made in the manner
provided in this Section.

The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by a certificate of a notary public or other officer authorized by
law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to him the execution thereof. Where
such execution is by a signer acting in a capacity other than his individual
capacity, such certificate or affidavit shall also constitute sufficient proof
of his authority. The fact and date of the execution of any such instrument or
writing, or the authority of the Person executing the same, may also be proved
in any other manner which the Trustee deems sufficient.

The ownership, principal amount and serial numbers of Debentures held
by any Person, and the date of commencement of such Person's holding the same,
shall be proved by the Security Register.

Any request, demand, authorization, direction, notice, consent, waiver
or other action to the Holder of any Debenture shall bind every future Holder
of the same Debenture and the Holder of every Debenture issued upon the
registration of transfer thereof or in exchange therefor or in lieu thereof in
respect of anything done, omitted or suffered to be done by the Trustee or the
Company in reliance thereon, whether or not notation of such action is made
upon such Debenture.

Without limiting the foregoing, a Holder entitled hereunder to give or
take any action hereunder with regard to any particular Debenture may do so
with regard to all or any part of the

11
<PAGE> 18
principal amount of such Debenture or by one or more duly appointed agents each
of which may do so pursuant to such appointment with regard to all or any
different part of such principal amount.

The Company may set any day as the record date for the purpose of
determining the Holders of Outstanding Debentures entitled to give or take any
request, demand, authorization, direction, notice, consent, waiver or other
action provided or permitted by this Indenture to be given or taken by Holders
of Debentures, but the Company shall have no obligation to do so. With regard
to any record date set pursuant to this paragraph, the Holders of Outstanding
Debentures on such record date (or their duly appointed agents), and only such
Persons, shall be entitled to give or take the relevant action, whether or not
such Holders remain Holders after such record date.

SECTION 1.5 Notices, Etc., to Trustee and Company.

Any request, demand, authorization, direction, notice, consent, waiver
or Act of Holders or other document provided or permitted by this Indenture to
be made upon, given or furnished to, or filed with,

(a) the Trustee by any Holder or by the Company shall be
sufficient for every purpose hereunder if made, given, furnished or filed in
writing to or with the Trustee at its Corporate Trust Office, Attention:
Corporate Trustee Administration Department, or at any other address previously
furnished in writing to the Company by the Trustee, or

(b) the Company by the Trustee or by any Holder shall be
sufficient for every purpose hereunder (unless otherwise herein expressly
provided) if in writing and mailed, first-class postage prepaid, to the Company
addressed to it at 2200 City Center II, 301 Commerce Street, Fort Worth, Texas
76102, to the attention of the Corporate Secretary, or at any other address
previously furnished in writing to the Trustee by the Company.

SECTION 1.6 Notice to Holders; Waiver.

Where this Indenture provides for notice to Holders of any event, such
notice shall be sufficiently given (unless otherwise herein expressly provided)
if in writing and mailed, first-class postage prepaid (if international mail,
by air mail) to each Holder affected by such event, at his address as it
appears in the Security Register, not later than the latest date (if any), and
not earlier than the earliest date (if any), prescribed for the giving of such
notice. In any case where notice to Holders is given by mail, neither the
failure to mail such notice, nor any defect in any notice so mailed, to any
particular Holder shall affect the sufficiency of such notice with respect to
other Holders. Any notice mailed to a Holder in the manner herein prescribed
shall be conclusively deemed to have been received by such Holder, whether or
not such Holder actually receives such notice.

Where this Indenture provides for notice in any manner, such notice
may be waived in writing by the Person entitled to receive such notice, either
before or after the event, and such waiver

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shall be the equivalent of such notice. Waivers of notice by Holders shall be
filed with the Trustee, but such filing shall not be a condition precedent to
the validity of any action taken in reliance upon such waiver.

In case by reason of the suspension of regular mail service or by
reason of any other cause it shall be impracticable to give such notice by
mail, then such notification as shall be made with the approval of the Trustee
shall constitute a sufficient notification for every purpose hereunder.

SECTION 1.7 Conflict with Trust Indenture Act.

If any provision hereof limits, qualifies or conflicts with a
provision of the Trust Indenture Act that is required under the Trust Indenture
Act to be a part of and govern this Indenture, the latter provision shall
control. If any provision of this Indenture modifies or excludes any provision
of the Trust Indenture Act that may be so modified or excluded, the latter
provision shall be deemed to apply to this Indenture as so modified or
excluded, as the case may be.

SECTION 1.8 Effect of Headings and Table of Contents.

The Article and Section headings herein and the Table of Contents are
for convenience only and shall not affect the construction hereof.

SECTION 1.9 Successors and Assigns.

All covenants and agreements in this Indenture by the parties hereto
shall bind their respective successors and assigns, and inure to the benefit of
their respective successors and assigns, whether so expressed or not.

SECTION 1.10 Separability Clause.

In case any provision in this Indenture or in the Debentures shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.

SECTION 1.11 Benefits of Indenture.

Nothing in this Indenture or in the Debentures, express or implied,
shall give to any Person, other than the parties hereto and their successors
hereunder, the holders of Senior Debt and the Holders, any benefit or any legal
or equitable right, remedy or claim under this Indenture.

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SECTION 1.12 Governing Law.

This Indenture and the Debentures shall be governed by and construed
in accordance with the law of the State of New York with regard to the
conflicts of law rules of said state.

SECTION 1.13 Legal Holidays.

In any case where any Interest Payment Date, Redemption Date or Stated
Maturity shall not be a Business Day at any Place of Payment, then
(notwithstanding any other provision of this Indenture or of the Debentures)
payment of interest or principal need not be made at such Place of Payment on
such date, but may be made on the next succeeding day which is a Business Day
except that, if such Business Day is in the next succeeding calendar year, such
payment shall be made on the immediately preceding Business Day, in each case
with the same force and effect as if made on the Interest Payment Date or
Redemption Date, or at the Stated Maturity, provided that no interest shall
accrue for the period from and after such Interest Payment Date, Redemption
Date or Stated Maturity, as the case may be.

SECTION 1.14 Language of Notices, Etc.

Any request, demand, authorization, direction, notice, consent, waiver
or Act required or permitted under this Indenture shall be in the English
language, except that any published notice may be in an official language of
the country of publication.

SECTION 1.15 Incorporators, Stockholders, Officers and Directors of the
Company Exempt from Individual Liability.

No recourse under or upon any obligation, covenant or agreement of or
contained in this Indenture or of or contained in the Debentures, or for any
claim based thereon or otherwise in respect thereof, or in the Debentures, or
because of the creation of any indebtedness represented thereby, shall be had
against any incorporator, stockholder, officer or director, as such, past,
present or future, of the Company or any successor Person, either directly or
through the Company or any successor Person, whether by virtue of any
constitution, statute or rule of law, or by the enforcement of any assessment
or penalty or otherwise; it being expressly understood that all such liability
is hereby expressly waived and released as a condition of, and as a part of the
consideration for, the execution of this Indenture and the issue of the
Debentures.

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ARTICLE II

DEBENTURE FORM

SECTION 2.1 Forms Generally.

The Debentures, with the form of the Trustee's Certificate of
Authentication to be endorsed thereon, shall be substantially in the form of
Exhibit A hereto.

The definitive Debentures shall be printed, lithographed or engraved
on steel engraved borders or may be produced in any other manner, all as
determined by the officers executing such Debentures, as evidenced by their
execution of such Debentures.

SECTION 2.2 Global Securities.

Every Global Security authenticated and delivered hereunder shall bear
a legend in substantially the following form:

THIS DEBENTURE IS A GLOBAL SECURITY WITHIN THE
MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS
REGISTERED IN THE NAME OF A DEPOSITORY OR A NOMINEE THEREOF.
THIS DEBENTURE MAY NOT BE TRANSFERRED TO, OR REGISTERED OR
EXCHANGED FOR DEBENTURES REGISTERED IN THE NAME OF, ANY PERSON
OTHER THAN THE DEPOSITORY OR A NOMINEE THEREOF AND NO SUCH
TRANSFER MAY BE REGISTERED, EXCEPT IN THE LIMITED
CIRCUMSTANCES DESCRIBED IN THE INDENTURE. EVERY DEBENTURE
AUTHENTICATED AND DELIVERED UPON REGISTRATION OF TRANSFER OF,
OR IN EXCHANGE FOR OR IN LIEU OF, THIS DEBENTURE SHALL BE A
GLOBAL SECURITY SUBJECT TO THE FOREGOING, EXCEPT IN SUCH
LIMITED CIRCUMSTANCES.

If Debentures are issuable in whole or in part in the form of one or
more Global Securities, then any Global Security shall represent such of the
Outstanding Debentures as shall be specified therein and may provide that it
shall represent the aggregate amount of Outstanding Debentures from time to
time endorsed thereon and that the aggregate amount of Outstanding Debentures
represented thereby may from time to time be reduced or increased, as the case
may be, to reflect redemptions or exchanges. Any endorsement of a Global
Security to reflect the amount, or any reduction or increase in the amount, of
Outstanding Debentures represented thereby shall be made in such manner and
upon instructions given by such Person or Persons as shall be specified therein
or in a Company Order. Subject to the provisions of Sections 3.2, 3.3 and 3.4,
the Trustee shall deliver and redeliver

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<PAGE> 22
any Global Security in the manner and upon instructions given by the Person or
Persons specified therein or in the applicable Company Order. Any instructions
by the Company with respect to endorsement or delivery or redelivery of a
Global Security shall be in a Company Order (which need not comply with Section
1.2 and need not be accompanied by an Opinion of Counsel).

The provisions of the last sentence of Section 3.2 shall apply to any
Debenture represented by a Global Security if such Debenture was never issued
and sold by the Company and the Company delivers to the Trustee the Global
Security together with a Company Order (which need not comply with Section 1.2
and need not be accompanied by an Opinion of Counsel) with regard to the
reduction or increase, as the case may be, in the principal amount of
Debentures represented thereby, together with the written statement
contemplated by the last sentence of Section 3.2.

SECTION 2.3 Form of Trustee's Certificate of Authentication.

The Trustee's certificate of authentication shall be in substantially
the following form:

This is one of the Debentures referred to in the within-mentioned
Indenture.

THE FIRST NATIONAL BANK OF CHICAGO,
As Trustee

By:
----------------------------------
Authorized Officer

ARTICLE III

GENERAL TERMS AND CONDITIONS OF THE DEBENTURES

SECTION 3.1 Designation, Title and Terms.

There is hereby authorized the Company's " % Subordinated
Debentures due 2028," limited in aggregate principal amount to (a) $25,750,000
plus (b) such aggregate principal amount (which may not exceed $3,862,500
principal amount) of additional Debentures as shall be purchased by the
Underwriters pursuant to the Underwriting Agreement on the Option Closing Date
(as such term is defined in the Underwriting Agreement), which amount shall be
as set forth in any written order of the Company for the authentication and
delivery of Debentures pursuant to Section 3.2. All of the Debentures issued
pursuant to this Indenture shall be deemed to have been issued as of, and shall
begin to accrue interest as specified herein from, the Closing Time (as such
term is defined in the Underwriting Agreement). The Debentures will be issued
only in registered form without coupons and only in denominations of $25 and
any integral multiple thereof. The Debentures will mature on November __, 2028
and bear interest at a rate of % per annum from November __, 1998, or
from the most recent Interest Payment Date to which interest has been paid or
duly provided

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<PAGE> 23
for, payable quarterly in arrears on February __, May __, August __, and
November __ of each year, commencing February __, 1999. The interest so
payable, and punctually paid or duly provided for, on any Interest Payment Date
will be paid to the Person in whose name this Debenture (or one or more
Predecessor Debentures) is registered at the close of business on the Regular
Record Date for such interest, which shall be the [fifteenth] day of the
[month] of such Interest Payment Date (that is, each , ,
and ). Interest on the Debentures will be
computed on the basis of a 360-day year comprised of twelve, 30-day months.

Principal of and interest on the Debentures will be payable and
transfers of the Debentures will be registrable at the office or agency of the
Company which will be the Corporate Trust Office and transfers of the Debentures
will also be registrable at such other office or agency of the Company as may be
maintained for such purpose. In addition, payment of interest may be made, at
the option of the Company, by (i) check mailed to the address of the Person
entitled thereto as shown on the Security Register or (ii) by wire transfer in
immediately available funds at such place and to such account as may be
designated to the Paying Agent by the Person entitled thereto as specified in
the Security Register no later than the applicable Record Date.

The Debentures will be redeemable as provided in Article XI.

All Debentures shall be substantially identical except as to
denomination and except as may otherwise be provided in and (subject to Section
3.2) set forth, or determined in the manner provided, in any indenture
supplemental hereto.

SECTION 3.2 Execution, Authentication, Delivery and Dating.

The Debentures shall be executed on behalf of the Company by its
Chairman of the Board, its Chief Executive Officer, its Chief Financial
Officer, its President or any Vice President and need not be attested. The
signature of any of these officers on the Debentures may be manual or
facsimile.

Debentures bearing the manual or facsimile signatures of individuals
who were at any time the proper officers of the Company shall bind the Company,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Debentures or did not
hold such offices at the date of such Debentures.

At any time and from time to time after the execution and delivery of
this Indenture, the Company may deliver Debentures executed by the Company to
the Trustee for authentication, together with a Company Order for the
authentication and delivery of such Debentures, and the Trustee in accordance
with the Company Order shall authenticate and deliver such Debentures.

Each Debenture shall be dated the date of its authentication.

No Debenture shall be entitled to any benefit under this Indenture or
be valid or obligatory for any purpose unless there appears on such Debenture a
certificate of authentication substantially

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<PAGE> 24
in the form provided for herein executed by the Trustee by manual signature of
an authorized officer, and such certificate upon any Debenture shall be
conclusive evidence, and the only evidence, that such Debenture has been duly
authenticated and delivered hereunder. Notwithstanding the foregoing, if any
Debenture shall have been authenticated and delivered hereunder but never
issued and sold by the Company, and the Company shall deliver such Debenture to
the Trustee for cancellation as provided in Section 3.8, for all purposes of
this Indenture such Debenture shall be deemed never to have been authenticated
and delivered hereunder and shall never be entitled to the benefits of this
Indenture.

SECTION 3.3 Temporary Debentures.

Pending the preparation of Definitive Debentures, the Company may
execute, and upon Company Order the Trustee shall authenticate and deliver,
temporary Debentures which are printed, lithographed, typewritten, mimeographed
or otherwise produced, in any authorized denomination, substantially of the
tenor of the Definitive Debentures in lieu of which they are issued and with
such appropriate insertions, omissions, substitutions and other variations as
the officers executing such Debentures may determine, as evidenced by their
execution of such Debentures.

If temporary Debentures are issued, the Company will cause Definitive
Debentures to be prepared without unreasonable delay. After the preparation of
Definitive Debentures, the temporary Debentures shall be exchangeable for
Definitive Debentures upon surrender of the temporary Debentures at the office
or agency of the Company maintained pursuant to Section 10.2 for the purpose of
exchanges of Debentures, without charge to the Holder. Upon surrender for
cancellation of any one or more temporary Debentures the Company shall execute
and the Trustee shall authenticate and deliver in exchange therefor one or more
Definitive Debentures, of any authorized denominations and of a like aggregate
principal amount. Until so exchanged the temporary Debentures shall in all
respects be entitled to the same benefits under this Indenture as Definitive
Debentures of such tenor.

SECTION 3.4 Registration, Registration of Transfer and Exchange.

The Company shall cause to be kept at an office or agency of the
Company a register (the register maintained in such office or in any other
office or agency of the Company in a Place of Payment being herein sometimes
referred to as the "Security Register") in which, subject to such reasonable
regulations as it may prescribe, the Company shall provide for the registration
of Debentures and of transfer of Debentures. The Company will prior to the
issuance of any Debentures hereunder, appoint the Trustee as the initial
"Security Registrar" for the purpose of registering Debentures and transfers of
Debentures as herein provided and its Corporate Trust Office as the initial
office or agency where the Security Register will be maintained. The Company
may at any time replace such Security Registrar, change such office or agency or
act as its own Security Registrar. The Company will give prompt written notice
to the Trustee of any change of the Security Registrar or of the location of
such office or agency.

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<PAGE> 25
Upon surrender for registration of transfer of any Debenture at the
office or agency of the Company maintained pursuant to Section 10.2 for such
purpose, the Company shall execute, and the Trustee shall authenticate and
deliver, in the name of the designated transferee or transferees, one or more
new Debentures, of any authorized denominations and of a like aggregate
principal amount.

At the option of the Holder, Debentures (except those in the form of a
Global Security) may be exchanged for other Debentures, of any authorized
denominations and of a like aggregate principal amount and tenor, upon
surrender of the Debentures to be exchanged at such office or agency. Whenever
any Debentures are so surrendered for exchange, the Company shall execute, and
the Trustee shall authenticate and deliver, the Debentures which the Holder
making the exchange is entitled to receive.

All Debentures issued upon any registration of transfer or exchange of
Debentures shall be the valid obligations of the Company, evidencing the same
debt, and entitled to the same benefits under this Indenture, as the Debentures
surrendered upon such registration of transfer or exchange.

Every Debenture presented or surrendered for registration of transfer
or exchange shall (if so required by the Company or the Trustee) be duly
endorsed, or be accompanied by a written instrument of transfer in form
satisfactory to the Company and the Security Registrar duly executed, by the
Holder thereof or his attorney duly authorized in writing.

No service charge shall be made for any registration of transfer or
exchange of Debentures, but the Company may require payment of a sum sufficient
to cover any tax or other governmental charge that may be imposed in connection
with any registration of transfer or exchange of Debentures, other than
exchanges pursuant to Section 3.3, 9.6 or 11.7 not involving any transfer.

The Company shall not be required (1) to issue, register the transfer
of or exchange Debentures during a period beginning at the opening of business
15 days before the day of the mailing of a notice of redemption of Debentures
selected for redemption under Section 11.3 and ending at the close of business
on the day of such mailing, or (2) to register the transfer of or exchange any
Debenture so selected for redemption in whole or in part, except the unredeemed
portion of any Debenture being redeemed in part.

Each Global Security authenticated under this Indenture shall be
registered in the name of the Depository designated for such Global Security or
a nominee thereof and delivered to such Depository or a nominee thereof or
custodian therefor, and each such Global Security shall constitute a single
Debenture for all purposes of this Indenture.

Any exchange of a Global Security for other Debentures may be made in
whole or in part, and all Debentures issued in exchange for a Global Security
or any portion thereof shall be registered in such names as the Depository for
such Global Security shall direct.

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<PAGE> 26
If at any time the Depository for the Debentures notifies the Company
that it is unwilling or unable to continue as Depository for the Debentures or
if at any time the Depository for the Debentures shall no longer be qualified
to serve as the Depository, the Company shall appoint a successor Depository
with respect to the Debentures. If a successor Depository for the Debentures
is not appointed by the Company within 90 days after the Company receives such
notice or becomes aware of such ineligibility, the Company will execute, and
the Trustee, upon receipt of a Company Order for the authentication and
delivery of Definitive Debentures, will authenticate and deliver Debentures of
like tenor and terms in definitive form in an aggregate principal amount equal
to the principal amount of the Global Security or Securities in exchange for
such Global Security or Securities.

The Company may at any time and in its sole discretion determine that
Debentures issued in the form of one or more Global Securities shall no longer
be represented by such Global Securities. In such event, the Company will
execute, and the Trustee, upon receipt of a Company Order for the
authentication and delivery of Definitive Debentures, will authenticate and
deliver Debentures of like tenor and terms in definitive form in an aggregate
principal amount equal to the principal amount of the Global Security or
Securities in exchange for such Global Security or Securities.

Notwithstanding any other provision in this Indenture, no Global
Security may be transferred to, or registered or exchanged for Debentures
registered in the name of, any Person other than the Depository for such Global
Security or any nominee thereof, and no such transfer may be registered, unless
(1) such Depository (A) notifies the Company that it is unwilling or unable to
continue as Depository for such Global Security or (B) ceases to be qualified
to serve as Depository, (2) the Company executes and delivers to the Trustee a
Company Order that such Global Security shall be so transferable, registrable
and exchangeable, and such transfers shall be registrable, or (3) there shall
have occurred and be continuing an Event of Default. Notwithstanding any other
provision in this Indenture, a Global Security to which the restriction set
forth in the preceding sentence shall have ceased to apply may be transferred
only to, and may be registered and exchanged for Debentures registered only in
the name or names of, such Person or Persons as the Depository for such Global
Security shall have directed and no transfer thereof other than such a transfer
may be registered.

Every Debenture authenticated and delivered upon registration of
transfer of or in exchange for or in lieu of a Global Security to which the
restriction set forth in the first sentence of the preceding paragraph shall
apply, whether pursuant to this Section, Section 3.3 or 3.5 or otherwise, shall
be authenticated and delivered in the form of, and shall be, a Global Security
unless such Debenture is registered in the name of a Person other than the
Depository for such Global Security or a nominee thereof.

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<PAGE> 27
SECTION 3.5 Mutilated, Destroyed, Lost and Stolen Debentures.

If any mutilated Debenture is surrendered to the Trustee, together
with, in proper cases, such security or indemnity as may be required by the
Company or the Trustee to save each of them and any agent of either of them
harmless, the Company shall execute and the Trustee shall authenticate and
deliver in exchange therefor a new Debenture of like tenor and principal amount
and bearing a number not contemporaneously outstanding.

If there shall be delivered to the Company and the Trustee (i)
evidence to their satisfaction of the destruction, loss or theft of any
Debenture and (ii) such security or indemnity as may be required by them to
save each of them and any agent of either of them harmless, then, in the
absence of notice to the Company or the Trustee that such Debenture has been
acquired by a bona fide purchaser, the Company shall execute and the Trustee
shall authenticate and deliver, in lieu of any such destroyed, lost or stolen
Debenture a new Debenture of like tenor and principal amount and bearing a
number not contemporaneously outstanding.

In case any such mutilated, destroyed, lost or stolen Debenture has
become or is about to become due and payable, the Company in its discretion
may, instead of issuing a new Debenture, pay such Debenture.

Upon the issuance of any new Debenture under this Section, the Company
may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Trustee) connected therewith.

Every new Debenture issued pursuant to this Section in exchange for
any mutilated Debenture or in lieu of any destroyed, lost or stolen Debenture
shall constitute an original additional contractual obligation of the Company,
whether or not the mutilated, destroyed, lost or stolen Debenture shall be at
any time enforceable by anyone, and shall be entitled to all the benefits of
this Indenture equally and proportionately with any and all other Debentures
duly issued hereunder.

The provisions of this Section are exclusive and shall preclude (to
the extent lawful) all other rights and remedies with respect to the
replacement or payment of mutilated, destroyed, lost or stolen Debentures.

SECTION 3.6 Payment of Interest; Interest Rights Preserved.

Interest on any Debenture which is payable, and is punctually paid or
duly provided for, on any Interest Payment Date shall be paid to the Person in
whose name that Debenture (or one or more Predecessor Debentures) is registered
at the close of business on the Regular Record Date for such interest.

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Subject to the provisions of Article XII, any interest on any
Debenture which is payable, but is not punctually paid or duly provided for, on
any Interest Payment Date (herein called "Defaulted Interest") shall forthwith
cease to be payable to the Holder on the relevant Regular Record Date by virtue
of having been such Holder, and such Defaulted Interest may be paid by the
Company, at its election in each case, as provided in Clause (a) or (b) below:

(a) The Company may elect to make payment of any
Defaulted Interest to the Persons in whose names the Debentures (or their
respective Predecessor Debentures) are registered at the close of business on a
Special Record Date for the payment of such Defaulted Interest, which shall be
fixed in the following manner. The Company shall notify the Trustee in writing
of the amount of Defaulted Interest proposed to be paid on each Debenture and
the date of the proposed payment, and at the same time the Company shall
deposit with the Trustee an amount of money equal to the aggregate amount
proposed to be paid in respect of such Defaulted Interest or shall make
arrangements satisfactory to the Trustee for such deposit prior to the date of
the proposed payment, such money when deposited to be held in trust for the
benefit of the Persons entitled to such Defaulted Interest as in this Clause
provided. Thereupon the Trustee shall fix a Special Record Date for the
payment of such Defaulted Interest which shall be not more than 15 days and not
less than 10 days prior to the date of the proposed payment and not less than
10 days after the receipt by the Trustee of the notice of the proposed payment.
The Trustee shall promptly notify the Company of such Special Record Date and,
in the name and at the expense of the Company, shall cause notice of the
proposed payment of such Defaulted Interest and the Special Record Date
therefor to be mailed, first-class postage prepaid, to each Holder of
Debentures at his address as it appears in the Security Register, not less than
10 days prior to such Special Record Date. Notice of the proposed payment of
such Defaulted Interest and the Special Record Date therefor having been so
mailed, such Defaulted Interest shall be paid to the Persons in whose names the
Debentures (or their respective Predecessor Debentures) are registered at the
close of business on such Special Record Date and shall no longer be payable
pursuant to the following Clause (b).

(b) The Company may make payment of any Defaulted
Interest on the Debentures in any other lawful manner not inconsistent with the
requirements of any securities exchange on which the Debentures may be listed,
and upon such notice as may be required by such exchange, if, after notice
given by the Company to the Trustee of the proposed payment pursuant to this
Clause, such manner of payment shall be deemed practicable by the Trustee.

Subject to the foregoing provisions of this Section, Section 3.4 and
Article XII, each Debenture delivered under this Indenture upon registration
of transfer of or in exchange for or in lieu of any other Debenture, shall
carry the rights to interest accrued and unpaid, and to accrue, which were
carried by such other Debenture.

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SECTION 3.7 Persons Deemed Owners.

Prior to due presentment of a Debenture for registration of transfer,
the Company, the Trustee and any agent of the Company or the Trustee may treat
the Person in whose name such Debenture is registered as the owner of such
Debenture for the purpose of receiving payment of principal of and (subject to
Sections 3.4 and 3.6) any interest on such Debenture and for all other purposes
whatsoever, whether or not such Debenture be overdue, and neither the Company,
the Trustee nor any agent of the Company or the Trustee shall be affected by
notice to the contrary.

No holder of any beneficial interest in any Global Security held on
its behalf by a Depository shall have any rights under this Indenture with
respect to such Global Security, and such Depository may be treated by the
Company, the Trustee, and any agent of the Company or the Trustee as the owner
of such Global Security for all purposes whatsoever. None of the Company, the
Trustee nor any agent of the Company or the Trustee will have any
responsibility or liability for any aspect of the records relating to or
payments made on account of beneficial ownership interests of a Global Security
or for maintaining, supervising or reviewing any records relating to such
beneficial ownership interests.

SECTION 3.8 Cancellation.

All Debentures surrendered for payment, redemption or registration of
transfer or exchange shall, if surrendered to any Person other than the
Trustee, be delivered to the Trustee and shall be promptly cancelled by it.
The Company may at any time deliver to the Trustee for cancellation any
Debentures previously authenticated and delivered hereunder which the Company
may have acquired in any manner whatsoever, and may deliver to the Trustee (or
to any other Person for delivery to the Trustee) for cancellation any
Debentures previously authenticated hereunder which the Company has not issued
and sold, and all Debentures so delivered shall be promptly cancelled by the
Trustee. No Debentures shall be authenticated in lieu of or in exchange for
any Debentures cancelled as provided in this Section, except as expressly
permitted by this Indenture. All cancelled Debentures held by the Trustee
shall be disposed of in accordance with its customary procedures, and the
Trustee shall thereafter deliver to the Company a certificate with respect to
such disposition.

SECTION 3.9 CUSIP Numbers.

The Company in issuing the Debentures may use "CUSIP" numbers (in
addition to the other identification numbers printed on the Debentures), and,
if so, the Trustee shall use "CUSIP" numbers in notices of redemption as a
convenience to Holders; provided, however, that any such notice may state that
no representation is made as to the correctness of such "CUSIP" numbers either
as printed on the Debentures or as contained in any notice of a redemption and
that reliance may be placed only on the other identification numbers printed on
the Debentures, and any such redemption shall not be affected by any defect in
or omission of such "CUSIP" numbers.

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ARTICLE IV

SATISFACTION AND DISCHARGE

SECTION 4.1 Satisfaction and Discharge of Indenture.

This Indenture shall upon Company Request cease to be of further
effect with respect to Debentures (except as to any surviving rights of
registration of transfer or exchange of the Debentures herein expressly
provided for), and the Trustee, at the expense of the Company, shall execute
proper instruments acknowledging satisfaction and discharge of this Indenture
with respect to such Debentures, when

(a) either

(i) all such Debentures theretofore authenticated
and delivered (other than (1) such Debentures which have been
destroyed, lost or stolen and which have been replaced or paid as
provided in Section 3.5, and (2) such Debentures for whose payment
money has theretofore been deposited in trust or segregated and held
in trust by the Company and thereafter repaid to the Company or
discharged from such trust, as provided in Section 10.3) have been
delivered to the Trustee for cancellation; or

(ii) all such Debentures not theretofore delivered
to the Trustee for cancellation

(A) have become due and payable, or

(B) will become due and payable at their
Stated Maturity within one year, or

(C) are to be called for redemption
within one year under arrangements satisfactory to the Trustee
for the giving of notice of redemption by the Trustee in the
name, and at the expense, of the Company,

and the Company in the case of (A), (B) or (C) above, has deposited or caused
to be deposited with the Trustee as trust funds in trust for the purpose an
amount of money sufficient to pay and discharge the entire indebtedness on the
Debentures not theretofore delivered to the Trustee for cancellation, for
principal and interest to the date of such deposit (in the case of Debentures
which have become due and payable) or to the Stated Maturity or Redemption
Date, as the case may be;

(b) the Company has paid or caused to be paid all other
sums payable hereunder by the Company with respect to such Debentures; and

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(c) the Company has delivered to the Trustee an Officer's
Certificate and an Opinion of Counsel, each stating that all conditions
precedent herein provided for relating to the satisfaction and discharge of
this Indenture with respect to such Debentures have been complied with.

Notwithstanding the satisfaction and discharge of this Indenture with
respect to the Debentures, (x) the obligations of the Company to the Trustee
under Section 6.7 and the right of the Trustee to resign under Section 6.10
shall survive, and (y) if money shall have been deposited with the Trustee
pursuant to subclause (ii) of Clause (a) of this Section, the obligations of
the Company and/or the Trustee under Sections 4.2, 6.6, 7.1 and 10.2 and the
last paragraph of Section 10.3 shall survive.

SECTION 4.2 Application of Trust Money.

Subject to the provisions of the last paragraph of Section 10.3, all
money deposited with the Trustee pursuant to Section 4.1 shall be held in trust
and applied by it, in accordance with the provisions of the Debentures and this
Indenture, to the payment, either directly or through any Paying Agent
(including the Company acting as its own Paying Agent) as the Trustee may
determine, to the Persons entitled thereto, of the principal and interest for
whose payment such money has been deposited with the Trustee.

ARTICLE V

REMEDIES

SECTION 5.1 Events of Default.

"Event of Default", wherever used herein with respect to the
Debentures, means any one of the following events (whatever the reason for such
Event of Default and whether it shall be voluntary or involuntary or be
effected by operation of law or pursuant to any judgment, decree or order of
any court or any order, rule or regulation of any administrative or
governmental body):

(a) default in the payment of any interest upon or any
additional amount payable in respect of any Debentures when it becomes due and
payable, and continuance of such default for a period of 30 days (whether or
not such payment is prohibited by the subordination provisions set forth in
Article XIV hereof or in any indenture supplemental hereto); provided, however,
that a valid extension of an interest payment period by the Company in
accordance with the terms of Article XII hereof or any indenture supplemental
hereto shall not constitute a default in the payment of interest for this
purpose;

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(b) default in the payment of the principal of any
Debentures as and when the same shall become due and payable whether at
Maturity, upon redemption, by declaration or otherwise, (whether or not such
payment is prohibited by the subordination provisions set forth in Article XIV
hereof or in any indenture supplemental hereto); provided, however, that a
valid extension of the Maturity of the Debentures in accordance with the terms
of this Indenture or any indenture supplemental hereto shall not constitute a
default in the payment of principal;

(c) default in the performance, or breach, of any term,
covenant or warranty of the Company in this Indenture (other than a term,
covenant or warranty a default in whose performance or whose breach is
elsewhere in this Section specifically dealt with), and continuance of such
default or breach for a period of 60 days after there has been given, by
registered or certified mail, to the Company by the Trustee or to the Company
and the Trustee by the Holders of at least 25% in principal amount of the
Outstanding Debentures, a written notice specifying such default or breach and
requiring it to be remedied and stating that such notice is a "Notice of
Default" hereunder; or

(d) the Company pursuant to or within the meaning of any
Bankruptcy Law (A) commences a voluntary case, (B) consents to the entry of any
order for relief against it in an involuntary case, (C) consents to the
appointment of a Custodian of it or for all or substantially all of its
property, or (D) makes a general assignment for the benefit of its creditors;
or

(e) a court of competent jurisdiction enters an order or
decree under any Bankruptcy Law that (A) is for relief against the Company in
an involuntary case, (B) appoints a Custodian of the Company or for all or
substantially all of its property, or (C) orders the liquidation of the
Company, and the order or decree remains unstayed and in effect for 90 days; or

(f) if, after the original issuance of the Debentures to
the Trust or the Property Trustee in connection with the original issuance of
Trust Securities by the Trust, the Trust shall have voluntarily or
involuntarily dissolved, wound-up its business or otherwise terminated its
existence, except in connection with (i) the distribution of the Debentures to
holders of Trust Securities in liquidation of their interests in the Trust,
(ii) the redemption of all of the outstanding Trust Securities of the Trust or
(iii) certain mergers, consolidations or amalgamations, each as permitted by
the Declaration.

SECTION 5.2 Acceleration of Maturity; Rescission and Annulment.

If an Event of Default occurs and is continuing, then in every such
case the Trustee or the Holders of not less than 25% in principal amount of the
Outstanding Debentures may declare the principal amount of all of the
Debentures to be due and payable immediately, by a notice in writing to the
Company (and to the Trustee if given by Holders), and upon any such declaration
such principal amount (or specified amount) shall become immediately due and
payable.

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At any time after such a declaration of acceleration with respect to
the Debentures has been made and before a judgment or decree for payment of the
money due has been obtained by the Trustee as hereinafter in this Article
provided, the Holders of a majority in principal amount of the Outstanding
Debentures, by written notice to the Company and the Trustee, may rescind and
annul such declaration and its consequences if

(a) the Company has paid or deposited with the Trustee a
sum sufficient to pay

(i) all overdue interest on all Debentures,

(ii) the principal of any Debentures which have
become due otherwise than by such declaration of acceleration and any
interest thereon at the rate or rates prescribed therefor in such
Debentures,

(iii) to the extent that payment of such interest
is lawful, interest upon overdue interest at the rate or rates
prescribed therefor in such Debentures, and

(iv) all sums paid or advanced by the Trustee
hereunder and the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel; and

(b) all Events of Default with respect to Debentures,
other than the nonpayment of the principal of Debentures which have become due
solely by such declaration of acceleration, have been cured or waived as
provided in Section 5.13.

No such rescission shall affect any subsequent Default or impair any
right consequent thereon.

SECTION 5.3 Collection of Indebtedness and Suits for Enforcement by
Trustee.

The Company covenants that if

(a) default is made in the payment of any interest on any
Debenture when such interest becomes due and payable and such default continues
for a period of 30 days (whether or not such payment is prohibited by the
provisions of Article XIV hereof), or

(b) default is made in the payment of the principal of
any Debenture at the Maturity thereof (whether or not such payment is
prohibited by the provisions of Article XIV hereof),

the Company will, upon demand of the Trustee, pay to it, for the benefit of the
Holders of such Debentures, the whole amount then due and payable on such
Debentures for principal and interest and, to the extent that payment of such
interest shall be legally enforceable, interest on any overdue

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principal and on any overdue interest, at the rate or rates prescribed therefor
in such Debentures, and, in addition thereto, such further amount as shall be
sufficient to cover the costs and expenses of collection, including the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel.

If the Company fails to pay such amounts forthwith upon such demand,
the Trustee, in its own name and as trustee of an express trust, may institute
a judicial proceeding for the collection of the sums so due and unpaid, may
prosecute such proceeding to judgment or final decree and may enforce the same
against the Company or any other obligor upon such Debentures and collect the
moneys adjudged or decreed to be payable in the manner provided by law out of
the property of the Company or any other obligor upon such Debentures, wherever
situated.

If an Event of Default with respect to the Debentures occurs and is
continuing, the Trustee may in its discretion proceed to protect and enforce
its rights and the rights of the Holders of the Debentures by such appropriate
judicial proceedings as the Trustee shall deem most effectual to protect and
enforce any such rights, whether for the specific enforcement of any covenant
or agreement in this Indenture or in aid of the exercise of any power granted
herein, or to enforce any other proper remedy.

SECTION 5.4 Trustee May File Proofs of Claim.

In case of any judicial proceeding relative to the Company or any
other obligor upon the Debentures, their property or their creditors, the
Trustee shall be entitled and empowered, by intervention in such proceeding or
otherwise, to take any and all actions authorized under the Trust Indenture
Act in order to have claims of the Holders and the Trustee allowed in any such
proceeding. In particular, the Trustee shall be authorized to collect and
receive any moneys or other property payable or deliverable on any such claims
and to distribute the same, and any custodian, receiver, assignee, trustee,
liquidator, sequestrator or other similar official in any such judicial
proceeding is hereby authorized by each Holder to make such payments to the
Trustee and, in the event that the Trustee shall consent to the making of such
payments directly to the Holders, to pay to the Trustee any amount due it for
the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, and any other amounts due the Trustee under
Section 6.7.

No provision of this Indenture shall be deemed to authorize the
Trustee to authorize or consent to or accept or adopt on behalf of any Holder
any plan of reorganization, arrangement, adjustment or composition affecting
the Debentures or the rights of any Holder thereof or to authorize the Trustee
to vote in respect of the claim of any Holder in any such proceeding; provided,
however, that the Trustee may, on behalf of the Holders, vote for the election
of a trustee in bankruptcy or similar official to be a member of a creditors'
or other similar committee.

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SECTION 5.5 Trustee May Enforce Claims Without Possession of Debentures.

All rights of action and claims under this Indenture or the Debentures
may be prosecuted and enforced by the Trustee without the possession of any of
the Debentures or the production thereof in any proceeding relating thereto,
and any such proceeding instituted by the Trustee shall be brought in its own
name as trustee of an express trust, and any recovery of judgment shall, after
provision for the payment of the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, be for the
ratable benefit of the Holders of the Debentures in respect of which such
judgment has been recovered.

SECTION 5.6 Application of Money Collected.

Any money collected by the Trustee pursuant to this Article shall be
applied in the following order, at the date or dates fixed by the Trustee and,
in case of the distribution of such money on account of principal or interest,
upon presentation of the Debentures and the notation thereon of the payment if
only partially paid and upon surrender thereof if fully paid:

FIRST: To the payment of all amounts due the Trustee under Section
6.7;

SECOND: Subject to Article XIV, to the payment of the amounts then due
and unpaid for principal of and interest on the Debentures ratably, without
preference or priority of any kind, according to the amounts due and payable on
such Debentures for principal and interest, respectively; and

THIRD: The balance, if any, to the Company.

SECTION 5.7 Limitation on Suits.

No Holder of any Debenture shall have any right to institute any
proceeding, judicial or otherwise, with respect to this Indenture, or for the
appointment of a receiver or trustee, or for any other remedy hereunder, unless

(a) such Holder has previously given written notice to
the Trustee of a continuing Event of Default with respect to the Debentures;

(b) the Holders of not less than 25% in principal amount
of the Outstanding Debentures shall have made written request to the Trustee to
institute proceedings in respect of such Event of Default in its own name as
Trustee hereunder;

(c) such Holder or Holders have offered to the Trustee
reasonable indemnity against the costs, expenses and liabilities to be incurred
in compliance with such request;

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(d) the Trustee for 60 days after its receipt of such
notice, request and offer of indemnity has failed to institute any such
proceeding; and

(e) no direction inconsistent with such written request
has been given to the Trustee during such 60-day period by the Holders of a
majority in principal amount of the Outstanding Debentures;

it being understood and intended that no one or more of such Holders shall have
any right in any manner whatever by virtue of, or by availing of, any provision
of this Indenture to affect, disturb or prejudice the rights of any other of
such Holders, or to obtain or to seek to obtain priority or preference over any
other of such Holders or to enforce any right under this Indenture, except in
the manner herein provided and for the equal and ratable benefit of all of such
Holders.

SECTION 5.8 Unconditional Right of Holders to Receive Principal and
Interest.

Notwithstanding any other provision in this Indenture, the Holder of
any Debenture shall have the right, which is absolute and unconditional, to
receive payment of the principal and (subject to Sections 3.4 and 3.6 and
Article XIV) interest on such Debenture on the respective Stated Maturities
expressed in such Debenture (or, in the case of redemption, on the Redemption
Date) and to institute suit for the enforcement of any such payment, and such
rights shall not be impaired without the consent of such Holder.

SECTION 5.9 Restoration of Rights and Remedies.

If the Trustee or any Holder has instituted any proceeding to enforce
any right or remedy under this Indenture and such proceeding has been
discontinued or abandoned for any reason, or has been determined adversely to
the Trustee or to such Holder, then and in every such case, subject to any
determination in such proceeding, the Company, the Trustee and the Holders
shall be restored severally and respectively to their former positions
hereunder, and thereafter all rights and remedies of the Trustee and the
Holders shall continue as though no such proceeding had been instituted.

SECTION 5.10 Rights and Remedies Cumulative.

Except as otherwise provided with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Debentures in the last
paragraph of Section 3.5, no right or remedy herein conferred upon or reserved
to the Trustee or to the Holders is intended to be exclusive of any other right
or remedy, and every right and remedy shall, to the extent permitted by law, be
cumulative and in addition to every other right and remedy given hereunder or
now or hereafter existing at law or in equity or otherwise. The assertion or
employment of any right or remedy hereunder, or otherwise, shall not prevent
the concurrent assertion or employment of any other appropriate right or
remedy.

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SECTION 5.11 Delay or Omission Not Waiver.

No delay or omission of the Trustee or of any Holder of any Debentures
to exercise any right or remedy accruing upon any Event of Default shall impair
any such right or remedy or constitute a waiver of any such Event of Default or
an acquiescence therein. Every right and remedy given by this Article or by
law to the Trustee or to the Holders may be exercised from time to time, and as
often as may be deemed expedient, by the Trustee or by the Holders, as the case
may be.

SECTION 5.12 Control by Holders.

The Holders of a majority in aggregate principal amount of the
Outstanding Debentures shall have the right to direct the time, method and
place of conducting any proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred on the Trustee, with respect to the
Debentures; provided, however, that

(a) such direction shall not be in conflict with any rule
of law or with this Indenture;

(b) the Trustee may take any other action deemed proper
by the Trustee which is not inconsistent with such direction; and

(c) subject to the provisions of Section 6.1, the Trustee
shall have the right to decline to follow any such direction if the Trustee in
good faith shall determine that the proceeding so directed would involve the
Trustee in personal liability.

SECTION 5.13 Waiver of Past Defaults.

The Holders of a majority in aggregate principal amount of the
Outstanding Debentures may on behalf of the Holders of all the Debentures waive
any past default hereunder and its consequences, except

(a) a continuing default in the payment of the principal
or any interest on any Debentures as and when the same shall become due by the
terms of the Debentures otherwise than by acceleration (unless such default has
been cured and sums sufficient to pay all matured installments of interest and
principal has been deposited with the Trustee (in accordance with this
Indenture)), which default cannot be waived without the consent of the
Holder(s) of each of the Debentures, and

(b) a default in respect of a covenant or provision
hereof which under Article IX cannot be modified or amended without the consent
of the Holder of each Outstanding Debenture affected; provided, however, that
if the Debentures are held by the Trust or a trustee of such Trust, such waiver
or modification to such waiver shall not be effective until the holders of a
majority in Liquidation Amount of Trust Securities of the Trust (or such higher
percentage in Liquidation

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Amount of Trust Securities as may be specified in the Declaration) shall have
consented to such waiver or modification to such waiver; provided further, that
if the consent of the Holders of a majority in Liquidation Amount of the Trust
Securities of a class (or such higher percentage in Liquidation Amount of such
class of Trust Securities as may be specified in the Declaration) is required
under the Declaration, such waiver shall not be effective until the Holders of
a majority (or such higher percentage, as the case may be) in Liquidation
Amount of the Trust Securities of such class shall have consented to such
waiver.

Upon any such waiver, such default shall cease to exist, and any Event
of Default arising therefrom shall be deemed to have been cured, for every
purpose of this Indenture, but no such waiver shall extend to any subsequent or
other default or impair any right consequent thereon.

SECTION 5.14 Undertaking for Costs.

In any suit for the enforcement of any right or remedy under this
Indenture, or in any suit against the Trustee for any action taken, suffered or
omitted by it as Trustee, a court may require any party litigant in such suit
to file an undertaking to pay the costs of such suit, and may assess costs
against any such party litigant, in the manner and to the extent provided in
the Trust Indenture Act; provided, however, that neither this Section nor the
Trust Indenture Act shall be deemed to authorize any court to require such an
undertaking or to make such an assessment in any suit instituted by the Company
or by the Trustee.

SECTION 5.15 Waiver of Usury, Stay or Extension Laws.

The Company covenants (to the extent that it may lawfully do so) that
it will not at any time insist upon, or plead, or in any manner whatsoever
claim or take the benefit or advantage of, any usury, stay or extension law
wherever enacted, now or at any time hereafter in force, which may affect the
covenants or the performance of this Indenture, and the Company (to the extent
that it may lawfully do so) hereby expressly waives all benefit or advantage of
any such law and covenants that it will not hinder, delay or impede the
execution of any power herein granted to the Trustee, but will suffer and
permit the execution of every such power as though no such law had been
enacted.

ARTICLE VI

THE TRUSTEE

SECTION 6.1 Certain Duties and Responsibilities.

The duties and responsibilities of the Trustee shall be as provided by
the Trust Indenture Act. No provision of this Indenture shall require the
Trustee to expend or risk its own funds or otherwise incur any financial
liability in the performance of any of its duties hereunder, or in the exercise
of any of its rights or powers, if it shall have reasonable grounds for
believing that repayment of such funds or adequate indemnity against such risk
or liability is not reasonably assured to it. Whether

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or not therein expressly so provided, every provision of this Indenture
relating to the conduct or affecting the liability of or affording protection
to the Trustee shall be subject to the provisions of this Section.

SECTION 6.2 Notice of Defaults.

If a Default occurs and is continuing with respect to the Debentures,
the Trustee shall, within 90 days after it occurs, transmit, in the manner and
to the extent provided in Section 313(c) of the Trust Indenture Act, notice of
all uncured or unwaived Defaults known to it; provided, however, that, except
in the case of a Default in payment on the Debentures, the Trustee may withhold
the notice if and so long as the board of directors, the executive committee or
a trust committee of its directors and/or its duly authorized officers in good
faith determines that withholding such notice is in the interests of Holders;
provided further, however, that, in the case of any default or breach of the
character specified in Section 5.1(c) with respect to the Debentures, no such
notice to Holders shall be given until at least 60 days after the occurrence
thereof.

SECTION 6.3 Certain Rights of Trustee.

Subject to the provisions of Section 6.1:

(a) the Trustee may rely on and shall be protected in
acting or refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order, bond,
debenture, note, other evidence of indebtedness or other paper or document
reasonably believed by it to be genuine and to have been signed or presented by
the proper party or parties;

(b) any request, direction, order or demand of the
Company mentioned herein shall be sufficiently evidenced by a Company Request
or Company Order (other than delivery of any Debenture to the Trustee for
authentication and delivery pursuant to Section 3.2, which shall be
sufficiently evidenced as provided therein) and any resolution of the Board of
Directors shall be sufficiently evidenced by a Board Resolution;

(c) whenever in the administration of this Indenture the
Trustee shall deem it desirable that a matter be proved or established prior to
taking, suffering or omitting any action hereunder, the Trustee (unless other
evidence be herein specifically prescribed) may, in the absence of bad faith on
its part, rely upon an Officer's Certificate;

(d) the Trustee may consult with counsel and the written
advice of such counsel or any Opinion of Counsel shall be full and complete
authorization and protection in respect of any action taken, suffered or
omitted by it hereunder in good faith and in reliance thereon;

(e) the Trustee shall be under no obligation to exercise
any of the rights or powers vested in it by this Indenture at the request or
direction of any of the Holders pursuant to this

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Indenture, unless such Holders shall have offered to the Trustee reasonable
security or indemnity against the costs, expenses and liabilities which might
be incurred by it in compliance with such request or direction;

(f) the Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution, certificate,
statement, instrument, opinion, report, notice, request, direction, consent,
order, bond, debenture, note, other evidence of indebtedness or other paper or
document but the Trustee, in its discretion, may make such further inquiry or
investigation into such facts or matters as it may see fit;

(g) the Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or through
agents or attorneys and the Trustee shall not be responsible for any misconduct
or negligence on the part of any agent or attorney appointed with due care by
it hereunder; and

(h) the Trustee may request that the Company deliver an
Officer's Certificate setting forth the names of individuals and/or titles of
officers authorized at such time to take specified actions pursuant to this
Indenture, which Officer's Certificate may be signed by any person authorized
to sign an Officer's Certificate, including any person specified as so
authorized in any such certificate previously delivered and not superseded.

SECTION 6.4 Not Responsible for Recitals or Issuance of Debentures.

The recitals contained herein and in the Debentures, except the
Trustee's certificates of authentication, shall be taken as the statements of
the Company, and the Trustee or any Authenticating Agent assumes no
responsibility for their correctness. Neither the Trustee nor any
Authenticating Agent makes any representations as to the validity or
sufficiency of this Indenture or of the Debentures. The Trustee or any
Authenticating Agent shall not be accountable for the use or application by the
Company of Debentures or the proceeds thereof.

SECTION 6.5 May Hold Debentures.

The Trustee, any Authenticating Agent, any Paying Agent, any Security
Registrar or any other agent of the Company, in its individual or any other
capacity, may become the owner or pledgee of Debentures and, subject to
Sections 6.8 and 6.13, may otherwise deal with the Company with the same rights
it would have if it were not Trustee, Authenticating Agent, Paying Agent,
Security Registrar or such other agent.

SECTION 6.6 Money Held in Trust.

Money held by the Trustee in trust hereunder need not be segregated
from other funds except to the extent required by law. The Trustee shall be
under no liability for interest on any money received by it hereunder except as
otherwise agreed with the Company.

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SECTION 6.7 Compensation and Reimbursement.

The Company agrees:

(a) to pay to the Trustee from time to time reasonable
compensation for all services rendered by it hereunder (which compensation
shall not be limited by any provision of law in regard to the compensation of a
trustee of an express trust);

(b) except as otherwise expressly provided herein, to
reimburse the Trustee upon its request for all reasonable expenses,
disbursements and advances incurred or made by the Trustee in accordance with
any provision of this Indenture (including the reasonable compensation and the
expenses and disbursements of its agents and counsel), except any such expense,
disbursement or advance as may be attributable to its negligence or bad faith;
and

(c) to indemnify the Trustee for, and to hold it harmless
against, any loss, liability or expense incurred without negligence or bad
faith on its part, arising out of or in connection with the acceptance or
administration of the trust or trusts hereunder, including the costs and
expenses of defending itself against any claim or liability in connection with
the exercise or performance of any of its powers or duties hereunder, except
those attributable to its negligence or bad faith.

The obligations of the Company under this Section to compensate the
Trustee and to pay or reimburse the Trustee for expenses, disbursements and
advances shall constitute additional indebtedness hereunder. Such additional
indebtedness shall be secured by a lien prior to that of the Debentures upon
all property and funds held or collected by the Trustee as such, except funds
held in trust for the benefit of the Holders of particular Debentures.

Without limiting any rights available to the Trustee under applicable
law, when the Trustee incurs expenses or renders services in connection with an
Event of Default specified in Section 5.1(d) or Section 5.1(e), the expenses
(including the reasonable charges and expenses of its counsel) and the
compensation for such services are intended to constitute expenses of
administration under any applicable Bankruptcy Law.

The provisions of this Section shall survive the satisfaction and
discharge of this Indenture and the defeasance of the Debentures.

SECTION 6.8 Disqualification; Conflicting Interests.

If the Trustee has or shall acquire a conflicting interest within the
meaning of the Trust Indenture Act, the Trustee shall either eliminate such
interest or resign, to the extent and in the manner provided by, and subject to
the provisions of, the Trust Indenture Act and this Indenture.

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SECTION 6.9 Corporate Trustee Required; Eligibility.

There shall at all times be one Trustee hereunder which shall be a
Person that is eligible pursuant to the Trust Indenture Act to act as such and
has a combined capital and surplus required by the Trust Indenture Act. If
such Person publishes reports of condition at least annually, pursuant to law
or to the requirements of a supervising or examining authority, then for the
purposes of this Section, the combined capital and surplus of such Person shall
be deemed to be its combined capital and surplus as set forth in its most
recent report of condition so published. If at any time the Trustee shall
cease to be eligible in accordance with the provisions of this Section, it
shall resign immediately in the manner and with the effect hereinafter
specified in this Article.

SECTION 6.10 Resignation and Removal; Appointment of Successor.

No resignation or removal of the Trustee and no appointment of a
successor Trustee pursuant to this Article shall become effective until the
acceptance of appointment by the successor Trustee in accordance with the
applicable requirements of Section 6.11.

The Trustee may resign at any time by giving written notice thereof to
the Company. If the instrument of acceptance by a successor Trustee required
by Section 6.11 shall not have been delivered to the Trustee within 60 days
after the giving of such notice of resignation, the resigning Trustee may
petition any court of competent jurisdiction for the appointment of a successor
Trustee.

The Trustee may be removed at any time by the Act of the Holders of a
majority in principal amount of the Outstanding Debentures, delivered to the
Trustee and to the Company.

If at any time:

(a) the Trustee shall fall to comply with Section 6.8
after written request therefor by the Company or by any Holder who has been a
bona fide Holder of a Debenture for at least six months, or

(b) the Trustee shall cease to be eligible under Section
6.9 and shall fail to resign after written request therefor by the Company or
by any such Holder, or

(c) the Trustee shall become incapable of acting or shall
be adjudged a bankrupt or insolvent or a receiver of the Trustee or of its
property shall be appointed or any public officer shall take charge or control
of the Trustee or of its property or affairs for the purpose of rehabilitation,
conservation or liquidation,

then, in any such case, (A) the Company may remove the Trustee, or (B) subject
to Section 5.14, any Holder who has been a bona fide Holder of a Debenture for
at least six months may, on behalf of himself and all others similarly
situated, petition any court of competent jurisdiction for the removal of the
Trustee and the appointment of a successor Trustee or Trustees.

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If the Trustee shall resign, be removed or become incapable of acting,
or if a vacancy shall occur in the office of Trustee for any cause, the Company
shall promptly appoint a successor Trustee and shall comply with the applicable
requirements of Section 6.11. If, within one year after such resignation,
removal or incapability, or the occurrence of such vacancy, a successor Trustee
shall be appointed by Act of the Holders of a majority in principal amount of
the Outstanding Debentures delivered to the Company and the retiring Trustee,
the successor Trustee so appointed shall, forthwith upon its acceptance of such
appointment in accordance with the applicable requirements of Section 6.11,
become the successor Trustee and to that extent supersede the successor Trustee
appointed by the Company. If no successor Trustee shall have been so appointed
by the Company or the Holders and accepted appointment in the manner required
by Section 6.11, any Holder who has been a bona fide Holder of a Debenture for
at least six months may, on behalf of himself and all others similarly
situated, petition any court of competent jurisdiction for the appointment of a
successor Trustee.

The Company shall give notice of each resignation and each removal of
the Trustee and each appointment of a successor Trustee to all Holders of
Debentures in the manner provided in Section 1.6. Each notice shall include
the name of the successor Trustee and the address of its Corporate Trust
Office.

SECTION 6.11 Acceptance of Appointment by Successor.

(a) In case of the appointment hereunder of a successor
Trustee, such successor Trustee so appointed shall execute, acknowledge and
deliver to the Company and to the retiring Trustee an instrument accepting such
appointment, and thereupon the resignation or removal of the retiring Trustee
shall become effective and such successor Trustee, without any further act,
deed or conveyance, shall become vested with all the rights, powers, trusts and
duties of the retiring Trustee; but, on the request of the Company or the
successor Trustee, such retiring Trustee shall, upon payment of its charges,
execute and deliver an instrument transferring to such successor Trustee all
the rights, powers and trusts of the retiring Trustee and shall duly assign,
transfer and deliver to such successor Trustee all property and money held by
such retiring Trustee hereunder.

(b) Upon request of any such successor Trustee, the
Company shall execute any and all instruments for more fully and certainly
vesting in and confirming to such successor Trustee all such rights, powers and
trusts referred to in paragraph (a) of this Section.

(c) No successor Trustee shall accept its appointment
unless at the time of such acceptance such successor Trustee shall be qualified
and eligible under this Article.

SECTION 6.12 Merger, Conversion, Consolidation or Succession to Business.

Any corporation into which the Trustee may be merged or converted or
with which it may be consolidated, or any corporation resulting from any
merger, conversion or consolidation to which the Trustee shall be a party, or
any corporation succeeding to all or substantially all the corporate

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trust business of the Trustee, shall be the successor of the Trustee hereunder,
provided such corporation shall be otherwise qualified and eligible under this
Article, without the execution or filing of any paper or any further act on the
part of any of the parties hereto. In case any Debentures shall have been
authenticated, but not delivered, by the Trustee then in office, any successor
by merger, conversion or consolidation to such authenticating Trustee may adopt
such authentication and deliver the Debentures so authenticated with the same
effect as if such successor Trustee had itself authenticated such Debentures.

SECTION 6.13 Preferential Collection of Claims Against Company.

If and when the Trustee shall be or become a creditor of the Company
(or any other obligor upon the Debentures), the Trustee shall be subject to the
provisions of the Trust Indenture Act regarding the collection of claims
against the Company (or any such other obligor).

SECTION 6.14 Appointment of Authenticating Agent.

The Trustee (upon notice to the Company) may appoint an Authenticating
Agent or Agents which shall be acceptable to the Company and shall be
authorized to act on behalf of the Trustee to authenticate Debentures issued
upon original issue (in accordance with procedures acceptable to the Trustee)
and upon exchange, registration of transfer or partial redemption thereof or
pursuant to Section 3.5, and Debentures so authenticated shall be entitled to
the benefits of this Indenture and shall be valid and obligatory for all
purposes as if authenticated by the Trustee hereunder. Wherever reference is
made in this Indenture to the authentication and delivery of Debentures by the
Trustee or the Trustee's certificate of authentication, such reference shall be
deemed to include authentication and delivery on behalf of the Trustee by an
Authenticating Agent and a certificate of authentication executed on behalf of
the Trustee by an Authenticating Agent. Each Authenticating Agent shall be
acceptable to the Company and shall at all times be a corporation organized and
doing business under the laws of the United States of America, any State
thereof or the District of Columbia, authorized under such laws to act as
Authenticating Agent, having a combined capital and surplus of not less than
$50,000,000 and subject to supervision or examination by Federal or State
authority. If such Authenticating Agent publishes reports of condition at
least annually, pursuant to law or to the requirements of said supervising or
examining authority, then for the purposes of this Section, the combined
capital and surplus of such Authenticating Agent shall be deemed to be its
combined capital and surplus as set forth in its most recent report of
condition so published. If at any time an Authenticating Agent shall cease to
be eligible in accordance with the provisions of this Section, such
Authenticating Agent shall resign immediately in the manner and with the effect
specified in this Section.

Any corporation into which an Authenticating Agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which such Authenticating Agent
shall be a party, or any corporation succeeding to all or substantially all of
the corporate agency or corporate trust business of such Authenticating Agent,
shall continue to be an Authenticating Agent, provided such corporation shall
be otherwise

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eligible under this Section, without the execution or filing of any paper or
any further act on the part of the Trustee or such Authenticating Agent.

An Authenticating Agent may resign at any time by giving written
notice thereof to the Trustee and to the Company. The Trustee may at any time
terminate the agency of an Authenticating Agent by giving written notice
thereof to such Authenticating Agent and to the Company. Upon receiving such a
notice of resignation or upon such a termination, or in case at any time such
Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section, the Trustee may appoint a successor Authenticating
Agent which shall be acceptable to the Company and shall mail written notice of
such appointment by first-class mail, postage prepaid, to all Holders of
Debentures as their names and addresses appear in the Security Register. Any
successor Authenticating Agent upon acceptance of its appointment hereunder
shall become vested with all the rights, powers and duties of its predecessor
hereunder, with like effect as if originally named as an Authenticating Agent.
No successor Authenticating Agent shall be appointed unless eligible under the
provisions of this Section.

The Company agrees to pay to each Authenticating Agent from time to
time reasonable compensation for its services under this Section.

If an appointment is made pursuant to this Section, the Debentures may
have endorsed thereon, in addition to the Trustee's certificate of
authentication, an alternative certificate of authentication in the following
form:

This is one of the Debentures referred to in the within-mentioned
Indenture.

The First National Bank of Chicago,
As Trustee

By:
--------------------------------------
As Authenticating Agent

By:
--------------------------------------
Authorized Officer

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ARTICLE VII

HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY

SECTION 7.1 Company to Furnish Trustee Names and Addresses of Holders.

The Company will furnish or cause to be furnished to the Trustee

(a) semi-annually, not later than [June 15] and [December
15] in each year, a list for each series of Securities, in such form as the
Trustee may reasonably require, of the names and addresses of the Holders of
Debentures as of the preceding [May 30] or [November 30], as the case may be,
and

(b) at such other times as the Trustee may request in
writing, within 30 days after the receipt by the Company of any such request, a
list of similar form and content as of a date not more than 15 days prior to
the time such list is furnished;

provided, however, that if and so long as the Trustee shall be the Security
Registrar, no such list need be furnished.

SECTION 7.2 Preservation of Information; Communications to Holders.

The Trustee shall comply with the obligations imposed upon it pursuant
to Section 312 of the Trust Indenture Act.

The rights of the Holders to communicate with other Holders with
respect to their rights under this Indenture or under the Debentures, and the
corresponding rights and privileges of the Trustee, shall be as provided by the
Trust Indenture Act.

Every Holder of Debentures, by receiving and holding the same, agrees
with the Company and the Trustee that neither the Company nor the Trustee nor
any agent of either of them shall be held accountable by reason of any
disclosure of information as to the names and addresses of Holders made
pursuant to the Trust Indenture Act.

SECTION 7.3 Reports by Trustee.

The Trustee shall transmit to Holders such reports concerning the
Trustee and its actions under this Indenture as may be required pursuant to the
Trust Indenture Act at the times and in the manner provided pursuant thereto.

Reports so required to be transmitted at stated intervals of not more
than 12 months shall be transmitted no later than July 15 in each calendar year
with respect to the 12-month period ending on the previous May 15, commencing
May 15, 1999.

A copy of each such report shall, at the time of such transmission to
Holders, be filed by the Trustee with the American Stock Exchange, with the
Commission and with the Company.

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SECTION 7.4 Reports by Company.

The Company shall:

(a) file with the Trustee, within 15 days after the
Company is required to file the same with the Commission, copies of the annual
reports and of the information, documents and other reports (or copies of such
portions of any of the foregoing as the Commission may from time to time by
rules and regulations prescribe) which the Company may be required to file with
the Commission pursuant to Section 13 or Section 15(d) of the Exchange Act; or,
if the Company is not required to file information, documents or reports
pursuant to either of said sections, then it shall file with the Trustee and
the Commission, in accordance with rules and regulations prescribed from time
to time by the Commission, such of the supplementary and periodic information,
documents and reports which may be required pursuant to Section 13 of the
Exchange Act in respect of a security listed and registered on a national
securities exchange as may be prescribed from time to time in such rules and
regulations;

(b) file with the Trustee and the Commission, in
accordance with rules and regulations prescribed from time to time by the
Commission, such additional information, documents and reports with respect to
compliance by the Company with the conditions and covenants of this Indenture
as may be required from time to time by such rules and regulations; and

(c) transmit by mail to all Holders, as their names and
addresses appear in the Security Register, within 30 days after the filing
thereof with the Trustee, such summaries of any information, documents and
reports required to be filed by the Company pursuant to paragraphs (a) and (b)
of this Section as may be required by rules and regulations prescribed from
time to time by the Commission.

ARTICLE VIII

CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE

SECTION 8.1 Company May Consolidate, Etc, Only on Certain Terms.

The Company shall not consolidate with or merge into any other Person
or sell, lease or transfer its properties and assets as, or substantially as,
an entirety to, any Person, unless:

(a) (A) in the case of a merger, the Company is the
surviving entity, or (B) the Person formed by such consolidation or into which
the Company is merged or the Person which acquires by sale or transfer, or
which leases, the properties and assets of the Company as, or substantially as,
an entirety shall expressly assume, by an indenture supplemental hereto,
executed and delivered to the Trustee, in form reasonably satisfactory to the
Trustee, the due and punctual payment of the principal of and interest on all
the Debentures and the performance or observance of every covenant and
condition of this Indenture on the part of the Company to be performed or
observed;

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(b) immediately after giving effect to such transaction,
no Default or Event of Default exists; and

(c) the Company has delivered to the Trustee an Officer's
Certificate and an Opinion of Counsel, each stating that such consolidation,
merger, sale, transfer or lease and the supplemental indenture required in
connection with such transaction comply with this Article and that all
conditions precedent herein provided for relating to such transaction have been
complied with.

SECTION 8.2 Company May Form Holding Company Only on Certain Terms.

Notwithstanding anything to the contrary in Section 8.1, the Company
may form a holding company by merger with or into a single direct or indirect
wholly owned subsidiary of the Company, whether under Section 251(g) of the
General Corporation Law of Delaware or otherwise, and in connection therewith
the Company may sell, transfer or lease any of its properties and units to such
holding company, provided that:

(a) Such holding company shall expressly assume, by an indenture
supplemental hereto, executed and delivered to the Trustee, in form reasonably
satisfactory to the Trustee, the due and punctual payment of the principal of
and interest on all Debentures and the performance or observance of every
covenant and condition of this Indenture on the part of the Company to be
performed or observed;

(b) Immediately after giving effect to such transaction, no
Default or Event of Default exists; and

(c) the Company has delivered to the Trustee an Officer's
Certificate and an Opinion of Counsel, each stating that the formation of such
holding company and the transactions effected in connection therewith and the
supplemental indenture required in connection with such transaction comply with
this Article and that all conditions precedent herein provided for relating to
such transactions have been complied with.

SECTION 8.3 Successor Substituted.

Upon any consolidation of the Company with, or merger of the Company
into, any other Person or any sale, transfer or lease of the properties and
assets of the Company as, or substantially as, an entirety in accordance with
Section 8.1 or formation of a holding company in accordance with Section 8.2,
the successor Person formed by such consolidation or into which the Company is
merged or to which such sale, transfer or lease is made, or which constitutes
the holding company contemplated by Section 8.2, shall succeed to, and be
substituted for, and may exercise every right

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and power of, the Company under this Indenture with the same effect as if such
successor Person had been named originally as the Company herein, and
hereafter, except in the case of a lease, the predecessor Person shall be
relieved of all obligations and covenants under this Indenture and the
Debentures.

ARTICLE IX

SUPPLEMENTAL INDENTURES

SECTION 9.1 Supplemental Indentures Without Consent of Holders.

Without the consent of any Holders, the Company and the Trustee, at
any time and from time to time, may enter into one or more indentures
supplemental hereto, in form satisfactory to the Trustee, for any of the
following purposes:

(a) to secure the Debentures; or

(b) to evidence the succession of another Person to the
Company and the assumption by such successor of the covenants of the Company
herein and in the Debentures; or

(c) to add to the covenants of the Company or the Events
of Default for the benefit of the Holders of Debentures or to surrender any
right or power herein conferred upon the Company; or

(d) to cure any ambiguity, to correct or supplement any
provision herein which may be inconsistent with any other provision herein, to
comply with any applicable mandatory provisions of law or to make any other
provisions with respect to matters or questions arising under this Indenture,
provided that such action pursuant to this Clause (d) shall not adversely
affect the interests of the Holders of Debentures in any material respect; or

(e) to evidence and provide for the acceptance of
appointment hereunder by a successor Trustee pursuant to the requirements of
Section 6.11; or

(f) to modify, eliminate or add to the provisions of this
Indenture to such extent as shall be necessary to effect the qualification of
this Indenture under the Trust Indenture Act or under any similar federal
statute subsequently enacted, and to add to this Indenture such other
provisions as may be expressly required under the Trust Indenture Act.

SECTION 9.2 Supplemental Indentures with Consent of Holders.

With the consent of the Holders of a majority in aggregate principal
amount of the Outstanding Debentures, by Act of said Holders delivered to the
Company and the Trustee, the Company and the Trustee may enter into an
indenture or indentures supplemental hereto for the

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purpose of adding any provisions to or changing in any manner or eliminating
any of the provisions of this Indenture or of modifying in any manner the
rights of the Holders of Debentures under this Indenture; provided, however,
that no such supplemental indenture shall, without the consent of the Holder of
each Outstanding Debenture affected thereby,

(a) change the Stated Maturity of the principal of or
interest on, any Debenture, or reduce the principal amount thereof or the rate
of interest thereon or modify the provisions of this Indenture with respect to
the subordination of the Debentures in a manner adverse to the Holders, or

(b) reduce the percentage in principal amount of the
Outstanding Debentures the consent of whose Holders is required for any such
supplemental indenture, or the consent of whose Holders is required for any
waiver (of compliance with certain provisions of this Indenture or certain
defaults hereunder and their consequences) provided for in this Indenture, or

(c) change any obligation of the Company, with respect to
Outstanding Debentures, to maintain an office or agency in the places and for
the purposes specified in Section 10.2, or

(d) modify any of the provisions of this Section, Section
5.13 or Section 10.6, except to increase any such percentage or to provide that
certain other provisions of this Indenture cannot be modified or waived without
the consent of the Holder of each Outstanding Debenture affected thereby;
provided, however, that this clause shall not be deemed to require the consent
of any Holder with respect to changes in the references to the "Trustee" and
concomitant changes in this Section, or the deletion of this proviso, in
accordance with the requirements of Sections 6.11 and 9.1(e).

It shall not be necessary for any Act of Holders under this Section to
approve the particular form of any proposed supplemental indenture, but it
shall be sufficient if such Act shall approve the substance thereof.

SECTION 9.3 Execution of Supplemental Indentures.

In executing, or accepting the additional trusts created by, any
supplemental indenture permitted by this Article or the modifications thereby
of the trusts created by this Indenture, the Trustee shall be entitled to
receive, and (subject to Section 6.1) shall be fully protected in relying upon,
an Opinion of Counsel stating that the execution of such supplemental indenture
is authorized or permitted by this Indenture. The Trustee may, but shall not
be obligated to, enter into any such supplemental indenture which affects the
Trustee's own rights, duties or immunities under this Indenture or otherwise.

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SECTION 9.4 Effect of Supplemental Indentures.

Upon the execution of any supplemental indenture under this Article,
this Indenture shall be modified in accordance therewith, and such supplemental
indenture shall form a part of this Indenture for all purposes, and every
Holder of Debentures theretofore or thereafter authenticated and delivered
hereunder shall be bound thereby.

SECTION 9.5 Conformity with Trust Indenture Act.

Every supplemental indenture executed pursuant to this Article shall
conform to the requirements of the Trust Indenture Act as then in effect.

SECTION 9.6 Reference in Debentures to Supplemental Indentures.

Debentures authenticated and delivered after the execution of any
supplemental indenture pursuant to this Article may, and if required by the
Trustee shall, bear a notation in form approved by the Trustee as to any matter
provided for in such supplemental indenture. If the Company shall so
determine, new Debentures so modified as to conform, in the opinion of the
Trustee and the Company, to any such supplemental indenture may be prepared and
executed by the Company and authenticated and delivered by the Trustee in
exchange for Outstanding Debentures.

ARTICLE X

COVENANTS

SECTION 10.1 Payment of Principal and Interest.

The Company covenants and agrees for the benefit of the Debentures
that it will duly and punctually pay the principal of and interest on the
Debentures in accordance with the terms of the Debentures and this Indenture.

SECTION 10.2 Maintenance of Office or Agency.

The Company will maintain in the Place of Payment for the Debentures
an office or agency where Debentures may be presented or surrendered for
payment, where Debentures may be surrendered for registration of transfer or
exchange and where notices and demands to or upon the Company in respect of the
Debentures and this Indenture may be served. The Company will give prompt
written notice to the Trustee of the location, and any change in the location,
of such office or agency. If at any time the Company shall fail to maintain
any such required office or agency or shall fail to furnish the Trustee with
the address thereof, such presentations, surrenders, notices and demands may be
made or served at the Corporate Trust Office of the Trustee, and the Company
hereby appoints the Trustee as its agent to receive all such presentations,
surrenders, notices and demands.

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The Company may also from time to time designate one or more other
offices or agencies where the Debentures may be presented or surrendered for
any or all such purposes and may from time to time rescind such designations,
provided, however, that no such designation or rescission shall in any manner
relieve the Company of its obligation to maintain an office or agency in each
Place of Payment for Debentures for such purposes. The Company will give
prompt written notice to the Trustee of any such designation or rescission and
of any change in the location of any such other office or agency.

The Company hereby initially designates as the Place of Payment
Chicago, Illinois, and initially appoints the Trustee at its Corporate Trust
Office as the Company's office or agency for each such purpose.

SECTION 10.3 Money for Debenture Payments to Be Held in Trust.

If the Company shall at any time act as its own Paying Agent, it will,
on or before each due date of the principal of or interest on any of the
Debentures, segregate and hold in trust for the benefit of the Persons entitled
thereto a sum sufficient to pay the principal and interest so becoming due
until such sums shall be paid to such Persons or otherwise disposed of as
herein provided and will promptly notify the Trustee of its action or failure
so to act.

Whenever the Company shall have one or more Paying Agents, it will, on
or prior to each due date of the principal of or interest on any Debentures,
deposit with a Paying Agent a sum sufficient to pay such amount, such sum to be
held as provided by the Trust Indenture Act, and (unless such Paying Agent is
the Trustee) the Company will promptly notify the Trustee of its action or
failure so to act.

The Company will cause each Paying Agent other than the Trustee to
execute and deliver to the Trustee an instrument in which such Paying Agent
shall agree with the Trustee, subject to the provisions of this Section, that
such Paying Agent will (1) hold all sums held by it for the payment of the
principal of or interest on Debentures in trust for the benefit of the Persons
entitled thereto until such sums shall be paid to such Persons or otherwise
disposed of as herein provided; (2) give the Trustee notice of any default by
the Company (or any other obligor upon the Debentures) in the making of any
payment of principal or interest on the Debentures; and (3) during the
continuance of any such default, upon the written request of the Trustee,
forthwith pay to the Trustee all sums held in trust by such Paying Agent for
payment in respect of the Debentures.

The Company may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, pay, or
by Company Order direct any Paying Agent to pay, to the Trustee all sums held
in trust by the Company or such Paying Agent, such sums to be held by the
Trustee upon the same trusts as those upon which such sums were held by the
Company or such

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Paying Agent; and, upon such payment by any Paying Agent to the Trustee, such
Paying Agent shall be released from all further liability with respect to such
money.

Any money deposited with the Trustee or any Paying Agent, or then held
by the Company, in trust for the payment of the principal of or interest on any
Debenture and remaining unclaimed for two years after such principal or
interest has become due and payable shall be paid to the Company on Company
Request, or (if then held by the Company) shall be discharged from such trust;
and the Holder of such Debenture shall thereafter, as an unsecured general
creditor, look only to the Company for payment thereof, and all liability of
the Trustee or such Paying Agent with respect to such trust money, and all
liability of the Company as trustee thereof, shall thereupon cease, provided,
however, that the Trustee or such Paying Agent, before being required to make
any such repayment, may at the expense of the Company cause to be published
once, in an Authorized Newspaper in each Place of Payment with respect to such
series, notice that such money remains unclaimed and that, after a date
specified therein, which shall not be less than 30 days from the date of such
publication, any unclaimed balance of such money then remaining will be repaid
to the Company.

SECTION 10.4 Statement by Officers as to Default.

The Company will deliver to the Trustee, within 150 days after the end
of each fiscal year of the Company ending after the date hereof, an Officer's
Certificate, stating whether or not to the best knowledge of the signer thereof
the Company is in default in the performance and observance of any of the
terms, provisions and conditions of this Indenture (without regard to any
period of grace or requirement of notice provided hereunder) and, if the
Company shall be in default, specifying all such defaults and the nature and
status thereof of which they may have knowledge.

SECTION 10.5 Existence.

Subject to Article Eight, the Company will do or cause to be done all
the things necessary to preserve and keep in full force and effect its
existence, rights (charter and statutory) and franchises; provided, however,
that the Company shall not be required to preserve any such right or franchise
if it shall determine that the preservation thereof is no longer desirable in
the conduct of the business of the Company.

SECTION 10.6 Waiver of Certain Covenants.

The Company may omit in any particular instance to comply with any
term, provision or condition set forth in Section 10.5, if before the time for
such compliance the Holders of at least a majority in aggregate principal
amount of the Outstanding Debentures shall, by Act of such Holders, either
waive such compliance in such instance or generally waive compliance with such
term, provision or condition, but no such waiver shall extend to or affect such
term, provision or condition except to the extent so expressly waived, and,
until such waiver shall become effective, the obligations of the Company and
the duties of the Trustee in respect of any such term, provision or condition
shall remain in full force and effect; provided, however, that if the
Debentures are held by

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the Trust or a trustee of such Trust, such waiver or modification to such
waiver shall not be effective until the holders of a majority in Liquidation
Amount of Trust Securities shall have consented to such waiver or modification
to such waiver; provided further, that if the consent of the Holders of a
majority in Liquidation Amount of the Trust Securities of a class is required
under the Declaration, such waiver shall not be effective until the Holders of
a majority in Liquidation Amount of the Trust Securities of each such class
shall have consented to such waiver.

ARTICLE XI

REDEMPTION AND EXCHANGE OF DEBENTURES

SECTION 11.1 Optional Redemption.

Subject to the provisions of this Article XI set forth below, the
Company shall have the right to redeem the Debentures, in whole or in part,
from time to time, on or after November __, 2001. Any redemption will be made
upon not less than 30 days nor more than 60 days notice to the Holders of the
Debentures, at a Redemption Price equal to 100% of the principal amount of the
Debentures being redeemed together with accrued and unpaid interest (including
Additional Interest and Additional Sums, if any) to (but not including) the
date fixed for redemption (subject to the rights of Holders of record on any
Regular Record Date to receive interest due on any Interest Payment Date that
is on or prior to such redemption date).

SECTION 11.2 Election to Redeem; Notice to Trustee.

The election of the Company to redeem any Debentures shall be
evidenced by a Board Resolution. The Company shall, at least [60] days prior
to the Redemption Date fixed by the Company (unless a shorter notice shall be
satisfactory to the Trustee), notify the Trustee of such Redemption Date, of
the principal amount of Debentures to be redeemed and, if applicable, of the
tenor of the Debentures to be redeemed.

SECTION 11.3 Selection by Trustee of Debentures to Be Redeemed.

If less than all the Debentures are to be redeemed, the particular
Debentures to be redeemed shall be selected not more than 60 days prior to the
Redemption Date by the Trustee, from the Outstanding Debentures not previously
called for redemption, by such method as the Trustee shall deem fair and
appropriate and which may provide for the selection for redemption of portions
(equal to the minimum authorized denomination for the Debentures or any integral
multiple thereof) of the principal amount of Debentures of a denomination larger
than the minimum authorized denomination for Debentures.

The Trustee shall promptly notify the Company in writing of the
Debentures selected for redemption and, in the case of any Debentures selected
for partial redemption, the principal amount thereof to be redeemed.

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For all purposes of this Indenture, unless the context otherwise
requires, all provisions relating to the redemption of Debentures shall relate,
in the case of any Debentures redeemed or to be redeemed only in part, to the
portion of the principal amount of such Debentures which has been or is to be
redeemed.

SECTION 11.4 Notice of Redemption.

Notice of redemption shall be given by first-class mail (if
international mail, by air mail), postage prepaid, mailed not less than 30 nor
more than 60 days prior to the Redemption Date, to each Holder of Debentures to
be redeemed, at his address appearing in the Security Register.

All notices of redemption shall state:

(a) the Redemption Date,

(b) the Redemption Price,

(c) if less than all the Outstanding Debentures are to be
redeemed, the identification (and, in the case of partial redemption of any
Debentures, the principal amounts) of the particular Debentures to be redeemed,

(d) that on the Redemption Date the Redemption Price will
become due and payable upon each such Debenture to be redeemed and that
interest thereon will cease to accrue on and after said date, and

(e) the place or places where such Debentures are to be
surrendered for payment of the Redemption Price.

Notice of redemption of Debentures to be redeemed shall be given by
the Company or, at the Company's request, by the Trustee in the name and at the
expense of the Company.

SECTION 11.5 Deposit of Redemption Price.

On or prior to any Redemption Date, the Company shall deposit with the
Trustee or with a Paying Agent (or, if the Company is acting as its own Paying
Agent, segregate and hold in trust as provided in Section 10.3) an amount of
money sufficient to pay the Redemption Price of, and (except if the Redemption
Date shall be an Interest Payment Date) accrued interest on, all the Debentures
which are to be redeemed on that date.

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SECTION 11.6 Debentures Payable on Redemption Date.

Notice of redemption having been given as aforesaid, the Debentures so
to be redeemed shall, on the Redemption Date, become due and payable at the
Redemption Price, and from and after such date (unless the Company shall
default in the payment of the Redemption Price and accrued interest) such
Debentures shall cease to bear interest. Upon surrender of any such Debenture
for redemption in accordance with said notice, such Debenture shall be paid by
the Company at the Redemption Price, together with accrued interest to the
Redemption Date; provided, however, that, installments of interest whose Stated
Maturity is on or prior to the Redemption Date shall be payable to the Holders
of such Debentures, or one or more Predecessor Debentures, registered as such
at the close of business on the relevant Record Dates according to their terms
and the provisions of Section 3.6.

If any Debenture called for redemption shall not be so paid upon
surrender thereof for redemption, the principal shall, until paid, bear
interest from the Redemption Date at the rate prescribed therefor in the
Debenture.

SECTION 11.7 Debentures Redeemed in Part.

Any Debenture which is to be redeemed only in part shall be
surrendered at a Place of Payment therefor (with, if the Company or the Trustee
so requires, due endorsement by, or a written instrument of transfer in form
satisfactory to the Company and the Trustee duly executed by, the Holder
thereof or his attorney duly authorized in writing), and the Company shall
execute, and the Trustee shall authenticate and deliver to the Holder of such
Debenture without service charge, a new Debenture or Debentures of like tenor,
of any authorized denomination as requested by such Holder, in aggregate
principal amount equal to and in exchange for the unredeemed portion of the
principal of the Debenture so surrendered.

SECTION 11.8 Exchange of Trust Securities for Debentures.

(a) At any time the Company shall have the right to
terminate the Trust and cause the Debentures to be distributed to the holders
of the Trust Securities in liquidation of the Trust after satisfaction of
liabilities to creditors of the Trust as provided by applicable law.

(b) If a Trust Special Event shall occur, the Company
shall give the Trustee notice of the same. If a Trust Special Event shall
occur and be continuing, the Declaration requires the Property Trustee and the
Administrative Trustees to direct the Trustee to exchange all outstanding Trust
Securities for the Debentures having an aggregate unpaid principal amount equal
to the aggregate Liquidation Amount of the Trust Securities to be exchanged
with accrued and unpaid interest in an amount equal to any unpaid distributions
(including any Additional Amounts) on the Trust Securities, provided that, in
the case of a Trust Tax Event, the Company shall have the right to direct the
Trustee that less than all, or none, of the Trust Securities be so exchanged if
and for so long as the Company shall have elected to pay any Additional Sums
such that the net amounts received by holders of the Trust Securities not so
exchanged in respect of distributions are not

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reduced as a result of such Trust Tax Event, and shall not have revoked any
such election or failed to make such payments.

SECTION 11.9 No Sinking Fund.

The Debentures are not entitled to the benefit of any sinking fund.

ARTICLE XII

EXTENSION OF INTEREST PAYMENT PERIOD

SECTION 12.1 Extension of Interest Payment Period.

As long as an Event of Default under Section 5.1 shall not have
occurred and be continuing, the Company shall have the right, at any time and
from time to time during the term of the Debentures, to defer payments of
interest by extending the interest payment period of such Debentures for a
period not exceeding 20 consecutive quarters as provided in the form of
Debenture attached as Exhibit A.

SECTION 12.2 Additional Sums.

In the event that (a) the Property Trustee is the Holder of all of the
Outstanding Debentures, (b) a Trust Tax Event in respect of the Trust shall
have occurred and be continuing and (c) the Company shall not have (i) redeemed
or exchanged all the Debentures pursuant to Section 11.1 or 11.8, respectively,
or (ii) terminated the Trust pursuant to Section 9.1 of the Declaration, the
Company shall pay Additional Sums to the Trust for so long as the Property
Trustee is the registered holder of the Debentures. Whenever in this Indenture
or the Debentures there is a reference in any context to the payment of
principal of or interest on the Debentures, such mention shall be deemed to
include mention of the payments of the Additional Sums provided for in this
section to the extent that, in such context, Additional Sums are, were or would
be payable in respect thereof pursuant to the provisions of this section and
express mention of the payment of Additional Sums (if applicable) in any
provisions hereof shall not be construed as excluding Additional Sums in those
provisions hereof where such express mention is not made; provided, however,
that the extension of an interest payment period pursuant to Section 12.1 shall
not extend the payment of any Additional Sums that may be due and payable
during such interest payment period.

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ARTICLE XIII

DEFEASANCE

SECTION 13.1 Legal Defeasance.

In addition to discharge of the Indenture pursuant to Section 4.1, the
Company shall be deemed to have paid and discharged the entire indebtedness on
all the Debentures on the 91st day after the date of the deposit referred to in
Clause (a) below, and the provisions of this Indenture with respect to the
Debentures shall no longer be in effect (except as to (1) rights of
registration of transfer and exchange of Debentures and the Company's right of
optional redemption, (2) substitution of mutilated, destroyed, lost or stolen
Debentures, (3) rights of holders of Debentures to receive payments of
principal thereof and interest thereon, upon the original Stated Maturities
therefor [or on the specified Redemption Dates therefor] (but not upon
acceleration), (4) the rights, obligations, duties and immunities of the
Trustee hereunder, (5) [the rights to exchange the Debentures], (6) the rights
of the Holders of Debentures as beneficiaries hereof with respect to the
property so deposited with the Trustee payable to all or any of them, and (7)
the obligations of the Company under Section 10.2), and the Trustee, at the
expense of the Company, shall, upon a Company Request, execute proper
instruments acknowledging the same, if the conditions set forth below are
satisfied (hereinafter, "defeasance"):

(a) The Company has irrevocably deposited or caused to be
deposited with the Trustee as trust funds in trust, for the purposes of making
the following payments, specifically pledged as security for, and dedicated
solely to, the benefit of the Holders of the Debentures (i) cash in an amount,
or (ii) U.S. Government Obligations, maturing as to principal and interest at
such times and in such amounts as will insure the availability of cash, or
(iii) a combination thereof, sufficient, in the opinion of a nationally
recognized firm of independent public accountants expressed in a written
certification thereof delivered to the Trustee, to pay the principal and
interest on all Debentures on each date that such principal or interest is due
and payable or on any Redemption Date established pursuant to Clause (c) below;

(b) The Company has delivered to the Trustee an Opinion
of Counsel based on the fact that (x) the Company has received from, or there
has been published by, the Internal Revenue Service a ruling, or (y) since the
date hereof, there has been a change in the applicable federal income tax law,
in either case to the effect that, and such opinion shall confirm that, the
Holders of the Debentures will not recognize income, gain or loss for federal
income tax purposes as a result of such deposit and defeasance and will be
subject to federal income tax on the same amount and in the same manner and at
the same times, as would have been the case if such deposit and defeasance had
not occurred;

(c) If the Debentures are to be redeemed prior to Stated
Maturity, notice of such redemption shall have been duly given pursuant to this
Indenture or provision therefor satisfactory to the Trustee shall have been
made;

(d) No Event of Default or event which with notice or
lapse of time or both would become an Event of Default shall have occurred and
be continuing on the date of such deposit; and

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(e) The Company has delivered to the Trustee an Officer's
Certificate and an Opinion of Counsel each stating that all conditions
precedent provided for or relating to the defeasance contemplated by this
provision have been complied with.

For this purpose, such defeasance means that the Company and any other
obligor upon the Debentures shall be deemed to have paid and discharged the
entire debt represented by the Debentures, which shall thereafter be deemed to
be "Outstanding" only for the purposes of Section 13.3 and the rights and
obligations referred to in Clauses (1) through (7), inclusive, of the first
paragraph of this Section, and to have satisfied all its other obligations
under the Debentures and this Indenture insofar as the Debentures are
concerned.

SECTION 13.2 Covenant Defeasance.

The Company and any other obligor, if any, shall be released on the
91st day after the date of the deposit referred to in Clause (a) below from its
obligations under Sections 7.4, 8.1 and 10.5 with respect to the Debentures on
and after the date the conditions set forth below are satisfied (hereinafter,
"covenant defeasance"), and the Debentures shall thereafter be deemed to be not
"Outstanding" for the purposes of any request, demand, authorization,
direction, notice, waiver, consent or declaration or other action or Act of
Holders (and the consequences of any thereof) in connection with such
covenants, but shall continue to be deemed Outstanding for all other purposes
hereunder. For this purpose, such covenant defeasance means that, with respect
to the Debentures, the Company may omit to comply with and shall have no
liability in respect of any term, condition or limitation set forth in any such
Section, whether directly or indirectly by reason of any reference elsewhere
herein to such Section or by reason of any reference in such Section to any
other provision herein or in any other document and such omission to comply
shall not constitute a Default or an Event of Default under Section 5.1, but,
except as specified above, the remainder of this Indenture and the Debentures
shall be unaffected thereby. The following shall be the conditions to
application of this Section 13.2:

(a) The Company has irrevocably deposited or caused to be
deposited with the Trustee as trust funds in trust for the purpose of making
the following payments, specifically pledged as security for, and dedicated
solely to, the benefit of the Holders of the Debentures, (i) cash in an amount,
or (ii) U.S. Government Obligations, maturing as to principal and interest at
such times and in such amounts as will insure the availability of cash, or
(iii) a combination thereof, sufficient, in the opinion of a nationally
recognized firm of independent public accountants expressed in a written
certification thereof delivered to the Trustee, to pay the principal and
interest on all Debentures on each date that such principal and interest is due
and payable or on any Redemption Date established pursuant to Clause (b) below;

(b) If the Debentures are to be redeemed prior to Stated
Maturity, notice of such redemption shall have been duly given pursuant to this
Indenture or provision therefor satisfactory to the Trustee shall have been
made;

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(c) No Event of Default or event which with notice or
lapse of time or both would become an Event of Default shall have occurred and
be continuing on the date of such deposit;

(d) The Company shall have delivered to the Trustee an
Opinion of Counsel which shall confirm that the holders of the Debentures will
not recognize income, gain or loss for federal income tax purposes as a result
of such deposit and covenant defeasance and will be subject to federal income
tax on the same amount and in the same manner and at the same time as would
have been the case if such deposit and covenant defeasance had not occurred;
and

(e) The Company shall have delivered to the Trustee an
Officer's Certificate and an Opinion of Counsel each stating that all conditions
precedent provided for relating to the covenant defeasance contemplated by this
provision have been complied with.

SECTION 13.3 Application by Trustee of Funds Deposited for Payment of
Debentures.

Subject to the provisions of the last paragraph of Section 10.3, all
monies or U.S. Government Obligations deposited with the Trustee pursuant to
Section 13.1 or 13.2 (and all funds earned on such monies or U.S. Government
Obligations) shall be held in trust and applied by it to the payment, either
directly or through any Paying Agent (including the Company acting as its own
Paying Agent), to the Holders of the Debentures for the payment or redemption
of which such monies have been deposited with the Trustee, of all sums due and
to become due thereon for principal and interest but such monies need not be
segregated from other funds except to the extent required by law. Subject to
Sections 13.1 and 13.2, the Trustee promptly shall pay to the Company upon
request any excess monies held by it at any time.

SECTION 13.4 Repayment to Company.

The Trustee and any Paying Agent promptly shall pay or return to the
Company upon Company Request any money and U.S. Government Obligations held by
them at any time that are not required for the payment of the principal of and
any interest on the Debentures for which money or U.S. Government Obligations
have been deposited pursuant to Section 13.1 or 13.2.

The provisions of the last paragraph of Section 10.3 shall apply to
any money held by the Trustee or any Paying Agent under this Article that
remains unclaimed for two years after the Maturity of Debentures for which
money or U.S. Government Obligations have been deposited pursuant to Section
13.1 or 13.2.

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ARTICLE XIV

SUBORDINATION OF DEBENTURES

SECTION 14.1 Agreement to Subordinate.

The Company, for itself, its successors and assigns, covenants and
agrees, and each Holder of Debentures, by his acceptance thereof, likewise
covenants and agrees, that the payment of the principal of and interest on
each and all of the Debentures is hereby expressly subordinated, to the extent
and in the manner hereinafter set forth, in right of payment to the prior
payment in full of all Senior Debt.

SECTION 14.2 Distribution on Dissolution, Liquidation and Reorganization;
Subrogation of Debentures.

Upon any distribution of assets of the Company upon any dissolution,
winding up, liquidation or reorganization of the Company, whether in
bankruptcy, insolvency, reorganization or receivership proceedings or upon an
assignment for the benefit of creditors or any other marshalling of the assets
and liabilities of the Company or otherwise (subject to the power of a court of
competent jurisdiction to make other equitable provision reflecting the rights
conferred in this Indenture upon the Senior Debt and the holders thereof with
respect to the Debentures and the Holders thereof by a lawful plan or
reorganization under applicable Bankruptcy Law),

(a) the holders of all Senior Debt shall be entitled to
receive payment in full of the principal thereof, premium, if any, interest,
and any interest thereon, due thereon before the Holders of the Debentures are
entitled to receive any payment upon the principal of and interest or other
amounts on the Debentures or interest on overdue amounts thereof; and

(b) any payment or distribution of assets of the Company
of any kind or character, whether in cash, property or securities, to which the
Holders of the Debentures or the Trustee would be entitled except for the
provisions of this Article XIV shall be paid by the liquidating trustee or
agent or other person making such payment or distribution, whether a trustee in
bankruptcy, a receiver or liquidating trustee or otherwise, directly to the
holders of Senior Debt or their representative or representatives or to the
trustee or trustees under any indenture under which any instruments evidencing
any of such Senior Debt may have been issued, ratably according to the
aggregate amounts remaining unpaid on account of the principal of, premium, if
any, interest, and any interest thereon, on the Senior Debt held or represented
by each, to the extent necessary to make payment in full of all Senior Debt
remaining unpaid, after giving effect to any concurrent payment or distribution
to the holders of such Senior Debt; and

(c) in the event that, notwithstanding the foregoing, any
payment or distribution of assets of the Company of any kind or character,
whether in cash, property or securities, shall be received by the Trustee or
the Holders of the Debentures before all Senior Debt is paid in full, such

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payment or distribution shall be paid over to the holders of such Senior Debt
or their representative or representatives or to the trustee or trustees under
any indenture under which any instruments evidencing any of such Senior Debt
may have been issued, ratably as aforesaid, for application to the payment of
all Senior Debt remaining unpaid until all such Senior Debt shall have been
paid in full, after giving effect to any concurrent payment or distribution to
the holders of such Senior Debt.

Subject to the payment in full of all Senior Debt, the Holders of the
Debentures shall be subrogated to the rights of the holders of Senior Debt to
receive payments or distributions of cash, property or securities of the
Company applicable to Senior Debt until the principal, interest and other
amounts, and any interest thereon, of or on the Debentures shall be paid in
full and no such payments or distributions to the Holders of the Debentures of
cash, property or securities otherwise distributable to the Senior Debt shall,
as between the Company, its creditors other than the holders of Senior Debt,
and the Holders of the Debentures, be deemed to be a payment by the Company to
or on account of the Debentures. It is understood that the provisions of this
Article XIV are and are intended solely for the purpose of defining the
relative rights of the Holders of the Debentures, on the one hand, and the
holders of Senior Debt, on the other hand. Nothing contained in this Article
XIV or elsewhere in this Indenture or in the Debentures is intended to or shall
impair, as between the Company, its creditors other than the holders of Senior
Debt, and the Holders of the Debentures, the obligation of the Company, which
is unconditional and absolute, to pay to the Holders of the Debentures the
principal, interest and other amounts, and any interest thereon, of or on the
Debentures as and when the same shall become due and payable in accordance with
their terms, or to affect the relative rights of the Holders of the Debentures
and creditors of the Company other than the holders of Senior Debt, nor shall
anything herein or in the Debentures prevent the Trustee or the Holder of any
Debenture from exercising all remedies otherwise permitted by applicable law
upon default under this Indenture, subject to the rights, if any, under this
Article XIV of the holders of Senior Debt in respect of cash, property or
securities of the Company received upon the exercise of any such remedy. Upon
any payment or distribution of assets of the Company referred to in this
Article XIV, the Trustee shall be entitled to conclusively rely upon a
certificate of the liquidating trustee or agent or other person making any
distribution to the Trustee for the purpose of ascertaining the persons
entitled to participate in such distribution, the holders of Senior Debt and
other indebtedness of the Company, the amount thereof or payable thereon, the
amount or amounts paid or distributed thereon, and all other facts pertinent
thereto or to this Article XIV.

The Trustee, however, shall not be deemed to owe any fiduciary duty to
the holders of Senior Debt. The Trustee shall not be liable to any such holder
if it shall pay over or distribute to or on behalf of Holders of Debentures or
the Company money or assets to which any holder of Senior Debt shall be
entitled by virtue of this Article XIV. The rights and claims of the Trustee
under Section 6.7 shall not be subject to the provisions of this Article XIV.

If the Trustee or any Holder of Debentures does not file a proper
claim or proof of debt in the form required in any proceeding referred to above
prior to 30 days before the expiration of the time to file such claim in such
proceeding, then the holder of any Senior Debt is hereby authorized, and has
the right, to file an appropriate claim or claims for or on behalf of such
Holder of Debentures.

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SECTION 14.3 No Payment on Debentures in Event of Default on Senior Debt.

No payment by the Company on account of principal, interest or other
amounts, and any interest thereon, of or on the Debentures shall be made unless
full payment of amounts then due for principal, premium, if any, sinking funds,
and interest or other amounts on Senior Debt has been made or duly provided for
in money or money's worth.

SECTION 14.4 Payments on Debentures Permitted.

Nothing contained in this Indenture or in any of the Debentures shall
(a) affect the obligation of the Company to make, or prevent the Company from
making, at any time except as provided in Sections 14.2 and 14.3, payments of
principal, interest or other amounts, and interest thereon, of or on the
Debentures or (b) prevent the application by the Trustee of any monies
deposited with it hereunder to the payment of or on account of the principal,
interest or other amounts, and any interest thereon, of or on the Debentures
unless the Trustee shall have received at its Corporate Trust Office written
notice of any event prohibiting the making of such payment at least [two]
Business Days (i) prior to the date fixed for such payment, (ii) prior to the
execution of an instrument to satisfy and discharge this Indenture based upon
the deposit of funds under Section 4.1(a)(ii), (iii) prior to the execution of
an instrument acknowledging the defeasance of such Debentures pursuant to
Section 13.1 or (iv) prior to any deposit pursuant to Clause (a) of Section
13.2 with respect to such Debentures.

SECTION 14.5 Authorization of Holders of Debentures to Trustee to Effect
Subordination.

Each Holder of Debentures by his acceptance thereof authorizes and
directs the Trustee on his behalf to take such action as may be necessary or
appropriate to effectuate the subordination as provided in this Article XIV and
appoints the Trustee his attorney-in-fact for any and all such purposes.

SECTION 14.6 Notices to Trustee.

The Company shall give prompt written notice to a Responsible Officer
of the Trustee located at the Corporate Trust Office of the Trustee of any fact
known to the Company which would prevent the making of any payment to or by the
Trustee in respect of the Debentures. Notwithstanding the provisions of this
Article XIV or any other provisions of this Indenture, neither the Trustee nor
any Paying Agent (other than the Company) shall be charged with knowledge of
the existence of any Senior Debt or of any event which would prohibit the
making of any payment of monies to or by the Trustee or such Paying Agent,
unless and until a Responsible Officer of the Trustee or such Paying Agent
shall have received (in the case of the Trustee, at its Corporate Trust Office)
written notice thereof from the Company or from the holder of any Senior Debt
or from the trustee for or representative of any Senior Debt together with
proof satisfactory to the Trustee of such holding of Senior Debt or of the
authority of such trustee or representative; provided, however, that if at
least two Business Days prior to the date upon which by the terms hereof any
such monies may

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become payable for any purpose (including, without limitation, the payment of
the principal of, interest or other amounts on any Debenture, or any interest
thereon) or the date on which the Trustee shall execute an instrument
acknowledging satisfaction and discharge of this Indenture or the defeasance of
Debentures pursuant to Section 13.1 or the date on which a deposit pursuant to
Clause (a) of Section 13.2 is made, the Trustee shall not have received with
respect to such monies or the monies deposited with it as a condition to such
satisfaction and discharge or defeasance the notice provided for in this
Section 14.6, then, anything herein contained to the contrary notwithstanding,
the Trustee shall have full power and authority to receive such monies and to
apply the same to the purpose for which they were received, and shall not be
affected by any notice to the contrary which may be received by it on or after
such two Business Days prior to such date. The Trustee shall be entitled to
conclusively rely on the delivery to it of a written notice by a person
representing himself to be a holder of Senior Debt (or a trustee or
representative on behalf of such holder) to establish that such a notice has
been given by a holder of Senior Debt or a trustee or representative on behalf
of any such holder. In the event that the Trustee determines in good faith
that further evidence is required with respect to the right of any Person as a
holder of Senior Debt to participate in any payment or distribution pursuant to
this Article XIV, the Trustee may request such Person to furnish evidence to
the reasonable satisfaction of the Trustee as to the amount of Senior Debt held
by such Person, the extent to which such Person is entitled to participate in
such payment or distribution and any other facts pertinent to the rights of
such Person under this Article XIV and, if such evidence is not furnished, the
Trustee may defer any payment to such Person pending judicial determination as
to the right of such Person to receive such payment.

SECTION 14.7 Trustee as Holder of Senior Debt.

The Trustee shall be entitled to all the rights set forth in this
Article XIV in respect of any Senior Debt at any time held by it to the same
extent as any other holder of Senior Debt and nothing in this Indenture shall
be construed to deprive the Trustee of any of its rights as such holder.

SECTION 14.8 Modification of Terms of Senior Debt.

Any renewal or extension of the time of payment of any Senior Debt or
the exercise by the holders of Senior Debt of any of their rights under any
instrument creating or evidencing Senior Debt, including without limitation the
waiver of default thereunder, may be made or done all without notice to or
assent from Holders of the Debentures or the Trustee.

No compromise, alteration, amendment, modification, extension, renewal
or other change of, or waiver, consent or other action in respect of, any
liability or obligation under or in respect of, or of any of the terms,
covenants or conditions of any indenture or other instrument under which any
Senior Debt is outstanding or of such Senior Debt, whether or not such release
is in accordance with the provisions of any applicable document, shall in any
way alter or affect any of the provisions of this Article XIV or of the
Debentures relating to the subordination thereof.

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ARTICLE XV

LIMITATION OF TRANSACTIONS; COVENANTS AS TO TRUST

SECTION 15.1 Limitation of Transactions.

So long as any Debentures remain outstanding, if (a) for any
distribution period, full distributions on a cumulative basis on any Trust
Preferred Securities have not been paid or declared and set aside for payment,
(b) an Event of Default has occurred and is continuing or there shall have
occurred and be continuing any event of which the Company has actual knowledge
that, with the giving of notice or lapse of time, or both, would constitute an
Event of Default, (c) the Company is in default of its obligations under the
Trust Preferred Securities Guarantee or the Trust Common Securities Guarantee,
or (d) the Company shall have given notice of its election to defer payments of
interest on the Debentures by extending the interest payment period as provided
in Article XII and such period or any extension thereof shall be continuing,
then, during such period, the Company shall not (i) declare or pay dividends
on, make distributions with respect to, or redeem, purchase or acquire, or make
a liquidation payment with respect to any of its Capital Stock (except for
dividends or distributions in shares of, or options, warrants or rights to
subscribe for or purchase shares of its Capital Stock and conversions or
exchanges of Common Stock of one class for Common Stock of another class) or
(ii) make any payments of principal, interest or premium, if any, on or repay
or repurchase or redeem any debt securities (including guarantees of
indebtedness for money borrowed) of the Company that rank pari passu with or
junior to the Debentures (other than (v) any redemption, liquidation, interest,
principal or guarantee payment by the Company where the payment is made by way
of securities (including Capital Stock) that rank pari passu with or junior to
the securities on which such redemption, interest, principal or guarantee
payment is being made, (w) payments under the Trust Preferred Securities
Guarantee or the Trust Common Securities Guarantee, (x) purchases of Common
Stock related to the issuance of Common Stock under any of the Company's
benefit plans for its directors, officers or employees, (y) as a result of a
reclassification of the Company's Capital Stock or the exchange or conversion
of one series or class of the Company's Capital Stock for another series or
class of the Company's Capital Stock and (z) the purchase of fractional
interests in shares of the Company's Capital Stock pursuant to the conversion
or exchange provisions of such Capital Stock or the security being converted or
exchanged).

SECTION 15.2 Covenants As To Trust.

The Company covenants with each Holder of the Debentures that it will
(i) for so long as Trust Preferred Securities are outstanding, (a) maintain
directly or indirectly 100% ownership of the Trust Common Securities, provided,
that any permitted successor of the Company under this Indenture may succeed to
the Company's ownership of the Trust Common Securities; and (b) not voluntarily
terminate, wind-up or liquidate the Trust, except in connection with (A) a
distribution of the Debentures to the holders of Trust Preferred Securities in
liquidation of the Trust, (B) the redemption of all Trust Securities or (C)
mergers, consolidations or amalgamations permitted by the Declaration; (ii) use
its commercially reasonable efforts, consistent with the terms and provisions

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of the Declaration to cause the Trust to remain classified as a grantor trust,
and not taxable as a corporation, for United States federal income tax
purposes; and (iii) honor all obligations relating to the exchange of the Trust
Securities for Debentures.

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

This instrument may be executed with counterpart signature pages or in
any number of counterparts, each of which so executed shall be deemed to be an
original, but all such counterparts shall together constitute but one and the
same instrument.

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IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly executed, all as of the day and year first above written.

KBK CAPITAL CORPORATION

By:
------------------------------------
Name:
Title:

THE FIRST NATIONAL BANK OF CHICAGO,
as Trustee

By:
------------------------------------
Name:
Title:

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EXHIBIT A

[FORM OF FACE OF DEBENTURE]

[IF THE DEBENTURE IS TO BE A GLOBAL SECURITY, INSERT THE FOLLOWING --
THIS DEBENTURE IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE
HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITORY OR A
NOMINEE THEREOF. THIS DEBENTURE MAY NOT BE TRANSFERRED TO, OR REGISTERED OR
EXCHANGED FOR DEBENTURES REGISTERED IN THE NAME OF, ANY PERSON OTHER THAN THE
DEPOSITORY OR A NOMINEE THEREOF AND NO SUCH TRANSFER MAY BE REGISTERED, EXCEPT
IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE. EVERY DEBENTURE
AUTHENTICATED AND DELIVERED UPON REGISTRATION OF TRANSFER OF, OR IN EXCHANGE FOR
OR IN LIEU OF, THIS DEBENTURE SHALL BE A GLOBAL SECURITY SUBJECT TO THE
FOREGOING, EXCEPT IN SUCH LIMITED CIRCUMSTANCES.

UNLESS THIS DEBENTURE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW YORK, NEW YORK) TO THE ISSUER
OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY
DEBENTURE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY AND
ANY PAYMENT HEREON IS MADE TO CEDE & CO., ANY TRANSFER, PLEDGE OR OTHER USE
HEREOF FOR VALUE OR OTHERWISE BY A PERSON IS WRONGFUL SINCE THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.]

No. CUSIP NO.
------------------------ --------------

KBK CAPITAL CORPORATION

% SUBORDINATED DEBENTURE DUE 2028

KBK Capital Corporation, a Delaware corporation (the "Company," which
term includes any successor corporation under the Indenture hereinafter referred
to), for value received, hereby promises to pay to The First National Bank of
Chicago, as Property Trustee, or registered assigns, the principal sum
of ____________________________________________________ ($_______________)
[or such greater or lesser principal sums as shall be noted on the Schedule

A-1

<PAGE> 69

attached hereto]* on November __, 2028 and to pay interest on said principal sum
from November __, 1998 or from the most recent interest payment date (each such
date, an "Interest Payment Date") to which interest has been paid or duly
provided for, quarterly (subject to deferral as set forth herein) in arrears on
February __, May __, August __, and November __ of each year, commencing
February __, 1999, at the rate of % per annum plus Additional Interest and
Additional Sums (as defined in Section 1.1 of the Indenture) if any, until the
principal hereof shall have become due and payable, and on any overdue
principal. The amount of interest payable for any period will be computed on the
basis of a 360-day year of twelve 30-day months, and for any period shorter than
a full quarter, on the basis of the actual number of days elapsed in a 90-day
quarter. In the event that any date on which interest is payable on this
Debenture is not a Business Day, then a payment of the interest payable on such
date will be made on the next succeeding day which is a Business Day (and
without any interest or other payment in respect of any such delay) except that,
if such Business Day is in the next succeeding calendar year, such payment shall
be made on the immediately preceding Business Day (and without any interest or
other payment in respect of any such delay), in each case with the same force
and effect as if made on the date the payment was originally payable. A
"Business Day" shall mean any day other than a day on which banking institutions
in the City of New York or Chicago, Illinois are authorized or required by law
or executive order to close. The interest installment so payable, and punctually
paid or duly provided for, on any Interest Payment Date will, as provided in the
Indenture, be paid to the Person in whose name this Debenture (or one or more
Predecessor Debentures, as defined in the Indenture) is registered at the close
of business on the Regular Record Date for such interest installment, which
shall be the close of business on the [fifteenth] day of the [month] of such
Interest Payment Date. Any such interest installment not so punctually paid or
duly provided for shall forthwith cease to be payable to the Holder on such
Regular Record Date and may either be paid to the Person in whose name this
Debenture (or one or more Predecessor Debentures) is registered at the close of
business on a Special Record Date for the payment of such Defaulted Interest to
be fixed by the Trustee, notice of which shall be given to Holders of Debentures
not less than 10 days prior to such Special Record Date, or be paid at any time
in any other lawful manner not inconsistent with the requirements of any
securities exchange on which the Debentures may be listed, and upon such notice
as may be required by such exchange, all as more fully provided in said
Indenture.

The Company shall have the right at any time during the term of this
Debenture, from time to time, to extend the interest payment period of such
Debenture for a period not exceeding 20 consecutive quarters from the date of
issue or the most recent date that interest has been paid or been duly provided
for (an "Extension Period"). During any Extension Period, interest will compound
quarterly. At the end of any Extension Period the Company shall pay all interest
then accrued and unpaid (together with Additional Interest thereon to the extent
that payment of such interest is permitted by applicable law and Additional
Sums, if any) to the Holder(s) in whose names the Debentures are registered on
the Regular Record Date preceding the end of the Extension Period. "Additional
Interest" means interest that shall accrue on any interest on the Debentures
that is in arrears for more than one quarter or not paid during an Extension
Period, which in either case shall accrue at the rate per annum borne by this
Debenture compounded quarterly. Prior to the termination of any such Extension
Period, the Company may further extend the interest payment period, provided

- ---------------------------
* Insert if Global Security or if held by the Property Trustee.

A-2

<PAGE> 70

that such Extension Period together with all such previous and further
extensions thereof shall not exceed 20 consecutive quarters or extend beyond the
Maturity of this Debenture or end on a date other than an Interest Payment Date.
Upon the termination of any Extension Period and upon the payment of all accrued
and unpaid interest and any Additional Interest then due, the Company may select
a new Extension Period, subject to the foregoing requirements. No interest shall
be due and payable during an Extension Period except at the end thereof and no
default under this Debenture or Event of Default shall be deemed to occur solely
as a result of an Extension Period. The Company shall give the Holder of this
Debenture and the Trustee notice of its selection of an Extension Period at
least one Business Day prior to the earlier of (i) the record date for the date
distributions on the Trust Securities would have been payable or, if no Trust
Securities are outstanding, for the date interest on the Debentures would have
been payable or (ii) the date that the Property Trustee is required to give
notice to the American Stock Exchange or other applicable self-regulatory
organization or to holders of the Trust Securities of the record date or the
date distributions by such Trust are payable.

Payment of the principal of and interest on this Debenture will be made
at the Corporate Trust Office or such other office or agency of the Company
maintained for that purpose, in such coin or currency of the United States of
America as at the time of payment is legal tender for payment of public and
private debts; provided, however, that at the option of the Company payment of
interest may be made (i) by check mailed to the address of the Person entitled
thereto as such address shall appear in the Security Register or (ii) by wire
transfer in immediately available funds to such account as may be designated by
the Person entitled thereto as specified in the Security Register, so long as
the applicable Paying Agent has received proper transfer instructions in writing
by the Record Date prior to the applicable Interest Payment Date.

[If a Global Security, insert-- Payment of the principal of and [if
applicable, insert -- any such] interest on this Debenture will be made by
transfer of immediately available funds to a bank account in _______________
designated by the Holder in such coin or currency of the United States of
America as at the time of payment is legal tender for payment of public and
private debts.]

The indebtedness evidenced by this Debenture is, to the extent provided
in the Indenture, subordinate and subject in right of payment to the prior
payment in full of all Senior Debt, and this Debenture is issued subject to the
provisions of the Indenture with respect thereto. Each Holder of this Debenture,
by accepting the same, (a) agrees to and shall be bound by such provisions, (b)
authorizes and directs the Trustee on his behalf to take such action as may be
necessary or appropriate to effectuate the subordination so provided and (c)
appoints the Trustee his attorney-in-fact for any and all such purposes. Each
Holder hereof, by his acceptance hereof, waives all notice of the acceptance of
the subordination provisions contained herein and in the Indenture by each
holder of Senior Debt, whether now outstanding or hereafter incurred, and waives
reliance by each such holder upon said provisions.

Reference is hereby made to the further provisions of the Indenture
summarized on the reverse hereof, which further provisions shall for all
purposes have the same effect as if set forth at this place.

A-3

<PAGE> 71

Unless the certificate of authentication hereon has been executed by
the Trustee referred to on the reverse hereof by manual signature, this
Debenture shall not be entitled to any benefit under the Indenture or be valid
or obligatory for any purpose.

IN WITNESS WHEREOF, KBK Capital Corporation has caused this instrument
to be duly executed under its corporate seal.

Dated: ,
------------------ -------

KBK CAPITAL CORPORATION

By:
-----------------------------------
Name:
Title:

A-4

<PAGE> 72

[FORM OF CERTIFICATE OF AUTHENTICATION]

This is one of the Debentures referred to in the within mentioned
Indenture.

THE FIRST NATIONAL BANK OF CHICAGO,
as Trustee

By:
---------------------------------
Authorized Officer

A-5

<PAGE> 73

[FORM OF REVERSE OF DEBENTURE]

This Debenture is one of a duly authorized issue of debt securities of
the Company, designated as its % Subordinated Debentures Due 2028 (herein
called the "Debentures"), limited in aggregate principal amount to (a)
$20,600,000 plus (b) such additional aggregate principal amount (which may not
exceed $3,090,000 principal amount) of Debentures as shall be purchased in
connection with the exercise by the Underwriters of the over-allotment option
pursuant to the Underwriting Agreement, issued under an Indenture, dated as of
November 1, 1998 (the "Indenture"), between the Company and The First National
Bank of Chicago, as Trustee (herein called the "Trustee," which term includes
any successor trustee under the Indenture), to which Indenture and all
indentures supplemental thereto reference is hereby made for a statement of the
respective rights, limitations of rights, duties and immunities thereunder of
the Trustee, the Company and the Holders of the Debentures, and of the terms
upon which the Debentures are, and are to be, authenticated and delivered.

All terms used in this Debenture which are defined in the Indenture
shall have the meanings assigned to them in the Indenture.

The Company shall have the right to redeem this Debenture, at the
option of the Company, upon not less than 30 nor more than 60 days' notice,
without premium or penalty, in whole or in part at any time on or after November
__, 2001 (an "Optional Redemption") at a price equal to 100% of the principal
amount of the Debentures being redeemed (the "Optional Redemption Price")
together with accrued and unpaid interest, including Additional Interest and
Additional Sums to, but excluding, the redemption date.

If the Debentures are redeemed on any February __, May __, August __,
or November __, accrued and unpaid interest (including accrued and unpaid
Additional Interest, if any) shall be payable to holders of record on the
relevant record date.

So long as the corresponding Trust Securities are outstanding, the
proceeds from the redemption of any of the Debentures will be used by the
Property Trustee to redeem Trust Securities in accordance with the Declaration.
[In addition, so long as the Trust Securities are outstanding, the proceeds from
any repayment or prepayment of the Debentures will be used to redeem Trust
Securities in accordance with the Declaration.]

If the Debentures are only partially redeemed by the Company pursuant
to an Optional Redemption, the Debentures will be redeemed pro rata or by lot or
by any other method utilized by the Trustee.

In the event of redemption of this Debenture in part only, a new
Debenture or Debentures for the unredeemed portion hereof will be issued in the
name of the Holder hereof upon the cancellation hereof, except in the case of a
Global Security in which case the Trustee may reflect a reduction in

A-6

<PAGE> 74

the principal amount of such Global Security by making a notation of same in the
schedule included in such Global Security.

In case an Event of Default, as defined in the Indenture, shall have
occurred and be continuing, the principal of all of the Debentures and the
interest accrued thereon may be declared, and upon such declaration shall
become, due and payable, in the manner, with the effect and subject to the
conditions provided in the Indenture.

If a Trust Special Event (as defined herein) shall occur and be
continuing, this Debenture shall be exchangeable for Trust Securities in
accordance with Section 11.8 of the Indenture.

"Trust Investment Company Event" means that the Property Trustee of the
Trust, on behalf of KBK Capital Trust I (the "Trust"), shall have received an
opinion of counsel from a firm having a national tax and securities practice and
that is experienced in such matters (which opinion of counsel shall not have
been rescinded by such law firm) to the effect that as a result of the
occurrence on or after November __, 1998 of a change in law or regulation or a
change in interpretation or application of law or regulation by any legislative
body, court, governmental agency or regulatory authority, there is more than an
insubstantial risk that the Trust is or, within 90 days after such date, will be
considered an "investment company" which is required to be registered under the
Investment Company Act of 1940.

"Trust Special Event" means the occurrence of a Trust Investment
Company Event or a Trust Tax Event.

"Trust Tax Event" means the receipt by the Property Trustee of the
Trust, on behalf of the Trust, of an opinion of counsel, from a firm having a
national tax and securities practice (which opinion of counsel shall not have
been rescinded by such law firm) to the effect that there has been (a) an
amendment to, change or announced proposed change in the laws (or any
regulations thereunder) of the United States or any political subdivision or
taxing authority thereof or therein, (b) a judicial decision interpreting,
applying or clarifying such laws or regulations, (c) an administrative
pronouncement or action that represents an official position (including a
clarification of an official position) of the governmental authority or
regulatory body making such administrative pronouncement or taking such action,
or (d) a threatened challenge asserted in connection with an audit of the
Company or any of its subsidiaries, or the Trust, or a threatened challenge
asserted in writing against any other taxpayer that has raised capital through
the issuance of securities that are substantially similar to the Debentures or
the Trust Preferred Securities, which amendment or change is adopted or which
decision, pronouncement or proposed change is announced or which action,
clarification or challenge occurs on or after November __, 1998 and that there
is more than an insubstantial risk that (a) the Trust is or, within 90 days
after such date, will be subject to United States federal income tax with
respect to income accrued or received on the Debentures, (b) the Trust is or,
within 90 days after such date, will be subject to more than a de minimis amount
of other taxes, duties, assessments or other governmental charges or (c)
interest payable by the Company on

A-7

<PAGE> 75

the Debentures is not or, within 90 days after such date, will not be deductible
by the Company for United States federal income taxes.

The Indenture contains provisions that relieve the Company from the
obligation to comply with certain restrictive covenants of the Indenture and for
satisfaction and discharge at any time of the entire indebtedness of this
Debenture upon compliance by the Company with certain conditions set forth in
the Indenture.

The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of the Debentures at any time by the
Company and the Trustee with the consent of the Holders of a majority in
aggregate principal amount of the Outstanding Debentures. The Indenture also
contains provisions permitting the Holders of a majority in aggregate principal
amount of the Outstanding Debentures, on behalf of the Holders of all
Debentures, to waive compliance by the Company with certain provisions of the
Indenture. The Indenture permits, with certain exceptions as therein provided,
the Holders of a majority in aggregate principal amount of the Outstanding
Debentures to waive defaults under the Indenture and their consequences. Any
such consent or waiver by the Holder of this Debenture shall be conclusive and
binding upon such Holder and upon all future Holders of this Debenture and of
any Debenture issued upon the registration of transfer thereof or in exchange
herefor or in lieu hereof, whether or not notation of such consent or waiver is
made upon this Debenture.

No reference herein to the Indenture and no provision of this Debenture
or of the Indenture shall alter or impair the obligation of the Company, which
is absolute and unconditional, to pay the principal of and interest on this
Debenture at the times, place and rate, and in the coin or currency, herein
prescribed.

As provided in the Indenture and subject to certain limitations therein
set forth, the transfer of this Debenture is registerable in the Security
Register, upon surrender of this Debenture for registration of transfer at the
office or agency of the Company in New York, New York, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Company and the Security Registrar duly executed by, the Holder hereof or his
attorney duly authorized in writing, and thereupon one or more new Debentures,
of authorized denominations and for the same aggregate principal amount, will be
issued to the designated transferee or transferees. No service charge shall be
made for any such registration of transfer or exchange, but the Company may
require payment of a sum sufficient to cover any tax or other governmental
charge payable in connection therewith.

Prior to due presentment of this Debenture for registration of
transfer, the Company, the Trustee and any of their respective agents may treat
the Person in whose name this Debenture is registered as the owner hereof for
all purposes, whether or not this Debenture shall be overdue, and neither the
Company, the Trustee nor any such agent shall be affected by notice to the
contrary.

A-8

<PAGE> 76

The Debentures are issuable only in registered form without coupons in
denominations of $25 and any integral multiple thereof. As provided in the
Indenture and subject to certain limitations therein set forth, Debentures are
exchangeable for a like aggregate principal amount of Debentures of a different
authorized denomination, as requested by the Holder surrendering the same.

The Company and, by its acceptance of this Debenture or a beneficial
interest herein, the Holder of, and any Person that acquires a beneficial
interest in, this Debenture agree that for United States federal, state and
local tax purposes it is intended that this Debenture constitutes indebtedness.

No recourse under or upon any obligation, covenant or agreement of or
contained in the Indenture or of or contained in any of the Debentures, or for
any claim based thereon or otherwise in respect thereof, or in any Debenture, or
because of the creation of any indebtedness represented thereby, shall be had
against any incorporator, stockholder, officer, employee or director, as such,
past, present or future, of the Company or of any successor Person, either
directly or through the Company or any successor Person, whether by virtue of
any constitution, statute or rule of law, or by the enforcement of any
assessment, penalty or otherwise; it being expressly understood by each Holder
that all such liability is hereby expressly waived and released by the
acceptance hereof and as a condition of, and as part of the consideration for,
the issuance of the Debentures and the execution of the Indenture.

THE DEBENTURES SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES
THEREOF.

A-9

<PAGE> 77

ASSIGNMENT FORM

To assign this Debenture, fill in the form below:

(I) or (we) assign or transfer this Debenture to

----------------------------------------------------------------
(Insert assignee's social security or tax identification number)

-----------------------------------------------------
(Print or type assignee's name, address and zip code)

and irrevocably appoint ___________________ agent to transfer this Debenture on
the books of the Company. The agent may substitute another to act for him.

Your Signature:
----------------------------------------------------------------
(Sign exactly as your name appears on the other side of this
Debenture)

Date:
-----------------------------

SIGNATURES

Signature Guarantee: *
---------------------------------------------------------

- ---------------
* Signature must be guaranteed by an institution which is a member of one
of the following recognized Signature Guaranty Programs: (i) The
Securities Transfer Agent Medallion Program (STAMP); (ii) The New York
Stock Exchange Medallion Program (MSP); (iii) The Stock Exchange
Medallion Program (SEMP); or (iv) in such other guarantee programs
acceptable to the Trustee.

A-10

<PAGE> 78

SCHEDULE*

The notations on the following table evidence decreases in the
principal sum of this Debenture resulting from increases resulting from the
exercise of the Over-Allotment Option. As used herein, the term "Over-Allotment
Option" means that certain option to purchase up to 120,000 additional Trust
Preferred Securities granted by the Trust to the Underwriters pursuant to the
Underwriting Agreement, dated November __, 1998, among the Company, the Trust
and the Underwriters (as defined in the Indenture).

- --------------------------------------------------------------------------------
Decrease or Increase in Principal Sum Notation Made by
Principal Sum Remaining after Decrease or Security Registrar
Increase
- --------------------------------------------------------------------------------

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

- ----------------------
* Include in Global Security or Debenture held by Property Trustee.

A-11

<PAGE> 1
EXHIBIT 4.2

CERTIFICATE OF TRUST
OF
KBK CAPITAL TRUST I

The undersigned, as the Administrative Trustees and the sole Delaware
Trustee of KBK Capital Trust I, desiring to form a business trust pursuant to
the Delaware Business Trust Act, 12 Del. C. Section 3810, et seq., hereby
certify as follows:

(a) The name of the business trust being formed hereby (the
"Trust") is KBK Capital Trust I

(b) The name and business address of the trustee of the Trust
which has its principal place of business in the State of
Delaware are as follows:

Wilmington Trust Company
Rodney Square North
1100 North Market Street
New Castle County
Wilmington, Delaware 19890

Attention: Corporate Trust Administration

IN WITNESS WHEREOF, the undersigned, as Trustees of the Trust, have
executed this Certificate of Trust or caused it to be executed as of the 29th
day of September, 1998.

WILMINGTON TRUST COMPANY
not in its individual capacity,
but solely as Delaware Trustee

By: /s/ NORMAN P. CLOSS
------------------------------------
Name: Norman P. Closs
----------------------------------
Title: Vice President
---------------------------------

/s/ JAY K. TURNER
-----------------------------------,
Jay K. Turner, not in his individual capacity,
but solely as Administrative Trustee

<PAGE> 2

/s/ DEBORAH B. WILKINSON
-------------------------------------,
Deborah B. Wilkinson, not in her individual
capacity, but solely as Administrative Trustee

/s/ ROBERT J. MCGEE
--------------------------------------,
Robert J. McGee, not in his individual capacity,
but solely as Administrative Trustee

<PAGE> 1

EXHIBIT 4.3

TRUST AGREEMENT
OF
KBK CAPITAL TRUST I

TRUST AGREEMENT ("Declaration") dated and effective as of September 29,
1998 by the Delaware Trustee (as defined herein), the Sponsor (as defined
herein), the Administrative Trustees (as defined herein), and by the holders
from time to time, of undivided beneficial interests in the Trust to be issued
pursuant to this Declaration;

WHEREAS, the Delaware Trustee, the Administrative Trustees and the
Sponsor desire to establish KBK Capital Trust I (the "Trust") pursuant to the
Delaware Business Trust Act for the sole purpose of issuing and selling certain
securities representing undivided beneficial interests in the assets of the
Trust and investing the proceeds thereof in certain Debentures of the Debentures
Issuer;

NOW, THEREFORE, it being the intention of the parties hereto that the
Trust constitute a business trust under the Delaware Business Trust Act and that
this Declaration constitute the governing instrument of such business trust.

ARTICLE I
DEFINITIONS

Section 1.1 Definitions.

Unless the context otherwise requires:

(a) Capitalized terms used in this Declaration but not defined
in the preamble above have the respective meanings assigned to
them in this Section 1.1;

(b) a term defined anywhere in this Declaration has the same
meaning throughout;

(c) all references to "the Declaration" or "this Declaration" are
to this Trust Agreement as modified, supplemented or amended
from time to time;

(d) all references in this Declaration to Articles and Sections
are to Articles and Sections of this Declaration unless
otherwise specified; and

(e) a reference to the singular includes the plural and vice
versa.

"Administrative Trustees" means each of Jay K. Turner, Deborah B.
Wilkinson, and Robert J. McGee, solely in such Person's capacity as an
Administrative Trustee of the Trust created hereunder and not in such Person's
individual capacity, or such Administrative Trustee's successor in interest in
such capacity, or any successor appointed as herein provided.

<PAGE> 2

"Affiliate" has the same meaning as given to that term in Rule 405 of
the Securities Act or any successor rule thereunder.

"Certificate of Trust" shall mean the certificate of trust to be filed
pursuant to Section 3810 of the Delaware Business Trust Act.

"Commission" means the Securities and Exchange Commission.

"Company Indemnified Person" means (a) any Administrative Trustee; (b)
any Affiliate of any Administrative Trustee; (c) any officers, directors,
shareholders, members, partners, employees, representatives or agents of any
Administrative Trustee or of the Trust or any of its Affiliates.

"Covered Person" means (a) any officer, director, shareholder, partner,
member, representative, employee or agent of (i) the Trust or (ii) the Trust's
Affiliates and (b) any holder of Trust Securities.

"Debenture Issuer" means the Parent in its capacity as the issuer of
the Debentures under the Subordinated Indenture.

"Debentures" means the series of Debentures to be issued by the
Debenture Issuer and acquired by the Trust.

"Delaware Business Trust Act" means Chapter 38 of Title 12 of the
Delaware Code, 12 Del. Code Section 3801 et seq., as it may be amended from time
to time, or any successor legislation.

"Delaware Trustee" has the meaning set forth in Section 3.1.

"Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time or any successor legislation.

"Fiduciary Indemnified Person" means (i) each Trustee, (ii) any
Affiliate of any Trustee, (iii) any officer, director, shareholder, employee,
member, partner, representative or agent of any Trustee, and (iv) any officer,
director, shareholder, employee, member, partner, representative or agent of the
Trust or its Affiliates.

"Indemnified Person" means a Company Indemnified Person or a Fiduciary
Indemnified Person.

"Parent" means KBK Capital Corporation, a Delaware corporation or any
successor entity in a merger, consolidation or similar reorganization.

"Person" means a legal person, including any individual, corporation,
estate, partnership, joint venture, association, joint stock company, limited
liability company, trust, unincorporated association, or government or any
agency or political subdivision thereof, or any other entity of whatever nature.

<PAGE> 3

"Property Trustee" has the meaning set forth in Section 3.4.

"Prospectus" has the meaning set forth in Section 2.6(b)(i).

"Securities Act" means the Securities Act of 1933, as amended from time
to time, or any successor legislation.

"Sponsor" means the Parent in its capacity as sponsor of the Trust.

"Subordinated Debt Trustee" means The First National Bank of Chicago, a
national banking association, as trustee under the Subordinated Indenture until
a successor is appointed thereunder, and thereafter means such successor
trustee.

"Subordinated Indenture" means the indenture by and between the Parent
and the Subordinated Debt Trustee and any indenture supplemental thereto
pursuant to which the Debentures are to be issued or governed.

"Trust Common Security" means a security representing an undivided
beneficial interest in the assets of the Trust having such rights and with such
terms as may be set out in this Declaration or in any amendment or restatement
hereof.

"Trust Common Security Holder" means the Parent, as the owner of the
Trust Common Securities.

"Trustee" or "Trustees" means each Person who has signed this
Declaration as a trustee, so long as such Person shall continue in office in
accordance with the terms hereof, and all other Persons who may from time to
time be duly appointed, qualified and serving as Trustees in accordance with the
provisions hereof, and references herein to a Trustee or the Trustees shall
refer to such Person or Persons solely in their capacity as trustees hereunder.

"Trust Preferred Security" means a security representing an undivided
beneficial interest in the assets of the Trust having such rights and with such
terms as may be set out in this Declaration or in any amendment or restatement
hereof.

"Trust Preferred Security Holders" means the persons acquiring Trust
Preferred Securities and holding the same, from time to time.

"Trust Securities" means the Trust Common Securities and the Trust
Preferred Securities.

"Underwriting Agreement" means the Underwriting Agreement by and among
the Parent, the Trust and Friedman, Billings, Ramsey & Co., Inc., and J.J.B.
Hilliard, W.L. Lyons, Inc.

<PAGE> 4

ARTICLE II
ORGANIZATION

Section 2.1 Name.

The Trust created by this Declaration is named "KBK Capital Trust I."
The Trust's activities may be conducted under the name of the Trust or any other
name deemed advisable by the Administrative Trustees.

Section 2.2 Office.

The address of the principal office of the Trust is c/o KBK Capital
Corporation, 301 Commerce Street, Suite 2200, 2200 City Center II, Forth Worth,
Texas 76102. At any time, the Administrative Trustees may designate another
principal office of the Trust.

Section 2.3 Purpose.

The exclusive purposes and functions of the Trust are (a) to issue and
sell Trust Securities and use the proceeds from such sale to acquire the
Debentures, (b) to distribute the Trust's income as provided in this Declaration
or any amendment or restatement hereof and (c) except as otherwise limited
herein, to engage in only those other activities necessary, or incidental
thereto. The Trust shall not borrow money, issue debt or reinvest proceeds
derived from investments, pledge any of its assets, or otherwise undertake (or
permit to be undertaken) any activity that would cause the Trust not to be
classified for United States federal income tax purposes as a grantor trust.

Section 2.4 Declaration and Authority.

The Administrative Trustees declare that all assets contributed to the
Trust will be held in trust for the benefit of the holders, from time to time,
of the securities representing undivided beneficial interests in the assets of
the Trust issued hereunder, subject to the provisions of this Declaration. The
Sponsor hereby contributes the sum of $10 to be held by the Administrative
Trustees hereunder and to which all other assets of the Trust, from time to
time, shall be added.

Subject to the limitations provided in this Declaration, the
Administrative Trustees shall have exclusive and complete authority to carry out
the purposes of the Trust. An action taken by the Administrative Trustees in
accordance with their powers shall constitute the act of, and serve to bind, the
Trust. In dealing with the Administrative Trustees acting on behalf of the
Trust, no person shall be required to inquire into the authority of the
Administrative Trustee to bind the Trust. Persons dealing with the Trust are
entitled to rely conclusively on the power and authority of the Administrative
Trustees as set forth in this Declaration.

Section 2.5 Title to Property of the Trust.

Legal title to all assets of the Trust shall be vested in the Trust.

<PAGE> 5

Section 2.6 Powers of the Administrative Trustees.

The Administrative Trustees shall have the exclusive power and
authority to cause the Trust to engage in the following activities at any time
and from time to time:

to issue and sell the Trust Preferred Securities and the Trust
Common Securities in accordance with this Declaration; provided, however, that
the Trust may issue no more than one series of Trust Preferred Securities and no
more than one series of Trust Common Securities, and, provided, further, that
there shall be no interests in the Trust other than the Trust Securities and the
issuance of the Trust Securities shall be limited to the simultaneous issuance
of both Trust Preferred and Trust Common Securities on the date the Trust
Preferred Securities are initially sold and any other date Trust Preferred
Securities and Trust Common Securities are sold pursuant to any over-allotment
option granted by the Trust under the Underwriting Agreement;

in connection with the issuance and sale of the Trust
Preferred Securities, at the direction of the Sponsor, to:

(i) permit the use of a Prospectus (the
"Prospectus") in preliminary and final form prepared by the
Sponsor, in relation to the offering and sale of Trust
Preferred Securities to certain buyers and to execute and file
with the Commission, at such time as determined by the
Sponsor, a registration statement prepared by the Sponsor,
including any amendments thereto in relation to the Trust
Preferred Securities;

(ii) execute and file any documents prepared
by the Sponsor, or take any acts as determined by the Sponsor
to be necessary in order to qualify or register all or part of
the Trust Preferred Securities in any State in which the
Sponsor has determined to qualify or register such Trust
Preferred Securities for sale;

(iii) execute and file an application,
prepared by the Sponsor, at such time as determined by the
Sponsor to the American Stock Exchange or any other national
stock exchange for listing or quotation of the Trust Preferred
Securities;

(iv) execute and enter into the Underwriting
Agreement and pricing agreement providing for the sale of the
Trust Preferred Securities; and

(v) make any qualifications and take any
acts required under the Trust Indenture Act of 1939;

to employ or otherwise engage employees and agents (who may be
designated as officers with titles) and managers, contractors, advisors, and
consultants and provide for reasonable compensation for such services;

<PAGE> 6

to incur expenses which are necessary or incidental to carry
out any of the purposes of this Declaration; and

to execute and deliver all documents and instruments, perform
all duties and powers, and do all things for and on behalf of the Trust in all
matters necessary or incidental to the foregoing.

Section 2.7 Filing of Certificate of Trust.

On the date of execution of this Declaration, the Delaware Trustee and
the Administrative Trustees shall cause the filing of the Certificate of Trust
for the Trust in the form attached hereto as Exhibit A with the Secretary of
State of the State of Delaware.

Section 2.8 Duration of Trust.

The Trust, absent termination pursuant to the provisions of Section
5.2, shall have existence for thirty-one (31) years from the date hereof.

Section 2.9 Responsibilities of the Sponsor.

In connection with the issuance and sale of the Trust Preferred
Securities, the Sponsor shall have the exclusive right and responsibility to
engage in the following activities at any time and from time to time following
such issuance and sale:

to prepare for filing by the Administrative Trustees on behalf
of Trust with the Commission a registration statement in relation to the Trust
Preferred Securities, including any amendments thereto;

to determine the States in which to take appropriate action to
qualify or register for sale of all or part of the Trust Preferred Securities or
the Trust Common Securities and to do any and all such acts, other than actions
which must be taken by the Trust, and advise the Trust of actions it must take,
and prepare for execution and filing any documents to be executed and filed by
the Trust, as the Sponsor deems necessary or advisable in order to comply with
the applicable laws of any such States;

to prepare for filing by the Trust an application at such time
as determined by the Sponsor to the American Stock Exchange or any other
national stock exchange for listing or quotation of the Trust Preferred
Securities;

to negotiate the terms of the Underwriting Agreement providing
for the sale of the Trust Preferred Securities; and

to prepare a prospectus in preliminary and final form in
relation to the offering and sale of Trust Preferred Securities as described in
Section 2.6(b)(i) hereof.

<PAGE> 7

Section 2.10 Declaration Binding on Trust Securities Holders.

Every Person by virtue of having become a holder of a Trust Security or
any interest therein in accordance with the terms of this Declaration, shall be
deemed to have expressly assented and agreed to the terms of, and shall be bound
by, this Declaration.

ARTICLE III
TRUSTEES

Section 3.1 Trustees.

The number of Trustees initially shall be four (4), and thereafter the
number of Trustees shall be such number as shall be fixed from time to time by a
written instrument signed by the Sponsor. The Sponsor is entitled to appoint or
remove without cause any Trustee at any time; provided, however, that the number
of Trustees shall in no event be less than three (3); provided, further, that
one (1) Trustee, in the case of a natural person, shall be a person who is a
resident of the State of Delaware or that, if not a natural person, is an entity
which has its principal place of business in the State of Delaware (the
"Delaware Trustee").

Section 3.2 Administrative Trustees.

The initial Administrative Trustees shall be:

Jay K. Turner
Deborah B. Wilkinson
Robert J. McGee

(a) Except as expressly set forth in this Declaration, any
power of the Administrative Trustees may be exercised by, or with the consent
of, any two such Administrative Trustees.

(b) Except as otherwise required by the Delaware Business
Trust Act, the Administrative Trustees are authorized to execute on behalf of
the Trust any documents which the Administrative Trustees have the power and
authority to cause the Trust to execute pursuant to Section 2.6.

Section 3.3 Delaware Trustee.

The initial Delaware Trustee shall be:
Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890
Attention: Corporate Trust Administration

<PAGE> 8
Notwithstanding any other provision of this Declaration, the Delaware
Trustee shall not be entitled to exercise any of the powers, nor shall the
Delaware Trustee have any of the duties and responsibilities, of the
Administrative Trustees described in this Declaration. The Delaware Trustee
shall be a Trustee for the sole and limited purpose of fulfilling the
requirements of Section 3807 of the Delaware Business Trust Act. Notwithstanding
anything herein to the contrary, the Delaware Trustee shall not be liable for
the acts or omissions of the Trust or of the Administrative Trustees except with
respect to acts which the Delaware Trustee is expressly obligated or authorized
to undertake under this Declaration or the Delaware Business Trust Act and
except for the gross negligence or willful misconduct of the Delaware Trustee.

Section 3.4 Property Trustee.

Prior to the issuance of the Trust Preferred Securities and the Trust
Common Securities, the Sponsor shall appoint another trustee (the "Property
Trustee") meeting the requirements of an eligible trustee of the Trust Indenture
Act of 1939, as amended, by the execution of an amendment to or restatement of
this Declaration executed by the Administrative Trustees, the Sponsor, the
Property Trustee and the Delaware Trustee.

Section 3.5 Not Responsible for Recitals or Sufficiency of Declaration.

The recitals contained in this Declaration shall be taken as the
statements of the Sponsor, and neither the Administrative Trustees nor the
Delaware Trustee assumes any responsibility for their correctness. The
Administrative Trustees and the Delaware Trustee make no representations as to
the value or condition of the property of the Trust or any part thereof. The
Administrative Trustees and the Delaware Trustee make no representations as to
the validity or sufficiency of this Declaration.

Section 3.6 Compensation of Administrative Trustees and Trustees.

The Sponsor agrees:

to pay the Trustees from time to time reasonable compensation
for all services rendered by them hereunder (which compensation shall not be
limited by any provision of law in regard to the compensation of a trustee of an
express trust and which, in the case of the Delaware Trustee, shall be as set
forth in a fee letter from the Delaware Trustee to the Sponsor);

except as otherwise expressly provided herein, to reimburse
the Trustees upon request for all reasonable documented expenses, disbursements
and advances incurred or made by the Trustees in accordance with any provision
of this Trust Agreement (including the reasonable compensation and the expenses
and disbursements of its agents and counsel), except any such expense,
disbursement or advance as may be attributable to the negligence or bad faith of
such Trustee;

<PAGE> 9

to the fullest extent possible the parties intend that Section
3561 of Title 12 of the Delaware Code shall not apply to the Trust and that
compensation paid pursuant to Section 3.6(a) not be subject to review by any
court under Section 3560 of Title 12 of the Delaware Code.

ARTICLE IV
LIMITATION OF LIABILITY OF
HOLDERS OF TRUST SECURITIES, TRUSTEES OR OTHERS

Section 4.1 Exculpation.

(a) No Indemnified Person shall be liable, responsible or
accountable in damages or otherwise to the Trust or any Covered Person for any
loss, damage or claim incurred by reason of any act or omission performed or
omitted by such Indemnified Person in good faith on behalf of the Trust and in a
manner such Indemnified Person reasonably believed to be within the scope of the
authority conferred on such Indemnified Person by this Declaration or by law,
except that the foregoing limitation shall not limit the liability, if any, of
an Indemnified Person to a Covered Person to the extent that any such loss,
damage or claim is incurred by the Covered Person by reason of such Indemnified
Person's gross negligence or willful misconduct with respect to such acts or
omissions; and

(b) An Indemnified Person shall be fully protected in relying
in good faith upon the records of the Trust and upon such information, opinions,
reports or statements presented to the Trust by any Person as to matters the
Indemnified Person reasonably believes are within such other Person's
professional or expert competence and who has been selected with reasonable care
by or on behalf of the Trust, including information, opinions, reports or
statements as to the value and amount of the assets, liabilities, profits,
losses, or any other facts pertinent to the existence and amount of assets from
which distributions to holders of Trust Securities might properly be paid.

Section 4.2 Fiduciary Duty.

(a) To the extent that, at law or in equity, an Indemnified
Person has duties (including fiduciary duties) and liabilities relating thereto
to the Trust or to any other Covered Person, an Indemnified Person acting under
this Declaration shall not be liable to the Trust or to any other Covered Person
for its good faith reliance on the provisions of this Declaration. The
provisions of this Declaration, to the extent that they restrict the duties and
liabilities of an Indemnified Person otherwise existing at law or in equity, are
agreed by the parties hereto to replace such other duties and liabilities of
such Indemnified Person;

(b) Unless otherwise expressly provided herein:

(i) whenever a conflict of interest exists or arises
between Covered Persons; or

<PAGE> 10

(ii) whenever this Declaration or any other agreement
contemplated herein or therein provides that an
Indemnified Person shall act in a manner that is, or
provides terms that are, fair and reasonable to the
Trust or any holder of Trust Securities,

the Indemnified Person shall resolve such conflict of interest, take such action
or provide such terms, considering in each case the relative interest of each
party (including its own interest) to such conflict, agreement, transaction or
situation and the benefits and burdens relating to such interests, any customary
or accepted industry practices, and any applicable generally accepted accounting
practices or principles. In the absence of bad faith by the Indemnified Person,
the resolution, action or term so made, taken or provided by the Indemnified
Person shall not constitute a breach of this Declaration or any other agreement
contemplated herein or of any duty or obligation of the Indemnified Person at
law or in equity or otherwise; and

(i) in its "discretion" or under a grant of similar
authority, the Indemnified Person shall be entitled to
consider such interests and factors as it desires, including
its own interests, and shall have no duty or obligation to
give any consideration to any interest of or factors affecting
the Trust or any other Person; or

(ii) in its "good faith" or another express standard,
the Indemnified Person shall act under such express standard
and shall not be subject to any other or different standard
imposed by this Declaration or by applicable law.

Section 4.3 Indemnification.

The Sponsor agrees, to the fullest extent permitted by applicable law,
to indemnify and hold harmless any Indemnified Person from and against any loss,
damage, liability, tax, penalty, expense or claim of any kind or nature
whatsoever incurred by such Indemnified Person by reason of the creation,
operation or termination of the Trust or any act or omission performed or
omitted by such Indemnified Person in good faith on behalf of the Trust and in a
manner such Indemnified Person reasonably believed to be within the scope of
authority conferred on such Indemnified Person by this Declaration, except that
no Indemnified Person shall be entitled to be indemnified in respect of any
loss, damage or claim incurred by such Indemnified Person by reason of
negligence or willful misconduct with respect to such acts or omissions.

Section 4.4 Outside Businesses.

Any Covered Person, the Sponsor and the Delaware Trustee may engage in
or possess an interest in other business ventures of any nature or description,
independently or with others, similar or dissimilar to the business of the
Trust, and the Trust and the holders of Trust Securities shall have no rights by
virtue of this Declaration in and to such independent ventures or the income or
profits derived therefrom and the pursuit of any such venture, even if
competitive with the business of the

<PAGE> 11

Trust, shall not be deemed wrongful or improper. No Covered Person, the Sponsor
or the Delaware Trustee shall be obligated to present any particular investment
or other opportunity to the Trust even if such opportunity is of a character
that, if presented to the Trust, could be taken by the Trust, and any Covered
Person, the Sponsor and the Delaware Trustee shall have the right to take for
its own account (individually or as a partner or fiduciary) or to recommend to
others any such particular investment or opportunity. Any Covered Person and the
Delaware Trustee may engage or be interested in any financial or other
transaction with the Sponsor or any Affiliate of the Sponsor or may act as
depositary for, trustee or agent for or may act on any committee or body of
holders of, securities or other obligations of the Sponsor or its Affiliates.

ARTICLE V
AMENDMENTS, TERMINATING, MISCELLANEOUS

Section 5.1 Amendments.

At any time before the issuance of any Trust Securities, this
Declaration may be amended or restated by, and only by, a written instrument
executed by all of the Administrative Trustees and the Sponsor, provided,
however, that no such amendment shall modify the duties of the Delaware Trustee
without the execution by such Delaware Trustee of such amendment or restatement,
as the case may be.

Section 5.2 Termination of Trust.

(a) The Trust shall terminate and be of no further force or
effect:

(i) upon the bankruptcy of the Sponsor;

(ii) upon the filing of a Certificate of Dissolution
or its equivalent with respect to the Sponsor or the failure
of the Sponsor to revive its Charter within ten (10) days
following the revocation of the Sponsor's charter or of the
Trust's Certificate of Trust;

(iii) upon the entry of a decree of judicial
dissolution of the Sponsor, or the Trust;

(iv) before the issuance of any Trust Securities,
with the consent of all of the Administrative Trustees and the
Sponsor; and

(v) upon the expiration of the term set forth in
Section 2.8;

(b) As soon as practicable after the occurrence of an event
referred to in Section 5.2(a), the Administrative Trustees shall execute and
file a certificate of cancellation with the Secretary of State of the State of
Delaware.

<PAGE> 12

Section 5.3 Governing Law.

This Declaration and the rights of the parties hereunder shall be
governed by and interpreted in accordance with the laws of the State of Delaware
and all rights and remedies shall be governed by such laws without regard to
principles of conflict of laws. The provisions of Section 3540 of Title 12 of
the Delaware Code shall not apply to the Trust.

Section 5.4 Headings.

Headings contained in this Declaration are inserted for convenience of
reference and do not affect the interpretation of this Declaration or any
provision hereof.

Section 5.5 Successors and Assigns.

Whenever in this Declaration any of the parties hereto is named or
referred to, the successors and assigns of such party shall be deemed to be
included, and all covenants and agreements in this Declaration by the Sponsor,
the Trustees shall bind and inure to the benefit of their respective successors
and assigns, whether or not so expressed.

Section 5.6 Partial Enforceability.

If any provision of this Declaration, or the application of such
provision to any Person or circumstance, shall be held invalid, the remainder of
this Declaration, or the application of such provision to persons or
circumstances other than those to which it is held invalid, shall not be
affected thereby.

Section 5.7 Counterparts.

This Declaration may contain more than one counterpart of the signature
page and this Declaration may be executed by the affixing of the signature of
each of the parties hereto to one of such counterpart signature pages. All such
counterpart signature pages shall be read as though one, and they shall have the
same force and effect as though all of the signers had signed a single signature
page.

[SPACE LEFT INTENTIONALLY BLANK FOR SIGNATURES]

<PAGE> 13

IN WITNESS WHEREOF, the undersigned has caused these presents
to be executed as of the day and year above written.

KBK CAPITAL CORPORATION,
as Sponsor

By: /s/ JAY K. TURNER
------------------------------------
Name: Jay K. Turner
----------------------------------
Title: Executive Vice President and
Chief Financial Officer
---------------------------------

WILMINGTON TRUST COMPANY,
not in its individual capacity, but solely
as Delaware Trustee

By: /s/ NORMAN P. CLOSS
------------------------------------
Name: Norman P. Closs
----------------------------------
Title: Vice President
---------------------------------

/s/ JAY K. TURNER
-----------------------------------,
Jay K. Turner, not in his individual capacity,
but solely as Administrative Trustee

/s/ DEBORAH B. WILKINSON
-------------------------------------,
Deborah K. Wilkinson, not in her individual
capacity, but solely as Administrative Trustee

/s/ ROBERT J. MCGEE
--------------------------------------,
Robert J. McGee, not in his individual capacity,
but solely as Administrative Trustee

<PAGE> 1
EXHIBIT 4.4
================================================================================

AMENDED AND RESTATED
DECLARATION OF TRUST

AMONG

KBK CAPITAL CORPORATION
AS SPONSOR,

THE FIRST NATIONAL BANK OF CHICAGO,
AS PROPERTY TRUSTEE,

WILMINGTON TRUST COMPANY,
AS DELAWARE TRUSTEE,

AND

THE ADMINISTRATIVE TRUSTEES
NAMED HEREIN,

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

DATED AS OF NOVEMBER ____, 1998

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

KBK CAPITAL TRUST I
================================================================================
<PAGE> 2
CROSS-REFERENCE TABLE*
<TABLE>
<S> <C>
Section of
Trust Indenture Act Section of
of 1939, as amended Declaration
310 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.3(a)
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Inapplicable
311 (c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Inapplicable
312 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2(a)
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2(b)
313 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.3
314 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.4
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Inapplicable
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.5
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Inapplicable
(f) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Inapplicable
315 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.9(b)
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.9(a)
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.9(a)
316 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Annex I
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.6(e)
</TABLE>

* This Cross-Reference Table does not constitute part of the Declaration
and shall not affect the interpretation of any of its terms or
provisions.
<PAGE> 3

TABLE OF CONTENTS

<TABLE>
<S> <C>
ARTICLE I
INTERPRETATION AND DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 1.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

ARTICLE II
TRUST INDENTURE ACT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 2.1 Trust Indenture Act; Application . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 2.2 Lists of Holders of Trust Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 2.3 Reports by the Property Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 2.4 Periodic Reports to Property Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 2.5 Evidence of Compliance with Conditions Precedent . . . . . . . . . . . . . . . . . . . . . 13
Section 2.6 Trust Enforcement Events; Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 2.7 Trust Enforcement Event; Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

ARTICLE III
ORGANIZATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 3.1 Name . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 3.2 Office . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 3.3 Purpose . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 3.4 Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 3.5 Title to Property of the Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 3.6 Powers and Duties of the Administrative Trustees . . . . . . . . . . . . . . . . . . . . . 16
Section 3.7 Prohibition of Actions by the Trust and the Trustees . . . . . . . . . . . . . . . . . . . 19
Section 3.8 Powers and Duties of the Property Trustee . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 3.9 Certain Duties and Responsibilities of the Property Trustee . . . . . . . . . . . . . . . . 21
Section 3.10 Certain Rights of the Property Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 3.11 Delaware Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 3.12 Execution of Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 3.13 Not Responsible for Recitals or Issuance of Trust Securities . . . . . . . . . . . . . . . 26
Section 3.14 Duration of Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 3.15 Mergers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 3.16 Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28

ARTICLE IV
SPONSOR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 4.1 Responsibilities of the Sponsor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 4.2 Indemnification and Expenses of the Trustee . . . . . . . . . . . . . . . . . . . . . . . . 29
</TABLE>
<PAGE> 4
<TABLE>
<S> <C>
ARTICLE V
TRUST COMMON SECURITIES HOLDER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 5.1 Company's Purchase of Trust Common Securities . . . . . . . . . . . . . . . . . . . . . . . 30
Section 5.2 Covenants of the Trust Common Securities Holder . . . . . . . . . . . . . . . . . . . . . . 30

ARTICLE VI
TRUSTEES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 6.1 Number of Trustees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 6.2 Delaware Trustee; Eligibility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 6.3 Property Trustee; Eligibility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 6.4 Qualifications of Administrative Trustees and Delaware
Trustee Generally . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 6.5 Administrative Trustees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 6.6 [INTENTIONALLY OMITTED] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 6.7 Appointment, Removal and Resignation of Trustees . . . . . . . . . . . . . . . . . . . . . 32
Section 6.8 Vacancies among Trustees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 6.9 Effect of Vacancies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 6.10 Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 6.11 Delegation of Power . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 6.12 Merger, Conversion, Consolidation or Succession to Business . . . . . . . . . . . . . . . . 36

ARTICLE VII
DISTRIBUTIONS; REDEMPTION; EXCHANGE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 7.1 Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 7.2 Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Section 7.3 Trust Special Event Exchange . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 7.4 Payment Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Section 7.5 Tax Reporting, Etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Section 7.6 Payment of Additional Sums by the Property Trustee . . . . . . . . . . . . . . . . . . . . 42
Section 7.7 Payments under Indenture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42

ARTICLE VIII
ISSUANCE OF TRUST SECURITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Section 8.1 Designation and General Provisions Regarding Trust Securities . . . . . . . . . . . . . . . 43
Section 8.2 Voting Rights of Trust Preferred Securities . . . . . . . . . . . . . . . . . . . . . . . . 44
Section 8.3 Voting Rights of Trust Common Securities . . . . . . . . . . . . . . . . . . . . . . . . . 47
Section 8.4 Paying Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Section 8.5 Listing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Section 8.6 Acceptance of Trust Guarantees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49

ARTICLE IX
TERMINATION AND LIQUIDATION OF THE TRUST . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Section 9.1 Termination of Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
</TABLE>
<PAGE> 5
<TABLE>
<S> <C>
Section 9.2 Liquidation Distribution Upon Termination and Dissolution
of the Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50

ARTICLE X
TRANSFER OF INTERESTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Section 10.1 Transfer and Exchange of Trust Securities . . . . . . . . . . . . . . . . . . . . . . . . . 50
Section 10.2 Transfer of Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Section 10.3 Deemed Security Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Section 10.4 Book Entry Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Section 10.5 Notices to Clearing Agency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Section 10.6 Appointment of Successor Clearing Agency . . . . . . . . . . . . . . . . . . . . . . . . . 53
Section 10.7 Definitive Trust Preferred Security Certificates . . . . . . . . . . . . . . . . . . . . . 53
Section 10.8 Mutilated, Destroyed, Lost or Stolen Certificates . . . . . . . . . . . . . . . . . . . . . 53
Section 10.9 Cancellation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Section 10.10 Appointment of Registrar and Transfer Agent . . . . . . . . . . . . . . . . . . . . . . . . 54

ARTICLE XI
LIMITATION OF LIABILITY OF HOLDERS OF TRUST SECURITIES,
TRUSTEES OR OTHERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Section 11.1 Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Section 11.2 Exculpation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Section 11.3 Fiduciary Duty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Section 11.4 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Section 11.5 Outside Businesses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59

ARTICLE XII
ACCOUNTING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
Section 12.1 Fiscal Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
Section 12.2 Certain Accounting Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
Section 12.3 Banking . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
Section 12.4 Withholding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60

ARTICLE XIII
AMENDMENTS AND MEETINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
Section 13.1 Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
Section 13.2 Meetings of the Holders of Trust Securities; Action by Written Consent
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64

ARTICLE XIV
REPRESENTATIONS OF PROPERTY TRUSTEE AND DELAWARE TRUSTEE . . . . . . . . . . . . . . . . . . . . . . . . . 65
Section 14.1 Representations and Warranties of Property Trustee . . . . . . . . . . . . . . . . . . . . 65
Section 14.2 Representations and Warranties of Delaware Trustee . . . . . . . . . . . . . . . . . . . . 66
</TABLE>
<PAGE> 6
<TABLE>
<S> <C>
ARTICLE XV
MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
Section 15.1 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
Section 15.2 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
Section 15.3 Intention of the Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
Section 15.4 Acceptance of Terms of Declaration, Trust Guarantees
and Subordinated Indenture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
Section 15.5 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
Section 15.6 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
Section 15.7 Partial Enforceability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
Section 15.8 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
Section 15.9 Holding Company Formation, Consolidations and Mergers . . . . . . . . . . . . . . . . . . . 70
</TABLE>
<PAGE> 7
AMENDED AND RESTATED
DECLARATION OF TRUST

KBK CAPITAL TRUST I

AMENDED AND RESTATED DECLARATION OF TRUST (the "Declaration"), dated
and effective as of November ___, 1998, by the Trustees (as defined herein), by
the Sponsor (as defined herein) and by the several Holders (as defined herein),
from time to time, of undivided beneficial interests in the Trust to be issued
pursuant to this Declaration.

R E C I T A L S:

WHEREAS, certain of the Trustees and the Sponsor declared and
established the KBK CAPITAL TRUST I (the "Trust"), a trust under the Delaware
Business Trust Act (the "Business Trust Act"), pursuant to a Declaration of
Trust dated as of September 29, 1998 (the "Original Declaration") and a
Certificate of Trust filed with the Secretary of State of the State of Delaware
on September 29, 1998, for the sole purpose of issuing and selling certain
securities representing undivided beneficial interests in the assets of the
Trust, making distributions to the holders thereof and investing the proceeds
thereof in the Subordinated Debentures (as defined herein) and engaging in
activities incidental thereto; and

WHEREAS, as of the date hereof, no interests in the Trust have been
issued; and

WHEREAS, all of the Trustees and the Sponsor, by this Declaration,
desire to amend and restate each and every term and provision of the Original
Declaration;

NOW, THEREFORE, it being the intention of the parties hereto to
continue the Trust as a business trust under the Business Trust Act and that
this Declaration constitute the governing instrument of such business trust,
the Trustees declare that all assets contributed to the Trust will be held in
trust for the benefit of the Holders, from time to time, of the securities
representing undivided beneficial ownership interests in the assets of the
Trust issued hereunder, subject to the provisions of this Declaration.

INTERPRETATION AND DEFINITIONS

Section 1.1 Definitions.

For all purposes of this Declaration, unless the context otherwise
requires:

1
<PAGE> 8
(a) Capitalized terms used in this Declaration but not
defined in the preamble above have the respective meanings assigned to them
in this Section 1.1;

(b) a term defined anywhere in this Declaration has the
same meaning throughout;

(c) all references to "the Declaration" or "this
Declaration" are to this Declaration as modified, supplemented or amended from
time to time;

(d) all references in this Declaration to Articles and
Sections and Exhibits are to Articles and Sections and Exhibits to this
Declaration unless otherwise specified;

(e) a term defined in the Trust Indenture Act has the
same meaning when used in this Declaration unless otherwise defined in this
Declaration or unless the context otherwise requires; and

(f) a reference to the singular includes the plural and
vice versa;

(g) all accounting terms not otherwise defined herein
have the meanings assigned to them in accordance with generally accepted
accounting principles, and the term "generally accepted accounting principles"
with respect to any computation required or permitted hereunder shall mean such
accounting principles which are generally accepted at the date or time of such
computation; and

(h) each reference herein to a rule or form of the
Commission shall mean such rule or form and any rule or form successor thereto,
in each case as amended from time to time.

"1940 Act" means the Investment Company Act of 1940, as amended from
time to time, or any successor legislation.

"Additional Amount" means, with respect to the Trust Securities, the
amount of Additional Interest (as defined in the Subordinated Indenture) paid
by the Sponsor on the Subordinated Debentures.

"Administrative Trustee" has the meaning set forth in Section 6.1(b)
hereof.

2
<PAGE> 9

"AMEX" means the American Stock Exchange, Inc.

"Authorized Officer" of a Person means any Person that is authorized
to bind such Person.

"Board of Directors" means the board of directors of the Company, or
the executive or any other committee of that board duly authorized to act in
respect thereof.

"Book Entry Interest" means a beneficial interest in a Global
Certificate, ownership and transfers of which shall be maintained and made
through book entries by a Clearing Agency as set forth in Section 10.4 of this
Declaration.

"Business Day" means any day other than a Saturday or Sunday, or a day
on which banking institutions in the City of New York are authorized or
required by law or executive order to close or a day on which the Corporate
Trust Office or the corporate trust office of the Subordinated Debenture
Trustee is closed for business.

"Business Trust Act" means Chapter 38 of Title 12 of the Delaware
Code, 12 Del. C. Sections 3801 et seq., as it may be amended from time to time,
or any successor legislation.

"Certificate" means a Trust Common Security Certificate or a Trust
Preferred Security Certificate.

"Clearing Agency" means an organization registered as a "Clearing
Agency" pursuant to Section 17A of the Exchange Act that is acting as
depository for the Trust Preferred Securities and in whose name or in the name
of a nominee of that organization shall be registered a Global Certificate and
which shall undertake to effect book entry transfers and pledges of beneficial
interests in the Trust Preferred Securities.

"Clearing Agency Participant" means a broker, dealer, bank, other
financial institution or other Person for whom from time to time the Clearing
Agency effects book entry transfers and pledges of interest in securities
deposited with the Clearing Agency.

3
<PAGE> 10

"Closing Date" means the first Closing Time (as defined in the
Underwriting Agreement), which date is also the date of execution and delivery
of this Declaration.

"Code" means the Internal Revenue Code of 1986, as amended from time
to time, or any successor legislation.

"Commission" means the United States Securities and Exchange
Commission, as from time to time constituted, created under the Exchange Act,
as amended, or, if at any time after the execution of this Declaration such
Commission is not existing or performing the duties now assigned to it under
the Trust Indenture Act, then the body performing such duties at such time.

"Common Security Holder of the Trust" means the Company in its
capacity as Holder of the Trust Common Securities.

"Common Stock" includes any stock of any class of any Person which has
no preference in respect of dividends or amounts payable in the event of any
voluntary or involuntary liquidation, dissolution or winding-up of such Person
and which is not subject to redemption by such Person.

"Company" means KBK Capital Corporation, and any successor to such
entity by merger, consolidation or similar transaction (including any holding
company established by KBK Capital Corporation in accordance with Section
251(g) of the DGCL).

"Compounded Distributions" has the meaning set forth in Section 7.1(a)
of this Declaration.

"Corporate Trust Office" means the principal corporate trust office of
the Property Trustee in Chicago, Illinois, which office at the date hereof is
located at One First National Plaza, Suite 0126.

"Covered Person" means: (a) any officer, director, shareholder,
partner, member, representative, employee or agent of (i) the Trust or (ii) the
Trust's Affiliates; and (b) any Holder of Trust Securities.

"Debenture Event of Default" means an "Event of Default" as defined in
the Subordinated Indenture.

"Debenture Redemption Date" means, with respect to any Subordinated
Debentures to be redeemed under the Subordinated Indenture, the date fixed for
redemption under the Subordinated Indenture.

4
<PAGE> 11

"Declaration" means this Amended and Restated Declaration of Trust, as
the same may be modified, amended or supplemented in accordance with the
applicable provisions hereof, including all exhibits hereto, including, for all
purposes of this Declaration, any such modification, amendment or supplement,
and the provisions of the Trust Indenture Act that are deemed to be a part of
and govern this Declaration.

"Definitive Trust Preferred Security Certificates" has the meaning set
forth in Section 10.4 of this Declaration.

"Delaware Trustee" has the meaning set forth in Section 6.2 of this
Declaration.

"DGCL" means the General Corporation Law of the State of Delaware.

"Distributions" has the meaning set forth in Section 7.1(a) of this
Declaration.

"DTC" means The Depository Trust Company, the initial Clearing Agency.

"Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time, or any successor legislation.

"Fiduciary Indemnified Person" has the meaning set forth in Section
11.4(b) of this Declaration.

"Fiscal Year" has the meaning set forth in Section 12.1 of this
Declaration.

"Global Certificate" has the meaning set forth in Section 10.4 of this
Declaration.

"Holder" means a Person in whose name a Certificate representing a
Trust Security or Trust Securities is registered, such Person being a
beneficial owner within the meaning of the Business Trust Act.

"Indemnified Person" means a Company Indemnified Person or a Fiduciary
Indemnified Person.

"Investment Company" means an investment company as defined in the
1940 Act.

"Legal Action" has the meaning set forth in Section 3.6(h) of this
Declaration.

"List of Holders" has the meaning set forth in Section 2.2(a) of this
Declaration.

"Liquidation Amount" means an amount with respect to the assets of the
Trust equal to $25 per Trust Security.

5
<PAGE> 12

"Majority in Liquidation Amount of the Trust Securities" means, except
as provided in the terms of the Trust Preferred Securities or by the Trust
Indenture Act, Holder(s) of outstanding Trust Securities voting together as a
single class or, as the context may require, Holders of outstanding Trust
Preferred Securities or Holders of outstanding Trust Common Securities voting
separately as a class, who are the record owners of more than 50% of the
aggregate Liquidation Amount of all outstanding Trust Securities of the
relevant class.

"Ministerial Action" means, a ministerial action (such as filing a
form or making an election or pursuing some other similar reasonable measure)
which in the sole judgment of the Company has or will cause no adverse effect
on the Trust, the Company or the holders of the Trust Securities and will
involve no material cost.

"Nasdaq" means the National Association of Securities Dealers
Automated Quotation System.

"Officers' Certificate" means, with respect to any Person (who is not
an individual), a certificate signed by the Chairman of the Board, the
President, a Vice President or the Treasurer, and by an Assistant Treasurer,
the Secretary or an Assistant Secretary of such Person. Any Officers'
Certificate delivered with respect to compliance with a condition or covenant
provided for in this Declaration shall include:

(a) a statement that each officer signing the Officers'
Certificate has read the covenant or condition and the definitions relating
thereto;

(b) a brief statement of the nature and scope of the
examination or investigation undertaken by each officer in rendering the
Officers' Certificate;

(c) a statement that each such officer has made such
examination or investigation as, in such officer's opinion, is necessary to
enable such officer to express an informed opinion as to whether or not such
covenant or condition has been complied with; and

(d) a statement as to whether, in the opinion of each
such officer, such condition or covenant has been complied with.

"Opinion of Counsel" means a written opinion of counsel, who may be
counsel for the Trust, the Property Trustee or the Sponsor, and who may be an
employee of any thereof, and who shall be acceptable to the Property Trustee.
Any Opinion of Counsel delivered with respect to compliance with a condition or
covenant provided for in this Declaration shall include:

(a) a statement that each individual signing the Opinion
of Counsel has read the covenant or condition and the definitions relating
thereto;

6
<PAGE> 13

(b) a brief statement of the nature and scope of the
examination or investigation undertaken by each individual in rendering the
Opinion of Counsel;

(c) a statement that each individual has made such
examination or investigation as is necessary to enable such individual to
express an informed opinion as to whether or not such covenant or condition has
been complied with; and

(d) a statement as to whether, in the opinion of each
such individual, such condition or covenant has been complied with.

"Over-Allotment Option" means the option granted by the Trust to the
several underwriters to purchase up to [_______________] additional Trust
Preferred Securities solely to cover over-allotments pursuant to the
Underwriting Agreement.

"Payment Amount" has the meaning set forth in Section 7.1(a) of this
Declaration.

"Paying Agent" has the meaning set forth in Section 3.8(g) of this
Declaration.

"Property Account" has the meaning set forth in Section 3.8(c) of this
Declaration.

"Property Trustee" means the Trustee meeting the eligibility
requirements set forth in Section 6.3 of this Declaration.

"Pro Rata" means, in reference to any distributions on or redemptions
of Trust Securities or the distribution of Subordinated Debentures or any other
payment with respect to Trust Securities in connection with a Trust Special
Event or liquidation of the Trust, pro rata to each Holder of Trust Securities
according to the aggregate Liquidation Amount of the Trust Securities held by
the relevant Holder in relation to the aggregate Liquidation Amount of all
Trust Securities outstanding. In any proration in connection with a
redemption, the Property Trustee may make such adjustments as may be
appropriate in order that only Trust Securities in authorized denominations
shall be redeemed.

"Quarterly Period" means a three month period ending on the last day
of February, May, August and November.

"Quorum" means a majority of the Administrative Trustees or, if there
are only two Administrative Trustees, both of them.

7
<PAGE> 14

"Redemption Date" means with respect to any Trust Security to be
redeemed, each Debenture Redemption Date.

"Redemption Price" means, with respect to any Trust Security, $25 per
Trust Security, plus accumulated and unpaid Distributions (including any unpaid
Additional Amounts) to the date of redemption.

"Responsible Officer" means, with respect to the Property Trustee, any
officer of the Property Trustee assigned to administer corporate trust matters
and also means, with respect to a particular corporate trust matter, any other
officer to whom such matter is referred because of his or her knowledge of and
familiarity with the particular subject.

"Securities Act" means the Securities Act of 1933, as amended from
time to time, or any successor legislation.

"Sponsor" means the Company or any successor entity in a merger,
consolidation or amalgamation, in its capacity as sponsor of the Trust.

"Subordinated Debenture Trustee" means the "Trustee," as defined in
the Subordinated Indenture, initially The First National Bank of Chicago, a
national banking association.

"Subordinated Debentures" means up to $___________ aggregate principal
amount ($ aggregate principal amount if the Over-Allotment Option is
exercised in full) of the Sponsor's ____% Subordinated Debentures due
______________, 2028 issued or to be issued pursuant to the Subordinated
Indenture.

"Subordinated Indenture" means the Subordinated Indenture, dated as of
November ______, 1998 between the Sponsor and the Subordinated Debenture
Trustee, as trustee, as further amended or supplemented from time to time.

"Successor Common Securities" has the meaning set forth in Section
3.15(b)(vii) of this Declaration.

"Successor Delaware Trustee" has the meaning set forth in Section
6.7(b) of this Declaration.

"Successor Entity" has the meaning set forth in Section 3.15 of this
Declaration.

"Successor Property Trustee" has the meaning set forth in Section
6.7(b) of this Declaration.

8
<PAGE> 15

"Successor Trust Securities" has the meaning set forth in Section 3.15
of this Declaration.

"Super Majority" has the meaning set forth in Section 2.6(a)(ii) of
this Declaration.

"Tax Action" means (a) an amendment to, change in or announced
proposed change in the laws (or any regulations thereunder) of the United
States or any political subdivision or taxing authority thereof or therein, (b)
a judicial decision interpreting, applying or clarifying such laws or
regulations, (c) an administrative pronouncement or action that represents an
official position (including a clarification of an official position) of the
governmental authority or regulatory body making such administrative
pronouncement or taking such action, or (d) a threatened challenge asserted in
connection with an audit of the Company or any of its subsidiaries, or the
Trust, or a threatened challenge asserted in writing against any other taxpayer
that has raised capital through the issuance of securities that are
substantially similar to the Subordinated Debentures, or the Trust Preferred
Securities, which amendment or change is adopted or which decision,
pronouncement or proposed change is announced or which action, clarification or
challenge occurs on or after the date of the original issuance of the Trust
Preferred Securities.

"10% in Liquidation Amount of the Trust Securities" means, except as
provided in the terms of the Trust Preferred Securities or by the Trust
Indenture Act, Holder(s) of outstanding Trust Securities voting together as a
single class or, as the context may require, Holders of outstanding Trust
Preferred Securities or Holders of outstanding Trust Common Securities voting
separately as a class, who are the record owners of 10% or more of the
aggregate Liquidation Amount of all outstanding Trust Securities of the
relevant class.

"Treasury Regulations" means the income tax regulations, including
temporary and proposed regulations, promulgated under the Code by the United
States Treasury Department, as such regulations may be amended from time to
time (including corresponding provisions of succeeding regulations).

"Trust Common Security" has the meaning set forth in Section 8.1 of
this Declaration.

"Trust Common Security Certificate" means a definitive certificate in
fully registered form representing a Trust Common Security substantially in the
form of Exhibit A-2.

"Trust Common Securities Guarantee" means the Trust Common Securities
Guarantee Agreement dated as of November _____, 1998 entered into by the
Company, as Guarantor, for the benefit of the holders of the Trust Common
Securities.

"Trust Dissolution Tax Opinion" means an opinion of nationally
recognized independent tax counsel experienced in such matters to the effect
that there has been a Trust Tax Event.

"Trust Enforcement Event" means the occurrence, at any time, of a
Debenture Event of Default.

9
<PAGE> 16

"Trust Guarantees" means the Trust Common Securities Guarantee and the
Trust Preferred Securities Guarantee, collectively.

"Trust Indenture Act" means the Trust Indenture Act of 1939, as
amended from time to time, or any successor legislation.

"Trust Investment Company Event" means that the Company shall have
requested and received and shall have delivered to the Property Trustee an
Opinion of Counsel from a firm having a national tax and securities practice
and that is experienced in 1940 Act matters (which Opinion of Counsel shall not
have been rescinded by such law firm) to the effect that as a result of a
Change in 1940 Act Law, there is more than an insubstantial risk that the Trust
is or, within 90 days after such date, will be considered an "investment
company" that is required to be registered under the 1940 Act.

"Trust Liquidation" has the meaning set forth in Section 9.2(a) of
this Declaration.

"Trust Liquidation Distribution" has the meaning set forth in Section
9.2(a) of this Declaration.

"Trust Preferred Guarantee Trustee" means the Trustee under the Trust
Preferred Securities Guarantee.

"Trust Preferred Securities Guarantee" means the Trust Preferred
Securities Guarantee Agreement dated as of November ____, 1998, entered into by
the Company, as Guarantor, and the Trust Preferred Guarantee Trustee, as
trustee, for the benefit of the holders of the Trust Preferred Securities.

"Trust Preferred Security" has the meaning set forth in Section 8.1(a)
of this Declaration.

"Trust Preferred Security Beneficial Owner" means, with respect to a
Book Entry Interest, a Person who is the beneficial owner of such Book Entry
Interest, as reflected on the books of the Clearing Agency, or on the books of
a Person maintaining an account with such Clearing Agency (directly as a
Clearing Agency Participant or as an indirect participant, in each case in
accordance with the rules of such Clearing Agency).

"Trust Preferred Security Certificate" means a certificate
representing a Trust Preferred Security substantially in the form of Exhibit
A-1.

"Trust Securities" means the Trust Common Securities and the Trust
Preferred Securities.

"Trust Special Event" means a Trust Tax Event or a Trust Investment
Company Event.

10
<PAGE> 17

"Trust Tax Event" means that the Company shall have requested and
received and shall have delivered to the Property Trustee an Opinion of Counsel
from a firm having a national tax and securities practice (which Opinion of
Counsel shall not have been rescinded by such law firm) that there has been a
Tax Action which relates to any of the items described in (i) through (iii)
below, and that there is more than an insubstantial risk that (i) the Trust is
or, within 90 days after such date, will be subject to United States federal
income tax with respect to income accrued or received on the Subordinated
Debentures, (ii) the Trust is or, within 90 days after such date, will be
subject to more than a de minimis amount of other taxes, duties, assessments or
other governmental charges or (iii) interest payable by the Company on the
Subordinated Debentures is not or, within 90 days after such date, will not be
deductible by the Company, in whole or in part, for United States federal
income tax purposes.

"Trustee" or "Trustees" means each Person who has signed this
Declaration as a trustee, so long as such Person shall continue in office in
accordance with the terms hereof, and all other Persons who may from time to
time be duly appointed, qualified and serving as Trustees in accordance with
the provisions hereof, and references herein to a Trustee or the Trustees shall
refer to such Person or Persons solely in their capacity as trustees hereunder.

"Underwriting Agreement" means that certain Underwriting Agreement,
dated as of November _____, 1998, among the Company, the Trust, and the several
underwriters named therein.

ARTICLE II

TRUST INDENTURE ACT

Section 2.1 Trust Indenture Act; Application.

(a) This Declaration is subject to the provisions of the
Trust Indenture Act that are required to be part of this Declaration and shall,
to the extent applicable, be governed by such provisions.

(b) The Property Trustee shall be the only Trustee which
is a Trustee for the purposes of the Trust Indenture Act.

(c) If and to the extent that any provision of this
Declaration limits, qualifies or conflicts with the duties imposed by Sections
310 to 317, inclusive, of the Trust Indenture Act, such imposed duties shall
control.

(d) The application of the Trust Indenture Act to this
Declaration shall not affect the nature of the Trust Securities as equity
securities representing undivided beneficial interests in the assets of the
Trust.

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Section 2.2 Lists of Holders of Trust Securities.

(a) Each of the Sponsor and the Administrative Trustees
on behalf of the Trust shall provide the Property Trustee (i) within 14 days
after each record date for payment of Distributions, a list, in such form as
the Property Trustee may reasonably require, of the names and addresses of the
Holders of the Trust Securities ("List of Holders") as of such record date,
provided, that neither the Sponsor nor the Administrative Trustees on behalf of
the Trust shall be obligated to provide such List of Holders at any time the
List of Holders does not differ from the most recent List of Holders given to
the Property Trustee by the Sponsor and the Administrative Trustees on behalf
of the Trust, and (ii) at any other time, within 30 days of receipt by the
Trust of a written request for a List of Holders as of a date no more than 14
days before such List of Holders is given to the Property Trustee. The
Property Trustee shall preserve, in as current a form as is reasonably
practicable, all information contained in Lists of Holders given to it or which
it receives in the capacity as Paying Agent (if acting in such capacity),
provided, that the Property Trustee may destroy any List of Holders previously
given to it on receipt of a new List of Holders.

(b) The Property Trustee shall comply with its
obligations under Sections 311(a), 311(b) and 312(b) of the Trust Indenture
Act.

Section 2.3 Reports by the Property Trustee.

Within 60 days after May 15 of each year commencing May 15, 1999, the
Property Trustee shall provide to the Holders of the Trust Preferred Securities
such reports as are required by Section 313(a) of the Trust Indenture Act, if
any, in the form and in the manner provided by Section 313 of the Trust
Indenture Act. The Property Trustee shall also comply with the requirements of
Section 313 of the Trust Indenture Act. The Sponsor shall promptly notify the
Property Trustee when the Trust Securities are listed for trading on any stock
exchange.

Section 2.4 Periodic Reports to Property Trustee.

Each of the Sponsor and the Administrative Trustees on behalf of the
Trust shall provide to the Property Trustee such documents, reports and
information as are required by Section 314 of the Trust Indenture Act (if any)
and the compliance certificate required by Section 314 of the Trust Indenture
Act in the form, in the manner and at the times required by Section 314 of the
Trust Indenture Act. Compliance certificates required by Section 314(a)(4) of
the Trust Indenture Act shall be delivered to the Property Trustee annually on
or before 120 days after the end of each fiscal year of the Sponsor.

Section 2.5 Evidence of Compliance with Conditions Precedent.

Each of the Sponsor and the Administrative Trustees on behalf of the
Trust shall provide to the Property Trustee such evidence of compliance with
any conditions precedent provided for in this Declaration that relate to any of
the matters set forth in Section 314(c) of the Trust Indenture Act.

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Any certificate or opinion required to be given by an officer pursuant to
Section 314(c)(1) of the Trust Indenture Act may be given in the form of an
Officers' Certificate.

Section 2.6 Trust Enforcement Events; Waiver.

(a) The Holders of a Majority in Liquidation Amount of
the Trust Preferred Securities may, by vote, on behalf of the Holders of all of
the Trust Preferred Securities, waive any past Trust Enforcement Event in
respect of the Trust Preferred Securities and its consequences, provided, that
if the underlying default or event of default:

(i) is not waivable under the Subordinated Indenture, the
Trust Enforcement Event under this Declaration shall also not be
waivable; or

(ii) requires the consent or vote of the holders of
greater than a majority (a "Super Majority") in aggregate principal
amount of the Subordinated Debentures to be waived under the
Subordinated Indenture, then, the Trust Enforcement Event under this
Declaration may only be waived by the vote of the Holders of at least
the relevant Super Majority in Liquidation Amount of the Trust
Preferred Securities.

The foregoing provisions of this Section 2.6(a) shall be in lieu of
Section 316(a)(1)(B) of the Trust Indenture Act and such Section 316(a)(1)(B)
of the Trust Indenture Act is hereby expressly excluded from this Declaration
and the Trust Securities, as permitted by the Trust Indenture Act. Upon such
waiver, any such default shall cease to exist, and any Trust Enforcement Event
with respect to the Trust Preferred Securities arising therefrom shall be
deemed to have been cured, for every purpose of this Declaration, but no such
waiver shall extend to any subsequent or other default or Trust Enforcement
Event with respect to the Trust Preferred Securities or impair any right
consequent thereon. Any waiver by the Holders of the Trust Preferred
Securities of Trust Enforcement Events with respect to the Trust Preferred
Securities shall also be deemed to constitute a waiver by the Holders of the
Trust Common Securities of any such Trust Enforcement Event with respect to the
Trust Common Securities for all purposes of this Declaration without any
further act, vote, or consent of the Holders of the Trust Common Securities.

(b) The Holders of a Majority in Liquidation Amount of
the Trust Common Securities may, by vote, on behalf of the Holders of all of
the Trust Common Securities, waive any past Trust Enforcement Event with
respect to the Trust Common Securities and its consequences, provided, that if
the underlying default or event of default:

(i) is not waivable under the Subordinated Indenture,
except where the Holders of the Trust Common Securities are deemed to
have waived such Trust Enforcement Event under this Declaration as
provided below in this Section 2.6(b), the Trust Enforcement Event
under this Declaration shall also not be waivable; or

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(ii) requires the consent or vote of the holders of a Super
Majority in aggregate principal amount of Subordinated Debentures to
be waived, except where the Holders of the Trust Common Securities are
deemed to have waived such Trust Enforcement Event under the
Declaration as provided below in this Section 2.6(b), then, the Trust
Enforcement Event under this Declaration may only be waived by the
vote of the Holders of at least the relevant Super Majority in
Liquidation Amount of the Trust Common Securities;

provided, further, each Holder of Trust Common Securities will be deemed to
have waived any such Trust Enforcement Event and all Trust Enforcement Events
with respect to the Trust Common Securities and its consequences if all Trust
Enforcement Events with respect to the Trust Preferred Securities have been
cured, waived or otherwise eliminated, and until such Trust Enforcement Events
have been so cured, waived or otherwise eliminated, the Property Trustee will
be deemed to be acting solely on behalf of the Holders of the Trust Preferred
Securities and only the Holders of the Trust Preferred Securities will have the
right to direct the Property Trustee in accordance with the terms of the Trust
Securities. The foregoing provisions of this Section 2.6(b) shall be in lieu
of Sections 316(a)(1)(A) and 316(a)(1)(B) of the Trust Indenture Act and such
Sections 316(a)(1)(A) and 316(a)(1)(B) of the Trust Indenture Act are hereby
expressly excluded from this Declaration and the Trust Securities, as permitted
by the Trust Indenture Act. Subject to the foregoing provisions of this
Section 2.6(b), upon such waiver, any such default shall cease to exist and any
Trust Enforcement Event with respect to the Trust Common Securities arising
therefrom shall be deemed to have been cured for every purpose of this
Declaration, but no such waiver shall extend to any subsequent or other default
or Trust Enforcement Event with respect to the Trust Common Securities or
impair any right consequent thereon.

Section 2.7 Trust Enforcement Event; Notice.

The Property Trustee shall, within 90 days after the occurrence of a
Trust Enforcement Event, transmit by mail, first class postage prepaid, to the
Holders of the Trust Securities, notices of all defaults with respect to the
Trust Securities actually known to a Responsible Officer of the Property
Trustee in its Corporate Trust Office, unless such defaults have been cured
before the giving of such notice (the term "defaults" for the purposes of this
Section 2.7 being hereby defined to be Events of Default as defined in the
Subordinated Indenture, not including any periods of grace provided for therein
and irrespective of the giving of any notice provided therein); provided, that
except for a default in the payment of principal of or interest (including
Additional Sums and Additional Amounts, if any) on any of the Subordinated
Debentures, the Property Trustee shall be fully protected in withholding such
notice if and so long as a Responsible Officer of the Property Trustee in good
faith determines that the withholding of such notice is in the interests of the
Holders of the Trust Securities.

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ARTICLE III

ORGANIZATION

Section 3.1 Name.

The Trust is named "KBK Capital Trust I," as such name may be modified
from time to time by the Administrative Trustees following written notice to
the Holders of Trust Securities and the other Trustees. The Trust's activities
may be conducted under the name of the Trust or any other name deemed advisable
by the Administrative Trustees.

Section 3.2 Office.

The address of the principal office of the Trust is c/o KBK Capital
Corporation, 2200 City Center II, 301 Commerce Street, Fort Worth, Texas 76102.
On 10 Business Days prior written notice to the Holders of Trust Securities and
the other Trustees, the Administrative Trustees may designate another principal
office.

Section 3.3 Purpose.

The exclusive purposes and functions of the Trust are (a) to issue the
Trust Securities, (b) to make Distributions to the Holders, (c) to invest the
proceeds from such sale of the Trust Securities to acquire the Subordinated
Debentures, and (d) except as otherwise limited herein, to engage in only those
other activities necessary or incidental thereto. The Trust shall not borrow
money, issue debt or reinvest proceeds derived from investments, mortgage or
pledge any of its assets, fail to make Distributions to the extent that the
Trust has funds legally available for payment of such Distributions in the
Property Account, or otherwise undertake (or permit to be undertaken) any
activity that would cause the Trust not to be classified for United States
federal income tax purposes as a grantor trust.

Section 3.4 Authority.

Subject to the limitations provided in this Declaration and to the
specific duties of the Property Trustee, the Administrative Trustees shall have
exclusive and complete authority to carry out the purposes of the Trust. An
action taken by the Administrative Trustees in accordance with their powers
shall constitute the act of and serve to bind the Trust and an action taken by
the Property Trustee on behalf of the Trust in accordance with its powers shall
constitute the act of and serve to bind the Trust. In dealing with the
Trustees acting on behalf of the Trust, no Person shall be required to inquire
into the authority of the Trustees to bind the Trust. Persons dealing with the
Trust are entitled to rely conclusively on the power and authority of the
Trustees as set forth in this Declaration.

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Section 3.5 Title to Property of the Trust.

Except as provided in Section 3.8 with respect to the Subordinated
Debentures and the Property Account or as otherwise provided in this
Declaration, legal title to all assets of the Trust shall be vested in the
Trust. The Holders shall not have legal title to any part of the assets of the
Trust, but shall have an undivided beneficial ownership interest in the assets
of the Trust.

Section 3.6 Powers and Duties of the Administrative Trustees.

The Administrative Trustees shall have the exclusive power, duty and
authority to cause the Trust to engage in the following activities:

(a) to issue and sell the Trust Preferred Securities and
the Trust Common Securities in accordance with this Declaration; provided,
however, that the Trust may issue no more than one series of Trust Preferred
Securities and no more than one series of Trust Common Securities, and,
provided, further, that there shall be no interests in the Trust other than the
Trust Securities, and the issuance of Trust Securities shall be limited to the
Trust Preferred Securities and Trust Common Securities issued on the Closing
Date and on each Date of Delivery (as such term is defined in the Underwriting
Agreement), and all Trust Securities issued by the Trust shall be deemed to
have been issued as of the Closing Date;

(b) in connection with the issue and sale of the Trust
Preferred Securities, at the direction of the Sponsor, to:

(i) execute and file with the Commission the registration
statement on Form S-2 prepared by the Sponsor, including any
amendments or supplements thereto, pertaining to the Trust Preferred
Securities and take such actions, or cause the Property Trustee to
take such actions, as may be necessary or appropriate to qualify this
Declaration under the Trust Indenture Act;

(ii) execute and file any documents prepared by the
Sponsor, or take any acts as determined by the Sponsor to be necessary
in order to qualify or register all or part of the Trust Preferred
Securities in any state in which the Sponsor has determined to qualify
or register such Trust Preferred Securities for sale;

(iii) execute and file an application, prepared by the
Sponsor, to the AMEX or any other national stock exchange or the
Nasdaq National Market System for listing upon notice of issuance of
any Trust Preferred Securities;

(iv) execute and file with the Commission a registration
statement, including any amendments thereto, prepared by the Sponsor,
relating to the registration of the Trust

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Preferred Securities and the Trust Preferred Securities Guarantee
under Section 12(b) of the Exchange Act, and to prepare and file all
periodic and other reports and documents required in connection
therewith; and

(v) execute and enter into an underwriting agreement
providing for the sale of the Trust Preferred Securities and perform
the duties and obligations of the Trust thereunder;

(c) to acquire the Subordinated Debentures with the
proceeds of the sale of the Trust Preferred Securities and the Trust Common
Securities; provided, however, that the Administrative Trustees shall cause
legal title to the Subordinated Debentures to be held of record in the name of
the Property Trustee for the benefit of the Holders of the Trust Preferred
Securities and the Holders of Trust Common Securities;

(d) to give the Sponsor and the Property Trustee prompt
written notice of the occurrence of a Trust Special Event; provided, that the
Administrative Trustees shall consult with the Sponsor before taking or
refraining from taking any Ministerial Action in relation to a Trust Special
Event;

(e) to establish a record date with respect to all
actions to be taken hereunder that require a record date be established,
including and with respect to, for the purposes of Section 316(c) of the Trust
Indenture Act, Distributions, voting rights, redemptions and exchanges, and to
issue relevant notices to the Holders of Trust Preferred Securities and Holders
of Trust Common Securities as to such actions and applicable record dates;

(f) to give prompt written notice to the Holders of the
Trust Securities of any notice received from the Company of the Company's
election not to make a current, quarterly payment on the Subordinated
Debentures;

(g) to take all actions and perform such duties as may be
required of the Administrative Trustees pursuant to the terms of the Trust
Securities;

(h) to bring or defend, pay, collect, compromise,
arbitrate, resort to legal action, or otherwise adjust claims or demands of or
against the Trust ("Legal Action"), unless pursuant to Section 3.8(e), the
Property Trustee has the exclusive power to bring such Legal Action;

(i) to employ or otherwise engage employees and agents
(who may be designated as officers with titles) and managers, contractors,
advisors, and consultants and pay reasonable compensation for such services;

(j) to cause the Trust to comply with the Trust's
obligations under the Trust Indenture Act;

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(k) to give the certificate required by Section 314(a)(4)
of the Trust Indenture Act to the Property Trustee, which certificate may be
executed by any Administrative Trustee;

(l) to incur expenses that are necessary or incidental to
carry out any of the purposes of the Trust and to appoint a Paying Agent or
Paying Agents to serve in accordance with this Declaration;

(m) to act as, or appoint another Person to act as,
registrar and transfer agent for the Trust Securities;

(n) to execute all documents or instruments, perform all
duties and powers, and do all things for and on behalf of the Trust in all
matters necessary or incidental to the foregoing;

(o) to take all action that may be necessary or
appropriate for the preservation and the continuation of the Trust's valid
existence, rights, franchises and privileges as a statutory business trust
under the laws of the State of Delaware and of each other jurisdiction in which
such existence is necessary to protect the limited liability of the Holders of
the Trust Preferred Securities or to enable the Trust to effect the purposes
for which the Trust was created;

(p) to take any action, or to take no action, not
inconsistent with this Declaration or with applicable law, that the
Administrative Trustees determine in their discretion to be necessary or
desirable in carrying out the activities of the Trust as set out in this
Section 3.6, including, but not limited to:

(i) causing the Trust not to be deemed to be an
Investment Company required to be registered under the 1940 Act;

(ii) cooperating with the Sponsor to ensure that the
Subordinated Debentures will be treated as indebtedness of the Sponsor
for United States federal income tax purposes; and

(iii) taking no action which would be reasonably likely to
cause the Trust to be classified as an association or a publicly
traded partnership taxable as a corporation for United States federal
income tax purposes;

provided, that such action does not adversely affect the rights,
preferences or privileges of the Holders; and

(q) to take all action necessary to cause all applicable
tax returns and tax information reports that are required to be filed with
respect to the Trust to be duly prepared and filed by the Administrative
Trustees, on behalf of the Trust.

The Administrative Trustees must exercise the powers set forth in this
Section 3.6 in a manner that is consistent with the purposes and functions of
the Trust set out in Section 3.3, and the

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Administrative Trustees shall not take any action that is inconsistent with the
purposes and functions of the Trust set forth in Section 3.3.

Subject to this Section 3.6, the Administrative Trustees shall have
none of the powers or the authority of the Property Trustee set forth in
Section 3.8.

Any expenses incurred by the Administrative Trustees pursuant to this
Section 3.6 shall be reimbursed by the Company.

The Administrative Trustees shall take all actions on behalf of the
Trust that are not specifically required by this Declaration to be taken by any
other Trustee.

Section 3.7 Prohibition of Actions by the Trust and the Trustees.

(a) The Trust shall not, and the Trustees (including the
Property Trustee) shall cause the Trust not to, engage in any activity other
than as required or authorized by this Declaration. In particular, the Trust
shall not and the Trustees (including the Property Trustee) shall cause the
Trust not to:

(i) invest any proceeds received by the Trust from
holding the Subordinated Debentures, but shall distribute all such
proceeds to Holders of Trust Securities pursuant to the terms of this
Declaration and of the Trust Securities;

(ii) acquire any assets other than as expressly provided
herein;

(iii) possess Trust property for other than a Trust
purpose;

(iv) make any loans or incur any indebtedness or acquire
any securities other than the Subordinated Debentures;

(v) possess any power or otherwise act in such a way as
to vary the Trust assets or the terms of the Trust Securities in any
way whatsoever;

(vi) issue any securities or other evidences of beneficial
ownership of, or beneficial interest in, the Trust other than the
Trust Securities;

(vii) other than as set forth herein, consent to any
amendment, modification or termination of the Subordinated Indenture
or the Subordinated Debentures where such consent shall be required;
and

(viii) other than in connection with the liquidation of the
Trust pursuant to a Trust Special Event or upon redemption of all the
Trust Securities, file a certificate of cancellation of the Trust.

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Section 3.8 Powers and Duties of the Property Trustee.

(a) The legal title to the Subordinated Debentures shall
be owned by and held of record in the name of the Property Trustee in trust for
the benefit of the Holders of the Trust Securities. The right, title and
interest of the Property Trustee to the Subordinated Debentures shall vest
automatically in each Person who may hereafter be appointed as Property Trustee
in accordance with Section 6.7. Such vesting and cessation of title shall be
effective whether or not conveyancing documents with regard to the Subordinated
Debentures have been executed and delivered.

(b) The Property Trustee shall not transfer its right,
title and interest in the Subordinated Debentures to the Administrative
Trustees or to the Delaware Trustee (if the Property Trustee does not also act
as Delaware Trustee).

(i) establish and maintain a segregated non-interest
bearing trust account (the "Property Account") in the name of and
under the exclusive control of the Property Trustee on behalf of the
Holders of the Trust Securities and, upon the receipt of payments of
funds made in respect of the Subordinated Debentures held by the
Property Trustee or the Trust Guarantees, deposit such funds into the
Property Account and make payments to the Holders of the Trust
Preferred Securities and Holders of the Trust Common Securities from
the Property Account in accordance with Section 7.1. Funds in the
Property Account shall be held uninvested until disbursed in
accordance with this Declaration. The Property Account shall be an
account that is maintained with a banking institution (including the
Property Trustee if it qualifies hereunder) authorized to exercise
corporate trust powers and having a combined capital and surplus of at
least $50,000,000 and subject to supervision or examination by federal
or state authority; and

(ii) upon written notice of distribution issued by the
Administrative Trustees in accordance with the terms of the Trust
Securities, engage in such ministerial activities as shall be
necessary or appropriate to effect the distribution of the
Subordinated Debentures to Holders of Trust Securities upon the
occurrence of a Trust Special Event.

(d) The Property Trustee shall take all actions and
perform such duties as may be specifically required of the Property Trustee
pursuant to the terms of the Trust Securities.

(e) The Property Trustee may take any Legal Action which
arises out of or in connection with a Trust Enforcement Event of which a
Responsible Officer of the Property Trustee in its Corporate Trust Office has
actual knowledge or the Property Trustee's duties and obligations under this
Declaration or the Trust Indenture Act.

(f) The Property Trustee shall have the legal power to
exercise all of the rights, powers and privileges of a Holder of Trust
Preferred Securities and, if a Trust Enforcement Event

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occurs and is continuing, the Property Trustee may, for the benefit of Holders
of the Trust Preferred Securities, enforce its rights as Holder of the Trust
Preferred Securities subject to the rights of the Holders pursuant to the terms
of such Trust Preferred Securities.

(g) The Property Trustee may authorize one or more
Persons (each, a "Paying Agent") to pay Distributions, redemption payments or
liquidation payments on behalf of the Trust with respect to all Trust
Securities and any such Paying Agent shall comply with Section 317(b) of the
Trust Indenture Act. Any Paying Agent may be removed by the Property Trustee
at any time and a successor Paying Agent or additional Paying Agents may be
appointed at any time by the Property Trustee.

(h) The Property Trustee shall continue to serve as a
Trustee until either:

(i) the Trust has been completely liquidated and the
proceeds of the liquidation distributed to the Holders of Trust
Securities pursuant to the terms of the Trust Securities; or

(ii) a Successor Property Trustee has been appointed and
has accepted that appointment in accordance with Section 6.7.

(i) Subject to this Section 3.8, the Property Trustee
shall have none of the duties, liabilities, powers or authority of the
Administrative Trustees set forth in Section 3.6.

The Property Trustee must exercise the powers set forth in this
Section 3.8 in a manner that is consistent with the purposes and functions of
the Trust set out in Section 3.3, and the Property Trustee shall not take any
action that is inconsistent with the purposes and functions of the Trust set
out in Section 3.3.

Section 3.9 Certain Duties and Responsibilities of the Property Trustee.

(a) The Property Trustee, before the occurrence of any
Trust Enforcement Event and after the curing or waiver of all Trust Enforcement
Events that may have occurred, shall undertake to perform only such duties as
are specifically set forth in this Declaration and no implied covenants shall
be read into this Declaration against the Property Trustee. In case a Trust
Enforcement Event has occurred (that has not been cured or waived pursuant to
Section 2.6) of which a Responsible Officer of the Property Trustee in its
Corporate Trust Office has actual knowledge, the Property Trustee shall
exercise such of the rights and powers vested in it by this Declaration, and
use the same degree of care and skill in their exercise, as a prudent person
would exercise or use under the circumstances in the conduct of his or her own
affairs.

(b) No provision of this Declaration shall be construed
to relieve the Property Trustee from liability for its own negligent action,
its own negligent failure to act, or its own willful misconduct, except that:

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(i) prior to the occurrence of a Trust Enforcement Event
and after the curing or waiving of all such Trust Enforcement Events
that may have occurred:

(A) the duties and obligations of the Property
Trustee shall be determined solely by the express provisions of
this Declaration and the Property Trustee shall not be liable
except for the performance of such duties and obligations as
are specifically set forth in this Declaration, and no implied
covenants or obligations shall be read into this Declaration
against the Property Trustee; and

(B) in the absence of bad faith on the part of the
Property Trustee, the Property Trustee may conclusively rely,
as to the truth of the statements and the correctness of the
opinions expressed therein, upon any certificates or opinions
furnished to the Property Trustee and conforming to the
requirements of this Declaration; but in the case of any such
certificates or opinions that by any provision hereof are
specifically required to be furnished to the Property Trustee,
the Property Trustee shall be under a duty to examine the same
to determine whether or not they conform to the requirements of
this Declaration;

(ii) the Property Trustee shall not be liable for any
error of judgment made in good faith by a Responsible Officer of the
Property Trustee, unless it shall be proved that the Property Trustee
was negligent in ascertaining the pertinent facts;

(iii) the Property Trustee shall not be liable with respect
to any action taken or omitted to be taken by it in good faith in
accordance with the direction of the Holders of not less than a
Majority in Liquidation Amount of the Trust Securities relating to the
time, method and place of conducting any proceeding for any remedy
available to the Property Trustee, or, subject to the requirement of
the Property Trustee receiving a tax opinion as set forth in Section
8.2(d) or 8.3(c), as the case may be, exercising any trust or power
conferred upon the Property Trustee under this Declaration;

(iv) no provision of this Declaration shall require the
Property Trustee to expend or risk its own funds or otherwise incur
personal financial liability in the performance of any of its duties
or in the exercise of any of its rights or powers, if it shall have
reasonable grounds for believing that the repayment of such funds or
protection from such liability is not reasonably assured to it under
the terms of this Declaration or indemnity reasonably satisfactory to
the Property Trustee against such risk or liability is not reasonably
assured to it;

(v) the Property Trustee's sole duty with respect to the
custody, safe keeping and physical preservation of the Subordinated
Debentures, the Trust Preferred Securities Guarantee and the Property
Account shall be to deal with such property in a similar manner as the
Property Trustee deals with similar property for its own account,
subject to the

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protections and limitations on liability afforded to the Property
Trustee under this Declaration and the Trust Indenture Act;

(vi) the Property Trustee shall have no duty or liability
for or with respect to the value, genuineness, existence or
sufficiency of the Subordinated Debentures, the Trust Preferred
Securities Guarantee or the payment of any taxes or assessments levied
thereon or in connection therewith;

(vii) money held by the Property Trustee need not be
segregated from other funds held by it except in relation to the
Property Account maintained by the Property Trustee pursuant to
Section 3.8(c)(i) and except to the extent otherwise required by law;
and

(viii) the Property Trustee shall not be responsible for
monitoring the compliance by the Administrative Trustees or the
Sponsor with their respective duties under this Declaration, nor shall
the Property Trustee be liable for any default or misconduct of the
Administrative Trustees or the Sponsor.

(c) Whether or not expressly stated, every provision hereof
regarding the Property Trustee shall be subject to this Section 3.9.

Section 3.10 Certain Rights of the Property Trustee.

(a) Subject to the provisions of Section 3.9:

(i) the Property Trustee may conclusively rely and shall
be fully protected in acting or refraining from acting upon any
resolution, certificate, statement, instrument, opinion, report,
notice, request, direction, consent, order, bond, debenture, note,
other evidence of indebtedness or other paper or document believed by
it to be genuine and to have been signed, sent or presented by the
proper party or parties;

(ii) any direction or act of the Sponsor or the
Administrative Trustees acting on behalf of the Trust contemplated by
this Declaration shall be sufficiently evidenced by an Officers'
Certificate;

(iii) whenever in the administration of this Declaration,
the Property Trustee shall deem it desirable that a matter be proved
or established before taking, suffering or omitting any action
hereunder, the Property Trustee (unless other evidence is herein
specifically prescribed) may, in the absence of bad faith on its part,
request and conclusively rely upon an Officers' Certificate which,
upon receipt of such request, shall be promptly delivered by the
Sponsor or the Administrative Trustees;

(iv) the Property Trustee shall have no duty to see to any
recording, filing or registration of any instrument (including any
financing or continuation statement or any filing under tax or
securities laws) or any rerecording, refiling or registration thereof;

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(v) the Property Trustee may consult with counsel or
other experts and the advice or opinion of such counsel and experts
shall be full and complete authorization and protection in respect of
any action taken, suffered or omitted by it hereunder in good faith and
in accordance with such advice or opinion; such counsel may be counsel
to the Sponsor or any of its Affiliates, and may include any of its
employees. The Property Trustee shall have the right at any time to
seek instructions concerning the administration of this Declaration
from any court of competent jurisdiction;

(vi) the Property Trustee shall be under no obligation to
exercise any of the rights or powers vested in it by this Declaration
at the request or direction of any Holder, unless (a) such Holder
shall have provided to the Property Trustee security and indemnity,
reasonably satisfactory to the Property Trustee, against the costs,
expenses (including attorneys' fees and expenses and the expenses of
the Property Trustee's agents, nominees or custodians) and liabilities
that might be incurred by it in complying with such request or
direction, including such reasonable advances as may be requested by
the Property Trustee and (b) the Property Trustee has received the
legal opinions, if any, required by Section 8.2(d) or 8.3(c), as the
case may be, of this Declaration; provided, that nothing contained in
this Section 3.10(a)(vi) shall be taken to relieve the Property
Trustee, upon the occurrence of a Trust Enforcement Event, of its
obligation to exercise the rights and powers vested in it by this
Declaration;

(vii) the Property Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture, note, other evidence of
indebtedness or other paper or document, but the Property Trustee, in
its discretion, may make such further inquiry or investigation into
such facts or matters as it may see fit;

(viii) the Property Trustee may execute any of the trusts or
powers hereunder or perform any duties hereunder either directly or by
or through agents, custodians, nominees or attorneys and the Property
Trustee shall not be responsible for any misconduct or negligence on
the part of any agent or attorney appointed with due care by it
hereunder;

(ix) any action taken by the Property Trustee or its
agents hereunder shall bind the Trust and the Holders of the Trust
Securities, and the signature of the Property Trustee or its agents
alone shall be sufficient and effective to perform any such action and
no third party shall be required to inquire as to the authority of the
Property Trustee to so act or as to its compliance with any of the
terms and provisions of this Declaration, both of which shall be
conclusively evidenced by the Property Trustee's or its agent's taking
such action;

(x) whenever in the administration of this Declaration
the Property Trustee shall deem it desirable to receive instructions
with respect to enforcing any remedy or right or taking any other
action hereunder, the Property Trustee (i) may request instructions
from the Holders of the Trust Securities which instructions may only
be given by the Holders of the

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same proportion in Liquidation Amount of the Trust Securities as would
be entitled to direct the Property Trustee under the terms of the
Trust Securities in respect of such remedy, right or action, (ii) may
refrain from enforcing such remedy or right or taking such other
action until such instructions are received, and (iii) shall be fully
protected in conclusively relying on or acting in or in accordance
with such instructions; provided, however, that the Property Trustee
shall not be required to take any action unless it shall have received
the legal opinions, if any, required by Section 8.2(d) or 8.3(c), as
the case may be, of this Agreement;

(xi) the Property Trustee shall not be under any obligation
to take any action that is discretionary under the provisions of this
Declaration; and

(xii) if no Trust Enforcement Event has occurred and is
continuing and if (i) in performing its duties under this Declaration
the Property Trustee is required to decide between alternative courses
of action or (ii) in construing any of the provisions in this
Declaration the Property Trustee finds the same ambiguous or
inconsistent with any other provisions contained herein or (iii) the
Property Trustee is unsure of the application of any provision of this
Declaration, then, except as to any matter as to which the Holders of
Trust Preferred Securities are entitled to vote under the terms of
this Declaration, the Property Trustee shall deliver a notice to the
Sponsor requesting written instructions of the Sponsor as to the
course of action to be taken and the Property Trustee shall take such
action, or refrain from taking such action, as the Property Trustee
shall be instructed in writing to take, or to refrain from taking, by
the Sponsor; provided, however, that if the Property Trustee does not
receive such instructions of the Sponsor within 10 Business Days after
it has delivered such notice, or such reasonably shorter period of
time set forth in such notice (which to the extent practicable shall
not be less than two Business Days), it may, but shall be under no
duty to, take or refrain from taking such action not inconsistent with
this Declaration as it shall deem advisable and in the best interests
of the Holders, in which event the Property Trustee shall have no
liability except for its own bad faith, negligence or willful
misconduct.

(b) No provision of this Declaration shall be deemed to
impose any duty or obligation on the Property Trustee to perform any act or
acts or exercise any right, power, duty or obligation conferred or imposed on
it, in any jurisdiction in which it shall be illegal, or in which the Property
Trustee shall be unqualified or incompetent in accordance with applicable law,
to perform any such act or acts, or to exercise any such right, power, duty or
obligation. No permissive power or authority available to the Property Trustee
shall be construed to be a duty.

Section 3.11 Delaware Trustee.

Notwithstanding any provision of this Declaration other than Section
6.2, the Delaware Trustee shall not be entitled to exercise any powers, nor
shall the Delaware Trustee have any of the duties and responsibilities of the
Administrative Trustees, the Property Trustee or the Sponsor

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described in this Declaration. Except as set forth in Section 6.2, the
Delaware Trustee shall be a Trustee for the sole and limited purpose of
fulfilling the requirements of Section 3807 of the Busines Trust Act.

Section 3.12 Execution of Documents.

Unless otherwise determined by the Administrative Trustees, and except
as otherwise required by the Business Trust Act, any Administrative Trustee is
authorized to execute on behalf of the Trust any documents that the
Administrative Trustees have the power and authority to cause the Trust to
execute pursuant to Section 3.6; provided, that the registration statement
referred to in Section 3.6(b)(i), including any amendments thereto, shall be
signed by the Sponsor.

Section 3.13 Not Responsible for Recitals or Issuance of Trust Securities.

The recitals contained in this Declaration and the Trust Securities
shall be taken as the statements of the Sponsor, and the Trustees do not assume
any responsibility for their correctness. The Trustees make no representations
as to the value or condition of the property of the Trust or any part thereof.
The Trustees make no representations as to the validity or sufficiency of this
Declaration, the Subordinated Debentures or the Trust Securities.

Section 3.14 Duration of Trust.

The Trust, unless earlier terminated pursuant to the provisions of
Article IX hereof, shall terminate on December 31, 2048.

Section 3.15 Mergers.

(a) The Trust may not consolidate, amalgamate, merge with
or into, or be replaced by, or convey, transfer or lease its properties and
assets substantially as an entirety to any Person, except as described in
Sections 3.15(b) and (c).

(b) The Trust may, with the consent of the Administrative
Trustees or, if there are more than two, a majority of the Administrative
Trustees and without the consent of the Holders of the Trust Securities, the
Delaware Trustee or the Property Trustee, consolidate, amalgamate, merge with
or into, or be replaced by, or convey, transfer or lease its properties and
assets as an entirety or substantially as an entirety to a trust organized as
such under the laws of any State of the United States; provided, that:

(i) if the Trust is not the survivor, such successor
entity (the "Successor Entity") either:

(A) expressly assumes all of the
obligations of the Trust under the Trust Securities; or

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(B) substitutes for the Trust Securities
other securities having substantially the same terms as the
Trust Securities (the "Successor Trust Securities") so long as
the Successor Trust Securities rank the same as the Trust
Securities rank with respect to Distributions, assets and
payments upon liquidation, redemption and otherwise;

(ii) the Company expressly appoints a trustee of the
Successor Entity that possesses the same powers and duties as the
Property Trustee as the Holder of the Subordinated Debentures;

(iii) the Successor Trust Securities are listed, or any
Successor Trust Securities will be listed upon notification of
issuance, on any national securities exchange or with another
organization on which the Trust Preferred Securities are then listed
or quoted;

(iv) such merger, consolidation, amalgamation,
replacement, conveyance, transfer or lease does not cause the Trust
Preferred Securities (including any Successor Trust Securities) to be
downgraded by any nationally recognized statistical rating
organization;

(v) such merger, consolidation, amalgamation,
replacement, conveyance, transfer or lease does not adversely affect
the rights, preferences and privileges of the Holders of the Trust
Securities (including any Successor Trust Securities) in any material
respect (other than with respect to any dilution of the Holders'
interests in the new entity);

(vi) such Successor Entity has a purpose identical to that
of the Trust;

(vii) the Company owns all of the securities of the
Successor Entity having substantially the same terms as the Trust
Common Securities (the "Successor Common Securities") and guarantees
the obligations of such Successor Entity under the Successor Trust
Securities and the Successor Common Securities at least to the extent
provided by the Trust Guarantees; and

(viii) prior to such merger, consolidation, amalgamation,
replacement, conveyance, transfer or lease, the Sponsor has received
an opinion of a nationally recognized independent counsel to the Trust
experienced in such matters to the effect that:

(A) such merger, consolidation,
amalgamation, replacement, conveyance, transfer or lease will
not adversely affect the rights, preferences and privileges of
the Holders of the Trust Preferred Securities (including any
Successor Trust Securities) in any material respect (other
than with respect to any dilution of the Holders' interest in
the new entity);

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(B) following such merger,
consolidation, amalgamation, replacement, conveyance, transfer
or lease, neither the Trust nor the Successor Entity will be
required to register as an Investment Company under the 1940
Act; and

(C) following such merger,
consolidation, amalgamation, replacement, conveyance, transfer
or lease, the Trust (or the Successor Entity) will not be
taxable as a corporation for United States federal income tax
purposes.

(c) Notwithstanding Section 3.15(b), the Trust shall not,
except with the consent of Holders of 100% in Liquidation Amount of the Trust
Securities, consolidate, amalgamate, merge with or into, or be replaced by or
convey, transfer or lease its assets substantially as an entirety to any other
entity or permit any other entity to consolidate, amalgamate, merge with or
into, or replace it if such consolidation, amalgamation, merger, replacement,
conveyance, transfer or lease would cause the Trust or Successor Entity to be
taxable as a corporation for United States federal income tax purposes.

Section 3.16 Compensation.

(a) The Sponsor agrees:

(i) to pay each of the Trustees from time to time such
compensation for all services rendered by such Trustee hereunder as
the Sponsor and such Trustee may agree upon from time to time (which
compensation shall not be limited by any provision of law in regard to
the compensation of a trustee of an express trust). To the fullest
extent possible the parties intend that Section 3561 of Title 12 of
the Delaware Code shall not apply to the Trust and that compensation
paid pursuant to this Section 3.16(a) not be subject to review by any
court under Section 3560 of Title 12 of the Delaware Code; and

(ii) except as otherwise expressly provided herein, to
reimburse the Trustees upon request for all reasonable expenses,
disbursements and advances incurred or made by the Trustees in
accordance with any provision of this Declaration (including the
reasonable compensation and the expenses and disbursements of its
agents and counsel), except any such expenses, disbursement or advance
as may be attributable to its negligence or bad faith; and

(b) Each of the Trustees hereby agrees that it shall not
claim any lien or charge on any Trust Property as a result of any amount due
pursuant to this Section 3.16. The provisions of this Section 3.16 shall
survive the dissolution of the Trust and the termination of this Declaration
and the removal or resignation of any Trustee.

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ARTICLE IV

SPONSOR

Section 4.1 Responsibilities of the Sponsor.

In connection with the issue and sale of the Trust Preferred
Securities, the Sponsor shall have the exclusive right and responsibility to
engage in the following activities:

(a) to prepare for filing by the Trust with the
Commission a registration statement on Form S-2 in relation to the Trust
Preferred Securities, including any amendments or supplements thereto;

(b) to determine the states in which to take appropriate
action to qualify or register for sale all or part of the Trust Preferred
Securities and to do any and all such acts, other than actions which must be
taken by the Trust, and advise the Trust of actions it must take, and prepare
for execution and filing any documents to be executed and filed by the Trust,
as the Sponsor deems necessary or advisable in order to comply with the
applicable laws of any such states;

(c) to prepare for filing by the Trust an application to
the AMEX or any other national stock exchange or the Nasdaq National Market
System for listing upon notice of issuance of any Trust Preferred Securities
and, if required, the Trust Preferred Securities Guarantee;

(d) to prepare for filing by the Trust with the
Commission a registration statement relating to the registration of the Trust
Preferred Securities and the Trust Preferred Securities Guarantee under Section
12(b) of the Exchange Act, including any amendments thereto; and

(e) to negotiate the terms of an underwriting agreement
providing for the sale of the Trust Preferred Securities.

Section 4.2 Indemnification and Expenses of the Trustee.

The Sponsor agrees to indemnify the Property Trustee and the Delaware
Trustee for, and to hold each of them harmless against, any loss, liability or
expense incurred without negligence or bad faith on the part of the Property
Trustee or the Delaware Trustee, as the case may be, arising out of or in
connection with the acceptance or administration of the trust hereunder,
including the costs and expenses of defending either of them against any claim
or liability in connection with the exercise or performance of any of their
respective powers or duties hereunder. The provisions of this Section 4.2
shall survive the resignation or removal of the Delaware Trustee or the
Property Trustee or the termination of this Declaration.

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ARTICLE V

TRUST COMMON SECURITIES HOLDER

Section 5.1 Company's Purchase of Trust Common Securities.

On the Closing Date the Company will purchase the Trust Common
Securities authorized for issuance by the Trust, for an amount at least equal
to 3% of the aggregate Liquidation Amount of the Trust Preferred Securities (as
determined as of the Closing Date), concurrently with the issuance of Trust
Preferred Securities on the Closing Date. Upon the exercise of the
Over-Allotment Option (if the closing of same occurs other than on the Closing
Date), the Company shall purchase such additional number of Trust Common
Securities at $25 per Trust Common Security so that the aggregate Liquidation
Amount of the additional Trust Common Securities so issued equals 3% of the
aggregate Liquidation Amount of the additional Trust Preferred Securities
issued pursuant to such exercise of the Over-Allotment Option. All Trust
Common Securities issued by the Trust shall be deemed to have been issued as of
the Closing Date.

Section 5.2 Covenants of the Trust Common Securities Holder.

For so long as the Trust Preferred Securities remain outstanding, the
Company will covenant (i) to maintain directly or indirectly 100% ownership of
the Trust Common Securities, (ii) to cause the Trust to remain a statutory
business trust and not to voluntarily dissolve, wind up, liquidate, or be
terminated, except as permitted by this Declaration, (iii) to use its
commercially reasonable efforts to ensure that the Trust will not be an
Investment Company, and (iv) to take no action which would be reasonably likely
to cause the Trust to be taxable as a corporation for United States federal
income tax purposes.

ARTICLE VI

TRUSTEES

Section 6.1 Number of Trustees.

The number of Trustees initially shall be five (5), and:

(a) at any time before the issuance of any Trust
Securities, the Sponsor may, by written instrument, increase or decrease the
number of Trustees; and

(b) after the issuance of any Trust Securities, the
number of Trustees may be increased or decreased by vote of the Holders of a
Majority in Liquidation Amount of the Trust Common Securities voting as a class
at a meeting of the Holders of the Trust Common Securities; provided, however,
that the number of Trustees shall in no event be less than three (3); provided,

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further, that (1) if required by the Business Trust Act, one Trustee shall be
the Delaware Trustee; (2) there shall be at least one Trustee who is an
employee or officer of, or is affiliated with, the Company (each, an
"Administrative Trustee"); and (3) one Trustee shall be the Property Trustee
for so long as this Declaration is required to qualify as an indenture under
the Trust Indenture Act, and such Property Trustee may also serve as Delaware
Trustee if it meets the applicable requirements.

Section 6.2 Delaware Trustee; Eligibility.

If required by the Business Trust Act, one Trustee (the "Delaware
Trustee") shall be:

(a) a natural person who is a resident of the State of
Delaware; or

(b) if not a natural person, an entity which has its
principal place of business in the State of Delaware, and otherwise meets the
requirements of applicable law,

provided, that if the Property Trustee has its principal place of business in
the State of Delaware and otherwise meets the requirements of applicable law,
then the Property Trustee may also be the Delaware Trustee (in which case
Section 3.11 shall have no application).

Wilmington Trust Company.

Section 6.3 Property Trustee; Eligibility.

(a) There shall at all times be one Trustee (the
"Property Trustee") which shall act as Property Trustee which shall:

(i) not be an Affiliate of the Sponsor; and
(ii) be a corporation or banking association organized and
doing business under the laws of the United States of America or any
state or territory thereof or of the District of Columbia, or a
corporation or Person permitted by the Commission to act as an
institutional trustee under the Trust Indenture Act, authorized under
such laws to exercise corporate trust powers, having a combined
capital and surplus of at least$50,000,000, and subject to supervision
or examination by federal, state, territorial or District of Columbia
authority. If such corporation publishes reports of condition at
least annually, pursuant to law or to the requirements of the
supervising or examining authority referred to above, then for the
purposes of this Section 6.3(a)(ii), the combined capital and surplus
of such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so
published.

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(b) If at any time the Property Trustee shall
cease to be eligible to so act under Section 6.3(a), the Property Trustee shall
immediately resign in the manner and with the effect set forth in Section
6.7(c).

(c) If the Property Trustee has or shall acquire
any "conflicting interest" within the meaning of Section 310(b) of the Trust
Indenture Act, the Property Trustee and the Holder of the Trust Common
Securities (as if it were the obligor referred to in Section 310(b) of the Trust
Indenture Act) shall in all respects comply with the provisions of Section
310(b) of the Trust Indenture Act.

(d) The Trust Preferred Securities Guarantee
shall be deemed to be specifically described in this Declaration for purposes of
clause (i) of the first proviso contained in Section 310(b) of the Trust
Indenture Act.

(e) The initial Property Trustee shall be:

The First National Bank of Chicago.

Section 6.4 Qualifications of Administrative Trustees and Delaware Trustee
Generally.

Each Administrative Trustee and the Delaware Trustee (unless the
Property Trustee also acts as Delaware Trustee) shall be either a natural
person who is at least 21 years of age or a legal entity that shall act through
one or more Authorized Officers.

Section 6.5 Administrative Trustees.

The initial Administrative Trustees shall be:

Robert J. McGee,
Jay K. Turner and
Deborah B. Wilkinson.

Except as expressly set forth in this Declaration and except if a
meeting of the Administrative Trustees is called with respect to any matter
over which the Administrative Trustees have power to act, any power of the
Administrative Trustees may be exercised by, or with the consent of, any one
such Administrative Trustee.

Section 6.6 [INTENTIONALLY OMITTED].

Section 6.7 Appointment, Removal and Resignation of Trustees.

(a) Subject to Section 6.7(b), Trustees may be appointed
or removed without cause at any time:

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(i) until the issuance of any Trust Securities, by
written instrument executed by the Sponsor; and

(ii) after the issuance of any Trust Securities, by vote
of the Holders of a Majority in Liquidation Amount of the Trust Common
Securities voting as a class at a meeting of the Holders of the Trust
Common Securities, provided, however, that if a Trust Enforcement
Event shall have occurred and be continuing the Property Trustee may
be removed and a successor thereto appointed only by the Holders of a
Majority in Liquidation Amount of the Trust Preferred Securities.

(b) (i) The Trustee that acts as Property Trustee
shall not be removed in accordance with Section 6.7(a) until a
successor Trustee possessing the qualifications to act as Property
Trustee under Section 6.3 (a "Successor Property Trustee") has been
appointed and has accepted such appointment by written instrument
executed by such Successor Property Trustee and delivered to the
Administrative Trustees and the Sponsor; and

(ii) the Trustee that acts as Delaware Trustee shall not
be removed in accordance with Section 6.7(a) until a successor Trustee
possessing the qualifications to act as Delaware Trustee under
Sections 6.2 and 6.4 (a "Successor Delaware Trustee") has been
appointed and has accepted such appointment by written instrument
executed by such Successor Delaware Trustee and delivered to the
Administrative Trustees and the Sponsor.

(c) A Trustee appointed to office shall hold office until
his successor shall have been appointed or until his death, removal or
resignation. Any Trustee may resign from office (without need for prior or
subsequent accounting) by an instrument in writing signed by the Trustee and
delivered to the Sponsor and the Trust, which resignation shall take effect
upon such delivery or upon such later date as is specified therein; provided,
however, that:

(i) No such resignation of the Trustee that acts as the
Property Trustee shall be effective:

(A) until a Successor Property Trustee has been
appointed and has accepted such appointment by instrument
executed by such Successor Property Trustee and delivered to
the Trust, the Sponsor and the resigning Property Trustee; or

(B) until the assets of the Trust have been
completely liquidated and the proceeds thereof distributed
to the Holders of the Trust Securities; and

(ii) no such resignation of the Trustee that acts as the
Delaware Trustee shall be effective until a Successor Delaware Trustee
has been appointed and has accepted such appointment by instrument
executed by such Successor Delaware Trustee and delivered to the
Trust, the Sponsor and the resigning Delaware Trustee.

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(d) The Holders of the Trust Common Securities shall use
their best efforts to promptly appoint a Successor Delaware Trustee or
Successor Property Trustee, as the case may be, if the Property Trustee or the
Delaware Trustee delivers an instrument of resignation in accordance with this
Section 6.7; provided, however, that if a Trust Enforcement Event shall have
occurred and be continuing a Successor Property Trustee may be appointed only
by the Holders of a Majority in Liquidation Amount of the Trust Preferred
Securities.

(e) If no Successor Property Trustee or Successor
Delaware Trustee shall have been appointed and accepted appointment as provided
in this Section 6.7 within 60 days after delivery to the Sponsor and the Trust
of an instrument of resignation, the resigning Property Trustee or Delaware
Trustee, as applicable, may petition any court of competent jurisdiction for
appointment of a Successor Property Trustee or Successor Delaware Trustee.
Such court may thereupon, after prescribing such notice, if any, as it may deem
proper and prescribe, appoint a Successor Property Trustee or Successor
Delaware Trustee, as the case may be.

(f) No Property Trustee or Delaware Trustee shall be
liable for the acts or omissions to act of any Successor Property Trustee or
Successor Delaware Trustee, as the case may be.

(g) In case of the appointment hereunder of a successor
Trustee, such successor Trustee so appointed shall execute, acknowledge and
deliver to the Trust and to the retiring Trustee an instrument accepting such
appointment, and thereupon the resignation or removal of the retiring Trustee
shall become effective and such successor Trustee, without any further act,
deed or conveyance, shall become vested with all the rights, powers, trusts and
duties of the retiring Trustee; but, on the request of the Sponsor or the
successor Trustee, such retiring Trustee shall, upon payment of its charges,
execute and deliver an instrument transferring to such successor Trustee all
the rights, powers and trusts of the retiring Trustee and if the Property
Trustee is the resigning Trustee shall duly assign, transfer and deliver to the
successor Trustee all property and money held by such retiring Property Trustee
hereunder.

Section 6.8 Vacancies among Trustees.

If a Trustee ceases to hold office for any reason and the number of
Trustees is not reduced pursuant to Section 6.1, or if the number of Trustees
is increased pursuant to Section 6.1, a vacancy shall occur. A resolution
certifying the existence of such vacancy by the Administrative Trustees or, if
there are more than two, a majority of the Administrative Trustees shall be
conclusive evidence of the existence of such vacancy. The vacancy shall be
filled with a Trustee appointed in accordance with Section 6.7.

Section 6.9 Effect of Vacancies.

The death, resignation, retirement, removal, bankruptcy, dissolution,
liquidation, incompetence or incapacity to perform the duties of a Trustee
shall not operate to annul the Trust.

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Whenever a vacancy in the number of Administrative Trustees shall occur, until
such vacancy is filled by the appointment of an Administrative Trustee in
accordance with Section 6.7, the Administrative Trustees in office, regardless
of their number, shall have all the powers granted to the Administrative
Trustees and shall discharge all the duties imposed upon the Administrative
Trustees by this Declaration.

Section 6.10 Meetings.

If there is more than one Administrative Trustee, meetings of the
Administrative Trustees shall be held from time to time upon the call of any
Administrative Trustee. Regular meetings of the Administrative Trustees may be
held at a time and place fixed by resolution of the Administrative Trustees.
Notice of any in-person meetings of the Administrative Trustees shall be hand
delivered or otherwise delivered in writing (including by facsimile, with a
hard copy by overnight courier) not less than 48 hours before such meeting.
Notice of any telephonic meetings of the Administrative Trustees or any
committee thereof shall be hand delivered or otherwise delivered in writing
(including by facsimile, with a hard copy by overnight courier) not less than
24 hours before a meeting. Notices shall contain a brief statement of the
time, place and anticipated purposes of the meeting. The presence (whether in
person or by telephone) of an Administrative Trustee at a meeting shall
constitute a waiver of notice of such meeting except where an Administrative
Trustee attends a meeting for the express purpose of objecting to the
transaction of any activity on the ground that the meeting has not been
lawfully called or convened. Unless provided otherwise in this Declaration,
any action of the Administrative Trustees may be taken at a meeting by vote of
a majority of the Administrative Trustees present (whether in person or by
telephone) and eligible to vote with respect to such matter; provided, that a
Quorum is present, or without a meeting by the unanimous written consent of the
Administrative Trustees. Notwithstanding the foregoing, any and all actions of
the Administrative Trustees may be taken by the unanimous written consent of
all Administrative Trustees.

Section 6.11 Delegation of Power.

(a) Any Administrative Trustee may, by power of attorney
consistent with applicable law, delegate to any other natural person over the
age of 21 his or her power for the purpose of executing any documents
contemplated in Section 3.6, including any registration statement or amendment
thereto filed with the Commission, or making any other governmental filing.

(b) The Administrative Trustees shall have power to
delegate from time to time to such of their number or to officers of the Trust
the doing of such things and the execution of such instruments either in the
name of the Trust or the names of the Administrative Trustees or otherwise as
the Administrative Trustees may deem expedient, to the extent such delegation
is not prohibited by applicable law or contrary to the provisions of the Trust,
as set forth herein.

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Section 6.12 Merger, Conversion, Consolidation or Succession to Business.

Any corporation into which the Property Trustee, the Delaware Trustee
or an Administrative Trustee, as the case may be, may be merged or converted or
with which either may be consolidated, or any corporation resulting from any
merger, conversion or consolidation to which the Property Trustee, the Delaware
Trustee or an Administrative Trustee, as the case may be, shall be a party, or
any corporation succeeding to all or substantially all the corporate trust
business of the Property Trustee, the Delaware Trustee or an Administrative
Trustee, as the case may be, shall be the successor of the Property Trustee,
the Delaware Trustee or Administrative Trustee, as the case may be, hereunder;
provided, that such corporation shall be otherwise qualified and eligible under
this Article, without the execution or filing of any paper or any further act
on the part of any of the parties hereto.

ARTICLE VII

DISTRIBUTIONS; REDEMPTION; EXCHANGE

Section 7.1 Distributions.

(a) The Trust Securities represent undivided beneficial
interests in the Trust property, and Holders of Trust Securities shall be
entitled to receive cumulative cash distributions at the rate per annum of ___%
of the stated Liquidation Amount of $25 per Trust Security, calculated on the
basis of a 360-day year consisting of twelve 30-day months. For any period
shorter than a full 90-day quarter, distributions will be computed on the basis
of the actual number of days elapsed in such 90-day quarter. Distributions
shall be made on the Trust Preferred Securities and the Trust Common Securities
in accordance with Section 7.4. Distributions on the Trust Securities shall,
from the Closing Date, accrue and be cumulative and shall be payable quarterly
only to the extent that the Trust has funds legally available for the payment
of such Distributions in the Property Account. Distributions not paid on the
scheduled payment date will accumulate and compound quarterly at the rate of
__% per annum ("Compounded Distributions"). "Distributions" shall mean ordinary
cumulative distributions in respect of each Quarterly Period together with any
Compounded Distributions. If and to the extent that the Company makes a payment
on the Subordinated Debentures held by the Property Trustee (except for
Additional Sums to the extent such Additional Sums are required to pay any
taxes, duties or governmental charges of whatsoever nature (other than
withholding taxes) imposed on the Trust by the United States or any other taxing
authority) or the Company makes a payment under the Trust Guarantees (the amount
of any such payments being a "Payment Amount"), the Trust shall and the Property
Trustee is directed, to the extent funds are legally available for that purpose,
to make a Pro Rata Distribution of the Payment Amount to the Holders entitled
thereto.

(b) Distributions on the Trust Securities will be payable
quarterly in arrears on each February ___, May ____, August ____ and November
____, commencing February ___, 1999, when, as and if funds are legally
available for payment, by the Property Trustee, except as otherwise

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described below. If Distributions are not paid when scheduled, the accumulated
Distributions shall be paid to the Holders of record of Trust Securities as
they appear on the books and records of the Trust on the record date
established for such accumulated Distributions as determined under Section
7.1(e) below.

(c) The Company has the right under the Subordinated
Indenture to defer payments of interest by extending the interest payment
period from time to time on the Subordinated Debentures for a period not
exceeding 20 consecutive quarters (each an "Extension Period"); provided, that
no Extension Period shall last beyond the date of the maturity of the
Subordinated Debentures and, as a consequence of such deferral, Distributions
will also be deferred. Despite such deferral, quarterly Distributions will
continue to accrue with interest thereon (to the extent permitted by applicable
law) at the rate specified above compounded quarterly during any such Extension
Period. Prior to the termination of any such Extension Period, the Company may
further extend such Extension Period; provided, that such Extension Period
together with all such previous and further extensions thereof may not exceed
20 consecutive quarters or extend beyond the maturity of the Subordinated
Debentures.

(d) Amounts available to the Trust for distribution to
the Holders of the Trust Securities will be limited to payments received by the
Trust from the Company on the Subordinated Debentures or the Trust Guarantees.
If the Property Trustee, as the holder of the Subordinated Debentures for the
benefit of the Holders of the Trust Securities, receives notice of any
determination by the Company not to make payment on such Subordinated
Debentures, the Property Trustee shall give notice of such determination to the
Holders.

(e) Distributions on the Trust Securities will be payable
to the Holders thereof as they appear on the books and records of the Trust on
the relevant record dates, which relevant record dates will be the 15th day of
the month of the relevant payment dates (that is, each February 15, May 15,
August 15 and November 15). Such Distributions will be paid through the
Property Trustee who will hold amounts received in respect of the Subordinated
Debentures and Trust Guarantees in the Property Account for the benefit of the
Holders of the Trust Securities. In the event that any date on which
distributions are payable on the Trust Securities is not a Business Day,
payment of the distribution payable on such date will be made on the next
succeeding day which is a Business Day (without any interest or other payment
in respect of any such delay) except that, if such Business Day is in the next
succeeding calendar year, such payment shall be made on the immediately
preceding Business Day, in each case with the same force and effect as if made
on such date. The record date for Trust Common Securities shall be the same
date as is established as the record date for Trust Preferred Securities.

Section 7.2 Redemption.

(a) (i) Upon the repayment of the Subordinated
Debentures either at maturity or as a result of the acceleration of
the Subordinated Debentures upon the occurrence of a Debenture Event
of Default, the proceeds from such repayment or prepayment shall be

<PAGE> 44
applied by the Property Trustee (subject to the Property Trustee having
received written notice no later than 60 days prior to the related
redemption of the Trust Securities) to redeem Trust Securities having
an aggregate Liquidation Amount equal to the principal amount of the
Subordinated Debentures so repaid, at the Redemption Price.

(ii) Upon an optional redemption (as set forth in the
Subordinated Indenture) of Subordinated Debentures, the proceeds from
such redemption shall be applied to redeem Trust Securities having an
aggregate Liquidation Amount equal to the aggregate unpaid principal
amount of the Subordinated Debentures so redeemed by the Sponsor at
the Redemption Price.

(b) Notice of redemption (which notice will be
irrevocable) shall be given by the Property Trustee by first-class mail,
postage prepaid, mailed not less than 30 nor more than 60 days prior to the
Redemption Date to the Sponsor and each Holder of Trust Securities to be
redeemed, at such Holder's address as it appears in the books and records of
the Trust. All notices of redemption shall state:

(i) the Redemption Date;

(ii) the Redemption Price;

(iii) the applicable CUSIP number;

(iv) if less than all of the outstanding Trust Securities
are to be redeemed, the identification and the aggregate Liquidation
Amount of the particular Trust Securities to be redeemed;

(v) that on the Redemption Date the Redemption Price will
become due and payable upon each such Trust Security to be redeemed
and that Distributions thereon will cease to accrue on and after said
date; and

(vi) the place or places where such Trust Securities are
to be surrendered for payment of the Redemption Price.

(c) The Trust Securities redeemed on each Redemption Date
shall be redeemed at the Redemption Price with the proceeds from the
contemporaneous redemption of Subordinated Debentures. Redemption of the Trust
Securities shall be made and the Redemption Price shall be payable on each
Redemption Date only to the extent that the Trust has funds then on hand and
available in the Property Account for the payment of such Redemption Price.

(d) If the Property Trustee gives a notice of redemption
in respect of any Trust Preferred Securities, then by 12:00 noon, New York City
time, on the Redemption Date, subject to Section 7.2(c) and to the Property
Trustee's having received for deposit to the Property Account

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available funds sufficient for such redemption by 10:00 A.M., New York City
time, on the Redemption Date, the Property Trustee will, so long as and to the
extent the Trust Preferred Securities are in book-entry only form, irrevocably
deposit with the Clearing Agency for the Trust Preferred Securities funds
sufficient to pay the applicable Redemption Price and the Clearing Agency is
hereby authorized to pay the Redemption Price to the Holders of such Trust
Preferred Securities. If the Trust Preferred Securities are no longer in
book-entry only form, the Property Trustee, subject to Section 7.2(c), will
irrevocably deposit with the Paying Agent funds sufficient to pay the applicable
Redemption Price on such Trust Preferred Securities held in certificated form
and will give the Paying Agent irrevocable instructions and authority to pay the
Redemption Price to the Holders thereof upon surrender of their Trust Preferred
Securities Certificates. Notwithstanding the foregoing, Distributions payable on
or prior to the Redemption Date for any Trust Securities called for redemption
shall be payable to the Holders of such Trust Securities as they appear in the
books and records of the Trust Securities on the relevant record dates for the
related Distribution dates. If notice of redemption shall have been given and
funds deposited as required, then, upon the date of such deposit, all rights of
Holders holding Trust Securities so called for redemption will cease, except the
right of such Holders to receive the Redemption Price, without interest, on
such Redemption Date and such Trust Securities will cease to be outstanding. In
the event that any date on which any Redemption Price is payable is not a
Business Day, then payment of the Redemption Price payable on such date will be
made on the next succeeding day which is a Business Day and without interest or
other payment in respect of any such delay, except that, if such Business Day is
in the next succeeding calendar year, such payment shall be made on the
immediately preceding Business Day, in each case, with the same force and effect
as if made on such date. In the event that payment of the Redemption Price in
respect of Trust Securities called for redemption is improperly withheld or
refused and not paid by the Trust or by the Sponsor pursuant to the Trust
Guarantees, Distributions on such Trust Securities will continue to accumulate
at the then applicable rate, from the Redemption Date originally established by
the Trust to the date such Redemption Price is actually paid, in which case the
actual payment date will be the date fixed for redemption for the purpose of
calculating the Redemption Price.

(e) If less than all the outstanding Trust Securities are
to be redeemed on a Redemption Date, then the aggregate Liquidation Amount of
Trust Securities to be redeemed shall be allocated, subject to Section 9.2(b),
on a Pro Rata basis among the Trust Common Securities and the Trust Preferred
Securities that are to be redeemed. The particular Trust Preferred Securities
to be redeemed shall be selected not more than 60 days prior to the Redemption
Date by the Property Trustee from the outstanding Trust Preferred Securities
not previously called for redemption, by lot or by such other method as the
Property Trustee shall deem fair and appropriate and which may provide for the
selection for redemption of portions equal to $25 (or an integral multiple of
$25 in excess thereof) of the Liquidation Amount of the Trust Preferred
Securities. The Property Trustee shall promptly notify the registrar and
transfer agent of the Trust Securities in writing of the Trust Preferred
Securities selected for partial redemption and, in the case of any Trust
Preferred Securities selected for redemption, the Liquidation Amount thereof to
be redeemed; it being understood that, in the case of Trust Preferred
Securities registered in the name of and held of record by the Clearing Agency
or any nominee, the distribution of the proceeds of such redemption will be
made in

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<PAGE> 46

accordance with the procedures of the Clearing Agency or its nominee. For all
purposes of this Declaration, unless the context otherwise requires, all
provisions relating to the redemption of Trust Preferred Securities shall
relate, in the case of any Trust Preferred Securities redeemed or to be
redeemed only in part, to the portion of the Liquidation Amount of Trust
Preferred Securities which has been or is to be redeemed. In the event of any
redemption in part, the Trust shall not be required to (i) issue, or register
the transfer of or exchange of, any Trust Preferred Security during a period
beginning at the opening of business 15 days before any selection for
redemption of Trust Preferred Securities and ending at the close of business on
the earliest date in which the relevant notice of redemption is deemed to have
been given to all holders of Trust Preferred Securities to be so redeemed or
(ii) register the transfer of or exchange of any Trust Preferred Securities so
selected for redemption, in whole or in part, except for the unredeemed portion
of any Trust Preferred Securities being redeemed in part.

Section 7.3 Trust Special Event Exchange.

(a) If a Trust Special Event shall occur and be
continuing, the Administrative Trustees shall direct the Property Trustee to
exchange all outstanding Trust Securities for Subordinated Debentures having an
unpaid principal amount equal to the aggregate Liquidation Amount of the Trust
Securities to be exchanged and to dissolve the Trust; provided, however, that,
in the case of a Trust Tax Event, the Sponsor shall have the right to direct
that less than all, or none, as appropriate, of the Trust Securities be so
exchanged if and for so long as the Sponsor shall have elected to pay any
Additional Sums such that the net amounts received by Holders of Trust
Securities not so exchanged in respect of Distributions are not reduced as a
result of such Trust Tax Event, and shall not have revoked any such election or
failed to make such payments.

(b) Notice of any exchange pursuant to this Section 7.3
(an "Exchange Notice") of the Trust Securities, which Exchange Notice shall be
irrevocable, will be given by the Property Trustee by first-class mail to the
Sponsor and to each record Holder of Trust Securities to be exchanged not less
than 30 nor more than 60 days prior to the date fixed for exchange thereof.
The Sponsor shall notify the Property Trustee of such exchange at least 15 days
prior to the latest date that the Property Trustee must give such notice. For
purposes of the calculation of the date of exchange and the dates on which
notices are given pursuant to this paragraph (b), an Exchange Notice shall be
deemed to be given on the day such notice is first mailed by first-class mail,
postage prepaid, to each Holder. Each Exchange Notice shall be addressed to
each Holder of Trust Securities at the address of such Holder appearing in the
books and records of the Trust. Each Exchange Notice shall state: (A) the
exchange date; (B) the aggregate Liquidation Amount of the Trust Securities to
be exchanged and the aggregate principal amount of the Subordinated Debentures
to be so exchanged therefor; (C) that on the exchange date the Trust Securities
to be so exchanged shall be exchanged for Subordinated Debentures bearing
interest accruing from and including the last date to which Distributions have
been made on the Trust Securities and that Distributions on the Trust
Securities so exchanged will cease to accumulate on and after said date; and
(D) the place or places where the Trust Securities to be exchanged are to be
surrendered in exchange for Subordinated

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<PAGE> 47

Debentures. No defect in the Exchange Notice or in the mailing thereof with
respect to any Trust Security shall affect the validity of the exchange
proceedings for any other Trust Security.

(c) If less than all the outstanding Trust Securities are
to be exchanged, then the aggregate Liquidation Amount of Trust Securities to
be exchanged shall be allocated on a Pro Rata basis among the Trust Common
Securities and the Trust Preferred Securities that are to be exchanged. In the
event that fewer than all the outstanding Trust Preferred Securities are to be
exchanged, then, on the exchange date, (i) if all of the outstanding Trust
Preferred Securities are represented by Definitive Trust Preferred Securities
Certificates, the particular Trust Preferred Securities to be exchanged will be
selected by the Property Trustee from the outstanding Trust Preferred
Securities not previously called for redemption or exchange on a Pro Rata
basis, (ii) if all of the outstanding Trust Preferred Securities are
represented by Book-Entry Interests, the Property Trustee shall provide for the
selection for exchange of a portion of the Global Certificate representing the
Book-Entry Interests on a Pro Rata basis and (iii) if outstanding Trust
Securities are represented by both Definitive Trust Preferred Securities
Certificate and Book-Entry Interests, the Property Trustee shall select the
portion of the Global Certificate representing the Book-Entry Interests and the
particular outstanding Trust Preferred Securities represented by Definitive
Preferred Securities Certificates to be exchanged on a Pro Rata basis. In the
case of clause (ii) or (iii) above, the particular Book-Entry Interests to be
exchanged shall be selected in accordance with the applicable rules and
procedures for the Clearing Agency in whose name, or whose nominee's name, such
Global Certificate is then held. Any Trust Preferred Securities Certificate
that is to be exchanged only in part shall be surrendered with due endorsement
or by a written instrument of transfer fully executed by the Holder thereof (or
its attorney duly authorized in writing) and the Trust shall prepare and
deliver to such Holder, without service charge, a new Trust Preferred
Securities Certificate or Certificates in aggregate stated Liquidation Amount
equal to, and in exchange for, the unredeemed portion of the Trust Preferred
Securities Certificate so surrendered. The Trust Common Securities shall be
exchanged in a manner similar to that described for Trust Preferred Securities
represented by Definitive Trust Preferred Securities Certificates.

(d) In the event of an exchange pursuant to this Section
7.3, on the date fixed for any such exchange (i) if the Trust Preferred
Securities are represented by Book-Entry Interests, the Clearing Agency or its
nominee, as the record Holder of the Trust Preferred Securities, will exchange
the Global Certificate representing the Trust Preferred Securities to be
exchanged for a registered Global Certificate or certificates representing the
Subordinated Debentures to be delivered upon such exchange, (ii) if the Trust
Preferred Securities are represented by Definitive Trust Preferred Securities
Certificates, the certificates representing the Trust Preferred Securities to
be so exchanged will be deemed to represent Subordinated Debentures having a
principal amount equal to the aggregate stated Liquidation Amount of such
Subordinated Preferred Securities until such certificates are presented to the
Property Trustee for exchange for definitive certificates representing
Subordinated Debentures and (iii) all rights of the Holders of the Trust
Preferred Securities so exchanged will cease, except for the right of such
Holders to receive Subordinated Debentures. The Trust Common Securities shall
be exchanged in a manner similar to that described for Trust Preferred
Securities represented by Definitive Trust Preferred Securities Certificates.

<PAGE> 48

(e) Each Holder, by becoming a party to this Declaration
pursuant to Section 15.4 of this Declaration, will be deemed to have agreed to
be bound by these exchange provisions in regard to the exchange of Trust
Securities for Subordinated Debentures pursuant to the terms described above.

(f) Nothing in this Section 7.3 shall limit the
requirement of the Trust to withhold taxes pursuant to the terms of the Trust
Securities or as set forth in this Declaration or otherwise require the
Property Trustee or the Trust to pay any amounts on account of such
withholdings.

Section 7.4 Payment Procedures.

Payments in respect of the Trust Preferred Securities shall be made by
check mailed to the address of the Person entitled thereto as such address
shall appear on the books and records of the Trust or, if the Trust Preferred
Securities are held by a Clearing Agency, such Distributions shall be made to
the Clearing Agency in immediately available funds, in accordance with the
applicable depository agreement on the applicable Distribution dates or
Redemption Dates. Payments, if any, in respect of the Trust Common Securities
shall be made in such manner as shall be mutually agreed between the Property
Trustee and the Holder of the Trust Common Securities.

Section 7.5 Tax Reporting, Etc.

The Administrative Trustees shall prepare (or cause to be prepared),
at the Sponsor's expense, and file all United States federal, state and local
tax and information returns and reports required to be filed by or in respect
of the Trust. In this regard, the Administrative Trustees shall (a) prepare
and file (or cause to be prepared or filed) Form 1041 or the appropriate
Internal Revenue Service form required to be filed in respect of the Trust in
each taxable year of the Trust and (b) prepare and furnish (or cause to be
prepared and furnished) to each Holder a Form 1099 or the appropriate Internal
Revenue Service form required to be furnished to such Holder or the information
required to be provided on such form. The Administrative Trustees shall
provide the Sponsor and the Property Trustee with a copy of all such returns,
reports and schedules promptly after such filing or furnishing. The Trustees
shall comply with United States federal withholding and backup withholding tax
laws and information reporting requirements with respect to any payments to
Holders under the Trust Securities.

Section 7.6 Payment of Additional Sums by the Property Trustee.

Upon receipt under the Subordinated Debentures of Additional Sums the
Property Trustee, upon receipt of written notice from the Sponsor or the
Administrative Trustees, shall promptly pay from such Additional Sums any
taxes, duties or governmental charges of whatsoever nature (other than
withholding taxes) imposed on the Trust by the United States or any other
taxing authority.

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Section 7.7 Payments under Indenture.

Any amount payable hereunder to any Holder of Trust Preferred
Securities (and any Trust Preferred Security Beneficial Owner with respect
thereto) shall be reduced by the amount of any corresponding payment such
Holder (or Owner) has directly received pursuant to the Subordinated Indenture
in accordance with the terms of Section 8.2(c) hereof.

ARTICLE VIII

ISSUANCE OF TRUST SECURITIES

Section 8.1 Designation and General Provisions Regarding Trust Securities.

(a) The Administrative Trustees shall on behalf of the
Trust issue one class of preferred securities representing undivided preferred
beneficial ownership interests in the assets of the Trust and one class of
common securities representing undivided subordinated beneficial ownership
interests in the assets of the Trust as follows:

(i) Trust Preferred Securities. __________ ___% Trust
Preferred Securities of the Trust (including __________ ___% Trust
Preferred Securities subject to issuance upon exercise of the
Over-Allotment Option) with an aggregate Liquidation Amount with
respect to the assets of the Trust of __________________________
Dollars ($_____________), (__________________________ Dollars
($_____________) if the Over-Allotment Option is exercised in full)
and a Liquidation Amount with respect to the assets of the Trust of
$25 per trust preferred security, are hereby designated for the
purpose of identification only as ___% Trust Preferred Securities (the
"Trust Preferred Securities"). The Trust Preferred Security
Certificates evidencing the Trust Preferred Securities shall be
substantially in the form of Exhibit A-1 to the Declaration, with such
changes and additions thereto or deletions therefrom as may be
required by ordinary usage, custom or practice or to conform to the
rules of any stock exchange on which the Trust Preferred Securities
are listed.

(ii) Trust Common Securities. ____________ ___% Trust
Common Securities of the Trust (including ____________ ___% Trust
Common Securities subject to issuance if the Over-Allotment Option is
exercised in full) with an aggregate Liquidation Amount with respect
to the assets of the Trust of _________________________ Dollars
($_____________) (_________________________ Dollars ($_____________)
if the Over-Allotment Option is exercised in full) and a Liquidation
Amount with respect to the assets of the Trust of $25 per trust common
security, are hereby designated for the purposes of identification
only as ___% Trust Common Securities (the "Trust Common Securities").
The Trust Common Security Certificates evidencing the Trust Common
Securities shall be substantially in the form of Exhibit A-2 to the
Declaration, with such changes and additions thereto or deletions
therefrom as may be required by ordinary usage, custom or practice.

(iii) All Trust Securities issued by the Trust shall be
deemed to have been issued on the Closing Date.

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<PAGE> 50

(b) Except as provided in Section 9.2(b) of this
Declaration, the Trust Preferred Securities rank pari passu, and payment
thereon shall be made Pro Rata, with the Trust Common Securities. The Trust
shall issue no securities or other interests in the assets of the Trust other
than the Trust Preferred Securities and the Trust Common Securities.

(c) Any Administrative Trustee shall sign the Trust
Securities for the Trust by manual or facsimile signature. In case any
Administrative Trustee of the Trust who shall have signed any of the Trust
Securities shall cease to be an Administrative Trustee before the Certificates
so signed shall be delivered by the Trust, such Certificates nevertheless may
be delivered as though the person who signed such Certificates had not ceased
to be such Administrative Trustee; and any Certificate may be signed on behalf
of the Trust by such persons who, at the actual date of execution of such Trust
Security, shall be the Administrative Trustees of the Trust, although at the
date of the execution and delivery of the Declaration any such person was not
such an Administrative Trustee. Certificates shall be printed, lithographed or
engraved or may be produced in any other manner as is reasonably acceptable to
the Administrative Trustees, as evidenced by their execution thereof, and may
have such letters, numbers or other marks of identification or designation and
such legends or endorsements as the Administrative Trustees may deem
appropriate, or as may be required to comply with any law or with any rule or
regulation of any stock exchange on which Trust Securities may be listed, or to
conform to usage.

A Trust Security shall not be valid until authenticated by the manual
signature of an authorized officer of the Property Trustee. Such signature
shall conclusively evidence that the Trust Security has been authenticated
under this Declaration.

Trust Securities shall be dated the date of their authentication.

Upon a written order of the Trust signed by one Administrative
Trustee, the Property Trustee shall authenticate the Trust Securities for
original issue. The aggregate Liquidation Amount of Trust Securities
outstanding at any time shall not exceed the Liquidation Amount set forth in
Section 8.1(a).

The Property Trustee may appoint an authenticating agent acceptable to
the Trust to authenticate Trust Securities. An authenticating agent may
authenticate Trust Securities whenever the Property Trustee may do so. Each
reference in this Declaration to authentication by the Property Trustee
includes authentication by such agent. An authenticating agent has the same
rights as the Property Trustee to deal with the Sponsor or an Affiliate of the
Sponsor.

(d) The consideration received by the Trust for the
issuance of the Trust Securities shall constitute a contribution to the capital
of the Trust and shall not constitute a loan to the Trust.

(e) Upon issuance of the Trust Securities as provided in
this Declaration, the Trust Securities so issued shall be deemed to be validly
issued, fully paid and non-assessable.

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<PAGE> 51

(f) Every Person, by virtue of having become a Holder or
a Trust Preferred Security Beneficial Owner in accordance with the terms of
this Declaration, shall be deemed to have expressly assented and agreed to the
terms of, and shall be bound by, this Declaration.

Section 8.2 Voting Rights of Trust Preferred Securities.

(a) Except as provided under Sections 3.15(c), 6.7(a),
and 9.1(a)(iii), this Article VIII and Article XIII and as otherwise required
by the Business Trust Act, the Trust Indenture Act and other applicable law,
the Holders of the Trust Preferred Securities will have no voting rights.

(b) Subject to the requirement to provide the Property
Trustee an Opinion of Counsel in certain circumstances set forth in Section
8.2(d) below, the Holders of a Majority in Liquidation Amount of the Trust
Preferred Securities have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Property Trustee, or
direct the exercise of any trust or power conferred upon the Property Trustee
under the Declaration, including the right to direct the Property Trustee, as
Holder of the Subordinated Debentures, to (i) exercise the remedies available to
it under the Subordinated Indenture as a Holder of the Subordinated Debentures
or (ii) consent to any amendment, modification, or termination of the
Subordinated Indenture or the Subordinated Debentures where such consent shall
be required; provided, however, that where a consent or action under the
Subordinated Indenture would require the consent or act of the Holders of more
than a majority of the outstanding principal amount of the Subordinated
Debentures affected thereby, only the Holders of the percentage of the aggregate
stated Liquidation Amount of the Trust Preferred Securities which is at least
equal to such required percentage of the principal amount of Subordinated
Debentures may direct the Property Trustee to give such consent or take such
action; provided further, however, that (subject to the provisions of Section
3.9) the Property Trustee shall have the right to decline to follow any such
direction if the Property Trustee, being advised by counsel, determines that the
action or proceeding so directed may not lawfully be taken or if the Property
Trustee, in good faith, by its board of directors or trustees, executive
committee, or a trust committee of directors or trustees, and/or Responsible
Officers, shall determine that the action or proceeding so directed would
involve the Property Trustee in personal liability.

(c) If the Property Trustee fails to enforce its rights
under the Subordinated Indenture after a Holder of Trust Preferred Securities
has made a written request, such Holder of Trust Preferred Securities may
institute a legal proceeding directly against the Company, to enforce the
Property Trustee's rights under the Subordinated Indenture without first
instituting any legal proceeding against the Property Trustee or any other
person or entity. Notwithstanding the foregoing, if a Trust Enforcement Event
has occurred and is continuing and such event is attributable to the failure of
the Company to make any required payment when due on the Subordinated
Debentures, then a Holder of Trust Preferred Securities may directly institute
a proceeding against the Company for enforcement of such payment.

(d) The Property Trustee shall notify all Holders of the
Trust Preferred Securities of any notice of any Trust Enforcement Event
received from the Company with respect to the

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<PAGE> 52

Subordinated Debentures. Except with respect to directing the time, method,
and place of conducting a proceeding for a remedy, the Property Trustee shall
be under no obligation to take any of the actions described in Sections
8.2(b)(i) and (ii) above unless the Property Trustee has received an Opinion of
Counsel (which counsel shall be independent tax counsel) to the effect that as
a result of such action, the Trust will not be taxable as a corporation for
United States federal income tax purposes and that after such action each
Holder will continue to be treated as owning an undivided beneficial ownership
interest in the Subordinated Debentures.

(e) In the event the consent of the Property Trustee, as
the Holder of the Subordinated Debentures, is required under the Subordinated
Indenture with respect to any amendment, modification or termination of the
Subordinated Indenture or the Subordinated Debentures, the Property Trustee
shall request the direction of the Holders of the Trust Securities with respect
to such amendment, modification or termination and shall vote with respect to
such amendment, modification or termination as directed by a Majority in
Liquidation Amount of the Trust Securities voting together as a single class;
provided, however, that where a consent under the Subordinated Indenture would
require the consent of a Super Majority of the Holders of Subordinated
Debentures the Property Trustee may only give such consent at the direction of
the Holders of at least the proportion in Liquidation Amount of the Trust
Securities which the relevant Super Majority represents of the aggregate
principal amount of the Subordinated Debentures outstanding; provided, further,
that the Property Trustee shall not take any action in accordance with the
directions of the Holders of the Trust Securities under this Section 13.1(c)
unless the Property Trustee has received an Opinion of Counsel (which counsel
shall be independent tax counsel) to the effect that for United States federal
income tax purposes the Trust will continue to be classified as a grantor trust
after consummation of such action and each Holder will be treated as owning an
undivided beneficial ownership interest in the Subordinated Debentures.

(f) Any required approval or direction of Holders of
Trust Preferred Securities may be given at a separate meeting of Holders of
Trust Preferred Securities convened for such purpose, at a meeting of all the
Holders of Trust Securities or pursuant to written consent. In accordance with
Section 13.2, the Administrative Trustees will cause a notice of any meeting at
which Holders of Trust Preferred Securities are entitled to vote, or of any
matter upon which action by written consent of such Holders is to be taken, to
be mailed to each Holder of Trust Preferred Securities. Each such notice will
include a statement setting forth the following information: (i) the date of
such meeting or the date by which such action is to be taken; (ii) a
description of any resolution proposed for adoption at such meeting on which
such Holders are entitled to vote or of such matter upon which written consent
is sought; and (iii) instructions for the delivery of proxies or consents.

(g) No vote or consent of the Holders of Trust Preferred
Securities will be required for the Trust to redeem and cancel Trust Preferred
Securities or distribute Subordinated Debentures in accordance with the
Declaration.

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<PAGE> 53

(h) Notwithstanding that Holders of Trust Preferred
Securities are entitled to vote or consent under any of the circumstances
described above, any of the Trust Preferred Securities that are beneficially
owned at such time by the Company or any entity directly or indirectly
controlled by, or under direct or indirect common control with, the Company,
shall not be entitled to vote or consent and shall, for purposes of such vote
or consent, be treated as if such Trust Preferred Securities were not
outstanding, except for Trust Preferred Securities purchased or acquired by the
Company or its Affiliates in connection with transactions effected by or for
the account of customers of the Company or any of its subsidiaries or in
connection with the distribution or trading of such Trust Preferred Securities;
provided, however, that persons (other than Affiliates of the Company) to whom
the Company or any of its subsidiaries have pledged Trust Preferred Securities
may vote or consent with respect to such pledged Trust Preferred Securities
pursuant to the terms of such pledge.

(i) Holders of the Trust Preferred Securities will have
no rights to appoint or remove the Administrative Trustees or the Delaware
Trustee, who may be appointed, removed or replaced solely by the Company, as
the Holder of all the Trust Common Securities.

Section 8.3 Voting Rights of Trust Common Securities.

(a) Except as provided under this Section 8.3 or as
otherwise required by the Business Trust Act, the Trust Indenture Act or other
applicable law or provided by the Declaration, the Holders of the Trust Common
Securities will have no voting rights.

(b) The Holders of the Trust Common Securities are
entitled, in accordance with Article VI of this Declaration, to vote to
appoint, remove or replace any Trustee or to increase or decrease the number of
Trustees.

(c) Subject to Section 2.6 of the Declaration and only
after all Trust Enforcement Events with respect to the Trust Preferred
Securities have been cured, waived, or otherwise eliminated and subject to the
requirement to provide the Property Trustee an Opinion of Counsel in certain
circumstances set forth in this paragraph (c), the Holders of a Majority in
Liquidation Amount of the Trust Common Securities have the right to direct the
time, method and place of conducting any proceeding for any remedy available to
the Property Trustee, or direct the exercise of any trust or power conferred
upon the Property Trustee under the Declaration, including the right to direct
the Property Trustee, as Holder of the Subordinated Debentures, to exercise the
remedies available to it under the Subordinated Indenture as a Holder of the
Subordinated Debentures; provided, however, that (subject to the provisions of
Section 3.9) the Property Trustee shall have the right to decline to follow any
such direction if the Property Trustee, being advised by counsel, determines
that the action or proceeding so directed may not lawfully be taken or if the
Property Trustee, in good faith, by its board of directors or trustees,
executive committee, or a trust committee of directors or trustees, and/or
Responsible Officers, shall determine that the action or proceeding so directed
would involve the Property Trustee in personal liability. Except with respect
to directing the time, method and place of conducting a proceeding for a remedy,
the Property Trustee shall be

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under no obligation to take any of the actions described above in this Section
8.3(c) unless the Property Trustee has received an Opinion of Counsel (which
counsel shall be independent tax counsel) to the effect that, as a result of
such action, for United States federal income tax purposes the Trust will not
be taxable as a corporation for United States federal income tax purposes and
each Holder will be treated as owning an undivided beneficial ownership
interest in the Subordinated Debentures and Trust Guarantees.

(d) If the Property Trustee fails to enforce its rights
under the Subordinated Debentures after a Holder of Trust Common Securities has
made a written request, such Holder of Trust Common Securities may institute a
legal proceeding directly against the Company to enforce the Property Trustee's
rights under the Subordinated Debentures without first instituting any legal
proceeding against the Property Trustee or any other person or entity.

(e) Any required approval or direction of Holders of
Trust Common Securities may be given at a separate meeting of Holders of Trust
Common Securities convened for such purpose, at a meeting of all the Holders of
Trust Securities or pursuant to written consent. In accordance with Section
13.2, the Administrative Trustees will cause a notice of any meeting at which
Holders of Trust Common Securities are entitled to vote, or of any matter upon
which action by written consent of such Holders is to be taken, to be mailed to
each Holder of record of Trust Common Securities. Each such notice will
include a statement setting forth the following information: (i) the date of
such meeting or the date by which such action is to be taken; (ii) a
description of any resolution proposed for adoption at such meeting on which
such Holders are entitled to vote or of such matter upon which written consent
is sought; and (iii) instructions for the delivery of proxies or consents.

(f) No vote or consent of the Holders of the Trust Common
Securities shall be required for the Trust to redeem and cancel Trust Common
Securities or to distribute Subordinated Debentures in accordance with the
Declaration and the terms of the Trust Securities.

Section 8.4 Paying Agent.

In the event that the Trust Preferred Securities are not in book-entry
only form, the Trust shall maintain in the Borough of Manhattan, City of New
York, State of New York, an office or agency where the Trust Preferred
Securities may be presented for payment ("Paying Agent"). The Trust may
appoint the Paying Agent and may appoint one or more additional paying agents
in such other locations as it shall determine. The term "Paying Agent"
includes any additional paying agent. The Trust may change any Paying Agent
without prior notice to any Holder. The Trust shall notify the Property
Trustee of the name and address of any Paying Agent not a party to this
Declaration. If the Trust fails to appoint or maintain another entity as
Paying Agent, the Property Trustee shall act as such. The Trust or any of its
Affiliates may act as Paying Agent. The First National Bank of Chicago shall
initially act as Paying Agent for the Trust Preferred Securities and the Trust
Common Securities.

<PAGE> 55
Section 8.5 Listing.

The Sponsor shall use its reasonable commercial efforts to cause the
Trust Preferred Securities to be listed for trading on AMEX.

Section 8.6 Acceptance of Trust Guarantees.

Each Holder of Trust Preferred Securities and Trust Common Securities,
by the acceptance thereof, agrees to the provisions of the applicable Trust
Guarantees, including the subordination provisions therein.

ARTICLE IX

TERMINATION AND LIQUIDATION OF THE TRUST

Section 9.1 Termination of Trust.

(a) The Trust shall terminate:

(i) upon the bankruptcy of the Holder of Trust Common
Securities or the Sponsor;

(ii) receipt by the Property Trustee of written direction
from the Sponsor to dissolve the Trust (which direction may be given in
the sole discretion of the Sponsor);

(iii) upon the filing of a certificate of dissolution or
its equivalent with respect to the Sponsor, the filing of a
certificate of cancellation with respect to the Trust after having
obtained the consent of at least a Majority in Liquidation Amount of
the Trust Securities, voting together as a single class, to file such
certificate of cancellation, or the revocation of the Sponsor's
charter and the expiration of 90 days after the date of revocation
without a reinstatement thereof;

(iv) upon the entry of a decree of judicial dissolution of
the Sponsor or the Trust;

(v) when all of the Trust Securities shall have been
called for redemption and the amounts necessary for redemption thereof
shall have been paid to the Holders in accordance with the terms of
the Trust Securities;

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(vi) following the occurrence and continuation of a Trust
Special Event pursuant to which Subordinated Debentures shall have been
distributed to the Holders of Trust Securities in exchange for all
outstanding Trust Securities; or

(vii) before the issuance of any Trust Securities, with the
consent of all of the Administrative Trustees and the Sponsor.

(b) As soon as is practicable after the occurrence of an
event referred to in Section 9.1(a), the Trustees shall file a certificate of
cancellation with the Secretary of State of the State of Delaware.

Section 9.2 Liquidation Distribution Upon Termination and Dissolution of
the Trust.

(a) In the event of any voluntary or involuntary
liquidation, dissolution, winding-up or termination of the Trust (each a "Trust
Liquidation"), the Holders of the Trust Preferred Securities on the date of the
Trust Liquidation will be entitled to receive, out of the assets of the Trust
legally available for distribution to Holders of Trust Securities after
satisfaction of the Trust's liabilities and creditors, distributions in cash or
other immediately available funds in an amount equal to the aggregate of the
stated Liquidation Amount of $25 per Trust Security plus accumulated and unpaid
Distributions thereon to the date of payment (such amount being the "Trust
Liquidation Distribution"), unless, in connection with such Trust Liquidation,
Subordinated Debentures shall be distributed (as provided in Section 9.1(a)) on
a Pro Rata basis to the Holders of the Trust Securities in exchange for such
Trust Securities.

(b) If, upon any such Trust Liquidation, the Trust
Liquidation Distribution can be paid only in part because the Trust has
insufficient assets available to pay in full the aggregate Trust Liquidation
Distribution, then the amounts payable directly by the Trust on the Trust
Securities shall be paid on a Pro Rata basis. The Holders of the Trust Common
Securities will be entitled to receive distributions upon any such Trust
Liquidation Pro Rata with the Holders of the Trust Preferred Securities;
provided, however, that if on any Distribution date or Redemption Date a
Debenture Event of Default or an event of default under the Trust Preferred
Securities Guarantee shall have occurred and be continuing, no payment of any
Distribution on, or the Redemption Price of, any Trust Common Security, and no
other payment on account of the redemption, liquidation or other acquisition of
Trust Common Securities, shall be made unless payment in full in cash of all

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all accumulated and unpaid Distributions on all outstanding Trust Preferred
Securities for all Distribution periods terminating on or prior thereto, or in
the case of payment of the Redemption Price the full amount of such Redemption
Price on all outstanding Trust Preferred Securities, shall have been made or
provided for, and all funds immediately available to the Property Trustee shall
first be applied to the payment in full in cash of all Distributions on, or the
Redemption Price of, Trust Preferred Securities then due and payable.

ARTICLE X

TRANSFER OF INTERESTS

Section 10.1 Transfer and Exchange of Trust Securities.

(a) Trust Securities may only be transferred, in whole or
in part, in accordance with the terms and conditions set forth in this
Declaration and in the terms of the Trust Securities. Any transfer or
purported transfer of any Trust Security not made in accordance with this
Declaration shall be null and void.

(b) Subject to this Article X, Trust Preferred Securities
shall be freely transferable.

(c) At the option of the Holder, Trust Securities of any
class (except a Global Security) may be exchanged for other Trust Securities of
the same class, and of a like aggregate Liquidation Amount and tenor, upon
surrender of the Trust Securities to be exchanged at the office of the
registrar. Whenever any Trust Securities are so surrendered for exchange, the
Administrative Trustees shall execute, and the Property Trustee shall
authenticate and deliver, the Trust Securities which the Holder making the
exchange is entitled to receive.

Section 10.2 Transfer of Certificates.

The Administrative Trustees shall provide for the registration of
Certificates and of transfers of Certificates, which will be effected without
charge but only upon payment (with such indemnity as the Administrative
Trustees may require) in respect of any tax or other government charges that
may be imposed in relation to it. Upon surrender for registration of transfer
of any Certificate, the Administrative Trustees shall cause one or more new
Certificates to be issued in the name of the designated transferee or
transferees. Every Certificate surrendered for registration of transfer shall
be accompanied by a written instrument of transfer in form satisfactory to the
Administrative Trustees and the Property Trustee duly executed by the Holder or
such Holder's attorney duly authorized in writing. Each Certificate
surrendered for registration of transfer shall be canceled by the Property
Trustee. A transferee of a Certificate shall be entitled to the rights and
subject to the obligations of a Holder hereunder upon the receipt by such
transferee of a Certificate. By acceptance of a Certificate, each transferee
shall be deemed to have agreed to be bound by this Declaration.

<PAGE> 58

Section 10.3 Deemed Security Holders.

The Trustees may treat the Person in whose name any Certificate shall
be registered on the books and records of the Trust as the sole Holder of such
Certificate and of the Trust Securities represented by such Certificate for
purposes of receiving Distributions and for all other purposes whatsoever and,
accordingly, shall not be bound to recognize any equitable or other claim to or
interest in such Certificate or in the Trust Securities represented by such
Certificate on the part of any Person, whether or not the Trust shall have
actual or other notice thereof.

Section 10.4 Book Entry Interests.

The Trust Preferred Securities Certificates, on original issuance,
will be issued in the form of one or more fully registered, global Trust
Preferred Security Certificates (each a "Global Certificate"), to be delivered
to DTC, the initial Clearing Agency, by, or on behalf of, the Trust. Such
Global Certificates shall initially be registered on the books and records of
the Trust in the name of Cede & Co., the nominee of DTC, and no Trust Preferred
Security Beneficial Owner will receive a definitive Trust Preferred Security
Certificate representing such Trust Preferred Security Beneficial Owner's
interests in such Global Certificates, except as provided in Section 10.7.
Unless and until definitive, fully registered Trust Preferred Security
Certificates (the "Definitive Trust Preferred Security Certificates") have been
issued to the Trust Preferred Security Beneficial Owners pursuant to Section
10.7:

(a) the provisions of this Section 10.4 shall be in full
force and effect;

(b) the Trust and the Trustees shall be entitled to deal
with the Clearing Agency for all purposes of this Declaration (including the
payment of Distributions on the Global Certificates and receiving approvals,
votes or consents hereunder) as the Holder of the Trust Preferred Securities
and the sole Holder of the Global Certificates and shall have no obligation to
the Trust Preferred Security Beneficial Owners;

(c) to the extent that the provisions of this Section
10.4 conflict with any other provisions of this Declaration, the provisions of
this Section 10.4 shall control; and

(d) the rights of the Trust Preferred Security Beneficial
Owners shall be exercised only through the Clearing Agency and shall be limited
to those established by law and agreements between such Trust Preferred
Security Beneficial Owners and the Clearing Agency and/or the Clearing Agency
Participants and the Clearing Agency shall receive and transmit payments of
Distributions on the Global Certificates to such Clearing Agency Participants.
The Clearing Agency will make book entry transfers among the Clearing Agency
Participants; provided, that solely for the purposes of determining whether the
Holders of the requisite amount of Trust Preferred Securities have voted on any
matter provided for in this Declaration, so long as Definitive Trust Preferred
Security Certificates have not been issued, the Trustees may conclusively rely
on, and shall be fully protected in relying on, any written instrument
(including a proxy) delivered to the Trustees by the

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Clearing Agency setting forth the Trust Preferred Security Beneficial Owners'
votes or assigning the right to vote on any matter to any other Persons either
in whole or in part.

Section 10.5 Notices to Clearing Agency.

Whenever a notice or other communication to the Trust Preferred
Security Holders is required under this Declaration, unless and until
Definitive Trust Preferred Security Certificates shall have been issued to the
Trust Preferred Security Beneficial Owners pursuant to Section 10.7, the
Trustee or Trustees required or authorized to give any such notice or
communication shall give all such notices and communications specified herein
to be given to the Trust Preferred Security Holders to the Clearing Agency, and
shall have no notice obligations to the Trust Preferred Security Beneficial
Owners.

Section 10.6 Appointment of Successor Clearing Agency.

If any Clearing Agency elects to discontinue, or becomes ineligible to
continue, its services as securities depository with respect to the Trust
Preferred Securities, the Administrative Trustees may, in their sole
discretion, appoint a successor Clearing Agency with respect to such Trust
Preferred Securities.

Section 10.7 Definitive Trust Preferred Security Certificates.

If:

(a) a Clearing Agency elects to discontinue, or becomes
ineligible to continue, its services as securities depository with respect to
the Trust Preferred Securities and a successor Clearing Agency is not appointed
within 90 days after such discontinuance or ineligibility pursuant to Section
10.6;

(b) the Administrative Trustees elect after consultation
with the Sponsor to terminate the book-entry system through the Clearing Agency
with respect to the Trust Preferred Securities; or

then:

(y) Definitive Trust Preferred Security Certificates
shall be prepared by the Administrative Trustees on behalf of the Trust with
respect to such Trust Preferred Securities; and

(z) upon surrender of the Global Certificates by the
Clearing Agency, accompanied by registration instructions, the Administrative
Trustees shall cause Definitive Trust Preferred Security Certificates to be
delivered to Trust Preferred Security Beneficial Owners in

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accordance with the instructions of the Clearing Agency. Neither the Trustees
nor the Trust shall be liable for any delay in delivery of such instructions
and each of them may conclusively rely on and shall be fully protected in
relying on, said instructions of the Clearing Agency. The Definitive Trust
Preferred Security Certificates shall be printed, lithographed or engraved or
may be produced in any other manner as is reasonably acceptable to the
Administrative Trustees, as evidenced by their execution thereof, and may have
such letters, numbers or other marks of identification or designation and such
legends or endorsements as the Administrative Trustees may deem appropriate, or
as may be required to comply with any law or with any rule or regulation made
pursuant thereto or with any rule or regulation of any stock exchange on which
Trust Preferred Securities may be listed, or to conform to usage.

Section 10.8 Mutilated, Destroyed, Lost or Stolen Certificates.

If:

(a) any mutilated Certificate should be surrendered to
the Property Trustee, or if the Property Trustee shall receive evidence to its
satisfaction of the destruction, loss or theft of any Certificate; and

(b) there shall be delivered to the Administrative
Trustees and the Property Trustee such security or indemnity as may be required
by them to keep each of them harmless,

then, in the absence of notice that such Certificate shall have been acquired
by a bona fide purchaser, any Administrative Trustee on behalf of the Trust
shall execute and the Property Trustee shall authenticate and deliver, in
exchange for or in lieu of any such mutilated, destroyed, lost or stolen
Certificate, a new Certificate of like denomination. In connection with the
issuance of any new Certificate under this Section 10.8, the Administrative
Trustees or the Property Trustee may require the payment of a sum sufficient to
cover any tax or other governmental charge that may be imposed in connection
therewith. Any duplicate Certificate issued pursuant to this Section shall
constitute conclusive evidence of an ownership interest in the relevant Trust
Securities, as if originally issued, whether or not the lost, stolen or
destroyed Certificate shall be found at any time.

Section 10.9 Cancellation.

All Trust Securities surrendered for payment, redemption, transfer or
exchange shall, if surrendered to any Person other than the Property Trustee,
be delivered to the Property Trustee and shall be promptly canceled by it. A
Holder may at any time deliver to the Property Trustee for cancellation any
Trust Securities previously authenticated and delivered hereunder, which the
Holder may have acquired in any manner whatsoever, and all Trust Securities so
delivered shall be promptly canceled by the Property Trustee. No Trust
Securities shall be authenticated in lieu of or in exchange for any Trust
Securities canceled as provided in this Section, except as expressly permitted
by this Declaration. All canceled Trust Securities held by the Property
Trustee shall be disposed of in

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accordance with its customary procedures, and upon written request, the Property
Trustee shall thereafter deliver to the Administrative Trustees a certificate
with respect to such disposition.

Section 10.10 Appointment of Registrar and Transfer Agent.

The Administrative Trustees hereby appoint the Property Trustee, The
First National Bank of Chicago, as registrar and transfer agent with respect to
the Trust Securities.

ARTICLE XI

LIMITATION OF LIABILITY OF
HOLDERS OF TRUST SECURITIES,
TRUSTEES OR OTHERS

Section 11.1 Liability.

(a) Except as expressly set forth in this Declaration,
the Trust Guarantees and the terms of the Trust Securities, the Sponsor and the
Trustees shall not be:

(i) personally liable for the return of any portion of
the capital contributions (or any return thereon) of the Holders of
the Trust Securities, which shall be made solely from assets of the
Trust; or

(ii) required to pay to the Trust or to any Holder of
Trust Securities any deficit upon dissolution of the Trust or
otherwise.

(b) Pursuant to Section 3803(a) of the Business Trust
Act, the Holders of the Trust Securities shall be entitled to the same
limitation of personal liability extended to shareholders of private
corporations for profit organized under the DGCL.

Section 11.2 Exculpation.

(a) No Company Indemnified Person shall be liable,
responsible or accountable in damages or otherwise to the Trust or any Covered
Person for any loss, damage or claim incurred by reason of any act or omission
performed or omitted by such Company Indemnified Person in good faith on behalf
of the Trust and in a manner such Company Indemnified Person reasonably
believed to be within the scope of the authority conferred on such Company
Indemnified Person by this Declaration or by law, except that a Company
Indemnified Person shall be liable for any such loss, damage or claim incurred
by reason of such Company Indemnified Person's gross negligence or willful
misconduct with respect to such acts or omissions.

(b) An Indemnified Person shall be fully protected in
relying in good faith upon the records of the Trust and upon such information,
opinions, reports or statements presented to the

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Trust by any Person as to matters the Indemnified Person reasonably believes
are within such other Person's professional or expert competence and, if
selected by such Indemnified Person, that has been selected by such Indemnified
Person with reasonable care by or on behalf of the Trust, including
information, opinions, reports or statements as to the value and amount of the
assets, liabilities, profits, losses, or any other facts pertinent to the
existence and amount of assets from which Distributions to Holders of Trust
Securities might properly be paid.

Section 11.3 Fiduciary Duty.

(a) To the extent that, at law or in equity, an
Indemnified Person has duties (including fiduciary duties) and liabilities
relating thereto to the Trust or to any other Covered Person, an Indemnified
Person acting under this Declaration shall not be liable to the Trust or to any
other Covered Person for its good faith reliance on the provisions of this
Declaration. The provisions of this Declaration, to the extent that they
restrict the duties and liabilities of an Indemnified Person otherwise existing
at law or in equity (other than the duties imposed on the Property Trustee
under the Trust Indenture Act), are agreed by the parties hereto to replace
such other duties and liabilities of such Indemnified Person.

(b) Unless otherwise expressly provided herein:

(i) whenever a conflict of interest exists or arises
between an Indemnified Person and any Covered Person; or

(ii) whenever this Declaration or any other agreement
contemplated herein or therein provides that an Indemnified Person
shall act in a manner that is, or provides terms that are, fair and
reasonable to the Trust or any Holder of Trust Securities,

the Indemnified Person shall resolve such conflict of interest, take such
action or provide such terms, considering in each case the relative interest of
each party (including its own interest) to such conflict, agreement,
transaction or situation and the benefits and burdens relating to such
interests, any customary or accepted industry practices, and any applicable
generally accepted accounting practices or principles. In the absence of bad
faith by the Indemnified Person, the resolution, action or term so made, taken
or provided by the Indemnified Person shall not constitute a breach of this
Declaration or any other agreement contemplated herein or of any duty or
obligation of the Indemnified Person at law or in equity or otherwise.

(i) in its "discretion" or under a grant of similar
authority, the Indemnified Person shall be entitled to consider such
interests and factors as it desires, including its own interests, and
shall have no duty or obligation to give any consideration to any
interest of or factors affecting the Trust or any other Person; or

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(ii) in its "good faith" or under another express
standard, the Indemnified Person shall act under such express
standard and shall not be subject to any other or different
standard imposed by this Declaration or by applicable law.

Section 11.4 Indemnification.

(a) (i) To the fullest extent permitted by applicable law, the Sponsor
shall indemnify and hold harmless any Company Indemnified Person who was or is
a party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative
or investigative (other than an action by or in the right of the Trust) by
reason of the fact that he is or was a Company Indemnified Person against
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the Trust,
and, with respect to any criminal action or proceeding, had no reasonable cause
to believe his conduct was unlawful. The termination of any action, suit or
proceeding by judgment, order, settlement, conviction, or upon a plea of nolo
contendere or its equivalent, shall not, of itself, create a presumption that
the Company Indemnified Person did not act in good faith and in a manner which
he reasonably believed to be in or not opposed to the best interests of the
Trust, and, with respect to any criminal action or proceeding, had reasonable
cause to believe that his conduct was unlawful.

(ii) The Sponsor shall indemnify, to the fullest extent
permitted by law, any Company Indemnified Person who was or is a party
or is threatened to be made a party to any threatened, pending or
completed action or suit by or in the right of the Trust to procure a
judgment in its favor by reason of the fact that he is or was a
Company Indemnified Person against expenses (including attorneys'
fees) actually and reasonably incurred by him in connection with the
defense or settlement of such action or suit if he acted in good faith
and in a manner he reasonably believed to be in or not opposed to the
best interests of the Trust and except that no such indemnification
shall be made in respect of any claim, issue or matter as to which
such Company Indemnified Person shall have been adjudged to be liable
to the Trust unless and only to the extent that the Court of Chancery
of Delaware or the court in which such action or suit was brought
shall determine upon application that, despite the adjudication of
liability but in view of all the circumstances of the case, such
person is fairly and reasonably entitled to indemnity for such
expenses which such Court of Chancery or such other court shall deem
proper.

(iii) To the extent that a Company Indemnified Person shall
be successful on the merits or otherwise (including dismissal of an
action without prejudice or the settlement of an action without
admission of liability) in defense of any action, suit or proceeding
referred to in paragraphs (i) and (ii) of this Section 11.4(a), or in
defense of any claim, issue or matter therein, he shall be
indemnified, to the fullest extent permitted by law, against expenses
(including attorneys' fees) actually and reasonably incurred by him in
connection therewith.

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(iv) Any indemnification under paragraphs (i) and (ii) of
this Section 11.4(a) (unless ordered by a court) shall be made by the
Sponsor only as authorized in the specific case upon a determination
that indemnification of the Company Indemnified Person is proper in
the circumstances because he has met the applicable standard of
conduct set forth in paragraphs (i) and (ii). Such determination
shall be made (1) by the Administrative Trustees by a majority vote of
a quorum consisting of such Administrative Trustees who were not
parties to such action, suit or proceeding, (2) if such a quorum is
not obtainable, or, even if obtainable, if a quorum of disinterested
Administrative Trustees so directs, by independent legal counsel in a
written opinion, or (3) by the Holder of the Trust Common Securities.

(v) Expenses (including attorneys' fees) incurred by a
Company Indemnified Person in defending a civil, criminal,
administrative or investigative action, suit or proceeding referred to
in paragraphs (i) and (ii) of this Section 11.4(a) shall be paid by
the Sponsor in advance of the final disposition of such action, suit
or proceeding upon receipt of an undertaking by or on behalf of such
Company Indemnified Person to repay such amount if it shall ultimately
be determined that he is not entitled to be indemnified by the Sponsor
as authorized in this Section 11.4(a). Notwithstanding the foregoing,
no advance shall be made by the Sponsor if a determination is
reasonably and promptly made (i) by the Administrative Trustees by a
majority vote of a quorum of disinterested Administrative Trustees,
(ii) if such a quorum is not obtainable, or, even if obtainable, if a
quorum of disinterested Administrative Trustees so directs, by
independent legal counsel in a written opinion or (iii) the Holder of
the Trust Common Securities, that, based upon the facts known to the
Administrative Trustees, counsel or the Holder of the Trust Common
Securities at the time such determination is made, such Company
Indemnified Person acted in bad faith or in a manner that such person
did not believe to be in or not opposed to the best interests of the
Trust, or, with respect to any criminal proceeding, that such Company
Indemnified Person believed or had reasonable cause to believe his
conduct was unlawful. In no event shall any advance be made in
instances where the Administrative Trustees, independent legal counsel
or the Holder of the Trust Common Securities reasonably determine that
such person deliberately breached his duty to the Trust or Holders of
Trust Securities.

(vi) The indemnification and advancement of expenses
provided by, or granted pursuant to, the other paragraphs of this
Section 11.4(a) shall not be deemed exclusive of any other rights to
which those seeking indemnification and advancement of expenses may be
entitled under any agreement, vote of shareholders or disinterested
directors of the Sponsor or, vote of Holders of the Trust Preferred
Securities or otherwise, both as to action in his official capacity
and as to action in another capacity while holding such office. All
rights to indemnification under this Section 11.4(a) shall be deemed
to be provided by a contract between the Sponsor and each Company
Indemnified Person who serves in such capacity at any time while this
Section 11.4(a) is in effect. Any repeal or modification of this
Section 11.4(a) shall not affect any rights or obligations then
existing.

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(vii) At the expense of the Sponsor, the Sponsor or the
Trust may purchase and maintain insurance on behalf of any person who
is or was a Company Indemnified Person against any liability asserted
against him and incurred by him in any such capacity, or arising out
of his status as such, whether or not the Sponsor would have the power
to indemnify him against such liability under the provisions of this
Section 11.4(a).

(viii) For purposes of this Section 11.4(a), references to
the "Trust" shall include, in addition to the resulting or surviving
entity, any constituent entity (including any constituent of a
constituent) absorbed in a consolidation or merger, so that any person
who is or was a director, trustee, officer or employee of such
constituent entity, or is or was serving at the request of such
constituent entity as a director, trustee, officer, employee or agent
of another entity, shall stand in the same position under the
provisions of this Section 11.4(a) with respect to the resulting or
surviving entity as he would have with respect to such constituent
entity if its separate existence had continued.

(ix) The indemnification and advancement of expenses
provided by, or granted pursuant to, this Section 11.4(a) shall,
unless otherwise provided when authorized or ratified, continue as to
a Person who has ceased to be a Company Indemnified Person and shall
inure to the benefit of the heirs, executors and administrators of
such a Person.

(b) The Sponsor agrees to indemnify the (i) Property
Trustee, (ii) the Delaware Trustee, (iii) any Affiliate of the Property Trustee
and the Delaware Trustee, and (iv) any officers, directors, shareholders,
members, partners, employees, representatives, custodians, nominees or agents
of the Property Trustee and the Delaware Trustee (each of the Persons in (i)
through (iv) being referred to as a "Fiduciary Indemnified Person") for, and to
hold each Fiduciary Indemnified Person harmless against, any loss, damage,
claim, liability or expense including taxes (other than taxes based on the
income of the Property Trustee or Delaware Trustee) incurred without negligence
or bad faith on the part of the Property Trustee or Delaware Trustee arising
out of or in connection with the acceptance or administration of the trust or
trusts hereunder, including the costs and expenses (including reasonable legal
fees and expenses) of defending itself against or investigating any claim or
liability in connection with the exercise or performance of any of its powers
or duties hereunder. The obligation to indemnify as set forth in this Section
11.4(b) shall survive the dissolution of the Trust and the termination of this
Declaration, and the resignation or removal of the Property Trustee or the
Delaware Trustee.

Section 11.5 Outside Businesses.

Any Covered Person, the Sponsor, the Delaware Trustee and the Property
Trustee may engage in or possess an interest in other business ventures of any
nature or description, independently or with others, similar or dissimilar to
the business of the Trust, and the Trust and the Holders of Trust Securities
shall have no rights by virtue of this Declaration in and to such independent
ventures or the income or profits derived therefrom, and the pursuit of any
such venture, even if competitive with the business of the Trust, shall not be
deemed wrongful or improper. No Covered Person, the Sponsor, the Delaware
Trustee, or the Property Trustee shall be obligated to present any particular

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investment or other opportunity to the Trust even if such opportunity is of a
character that, if presented to the Trust, could be taken by the Trust, and any
Covered Person, the Sponsor, the Delaware Trustee and the Property Trustee
shall have the right to take for its own account (individually or as a partner
or fiduciary) or to recommend to others any such particular investment or other
opportunity. Any Covered Person, the Delaware Trustee and the Property Trustee
may engage or be interested in any financial or other transaction with the
Sponsor or any Affiliate of the Sponsor, or may act as depository for, trustee
or agent for, or act on any committee or body of Holders of, securities or
other obligations of the Sponsor or its Affiliates.

ARTICLE XII

ACCOUNTING

Section 12.1 Fiscal Year.

The fiscal year ("Fiscal Year") of the Trust shall be the calendar
year.

Section 12.2 Certain Accounting Matters.

(a) At all times during the existence of the Trust, the
Administrative Trustees shall keep, or cause to be kept, full books of account,
records and supporting documents, which shall reflect in reasonable detail,
each transaction of the Trust. The books of account shall be maintained on the
accrual method of accounting, in accordance with generally accepted accounting
principles, consistently applied. The books of account and the records of the
Trust shall be examined by and reported upon as of the end of each Fiscal Year
of the Trust by a firm of independent certified public accountants selected by
the Administrative Trustees.

(b) The Administrative Trustees shall cause to be duly
prepared and delivered to each of the Holders of Trust Securities, any annual
United States federal income tax information statement, required by the Code,
containing such information with regard to the Trust Securities held by each
Holder as is required by the Code and the Treasury Regulations.
Notwithstanding any right under the Code to deliver any such statement at a
later date, the Administrative Trustees shall endeavor to deliver all such
statements within 30 days after the end of each Fiscal Year of the Trust.

(c) The Administrative Trustees shall cause to be duly
prepared and filed with the appropriate taxing authority, an annual United
States federal income tax return, on a Form 1041 or such other form required by
United States federal income tax law, and any other annual income tax returns
required to be filed by the Administrative Trustees on behalf of the Trust with
any state or local taxing authority.

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Section 12.3 Banking.

The Trust shall maintain one or more bank accounts in the name and for
the sole benefit of the Trust; provided, however, that all payments of funds in
respect of the Subordinated Debentures held by the Property Trustee shall be
made directly to the Property Account and no other funds of the Trust shall be
deposited in the Property Account . The sole signatories for such accounts
shall be designated by the Administrative Trustees; provided, however, that the
Property Trustee shall designate the signatories for the Property Account.

Section 12.4 Withholding.

The Trust and the Administrative Trustees shall comply with all
withholding requirements under United States federal, state and local law. The
Trust shall request, and the Holders shall provide to the Trust, such forms or
certificates as are necessary to establish an exemption from withholding with
respect to each Holder, and any representations and forms as shall reasonably
be requested by the Trust to assist it in determining the extent of, and in
fulfilling, its withholding obligations. The Administrative Trustees shall
file required forms with applicable jurisdictions and, unless an exemption from
withholding is properly established by a Holder, shall remit amounts withheld
with respect to the Holder to applicable jurisdictions. To the extent that the
Trust is required to withhold and pay over any amounts to any authority with
respect to distributions or allocations to any Holder, the amount withheld
shall be deemed to be a distribution in the amount of the withholding to the
Holder. In the event of any claim over withholding, Holders shall be limited
to an action against the applicable jurisdiction. If the amount required to be
withheld was not withheld from actual Distributions made, the Trust may reduce
subsequent Distributions by the amount of such withholding. Notwithstanding
anything herein to the contrary, the Trust and the Administrative Trustees
shall, absent receipt of an opinion of nationally recognized tax counsel to the
contrary, withhold thirty-one percent (31%) (or such other rate as may be
imposed as a result of an amendment to the Code or such lower rate as may be
imposed under an applicable income tax treaty) on the gross amount of any
Distributions on Trust Preferred Securities held by a Holder that is not a
"United States person" within the meaning of Section 7701(a)(30) of the Code.

ARTICLE XIII

AMENDMENTS AND MEETINGS

Section 13.1 Amendments.

(a) Except as otherwise provided in this Declaration or
by any applicable terms of the Trust Securities, this Declaration may only be
amended by a written instrument approved and executed by:

(i) the Administrative Trustees (or, if there are more than
two Administrative Trustees, a majority of the Administrative
Trustees);

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(ii) if the amendment affects the rights, powers, duties,
obligations or immunities of the Property Trustee, the Property
Trustee; and

(iii) if the amendment affects the rights, powers, duties,
obligations or immunities of the Delaware Trustee, the Delaware
Trustee.

(b) No amendment shall be made, and any such purported
amendment shall be void and ineffective:

(i) unless, in the case of any proposed amendment, the
Property Trustee shall have first received an Officers' Certificate
from each of the Trust and the Sponsor that such amendment is
permitted by, and conforms to, the terms of this Declaration;

(ii) unless, in the case of any proposed amendment which
affects the rights, powers, duties, obligations or immunities of the
Property Trustee, the Property Trustee shall have first received an
Opinion of Counsel that such amendment is permitted by, and conforms
to, the terms of this Declaration; and

(iii) to the extent the result of such amendment would be to:

(A) cause the Trust to fail to continue to be
classified for purposes of United States federal income
taxation as a grantor trust;

(B) cause the Trust to be taxable as a
corporation;

(C) reduce or otherwise adversely affect the
powers of the Property Trustee in contravention of the Trust
Indenture Act; or

(D) cause the Trust to be deemed to be an
Investment Company required to be registered under the 1940
Act.

(c) At such time after the Trust has issued any Trust
Securities that remain outstanding, any amendment that would (i) adversely
affect the powers, preferences or special rights of the Trust Securities or
(ii) provide for the dissolution, winding-up or termination of the Trust other
than pursuant to the terms of this Declaration, may be effected only with the
approval of the Holders of at least a Majority in Liquidation Amount of the
Trust Securities affected thereby; provided, that if any amendment or proposal
referred to in clause (i) hereof would adversely affect only the Trust
Preferred Securities or the Trust Common Securities, then only the affected
class will be entitled to vote on such amendment or proposal and such amendment
or proposal shall not be effective except with the approval of a Majority in
Liquidation Amount of such class of Trust Securities.

(d) Section 11.1(b) and this Section 13.1 shall not be
amended without the consent of all of the Holders of the Trust Securities.

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(e) Article IV shall not be amended without the consent
of the Holders of a Majority in Liquidation Amount of the Trust Common
Securities.

(f) The rights of the Holders of the Trust Common
Securities under Article VI to increase or decrease the number of, and appoint
and remove, Trustees shall not be amended without the consent of the Holders of
a Majority in Liquidation Amount of the Trust Common Securities.

(g) Notwithstanding anything herein to the contrary.1(c),
this Declaration may be amended without the consent of the Holders of the Trust
Securities:

(i) to cure any ambiguity;

(ii) to correct or supplement any provision in this
Declaration that may be defective or inconsistent with any other
provision of this Declaration, or to make any other provisions with
respect to matters or questions arising under this Declaration that
shall not be inconsistent with the other provisions of this
Declaration;

(iii) to add to the covenants, restrictions or obligations
of the Sponsor;

(iv) to conform to any change in the 1940 Act or written
change in interpretation or application of the rules and regulations
promulgated thereunder by any legislative body, court, government
agency or regulatory authority;

(v) to conform to any change in the Trust Indenture Act
or written change in interpretation or application of the rules and
regulations promulgated thereunder by any legislative body, court,
government agency or regulatory authority; or

(vi) to ensure that the Trust will be classified for
United States federal income tax purposes as a grantor trust at all
times that any Trust Securities are outstanding or to ensure that the
Trust will not be treated as an "investment company" required to be
registered under the 1940 Act.

provided, that such amendments do not have a material adverse effect on the
rights, preferences or privileges of the Holders.

Section 13.2 Meetings of the Holders of Trust Securities; Action by Written
Consent.

(a) Meetings of the Holders of any class of Trust
Securities may be called at any time by the Administrative Trustees (or as
otherwise provided in this Declaration) to consider and act on any matter on
which Holders of such class of Trust Securities are entitled to act under the
terms of this Declaration, the Trust Guarantees, the rules of any stock
exchange on which the Trust Preferred Securities are listed or admitted for
trading, the Business Trust Act or other applicable law.

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The Administrative Trustees shall call a meeting of the Holders of such class
if directed to do so by the Holders of at least 10% in Liquidation Amount of
such class of Trust Securities. Such direction shall be given by delivering to
the Administrative Trustees one or more notices in a writing stating that the
signing Holders of Trust Securities wish to call a meeting and indicating the
general or specific purpose for which the meeting is to be called. Any Holders
of Trust Securities calling a meeting shall specify in writing the Certificates
held by the Holders of Trust Securities exercising the right to call a meeting
and only those Trust Securities specified shall be counted for purposes of
determining whether the required percentage set forth in the second sentence of
this paragraph has been met.

(b) Except to the extent otherwise provided in the terms
of the Trust Securities, the following provisions shall apply to meetings of
Holders of Trust Securities:

(i) notice of any such meeting shall be given to all the
Holders of Trust Securities having a right to vote thereat at least
seven days and not more than 60 days before the date of such meeting.
Any action that may be taken at a meeting of the Holders of Trust
Securities may be taken without a meeting if a consent in writing
setting forth the action so taken is signed by the Holders of Trust
Securities owning not less than the minimum amount in Liquidation
Amount of Trust Securities that would be necessary to authorize or
take such action at a meeting at which all Holders of Trust Securities
having a right to vote thereon were present and voting. Prompt notice
of the taking of action without a meeting shall be given to the
Holders of Trust Securities entitled to vote who have not consented in
writing. The Administrative Trustees may specify that any written
consent submitted to the Holder for the purpose of taking any action
without a meeting shall be returned to the Trust within the time
specified by the Administrative Trustees;

(ii) each Holder of a Trust Security may authorize any
Person to act for it by proxy on all matters in which a Holder of
Trust Securities is entitled to participate, including waiving notice
of any meeting, or voting or participating at a meeting. No proxy
shall be valid after the expiration of 11 months from the date thereof
unless otherwise provided in the proxy. Every proxy shall be
revocable at the pleasure of the Holder of Trust Securities executing
it. Except as otherwise provided herein, all matters relating to the
giving, voting or validity of proxies shall be governed by the DGCL
relating to proxies, and judicial interpretations thereunder, as if
the Trust were a Delaware corporation and the Holders of the Trust
Securities were shareholders of a Delaware corporation;

(iii) each meeting of the Holders of the Trust Securities
shall be conducted by the Administrative Trustees or by such other
Person that the Administrative Trustees may designate; and

(iv) unless the Business Trust Act, this Declaration, the
Trust Indenture Act, the Trust Guarantees or the listing rules of any
stock exchange on which the Trust Preferred Securities are then listed
for trading otherwise provides, the Administrative Trustees, in their

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sole discretion, shall establish all other provisions relating to
meetings of Holders of Trust Securities, including notice of the time,
place or purpose of any meeting at which any matter is to be voted on
by any Holders of Trust Securities, waiver of any such notice, action
by consent without a meeting, the establishment of a record date,
quorum requirements, voting in person or by proxy or any other matter
with respect to the exercise of any such right to vote.

ARTICLE XIV

REPRESENTATIONS OF PROPERTY TRUSTEE AND DELAWARE TRUSTEE

Section 14.1 Representations and Warranties of Property Trustee.

The Trustee that acts as initial Property Trustee represents and
warrants to the Trust and to the Sponsor at the date of this Declaration, and
each Successor Property Trustee represents and warrants to the Trust and the
Sponsor at the time of the Successor Property Trustee's acceptance of its
appointment as Property Trustee (with appropriate changes to clause (a)) that:

(a) The Property Trustee is a national banking association
or state bank with trust powers, duly organized, validly existing and in good
standing under the laws of the United States, with trust power and authority to
execute and deliver, and to carry out and perform its obligations under the
terms of, the Declaration;

(b) The execution, delivery and performance by the
Property Trustee of the Declaration has been duly authorized by all necessary
corporate action on the part of the Property Trustee. The Declaration has been
duly executed and delivered by the Property Trustee and constitutes a legal,
valid and binding obligation of the Property Trustee, enforceable against it in
accordance with its terms, subject to applicable bankruptcy, reorganization,
moratorium, insolvency, and other similar laws affecting creditors' rights
generally and to general principles of equity and the discretion of the court
(regardless of whether the enforcement of such remedies is considered in a
proceeding in equity or at law);

(c) The execution, delivery and performance of the
Declaration by the Property Trustee does not conflict with or constitute a
breach of the charter or By-laws of the Property Trustee;

(d) No consent, approval or authorization of, or
registration with or notice to, any federal banking authority is required for
the execution, delivery or performance by the Property Trustee of this
Declaration; and

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(e) The Property Trustee, pursuant to this Declaration,
shall hold legal title to, and an ownership interest on behalf of the Holders
of the Trust Securities in, the Subordinated Debentures and agrees that, except
as expressly provided or contemplated by this Agreement, it will not create,
incur or assume, or suffer to exist any mortgage, pledge, hypothecation,
encumbrance, lien or other charge or security interest upon the Subordinated
Debentures.

Section 14.2 Representations and Warranties of Delaware Trustee.

The Trustee that acts as initial Delaware Trustee represents and
warrants to the Trust and to the Sponsor at the date of this Declaration, and
each Successor Delaware Trustee represents and warrants to the Trust and the
Sponsor at the time of the Successor Delaware Trustee's acceptance of its
appointment as Delaware Trustee that:

(a) The Delaware Trustee is a [Delaware] corporation duly
organized, validly existing and in good standing under the laws of the State of
[Delaware], with power and authority to execute and deliver, and to carry out
and perform its obligations under the terms of, the Declaration;

(b) The Delaware Trustee has been authorized to perform
its obligations under the Trust's certificate of trust and the Declaration.
The Declaration, under Delaware law, constitutes a legal, valid and binding
obligation of the Delaware Trustee, enforceable against it in accordance with
its terms, subject to applicable bankruptcy, reorganization, moratorium,
insolvency, and other similar laws affecting creditors' rights generally and to
general principles of equity and the discretion of the court (regardless of
whether the enforcement of such remedies is considered in a proceeding in
equity or at law);

(c) No consent, approval or authorization of, or
registration with or notice to, any Delaware or federal banking authority is
required for the execution, delivery or performance by the Delaware Trustee of
the Declaration; and

(d) The Delaware Trustee is an entity which has its
principal place of business in the State of Delaware.

ARTICLE XV

MISCELLANEOUS

Section 15.1 Notices.

All notices provided for in this Declaration shall be in writing, duly
signed by the party giving such notice, and shall be delivered, telecopied or
mailed by registered or certified mail, as follows:

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(a) if given to the Trust, in care of the Administrative
Trustees at the Trust's mailing address set forth below (or such other address
as the Trust may give notice of to the Holders of the Trust Securities and the
other Trustees):

KBK CAPITAL TRUST I
c/o KBK Capital Corporation
2200 City Center II
301 Commerce Street
Fort Worth, Texas 76102
Attention: Vice President and Controller

(b) if given to the Delaware Trustee, at the mailing
address set forth below (or such other address as the Delaware Trustee may give
notice of to the other Trustees):

Wilmington Trust Company
1100 North Market Street
Rodney Square North
Wilmington, Delaware 19890
Attention: [Corporate Trustee
Administration Department]

(c) if given to the Property Trustee, at its Corporate
Trust Office (or such other address as the Property Trustee may give notice of
to the Holders of the Trust Securities and the other Trustees).

(d) if given to the Holder of the Trust Common
Securities, at the mailing address of the Sponsor set forth below (or such
other address as the Holder of the Trust Common Securities may give notice of
to the Trust and the other Trustees):

KBK CAPITAL CORPORATION
2200 City Center II
301 Commerce Street
Fort Worth, Texas 76102
Attention: Vice President and Controller

(e) if given to any other Holder, at the address set
forth on the books and records of the Trust.

All such notices shall be deemed to have been given when received in
person, telecopied with receipt confirmed, or mailed by first class mail,
postage prepaid, except that if a notice or other document is refused delivery
or cannot be delivered because of a changed address of which no notice was
given, such notice or other document shall be deemed to have been delivered on
the date of such refusal or inability to deliver.

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Section 15.2 Governing Law.

THIS DECLARATION AND THE RIGHTS OF THE PARTIES HEREUNDER SHALL BE
GOVERNED BY AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
DELAWARE AND ALL RIGHTS AND REMEDIES SHALL BE GOVERNED BY SUCH LAWS WITHOUT
REGARD TO PRINCIPLES OF CONFLICTS OF LAWS OF THE STATE OF DELAWARE OR ANY OTHER
JURISDICTION THAT WOULD CALL FOR THE APPLICATION OF THE LAW OF ANY JURISDICTION
OTHER THAN THE STATE OF DELAWARE; PROVIDED, HOWEVER, THAT THERE SHALL NOT BE
APPLICABLE TO THE PARTIES HEREUNDER OR THIS DECLARATION ANY PROVISION OF THE
LAWS (COMMON OR STATUTORY) OF THE STATE OF DELAWARE PERTAINING TO TRUSTS THAT
RELATE TO OR REGULATE, IN A MANNER INCONSISTENT WITH THE TERMS HEREOF, (A) THE
FILING WITH ANY COURT OR GOVERNMENTAL BODY OR AGENCY OF TRUSTEE ACCOUNTS OR
SCHEDULES OF TRUSTEE FEES AND CHARGES, (B) AFFIRMATIVE REQUIREMENTS TO POST
BONDS FOR TRUSTEES, OFFICERS, AGENTS OR EMPLOYEES OF A TRUST, (C) THE NECESSITY
FOR OBTAINING COURT OR OTHER GOVERNMENTAL APPROVAL CONCERNING THE ACQUISITION,
HOLDING OR DISPOSITION OF REAL OR PERSONAL PROPERTY, (D) FEES OR OTHER SUMS
PAYABLE TO TRUSTEES, OFFICERS, AGENTS OR EMPLOYEES OF A TRUST, (E) THE
ALLOCATION OF RECEIPTS AND EXPENDITURES TO INCOME OR PRINCIPAL, (F)
RESTRICTIONS OR LIMITATIONS ON THE PERMISSIBLE NATURE, AMOUNT OR CONCENTRATION
OF TRUST INVESTMENTS OR REQUIREMENTS RELATING TO THE TITLING, STORAGE OR OTHER
MANNER OF HOLDING OR INVESTING TRUST ASSETS OR (G) THE ESTABLISHMENT OF
FIDUCIARY OR OTHER STANDARDS OF RESPONSIBILITY OR LIMITATIONS ON THE ACTS OR
POWERS OF TRUSTEES THAT ARE INCONSISTENT WITH THE LIMITATIONS OR AUTHORITIES
AND POWERS OF THE TRUSTEES HEREUNDER AS SET FORTH OR REFERENCED IN THIS
DECLARATION; PROVIDED, FURTHER, THAT THE IMMUNITIES AND STANDARD OF CARE OF THE
PROPERTY TRUSTEE IN CONNECTION WITH THE ADMINISTRATION OF ITS TRUSTS HEREUNDER
SHALL BE GOVERNED BY AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE
JURISDICTION OF ITS INCORPORATION. SECTION 3540 OF TITLE 12 OF THE DELAWARE
CODE SHALL NOT APPLY TO THE TRUST.

Section 15.3 Intention of the Parties.

It is the intention of the parties hereto that the Trust be classified
for United States federal income tax purposes as a grantor trust. The
provisions of this Declaration shall be interpreted to further this intention
of the parties.

Section 15.4 Acceptance of Terms of Declaration, Trust Guarantees and
Subordinated Indenture.

THE RECEIPT AND ACCEPTANCE OF A TRUST SECURITY OR ANY INTEREST THEREIN
BY OR ON BEHALF OF A HOLDER OR BENEFICIAL OWNER, WITHOUT ANY

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SIGNATURE OR FURTHER MANIFESTATION OF ASSENT, SHALL CONSTITUTE THE
UNCONDITIONAL ACCEPTANCE BY THE HOLDER AND ALL OTHERS HAVING A BENEFICIAL
INTEREST IN SUCH TRUST SECURITY OF ALL THE TERMS AND PROVISIONS OF THIS
DECLARATION (AND SUCH HOLDER AND OTHERS SHALL BE DEEMED TO BE A PARTY TO THIS
DECLARATION), THE TRUST GUARANTEES AND THE SUBORDINATED INDENTURE, AND SHALL
CONSTITUTE THE AGREEMENT OF THE TRUST, SUCH HOLDER AND SUCH OTHERS THAT THE
TERMS AND PROVISIONS OF THIS DECLARATION SHALL BE BINDING, OPERATIVE AND
EFFECTIVE ON THE TRUST AND SUCH HOLDER AND SUCH OTHERS.

Section 15.5 Headings.

Headings contained in this Declaration are inserted for convenience of
reference only and do not affect the interpretation of this Declaration or any
provision hereof.

Section 15.6 Successors and Assigns.

Whenever in this Declaration any of the parties hereto is named or
referred to, the successors and assigns of such party shall be deemed to be
included, and all covenants and agreements in this Declaration by the Sponsor
and the Trustees shall bind and inure to the benefit of their respective
successors and assigns, whether so expressed.

Section 15.7 Partial Enforceability.

If any provision of this Declaration, or the application of such
provision to any Person or circumstance, shall be held invalid, the remainder
of this Declaration, or the application of such provision to persons or
circumstances other than those to which it is held invalid, shall not be
affected thereby.

Section 15.8 Counterparts.

This Declaration may contain more than one counterpart of the
signature page and this Declaration may be executed by the affixing of the
signature of each of the Trustees and a duly authorized officer of the Sponsor
to one of such counterpart signature pages. All of such counterpart signature
pages shall be read as though one, and they shall have the same force and
effect as though all of the signers had signed a single signature page.

Section 15.9 Holding Company Formation, Consolidations and Mergers.

Notwithstanding anything to the contrary in this Declaration, the
Sponsor may form a holding company by merger with or into a single direct or
indirect wholly owned subsidiary of the Sponsor, whether under Section 251(g)
of the DGCL or otherwise, and in connection therewith the Sponsor may sell,
transfer or lease any of its properties and assets to such holding company.
Upon any

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consolidation of the Sponsor with, or merger of the Sponsor into, any other
Person or any sale, transfer or lease of the properties and assets of the
Sponsor as, or substantially as, an entirety by the Sponsor or upon any holding
company formation in accordance with the preceding sentence, the successor
Person formed by such consolidation or into which the Sponsor is merged or to
which such sale, transfer or lease is made, or which constitutes the holding
company formed as contemplated in the preceding sentence, shall execute and
deliver to the Property Trustee an instrument of assumption in form
satisfactory to the Property Trustee whereby such successor expressly assumes
the due and punctual performance and observance of all of the covenants and
conditions of this Declaration to be performed by the Sponsor and such
successor Person shall thereupon succeed to, and be substituted for, and may
exercise every right and power of, the Sponsor under this Declaration with the
same effect as if such successor Person had been named originally as the
Sponsor herein, and thereafter, except in the case of a lease, the predecessor
Person shall be relieved of all obligations and covenants under this
Declaration. Notwithstanding the foregoing, the predecessor Person may elect,
at its option, not to be so relieved of such obligations and covenants,
provided that the predecessor Person and the successor Person shall agree in
writing to be co-obligors jointly and severally with respect to all such
obligations and covenants. Concurrently with the delivery to the Property
Trustee of such instrument of assumption, the Sponsor shall deliver to the
Property Trustee an Officers' Certificate and an Opinion of Counsel, each
stating that such consolidation, merger, transfer, sale or lease or the
formation of such holding company and the transactions effected in connection
therewith and the related instrument of assumption comply with this Article and
that all conditions precedent herein provided relating to such transaction and
assumption have been complied with.

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IN WITNESS WHEREOF, each of the undersigned has caused these presents
to be executed as of the day and year first above written.

KBK CAPITAL CORPORATION,
As Sponsor

By:
Jay K. Turner
Executive Vice President and
Chief Financial Officer

ADMINISTRATIVE TRUSTEES

----------------------------------------
Robert J. McGee

----------------------------------------
Jay K. Turner

----------------------------------------
Deborah B. Wilkinson

THE FIRST NATIONAL BANK OF
CHICAGO,
As Property Trustee

By:
------------------------------------
Its:
-----------------------------------

WILMINGTON TRUST COMPANY,
As Delaware Trustee

By:
------------------------------------
Its:
-----------------------------------

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EXHIBIT A-1

[FORM OF FACE OF SECURITY]

Number of Trust Preferred Securities:__________
TPSI-

CUSIP NO. 48241E 20 6

TRUST PREFERRED SECURITY CERTIFICATE

This Trust Preferred Security is a Global Certificate within the
meaning of the Declaration hereinafter referred to and is registered in the
name of _____________. This Trust Preferred Security is exchangeable for
Trust Preferred Securities registered in the name of a person other than
____________ or its nominee only in the limited circumstances described in the
Declaration and no transfer of this Trust Preferred Security (other than a
transfer of this Trust Preferred Security as a whole by ____________ to a
nominee of ____________) may be registered except in limited circumstances.

Unless this Trust Preferred Security is presented by an authorized
representative of __________, to KBK Capital Trust I or its agent for
registration of transfer, exchange or payment, and any Trust Preferred Security
issued is registered in the name of ________________ or such other name as
requested by an authorized representative of ____________ and any payment
hereon is made to ______________ or such other entity as is requested by an
authorized representative of ____________, ANY TRANSFER, PLEDGE OR OTHER USE
HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the
registered owner hereof, ____________________ , has an interest herein.

CERTIFICATE EVIDENCING TRUST PREFERRED SECURITIES
OF
KBK CAPITAL TRUST I
___% TRUST PREFERRED SECURITIES
(LIQUIDATION AMOUNT $25 PER TRUST PREFERRED SECURITY)

KBK CAPITAL TRUST I, a statutory business trust formed under the laws
of the State of Delaware (the "Trust"), hereby certifies that __________ (the
"Holder") is the registered owner of ________________, or such lesser or
greater amount as shall be noted on the Schedule attached hereto, preferred
securities of the Trust representing undivided beneficial ownership interests
in the assets of the Trust designated the ___% Trust Preferred Securities
(Liquidation Amount $25 per Trust Preferred Security) (the "Trust Preferred
Securities"). The Trust Preferred Securities are freely transferable on the
books and records of the Trust, in person or by a duly authorized attorney,
upon surrender of this certificate duly endorsed and in proper form for
transfer. The designation, rights, powers, privileges, restrictions,
preferences and other terms and provisions of the Trust Preferred Securities
represented hereby are set forth in, issued under and shall in all respects be
subject to the
<PAGE> 79
provisions of the Amended and Restated Declaration of Trust dated as of
______________, 1998 as the same may be amended from time to time (the
"Declaration"). Capitalized terms used herein but not defined shall have the
meanings given them in the Declaration. The Holder is entitled to the benefits
of the Trust Preferred Securities Guarantee to the extent provided therein.
Each Holder of a Trust Preferred Security, by acceptance of this Certificate
and each certificate owner, by acquisition of a beneficial interest in a
Certificate, agrees to treat the Subordinated Debentures as indebtedness for
United States federal income tax purposes. The Sponsor will provide a copy of
the Declaration, the Trust Preferred Securities Guarantee and the Subordinated
Indenture to a Holder without charge upon written request to the Trust at its
principal place of business.

Upon receipt of this certificate, the Holder is bound by the
Declaration and is entitled to the benefits thereunder.

IN WITNESS WHEREOF, one of the Administrative Trustees of the Trust
has executed this certificate this _______ day of _________________________ ,
________.

KBK CAPITAL TRUST I

----------------------------
[ ]
as Administrative Trustee

(See reverse for additional terms)

CERTIFICATE OF AUTHENTICATION

This is one of the Trust Preferred Securities described in the
within-mentioned Declaration.

THE FIRST NATIONAL BANK OF CHICAGO,
AS PROPERTY TRUSTEE

By:
Authorized Officer
<PAGE> 80
[FORM OF REVERSE OF SECURITY]

Holders of Trust Preferred Securities shall be entitled to receive
cumulative cash distributions at a rate per annum of ___% of the stated
Liquidation Amount of $25 per Trust Preferred Security. Distributions on the
Trust Preferred Securities shall, from the Closing Date, accumulate and be
cumulative and shall be payable quarterly only to the extent that the Trust has
funds available for the payment of such distributions in the Property Account.
Distributions not paid on the scheduled quarterly payment date will accumulate
and compound quarterly (to the extent permitted by applicable law) at the rate
of ___% per annum. The term "Distributions" as used herein shall mean ordinary
cumulative distributions in respect of each Quarterly Period together with any
such Compounded Distributions. Amounts available to the Trust for distribution
to the holders of the Trust Preferred Securities will be limited to payments
received by the Trust from the Company on the Subordinated Debentures or on the
Trust Preferred Securities Guarantee. If and to the extent that the Company
makes a payment on the Subordinated Debentures held by the Property Trustee
(except for Additional Sums to the extent such Additional Sums are required to
pay any taxes, duties or governmental charges of whatsoever nature (other than
withholding taxes) imposed on the Trust by the United States or any other taxing
authority) or under the Trust Preferred Securities Guarantee (the amount of any
such payment being a "Payment Amount"), the Trust shall and the Property Trustee
is directed, to the extent funds are legally available for that purpose, to make
a Pro Rata Distribution of the Payment Amount to Holders.

The amount of Distributions payable for any period will be computed
for any full quarterly Distribution period on the basis of a 360-day year of
twelve 30-day months, and for any period shorter than a full quarterly
Distribution period on the basis of the actual number of days elapsed in a
90-day quarter.

Except as otherwise described herein, Distributions on the Trust
Preferred Securities will be cumulative, will accumulate from the Closing Date
and will be payable quarterly in arrears, on February ____, May ____, August
____ and November ____ of each year, commencing on ____________, 1999, if, as
and when available for payment by the Property Trustee. The Company has the
right under the Subordinated Indenture to defer payments of interest by
extending the interest payment period from time to time on the Subordinated
Debentures for a period not exceeding 20 consecutive quarters (each an
"Extension Period"); provided, that no Extension Period shall last beyond the
maturity of the Subordinated Debentures and, as a consequence of such deferral,
Distributions will also be deferred. Despite such deferral, quarterly
Distributions will continue to accrue with interest thereon (to the extent
permitted by applicable law) at the rate specified above compounded quarterly
during any such Extension Period. Prior to the termination of any such
Extension Period, the Company may further extend such Extension Period;
provided, that such Extension Period together with all such previous and
further extensions thereof may not exceed 20 consecutive quarters or extend
beyond the maturity of the Subordinated Debentures.

Distributions will be payable to the Holders of record of Trust
Preferred Securities as they appear on the books and records of the Trust on
the relevant record dates, which will be the 15th day of the month of the
relevant payment dates (that is, each February 15, May 15, August 15 and
November 15). In the event that any date on which Distributions are payable is
not a Business Day, payment of such Distribution shall be made on the next
succeeding day which is a Business Day
<PAGE> 81
(without any interest or other payment in respect of any such delay) except
that, if such Business Day falls in the next succeeding calendar year, such
payment shall be made on the immediately preceding Business Day, with the same
force and effect as if made on such date. Payments of accumulated
Distributions will be payable to Holders of record of Trust Preferred
Securities as they appear on the books and records of the Trust on the record
date with respect to the payment date for the Trust Preferred Securities which
corresponds to the payment date fixed by the Company with respect to the
payment of amounts due on the Subordinated Debentures.

The Trust Preferred Securities shall be redeemable as provided in the
Declaration.
<PAGE> 82
ASSIGNMENT

FOR VALUE RECEIVED, the undersigned assigns and transfers this Trust Preferred
Security certificate to:

(Insert assignee's social security or tax identification number)

(Insert address and zip code of assignee)

and irrevocably appoints

agent to transfer this Trust Preferred
Security Certificate on the books of the Trust. The agent may substitute
another to act for him or her.

Date:

Signature:
(Sign exactly as your name appears on the other side of this Trust Preferred
Security Certificate)

Signature Guarantee: *

* Signature must be guaranteed by an institution which is a member of
one of the following recognized Signature Guaranty Programs: (i) The
Securities Transfer Agent Medallion Program (STAMP); (ii) The New York
Stock Exchange Medallion Program (MSP); (iii) The Stock Exchange
Medallion Program (SEMP); or (iv) in such other guarantee programs
acceptable to the Conversion Agent.
<PAGE> 83
SCHEDULE

The notations on the following table evidence decreases in the number
of Trust Preferred Securities evidenced by this Global Certificate resulting
from exchanges or increases resulting from the exercise of the Over-Allotment
Option.

<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------
Decrease or Increase in Number of Number of Trust Notation made by
Trust Preferred Securities Preferred Securities Registrar
after such Decrease or Increase
- -------------------------------------------------------------------------------------------
<S> <C> <C>

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

- -------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 84
EXHIBIT A-2

[FORM OF FACE OF SECURITY]

Number of Trust Common Securities: __________
TCSI-

TRUST COMMON SECURITY CERTIFICATE

CERTIFICATE EVIDENCING TRUST COMMON SECURITIES
OF
KBK CAPITAL TRUST I
___% TRUST COMMON SECURITIES
(LIQUIDATION AMOUNT $25 PER TRUST COMMON SECURITY)

KBK CAPITAL TRUST I, a statutory business trust formed under the laws
of the State of Delaware (the "Trust"), hereby certifies that KBK Capital
Corporation, a Delaware corporation (the "Holder"), is the registered owner of
_________ common securities of the Trust representing undivided beneficial
ownership interests in the assets of the Trust designated the ___% Trust
Common Securities (Liquidation Amount $25 per Trust Common Security) (the
"Trust Common Securities"). The designation, rights, powers, privileges,
restrictions, preferences and other terms and provisions of the Trust Common
Securities represented hereby are set forth in, issued under and shall in all
respects be subject to the provisions of the Amended and Restated Declaration
of Trust dated as of _____________, 1998 as the same may be amended from time
to time (the "Declaration"). Capitalized terms used herein but not defined
shall have the meanings given them in the Declaration. The Holder is entitled
to the benefits of the Trust Common Securities Guarantee to the extent provided
therein. Each Holder of a Trust Common Security, by acceptance of this
Certificate, agrees to treat the Subordinated Debentures as indebtedness for
United States federal income tax purposes. The Sponsor will provide a copy of
the Declaration, the Trust Common Securities Guarantee and the Subordinated
Indenture to a Holder without charge upon written request to the Sponsor at its
principal place of business. THE TRUST COMMON SECURITIES ARE TRANSFERABLE ON
THE BOOKS AND RECORDS OF THE TRUST ONLY IN ACCORDANCE WITH THE TERMS OF THE
DECLARATION.

Upon receipt of this certificate, the Holder is bound by the
Declaration and is entitled to the benefits thereunder.

IN WITNESS WHEREOF, one of the Administrative Trustees of the Trust
has executed this certificate this ____th day of ____________, 1998.

KBK CAPITAL TRUST I

___________________________
[ ]
as Administrative Trustee

___________________________
[ ]
as Administrative Trustee
<PAGE> 85
CERTIFICATE OF AUTHENTICATION

This is one of the Trust Common Securities described in the
within-mentioned Declaration.

THE FIRST NATIONAL BANK OF CHICAGO,
AS TRUSTEE

By:
Authorized Officer

(See reverse for additional terms)

[FORM OF REVERSE OF SECURITY]

Holders of Trust Common Securities shall be entitled to receive
cumulative cash distributions at a rate per annum of ___% of the stated
Liquidation Amount of $25 per Trust Common Security. Distributions on the Trust
Common Securities shall, from the date of original issue, accumulate and be
cumulative and shall be payable quarterly only to the extent that the Trust has
funds available for the payment of such distributions in the Property Account.
Distributions not paid on the scheduled quarterly payment date will accumulate
and compound quarterly (to the extent permitted by applicable law) at the rate
of ___% per annum. The term "Distributions" as used herein shall mean ordinary
cumulative distributions in respect of each Quarterly Period together with any
such Compounded Distributions. Amounts available to the Trust for distribution
to the holders of the Trust Common Securities will be limited to payments
received by the Trust from the Company on the Subordinated Debentures or on the
Trust Common Securities Guarantee. If and to the extent that the Company makes
a payment on the Subordinated Debentures held by the Property Trustee (except
for Additional Sums to the extent such Additional Sums are required to pay any
taxes, duties or governmental charges of whatsoever nature (other than
withholding taxes) imposed on the Trust by the United States or any other taxing
authority) or under the Trust Common Securities Guarantee (the amount of any
such payment being a "Payment Amount"), the Trust shall and the Property Trustee
is directed, to the extent funds are legally available for that purpose, to make
a Pro Rata Distribution of the Payment Amount to Holders.

Except as otherwise described herein, distributions on the Trust
Common Securities will be cumulative, will accumulate from the Closing Date and
will be payable quarterly in arrears, on
<PAGE> 86
February ___, May ___, August ___ and November ___ of each year, commencing on
________, 1999 if, as and when available for payment by the Property Trustee.
The Company has the right under the Subordinated Indenture to defer payments of
interest by extending the interest payment period from time to time on the
Subordinated Debentures for a period not exceeding 20 consecutive quarters
(each an "Extension Period"); provided, that no Extension Period shall last
beyond the maturity of the Subordinated Debentures and, as a consequence of
such deferral, Distributions will also be deferred. Despite such deferral,
quarterly Distributions will continue to accrue with interest thereon (to the
extent permitted by applicable law) at the rate specified above compounded
quarterly during any such Extension Period. Prior to the termination of any
such Extension Period, the Company may further extend such Extension Period;
provided, that such Extension Period together with all such previous and
further extensions thereof may not exceed 20 consecutive quarters or extend
beyond the maturity of the Subordinated Debentures.

Distributions will be payable to the Holders of record of Trust Common
Securities as they appear on the books and records of the Trust on the relevant
record dates, which will be the fifteenth day of the month of the relevant
payment dates (that is, each February 15, May 15, August 15 and November 15).
In the event that any date on which distributions are payable is not a Business
Day, payment of the Distribution shall be made on the next succeeding day which
is a Business Day (without any interest or other payment in respect of any such
delay) except that, if such Business Day falls in the next succeeding calendar
year, such payment shall be made on the immediately preceding Business Day, in
each case with the same force and effect as if made on such date. Payments of
accumulated Distributions will be payable to Holders of record of Trust Common
Securities as they appear on the books and records of the Trust on the record
date with respect to the payment date for the Trust Common Securities which
corresponds to the payment date fixed by the Company with respect to amounts
due on the Subordinated Debentures.

The Trust Common Securities shall be redeemable as provided in the Declaration.
<PAGE> 87
ASSIGNMENT

FOR VALUE RECEIVED, the undersigned assigns and transfers this Trust Common
Security certificate to:

(Insert assignee's social security or tax identification number)

(Insert address and zip code of assignee)

and irrevocably appoints

agent to transfer this Trust Common
Security Certificate on the books of the Trust. The agent may substitute
another to act for him or her.

Date:

Signature:
(Sign exactly as your name appears on the other side of this Trust Common
Security Certificate)

Signature Guarantee: *

<PAGE> 1
EXHIBIT 4.5

TRUST PREFERRED SECURITIES
GUARANTEE AGREEMENT

KBK CAPITAL TRUST I

DATED AS OF ____________, 1998
<PAGE> 2
TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
<S> <C>
ARTICLE I
DEFINITIONS AND INTERPRETATION . . . . . . . . . . . . . . . . . . . 2
Section 1.1 Definitions and Interpretation . . . . . . . . . . . . 2

ARTICLE II
TRUST INDENTURE ACT . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 2.1 Trust Indenture Act; Application . . . . . . . . . . . 5
Section 2.2 Lists of Holders of Securities . . . . . . . . . . . . 5
Section 2.3 Reports by the Trust Preferred Guarantee Trustee . . . 6
Section 2.4 Periodic Reports to Trust Preferred Guarantee Trustee . 6
Section 2.5 Evidence of Compliance with Conditions Precedent . . . 6
Section 2.6 Guarantee Events of Default; Waiver . . . . . . . . . . 6
Section 2.7 Guarantee Event of Default; Notice . . . . . . . . . . 7
Section 2.8 Conflicting Interests . . . . . . . . . . . . . . . . . 7

ARTICLE III
POWERS, DUTIES AND RIGHTS OF THE TRUST PREFERRED
GUARANTEE TRUSTEE . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 3.1 Powers and Duties of the Trust Preferred Guarantee
Trustee . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 3.2 Certain Rights of Trust Preferred Guarantee Trustee . . 9
Section 3.3 Not Responsible for Recitals or Issuance of Trust
Preferred
Securities Guarantee. . . . . . . . . . . . . . . . . . 11

ARTICLE IV
TRUST PREFERRED GUARANTEE TRUSTEE . . . . . . . . . . . . . . . . . 12
Section 4.1 Trust Preferred Guarantee Trustee; Eligibility . . . . 12
Section 4.2 Appointment, Removal and Resignation of Trust Preferred
Guarantee Trustee . . . . . . . . . . . . . . . . . . . 12

ARTICLE V
GUARANTEE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 5.1 Guarantee . . . . . . . . . . . . . . . . . . . . . . . 13
Section 5.2 Waiver of Notice and Demand . . . . . . . . . . . . . . 13
Section 5.3 Obligations Not Affected . . . . . . . . . . . . . . . 14
Section 5.4 Rights of Holders . . . . . . . . . . . . . . . . . . . 15
Section 5.5 Guarantee of Payment . . . . . . . . . . . . . . . . . 15
Section 5.6 Subrogation . . . . . . . . . . . . . . . . . . . . . . 15
Section 5.7 Independent Obligations . . . . . . . . . . . . . . . . 16
</TABLE>

- i -
<PAGE> 3
<TABLE>
<S> <C>
ARTICLE VI
LIMITATION OF TRANSACTIONS; RANKING . . . . . . . . . . . . . . . . 16
Section 6.1 Limitation of Transactions . . . . . . . . . . . . . . 16
Section 6.2 Ranking . . . . . . . . . . . . . . . . . . . . . . . . 17

ARTICLE VII
TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 7.1 Termination . . . . . . . . . . . . . . . . . . . . . . 17

ARTICLE VIII
CERTAIN COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 8.1 Payment of Additional Sums . . . . . . . . . . . . . . 17
Section 8.2 Continued Ownership of Trust Common Securities, Etc. . 17

ARTICLE IX
INDEMNIFICATION, ETC. . . . . . . . . . . . . . . . . . . . . . . . 18
Section 9.1 Exculpation . . . . . . . . . . . . . . . . . . . . . . 18
Section 9.2 Fees, Expenses and Indemnification . . . . . . . . . . 18

ARTICLE X
MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 10.1 Successors and Assigns . . . . . . . . . . . . . . . . . 19
Section 10.2 Amendments . . . . . . . . . . . . . . . . . . . . . . . 19
Section 10.3 Holding Company Formation, Consolidations and Mergers . 19
Section 10.4 Notices . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 10.5 Benefit . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 10.6 Governing Law . . . . . . . . . . . . . . . . . . . . . 21
</TABLE>

- ii -
<PAGE> 4
KBK CAPITAL CORPORATION

TRUST PREFERRED SECURITIES
GUARANTEE AGREEMENT

This Trust Preferred Securities Guarantee Agreement (the "Trust
Preferred Securities Guarantee"), dated as of __________, 1998, is executed and
delivered by KBK Capital Corporation, a Delaware corporation (the "Guarantor"),
and The First National Bank of Chicago, a national banking association, as
trustee (the "Trust Preferred Guarantee Trustee"), for the benefit of the
Holders (as defined herein) from time to time of the Trust Preferred Securities
(as defined herein) of KBK Capital Trust I, a Delaware statutory business trust
(the "Issuer").

R E C I T A L S:

WHEREAS, pursuant to an Amended and Restated Declaration of Trust
(the "Declaration"), dated as of __________, 1998, among the trustees of the
Issuer named therein, KBK Capital Corporation, as sponsor (the "Sponsor"), and
the holders from time to time of undivided beneficial interests in the assets
of the Issuer, the Issuer is issuing on the date hereof _________ Trust
Preferred Securities, having an aggregate Liquidation Amount of $___________,
designated the ___% Trust Preferred Securities, which amounts exclude
__________ ___% Trust Preferred Securities having an aggregate Liquidation
Amount of $____________ that are subject to purchase pursuant to an
underwriters' over-allotment option (all ___% Trust Preferred Securities issued
by the Issuer, including any issued in connection with such over-allotment
option, are referred to herein collectively as the "Trust Preferred
Securities"); and

WHEREAS, as an incentive for the Holders to purchase the Trust
Preferred Securities, the Guarantor desires irrevocably and unconditionally to
agree, to the extent set forth in this Trust Preferred Securities Guarantee, to
pay to the Holders of the Trust Preferred Securities the Guarantee Payments (as
defined herein) and to make certain other payments on the terms and conditions
set forth herein; and

WHEREAS, the Guarantor is also executing and delivering a
guarantee agreement (the "Trust Common Securities Guarantee"), with
substantially identical terms to this Trust Preferred Securities Guarantee for
the benefit of the holders of the Trust Common Securities (as defined herein),
except that if the Guarantor is in default on any of its obligations under the
Trust Preferred Securities Guarantee or the Subordinated Indenture, the rights
of holders of the Trust Common Securities to receive "Guarantee Payments" (as
such term is defined in the Trust Common Securities Guarantee) under the Trust
Common Securities Guarantee are subordinated, to the extent and in the manner
set forth in the Trust Common Securities Guarantee, to the rights of Holders of
Trust Preferred Securities to receive Guarantee Payments under this Trust
Preferred Securities Guarantee;
<PAGE> 5
NOW, THEREFORE, in consideration of the purchase by each Holder
of Trust Preferred Securities, which purchase the Guarantor hereby acknowledges
shall benefit the Guarantor, the Guarantor executes and delivers this Trust
Preferred Securities Guarantee for the benefit of the Holders.

ARTICLE I
DEFINITIONS AND INTERPRETATION

Section 1.1 Definitions and Interpretation.

In this Trust Preferred Securities Guarantee, unless the context
otherwise requires:

(a) Capitalized terms used in this Trust Preferred Securities
Guarantee but not defined in the preamble above have the respective meanings
assigned to them in this Section 1.1;

(b) Capitalized terms used in this Trust Preferred Securities
Guarantee but not otherwise defined herein shall have the meanings assigned to
them in the Declaration or the Subordinated Indenture, as the case may be;

(d) All references to "the Trust Preferred Securities Guarantee" or
"this Trust Preferred Securities Guarantee" are to this Trust Preferred
Securities Guarantee as modified, supplemented or amended from time to time;

(e) All references in this Trust Preferred Securities Guarantee to
Articles and Sections are to Articles and Sections of this Trust Preferred
Securities Guarantee, unless otherwise specified;

(f) A term defined in the Trust Indenture Act has the same meaning
when used in this Trust Preferred Securities Guarantee, unless otherwise
defined in this Trust Preferred Securities Guarantee or unless the context
otherwise requires; and

(g) A reference to the singular includes the plural and vice versa.

"Affiliate" has the same meaning as given to that term in Rule
405 under the Securities Act of 1933, as amended, or any successor rule
thereunder; provided, however, that an Affiliate of the Guarantor shall not be
deemed to include the Issuer.

"Business Day" means any day other than a day on which banking
institutions in the City of New York are authorized or required by law or
executive order to close or a day on which the Corporate Trust Office is closed
for business.

- 2 -
<PAGE> 6
"Corporate Trust Office" means the principal corporate trust
office of the Trust Preferred Guarantee Trustee in Chicago, Illinois, which
office at the date hereof is located at One First National Plaza, Suite 0126.

"Covered Person" means any Holder or beneficial owner of Trust
Preferred Securities.

"Guarantee Event of Default" means a default by the Guarantor on
any of its payment or other obligations under this Trust Preferred Securities
Guarantee.

"Guarantee Payments" means the following payments or
distributions, without duplication, with respect to the Trust Preferred
Securities, to the extent not paid or made by the Issuer: (i) any accumulated
and unpaid Distributions (as defined in the Declaration) that are required to
be paid on such Trust Preferred Securities, to the extent the Issuer has funds
legally available therefor at such time, (ii) the redemption price, including
all accumulated and unpaid Distributions to the date of redemption (the
"Redemption Price"), to the extent the Issuer has funds legally available
therefor at such time, with respect to any Trust Preferred Securities called
for redemption by the Issuer, and (iii) upon a voluntary or involuntary
termination, dissolution, winding up or liquidation of the Issuer (other than
in connection with the distribution of Subordinated Debentures to the Holders
in exchange for Trust Preferred Securities as provided in the Declaration or
the redemption of all of the Trust Preferred Securities), the lesser of (a)
the aggregate of the Liquidation Amount and all accumulated and unpaid
Distributions on the Trust Preferred Securities to the date of payment, to the
extent the Issuer has funds legally available therefor, and (b) the amount of
assets of the Issuer, after satisfaction of all liabilities, remaining legally
available for distribution to Holders in liquidation of the Issuer (in either
case, the "Liquidation Distribution").

"Holder" shall mean any holder, as registered on the books and
records of the Issuer of any Trust Preferred Securities; provided, however,
that, in determining whether holders of the requisite percentage of Trust
Preferred Securities have given any request, notice, consent or waiver
hereunder, "Holder" shall not apply to Trust Preferred Securities beneficially
owned by the Guarantor or any Affiliate of the Guarantor.

"Indemnified Person" means the Trust Preferred Guarantee Trustee,
any Affiliate of the Trust Preferred Guarantee Trustee, or any officers,
directors, shareholders, members, partners, employees, representatives,
nominees, custodians or agents of the Trust Preferred Guarantee Trustee.

"Liquidation Amount" has the meaning assigned to such term in the
Declaration.

"Majority in Liquidation Amount of the Trust Preferred
Securities" means, except as provided by the Trust Indenture Act, a vote by
Holder(s) of Trust Preferred Securities, voting separately as a class, of more
than 50% of the aggregate Liquidation Amount of all Trust Preferred Securities.

- 3 -
<PAGE> 7
"Officers' Certificate" means, with respect to any Person (who is
not an individual), a certificate signed by the Chairman of the Board, the
President, a Vice President or the Treasurer, and by an Assistant Treasurer,
the Secretary or an Assistant Secretary of such Person. Any Officers'
Certificate delivered with respect to compliance with a condition or covenant
provided for in this Trust Preferred Securities Guarantee (other than pursuant
to Section 314(a)(4) of the Trust Indenture Act) shall include:

(a) A statement that each officer signing the Officers' Certificate
has read the covenant or condition and the definition relating thereto;

(b) A brief statement of the nature and scope of the examination or
investigation undertaken by each officer in rendering the Officers'
Certificate;

(c) A statement that each such officer has made such examination or
investigation as, in such officer's opinion, is necessary to enable such
officer to express an informed opinion as to whether or not such covenant or
condition has been complied with; and

(d) A statement as to whether, in the opinion of each such officer,
such condition or covenant has been complied with.

"Person" means a legal person, including any individual,
corporation, estate, partnership, joint venture, association, joint stock
company, limited liability company, trust, unincorporated association, or
government or any agency or political subdivision thereof, or any other entity
of whatever nature.

"Responsible Officer" means, with respect to the Trust Preferred
Guarantee Trustee, any officer of the Trust Preferred Guarantee Trustee
assigned to administer corporate trust matters and also means, with respect to a
particular corporate trust matter, any other officer to whom such matter is
referred because of his or her knowledge of and familiarity with the particular
subject.

"Senior Indebtedness" means any indebtedness of the Guarantor,
except for trade credit and any such indebtedness that is by its terms
subordinated to or pari passu with the Subordinated Debentures.

"Subordinated Indenture" means the Subordinated Indenture, dated
as of November _____, 1998 between the Company and The First National Bank of
Chicago, a national banking association, as trustee, as further amended or
supplemented from time to time.

- 4 -
<PAGE> 8
"Successor Trust Preferred Guarantee Trustee" means a successor
Trust Preferred Guarantee Trustee possessing the qualifications to act as Trust
Preferred Guarantee Trustee under Section 4.1.

"Trust Common Securities" means the common securities
representing subordinated undivided beneficial interests in the assets of the
Issuer in accordance with the Declaration that are issued by the Issuer at the
Closing Date or any Date of Delivery (as such terms are defined in the
Underwriting Agreement). All Trust Common Securities issued by the Issuer are
deemed to have been issued as of the Closing Time.

"Trust Indenture Act" means the Trust Indenture Act of 1939, as
amended.

"Trust Preferred Guarantee Trustee" means The First National Bank
of Chicago, a national banking association, until a Successor Trust Preferred
Guarantee Trustee has been appointed and has accepted such appointment pursuant
to the terms of this Trust Preferred Securities Guarantee and thereafter means
each such Successor Trust Preferred Guarantee Trustee.

"Trust Preferred Securities" has the meaning assigned to such
term in the preamble of this Agreement. All Trust Preferred Securities issued
by the Issuer are deemed to have been issued as of the Closing Time.

"Trust Securities" means the Trust Common Securities together
with the Trust Preferred Securities.

"Underwriting Agreement" means that certain Underwriting
Agreement, dated as of November ____, 1998, among the Sponsor, the Issuer and
the several underwriters named therein.

ARTICLE II
TRUST INDENTURE ACT

Section 2.1 Trust Indenture Act; Application.

(a) This Trust Preferred Securities Guarantee is subject to
the provisions of the Trust Indenture Act that are required to be part of this
Trust Preferred Securities Guarantee and shall, to the extent applicable, be
governed by such provisions; and

(b) If and to the extent that any provision of this Trust
Preferred Securities Guarantee limits, qualifies or conflicts with the duties
imposed by Section 310 to 317, inclusive, of the Trust Indenture Act, such
imposed duties shall control.

Section 2.2 Lists of Holders of Securities.

- 5 -
<PAGE> 9
(a) The Trust Preferred Guarantee Trustee shall preserve in as
current a form as is reasonably practicable the most recent list available to
it of the names and addresses of Holders of Trust Preferred Securities. If the
Trust Preferred Guarantee Trustee is not the registrar under the Declaration,
the Guarantor shall furnish to the Trust Preferred Guarantee Trustee semi-
annually on or before June 15 and December 15 in each year, and at such other
times as the Trust Preferred Guarantee Trustee may request in writing, a list,
in such form and as of such date as the Trust Preferred Guarantee Trustee may
require, containing all the information in the possession or control of the
registrar under the Declaration, the Guarantor or any of its Paying Agents (as
defined in the Declaration) other than the Trust Preferred Guarantee Trustee as
to the names and addresses of Holders of Trust Preferred Securities.

(b) The Trust Preferred Guarantee Trustee shall comply with
its obligations under Sections 311(a), 311(b) and Section 312(b) of the Trust
Indenture Act.

Section 2.3 Reports by the Trust Preferred Guarantee Trustee.

Within 60 days after May 15 of each calendar year, the Trust
Preferred Guarantee Trustee shall provide to the Holders of the Trust Preferred
Securities such reports as are required by Section 313(a) of the Trust
Indenture Act, if any, in the form and in the manner provided by Section 313 of
the Trust Indenture Act. The Trust Preferred Guarantee Trustee shall also
comply with the other requirements of Section 313 of the Trust Indenture Act.

Section 2.4 Periodic Reports to Trust Preferred Guarantee Trustee.

The Guarantor shall provide to the Trust Preferred Guarantee
Trustee such documents, reports and information as required by Section 314 (if
any) and the compliance certificate required by Section 314 of the Trust
Indenture Act in the form, in the manner and at the times required by Section
314 of the Trust Indenture Act, provided that such compliance certificate shall
be delivered on or before 120 days after the end of each fiscal year of the
Guarantor.

Section 2.5 Evidence of Compliance with Conditions Precedent.

The Guarantor shall provide to the Trust Preferred Guarantee
Trustee such evidence of compliance with the conditions precedent, if any,
provided for in this Trust Preferred Securities Guarantee that relate to any of
the matters set forth in Section 314(c) of the Trust Indenture Act. Any
certificate or opinion required to be given by an officer pursuant to Section
314(c)(1) may be given in the form of an Officers' Certificate.

Section 2.6 Guarantee Events of Default; Waiver.

The Holders of a Majority in Liquidation Amount of the Trust
Preferred Securities may, by vote, on behalf of the Holders of all of the Trust
Preferred Securities, waive any past Guarantee Event of Default and its
consequences. Upon such waiver, any such Guarantee Event of

- 6 -
<PAGE> 10
Default shall cease to exist, and any Guarantee Event of Default arising
therefrom shall be deemed to have been cured, for every purpose of this Trust
Preferred Securities Guarantee, but no such waiver shall extend to any
subsequent or other default or Guarantee Event of Default or impair any right
consequent thereon.

Section 2.7 Guarantee Event of Default; Notice.

(a) The Trust Preferred Guarantee Trustee shall, within 90
days after the occurrence of a Guarantee Event of Default, transmit by mail,
first class postage prepaid, to the Holders of the Trust Preferred Securities,
notices of all Guarantee Events of Default actually known to a Responsible
Officer of the Trust Preferred Guarantee Trustee charged with the
administration of this Trust Preferred Securities Guarantee, unless such
defaults have been cured before the giving of such notice, provided, that,
except in the case of default in any Guarantee Payment, the Trust Preferred
Guarantee Trustee shall be protected in withholding such notice if and so long
as a Responsible Officer of the Trust Preferred Guarantee Trustee in good faith
determines that the withholding of such notice is in the interests of the
Holders of the Trust Preferred Securities.

(b) The Trust Preferred Guarantee Trustee shall not be deemed
to have knowledge of any Guarantee Event of Default unless the Trust Preferred
Guarantee Trustee shall have received notice thereof from the Guarantor or a
Holder, or a Responsible Officer of the Trust Preferred Guarantee Trustee
charged with the administration of the Declaration shall have obtained actual
knowledge, of such Guarantee Event of Default.

Section 2.8 Conflicting Interests.

The Declaration shall be deemed to be specifically described in
this Trust Preferred Securities Guarantee for the purposes of clause (i) of the
first proviso contained in Section 310(b) of the Trust Indenture Act.

ARTICLE III
POWERS, DUTIES AND RIGHTS OF THE
TRUST PREFERRED GUARANTEE TRUSTEE

Section 3.1 Powers and Duties of the Trust Preferred Guarantee Trustee.

(a) This Trust Preferred Securities Guarantee shall be held by
the Trust Preferred Guarantee Trustee for the benefit of the Holders of the
Trust Preferred Securities, and the Trust Preferred Guarantee Trustee shall not
transfer this Trust Preferred Securities Guarantee to any Person except a
Holder of Trust Preferred Securities exercising his or her rights pursuant to
Section 5.4(b) or to a Successor Trust Preferred Guarantee Trustee on
acceptance by such Successor Trust Preferred Guarantee Trustee of its
appointment to act as Successor Trust Preferred Guarantee Trustee. The right,
title and interest of the Trust Preferred Guarantee Trustee shall automatically
vest in any

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Successor Trust Preferred Guarantee Trustee, and such vesting and succession of
title shall be effective whether or not conveyancing documents have been
executed and delivered pursuant to the appointment of such Successor Trust
Preferred Guarantee Trustee.

(b) If a Guarantee Event of Default actually known to a
Responsible Officer of the Trust Preferred Guarantee Trustee charged with the
administration of this Trust Preferred Securities Guarantee has occurred and is
continuing, the Trust Preferred Guarantee Trustee shall enforce this Trust
Preferred Securities Guarantee for the benefit of the Holders of the Trust
Preferred Securities.

(c) The Trust Preferred Guarantee Trustee, before the
occurrence of any Guarantee Event of Default and after the curing or waiver of
all Guarantee Events of Default that may have occurred, shall undertake to
perform only such duties as are specifically set forth in this Trust Preferred
Securities Guarantee, and no implied covenants shall be read into this Trust
Preferred Securities Guarantee against the Trust Preferred Guarantee Trustee.
In case a Guarantee Event of Default has occurred (that has not been cured or
waived pursuant to Section 2.6) and is actually known to a Responsible Officer
of the Trust Preferred Guarantee Trustee charged with the administration of
this Trust Preferred Securities Guarantee, the Trust Preferred Guarantee
Trustee shall exercise such of the rights and powers vested in it by this Trust
Preferred Securities Guarantee, and use the same degree of care and skill in
its exercise thereof, as a prudent person would exercise or use under the
circumstances in the conduct of his or her own affairs.

(d) No provision of this Trust Preferred Securities Guarantee
shall be construed to relieve the Trust Preferred Guarantee Trustee from
liability for its own negligent action, its own negligent failure to act, or
its own willful misconduct, except that:

(i) Prior to the occurrence of any Guarantee Event of
Default and after the curing or waiving of all such Guarantee Events of
Default that may have occurred:

(A) The duties and obligations of the Trust
Preferred Guarantee Trustee shall be determined solely by the
express provisions of this Trust Preferred Securities Guarantee,
and the Trust Preferred Guarantee Trustee shall not be liable
except for the performance of such duties and obligations as are
specifically set forth in this Trust Preferred Securities
Guarantee, and no implied covenants or obligations shall be read
into this Trust Preferred Securities Guarantee against the Trust
Preferred Guarantee Trustee; and

(B) In the absence of bad faith on the part of
the Trust Preferred Guarantee Trustee, the Trust Preferred
Guarantee Trustee may conclusively rely, as to the truth of the
statements and the correctness of the opinions expressed therein,
upon any certificates or opinions furnished to the Trust
Preferred Guarantee Trustee and conforming to the requirements of
this Trust Preferred Securities Guarantee; but in the case of any
such certificates or opinions that by any provision hereof are

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specifically required to be furnished to the Trust Preferred
Guarantee Trustee, the Trust Preferred Guarantee Trustee shall be
under a duty to examine the same to determine whether or not they
conform to the requirements of this Trust Preferred Securities
Guarantee;

(ii) The Trust Preferred Guarantee Trustee shall not be
liable for any error of judgment made in good faith by a Responsible
Officer of the Trust Preferred Guarantee Trustee, unless it shall be
proved that the Trust Preferred Guarantee Trustee was negligent in
ascertaining the pertinent facts upon which such judgment was made;

(iii) The Trust Preferred Guarantee Trustee shall not be
liable with respect to any action taken or omitted to be taken by it in
good faith in accordance with the direction of the Holders of a Majority
in Liquidation Amount of the Trust Preferred Securities relating to the
time, method and place of conducting any proceeding for any remedy
available to the Trust Preferred Guarantee Trustee, or exercising any
trust or power conferred upon the Trust Preferred Guarantee Trustee
under this Trust Preferred Securities Guarantee; and

(iv) No provision of this Trust Preferred Securities
Guarantee shall require the Trust Preferred Guarantee Trustee to expend
or risk its own funds or otherwise incur personal financial liability in
the performance of any of its duties or in the exercise of any of its
rights or powers, if the Trust Preferred Guarantee Trustee shall have
reasonable grounds for believing that the repayment of such funds or
liability is not assured to it under the terms of this Trust Preferred
Securities Guarantee or indemnity, reasonably satisfactory to the Trust
Preferred Guarantee Trustee, against such risk or liability is not
reasonably assured to it.

(e) Every provision of this Trust Preferred Securities
Guarantee shall be subject to this Section 3.1, whether or not expressly
stated.

Section 3.2 Certain Rights of Trust Preferred Guarantee Trustee.

(a) Subject to the provisions of Section 3.1:

(i) The Trust Preferred Guarantee Trustee may
conclusively rely, and shall be fully protected in acting or refraining
from acting, upon any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, bond,
debenture, note, other evidence of indebtedness or other paper or
document believed by it to be genuine and to have been signed, sent or
presented by the proper party or parties.

(ii) Any direction or act of the Guarantor contemplated
by this Trust Preferred Securities Guarantee shall be sufficiently
evidenced by an Officers' Certificate.

(iii) Whenever, in the administration of this Trust
Preferred Securities Guarantee, the Trust Preferred Guarantee Trustee
shall deem it desirable that a matter be proved or established before
taking, suffering or omitting any action hereunder, the Trust Preferred
Guarantee Trustee (unless other evidence is herein specifically
prescribed) may,

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in the absence of bad faith on its part, request and conclusively rely
upon an Officers' Certificate which, upon receipt of such request, shall
be promptly delivered by the Guarantor.

(iv) The Trust Preferred Guarantee Trustee shall have no
duty to see to any recording, filing or registration of any instrument
(or any rerecording, refiling or reregistration thereof).

(v) The Trust Preferred Guarantee Trustee may consult
with counsel of its selection, and the advice or opinion of such counsel
shall be full and complete authorization and protection in respect of any
action taken, suffered or omitted by it hereunder in good faith and in
accordance with such advice or opinion. Such counsel may be counsel to
the Guarantor or any of its Affiliates and may include any of its
employees. The Trust Preferred Guarantee Trustee shall have the right at
any time to seek instructions concerning the administration of this Trust
Preferred Securities Guarantee from any court of competent jurisdiction.

(vi) The Trust Preferred Guarantee Trustee shall be
under no obligation to exercise any of the rights or powers vested in it
by this Trust Preferred Securities Guarantee at the request or direction
of any Holder, unless such Holder shall have provided to the Trust
Preferred Guarantee Trustee such security and indemnity, reasonably
satisfactory to the Trust Preferred Guarantee Trustee, against the
costs, expenses (including attorneys' fees and expenses and the expenses
of the Trust Preferred Guarantee Trustee's agents, nominees or
custodians) and liabilities that might be incurred by it in complying
with such request or direction, including such reasonable advances as
may be requested by the Trust Preferred Guarantee Trustee; provided
that, nothing contained in this Section 3.2(a)(vi) shall be taken to
relieve the Trust Preferred Guarantee Trustee, upon the occurrence of a
Guarantee Event of Default, of its obligation to exercise the rights and
powers vested in it by this Trust Preferred Securities Guarantee.

(vii) The Trust Preferred Guarantee Trustee shall not be
bound to make any investigation into the facts or matters stated in any
resolution, certificate, statement, instrument, opinion, report, notice,
request, direction, consent, order, bond, debenture, note, other
evidence of indebtedness or other paper or document, but the Trust
Preferred Guarantee Trustee, in its discretion, may make such further
inquiry or investigation into such facts or matters as it may see fit.

(viii) The Trust Preferred Guarantee Trustee may execute
any of the trusts or powers hereunder or perform any duties hereunder
either directly or by or through agents, nominees, custodians or
attorneys, and the Trust Preferred Guarantee Trustee shall not be
responsible for any misconduct or negligence on the part of any agent or
attorney appointed with due care by it hereunder.

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<PAGE> 14
(ix) Any action taken by the Trust Preferred Guarantee
Trustee or its agents hereunder shall bind the Holders of the Trust
Preferred Securities, and the signature of the Trust Preferred Guarantee
Trustee or its agents alone shall be sufficient and effective to perform
any such action. No third party shall be required to inquire as to the
authority of the Trust Preferred Guarantee Trustee to so act or as to
its compliance with any of the terms and provisions of this Trust
Preferred Securities Guarantee, both of which shall be conclusively
evidenced by the Trust Preferred Guarantee Trustee or its agent taking
such action.

(x) Whenever in the administration of this Trust
Preferred Securities Guarantee the Trust Preferred Guarantee Trustee
shall deem it desirable to receive instructions with respect to
enforcing any remedy or right or taking any other action hereunder, the
Trust Preferred Guarantee Trustee (i) may request instructions from the
Holders of a Majority in Liquidation Amount of the Trust Preferred
Securities, (ii) may refrain from enforcing such remedy or right or
taking such other action until such instructions are received, and (iii)
shall be fully protected in conclusively relying on or acting in
accordance with such instructions.

(xi) The Trust Preferred Guarantee Trustee shall not be
liable for any action taken, suffered, or omitted to be taken by it in
good faith, without negligence, and reasonably believed by it to be
authorized or within the discretion or rights or powers conferred upon
it by this Trust Preferred Securities Guarantee.

(b) No provision of this Trust Preferred Securities Guarantee
shall be deemed to impose any duty or obligation on the Trust Preferred
Guarantee Trustee to perform any act or acts or exercise any right, power, duty
or obligation conferred or imposed on it in any jurisdiction in which it shall
be illegal, or in which the Trust Preferred Guarantee Trustee shall be
unqualified or incompetent in accordance with applicable law, to perform any
such act or acts or to exercise any such right, power, duty or obligation. No
permissive power or authority available to the Trust Preferred Guarantee
Trustee shall be construed to be a duty.

Section 3.3 Not Responsible for Recitals or Issuance of Trust Preferred
Securities Guarantee.

The recitals contained in this Trust Preferred Securities
Guarantee shall be taken as the statements of the Guarantor, and the Trust
Preferred Guarantee Trustee does not assume any responsibility for their
correctness. The Trust Preferred Guarantee Trustee makes no representation as
to the validity or sufficiency of this Trust Preferred Securities Guarantee.

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ARTICLE IV
TRUST PREFERRED GUARANTEE TRUSTEE

Section 4.1 Trust Preferred Guarantee Trustee; Eligibility.

(a) There shall at all times be a Trust Preferred Guarantee
Trustee which shall:

(i) Not be an Affiliate of the Guarantor; and

(ii) Be a corporation or banking association organized
and doing business under the laws of the United States of America or any
State or Territory thereof or of the District of Columbia, or a
corporation or Person permitted by the Securities and Exchange Commission
to act as an institutional trustee under the Trust Indenture Act,
authorized under such laws to exercise corporate trust powers, having a
combined capital and surplus of at least $50,000,000, and subject to
supervision or examination by federal, state, territorial or District of
Columbia authority. If such corporation publishes reports of condition
at least annually, pursuant to law or to the requirements of the
supervising or examining authority referred to above, then, for the
purposes of this Section 4.1(a)(ii), the combined capital and surplus of
such corporation shall be deemed to be its combined capital and surplus
as set forth in its most recent report of condition so published.

(b) If at any time the Trust Preferred Guarantee Trustee shall
cease to be eligible to so act under Section 4.1(a), the Trust Preferred
Guarantee Trustee shall immediately resign in the manner and with the effect
set out in Section 4.2(c).

(c) If the Trust Preferred Guarantee Trustee has or shall
acquire any "conflicting interest" within the meaning of Section 310(b) of the
Trust Indenture Act, the Trust Preferred Guarantee Trustee and Guarantor shall
in all respects comply with the provisions of Section 310(b) of the Trust
Indenture Act, subject to the penultimate paragraph thereof.

Section 4.2 Appointment, Removal and Resignation of Trust Preferred Guarantee
Trustee.

(a) Subject to Section 4.2(b), the Trust Preferred Guarantee
Trustee may be appointed or removed without cause at any time by the Guarantor
except during a Guarantee Event of Default. Upon the occurrence and during the
continuance of a Guarantee Event of Default, only the Holders of a Majority in
Liquidation Amount of the Trust Preferred Securities may appoint or remove the
Trust Preferred Guarantee Trustee.

(b) The Trust Preferred Guarantee Trustee shall not be removed
in accordance with Section 4.2(a) until a Successor Trust Preferred Guarantee
Trustee has been appointed and has accepted such appointment by written
instrument executed by such Successor Trust Preferred Guarantee Trustee and
delivered to the Guarantor.

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(c) The Trust Preferred Guarantee Trustee shall hold office
until a Successor Trust Preferred Guarantee Trustee shall have been appointed
or until its removal or resignation. The Trust Preferred Guarantee Trustee may
resign from office (without need for prior or subsequent accounting) by an
instrument in writing executed by the Trust Preferred Guarantee Trustee and
delivered to the Guarantor, which resignation shall not take effect until a
Successor Trust Preferred Guarantee Trustee has been appointed and has accepted
such appointment by instrument in writing executed by such Successor Trust
Preferred Guarantee Trustee and delivered to the Guarantor and the resigning
Trust Preferred Guarantee Trustee.

(d) If no Successor Trust Preferred Guarantee Trustee shall
have been appointed and accepted appointment as provided in this Section 4.2
within 60 days after delivery of an instrument of removal or resignation, the
Trust Preferred Guarantee Trustee resigning or being removed may petition any
court of competent jurisdiction for appointment of a Successor Trust Preferred
Guarantee Trustee. Such court may thereupon, after prescribing such notice, if
any, as it may deem proper, appoint a Successor Trust Preferred Guarantee
Trustee.

(e) No Trust Preferred Guarantee Trustee shall be liable for
the acts or omissions to act of any Successor Trust Preferred Guarantee
Trustee.

(f) Upon termination of this Trust Preferred Securities
Guarantee or removal or resignation of the Trust Preferred Guarantee Trustee
pursuant to this Section 4.2, the Guarantor shall pay to the Trust Preferred
Guarantee Trustee all amounts due to the Trust Preferred Guarantee Trustee
accrued to the date of such termination, removal or resignation.

ARTICLE V
GUARANTEE

Section 5.1 Guarantee.

The Guarantor irrevocably and unconditionally agrees to pay in
full to the Holders the Guarantee Payments (without duplication of amounts
theretofore paid by the Issuer), if, as and when due, regardless of any
defense, right of set-off or counterclaim that the Issuer may have or assert
other than defense of payment. The Guarantor's obligation to make a Guarantee
Payment may be satisfied by direct payment of the required amounts by the
Guarantor to the Holders or by causing the Issuer to pay such amounts to the
Holders.

Section 5.2 Waiver of Notice and Demand.

The Guarantor hereby waives notice of acceptance of this Trust
Preferred Securities Guarantee and of any liability to which it applies or may
apply, presentment, demand for payment, any right to require a proceeding first
against the Issuer or any other Person before proceeding

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<PAGE> 17
against the Guarantor, protest, notice of nonpayment, notice of dishonor,
notice of redemption and all other notices and demands.

Section 5.3 Obligations Not Affected.

The obligations, covenants, agreements and duties of the
Guarantor under this Trust Preferred Securities Guarantee shall in no way be
affected or impaired by reason of the happening from time to time of any of the
following:

(a) The release or waiver, by operation of law or otherwise,
of the performance or observance by the Issuer of any express or implied
agreement, covenant, term or condition relating to the Trust Preferred
Securities to be performed or observed by the Issuer.

(b) The extension of time for the payment by the Issuer of all
or any portion of the Distributions, Redemption Price, Liquidation Distribution
or any other sums payable under the terms of the Trust Preferred Securities or
the extension of time for the performance of any other obligation under,
arising out of, or in connection with, the Trust Preferred Securities.

(c) Any failure, omission, delay or lack of diligence on the
part of the Holders to enforce, assert or exercise any right, privilege, power
or remedy conferred on the Holders pursuant to the terms of the Trust Preferred
Securities, or any action on the part of the Issuer granting indulgence or
extension of any kind.

(d) The voluntary or involuntary liquidation, dissolution,
sale of any collateral, receivership, insolvency, bankruptcy, assignment for
the benefit of creditors, reorganization, arrangement, composition or
readjustment of debt of, or other similar proceedings affecting, the Issuer or
any of the assets of the Issuer;

(e) Any invalidity of, or defect or deficiency in, the Trust
Preferred Securities;

(f) The settlement or compromise of any obligation guaranteed
hereby or hereby incurred; or

(g) Any other circumstances whatsoever that might otherwise
constitute a legal or equitable discharge or defense of a guarantor, it being
the intent of this Section 5.3 that the obligations of the Guarantor hereunder
shall be absolute and unconditional under any and all circumstances.

There shall be no obligation of the Holders to give notice to, or
obtain consent of, the Guarantor with respect to the happening of any of the
foregoing.

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<PAGE> 18
Section 5.4 Rights of Holders.

(a) The Holders of a Majority in Liquidation Amount of the
Trust Preferred Securities have the right to direct the time, method and place
of conducting any proceeding for any remedy available to the Trust Preferred
Guarantee Trustee in respect of this Trust Preferred Securities Guarantee or
exercising any trust or power conferred upon the Trust Preferred Guarantee
Trustee under this Trust Preferred Securities Guarantee, provided, that,
subject to Section 3.1, the Trust Preferred Guarantee Trustee shall have the
right to decline to follow any such direction if the Trust Preferred Guarantee
Trustee, being advised by counsel, determines that the action or proceeding so
directed may not lawfully be taken or if the Trust Preferred Guarantee Trustee
in good faith by its board of directors or trustees, executive committee, or a
trust committee of directors or trustees, and/or Responsible Officers shall
determine that the action or proceeding so directed would involve the Trust
Preferred Guarantee Trustee in personal liability.

(b) If the Trust Preferred Guarantee Trustee fails to enforce
its rights under the Trust Preferred Securities Guarantee after a Holder of
Trust Preferred Securities has made a written request, such Holder of Trust
Preferred Securities may institute a legal proceeding directly against the
Guarantor to enforce the Trust Preferred Guarantee Trustee's rights under this
Trust Preferred Securities Guarantee, without first instituting a legal
proceeding against the Issuer, the Trust Preferred Guarantee Trustee or any
other person or entity. Notwithstanding the foregoing, if the Guarantor has
failed to make a Guarantee Payment, a Holder of Trust Preferred Securities may
directly institute a proceeding in such Holder's own name against the Guarantor
for enforcement of the Trust Preferred Securities Guarantee for such payment.
The Guarantor waives any right or remedy to require that any action be brought
first against the Issuer or any other person or entity before proceeding
directly against the Guarantor.

Section 5.5 Guarantee of Payment.

This Trust Preferred Securities Guarantee creates a guarantee of
payment and not of collection.

Section 5.6 Subrogation.

The Guarantor shall be subrogated to all (if any) rights of the
Holders of Trust Preferred Securities against the Issuer in respect of any
amounts paid to such Holders by the Guarantor under this Trust Preferred
Securities Guarantee; provided, however, that the Guarantor shall not (except
to the extent required by mandatory provisions of law) be entitled to enforce
or exercise any right that it may acquire by way of subrogation or any
indemnity, reimbursement or other agreement, in all cases as a result of
payment under this Trust Preferred Securities Guarantee, if, at the time of any
such payment, any amounts are due and unpaid under this Trust Preferred
Securities Guarantee. If any amount shall be paid to the Guarantor in
violation of the preceding sentence, the Guarantor agrees to hold such amount
in trust for the Holders and to pay over such amount to the Holders.

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Section 5.7 Independent Obligations.

The Guarantor acknowledges that its obligations hereunder are
independent of the obligations of the Issuer with respect to the Trust
Preferred Securities, and that the Guarantor shall be liable as principal and
as debtor hereunder to make Guarantee Payments pursuant to the terms of this
Trust Preferred Securities Guarantee notwithstanding the occurrence of any
event referred to in subsections (a) through (g), inclusive, of Section 5.3
hereof.

ARTICLE VI
LIMITATION OF TRANSACTIONS; RANKING

Section 6.1 Limitation of Transactions.

So long as any Trust Preferred Securities remain outstanding, if
(a) for any distribution period, full distributions on a cumulative basis on
any Trust Preferred Securities have not been paid or declared and set apart for
payment, (b) an Event of Default (as defined in the Subordinated Indenture) has
occurred and is continuing or there shall have occurred and be continuing any
event of which the Guarantor has actual knowledge that, with the giving of
notice or lapse of time, or both, would constitute an Event of Default with
respect to the Subordinated Debentures, (c) the Guarantor is in default of its
obligations under this Trust Preferred Securities Guarantee or the Trust Common
Securities Guarantee, or (d) the Guarantor shall have given notice of its
selection of an Extension Period (as defined in the Subordinated Indenture) as
provided in the Subordinated Indenture with respect to the Subordinated
Debentures and shall not have rescinded such notice, or such Extension Period
(or any extension thereof) shall be continuing, then, during such period the
Guarantor shall not (i) declare or pay dividends on, make distributions with
respect to, or redeem, purchase or acquire, or make a liquidation payment with
respect to any of its capital stock (except for dividends or distributions in
shares of, or options, warrants or rights to subscribe for or purchase shares
of, its capital stock and conversions or exchanges of common stock of one class
into common stock of another class) or (ii) make any payments of principal,
interest or premium, if any, on or repay or repurchase or redeem any debt
securities (including guarantees of indebtedness for money borrowed) of the
Guarantor that rank pari passu with or junior to the Subordinated Debentures
(other than (v) any redemption, liquidation, interest, principal or guarantee
payment by the Guarantor where the payment is made by way of securities
(including capital stock) that rank pari passu with or junior to the securities
on which such redemption, liquidation, interest, principal or guarantee payment
is being made, (w) payments under this Trust Preferred Securities Guarantee or
the Trust Common Securities Guarantee, (x) purchases of Common Stock related to
the issuance of Common Stock under any of the Guarantor's benefit plans for its
directors, officers or employees, (y) as a result of a reclassification of the
Guarantor's capital stock or the exchange or conversion of one series or class
of the Guarantor's capital stock for another series or class of the Guarantor's
capital stock, and (z) the purchase of fractional interests in shares of the
Guarantor's capital stock pursuant to the conversion or exchange provisions of
such capital stock or the security being converted or exchanged).

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Section 6.2 Ranking.

(a) This Trust Preferred Securities Guarantee will constitute
an unsecured obligation of the Guarantor and will rank (i) subordinate and
junior in right of payment to all other liabilities of the Guarantor (other
than the obligations of the Guarantor under the Trust Common Securities
Guarantee, which are subordinate and junior to this Trust Preferred Securities
Guarantee to the extent provided therein), (ii) pari passu with the most senior
preferred or preference stock now or hereafter issued by the Guarantor or any
of its Affiliates and (iii) senior to the Guarantor's common stock. Any
similar guarantee given hereafter by the Guarantor with respect to trust
preferred securities that is silent as to seniority will rank pari passu with
this Trust Preferred Securities Guarantee.

ARTICLE VII
TERMINATION

Section 7.1 Termination.

This Trust Preferred Securities Guarantee shall terminate upon
(i) full payment of the Redemption Price of all Trust Preferred Securities,
(ii) upon the distribution of the Subordinated Debentures to the Holders of all
of the Trust Preferred Securities or (iii) upon full payment of the amounts
payable in accordance with the Declaration upon liquidation of the Issuer.
Notwithstanding the foregoing, this Trust Preferred Securities Guarantee will
continue to be effective or will be reinstated, as the case may be, if at any
time any Holder of Trust Preferred Securities must restore payment of any sums
paid under the Trust Preferred Securities or under this Trust Preferred
Securities Guarantee.

ARTICLE VIII
CERTAIN COVENANTS

Section 8.1 Payment of Additional Sums.

Guarantor covenants and agrees that if and so long as (i) the
Issuer is the holder of all the Subordinated Debentures, (ii) a Trust Tax Event
(as defined in the Declaration) in respect of the Issuer has occurred and is
continuing and (iii) the Guarantor has elected, and has not revoked such
election, to pay Additional Sums (as defined in the Declaration) in respect of
the Trust Common Securities and Trust Preferred Securities, the Guarantor will
pay to the Issuer such Additional Sums.

Section 8.2 Continued Ownership of Trust Common Securities, Etc.

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The Guarantor covenants and agrees for so long as the Trust
Preferred Securities remain outstanding, (i) (a) to maintain directly or
indirectly 100% ownership of the Trust Common Securities, provided that certain
successor Persons in transactions which are permitted by Article VIII of the
Subordinated Indenture may succeed to the Guarantor's ownership of the Trust
Common Securities, and (b) not to voluntarily terminate, wind-up or liquidate
the Issuer, except in connection with (I) a distribution of the Subordinated
Debentures to the holders of the Trust Securities in liquidation of the Issuer,
(II) the redemption of all Trust Securities or (III) certain mergers,
consolidations or amalgamations permitted by the Declaration, (ii) to use its
reasonable commercial efforts, consistent with the terms and provisions of the
Declaration, to cause the Issuer to remain classified as a grantor trust and
not taxable as a corporation for United States federal income tax purposes, and
(iii) to honor all obligations relating to the exchange of the Trust Preferred
Securities for Subordinated Debentures.

ARTICLE IX
INDEMNIFICATION, ETC.

Section 9.1 Exculpation.

(a) No Indemnified Person shall be liable, responsible or
accountable in damages or otherwise to the Guarantor or any Covered Person for
any loss, damage or claim incurred by reason of any act or omission performed
or omitted by such Indemnified Person in good faith in accordance with this
Trust Preferred Securities Guarantee and in a manner that such Indemnified
Person reasonably believed to be within the scope of the authority conferred on
such Indemnified Person by this Trust Preferred Securities Guarantee or by law,
except that an Indemnified Person shall be liable for any such loss, damage or
claim incurred by reason of such Indemnified Person's gross negligence or
willful misconduct with respect to such acts or omissions.

(b) An Indemnified Person shall be fully protected in relying
in good faith upon the records of the Guarantor and upon such information,
opinions, reports or statements presented to the Guarantor by any Person as to
matters the Indemnified Person reasonably believes are within such other
Person's professional or expert competence and if selected by such Indemnified
Person, has been selected by such Indemnified Person with reasonable care by or
on behalf of the Guarantor, including information, opinions, reports or
statements as to the value and amount of the assets, liabilities, profits,
losses, or any other facts pertinent to the existence and amount of assets from
which Distributions to Holders of Trust Preferred Securities might properly be
paid.

Section 9.2 Fees, Expenses and Indemnification.

The Guarantor covenants and agrees to pay to the Trust Preferred
Guarantee Trustee from time to time, and the Trust Preferred Guarantee Trustee
shall be entitled to, reasonable compensation for all services rendered by it
hereunder (which compensation shall not be limited by any provision of law in
regard to the compensation of a trustee of an express trust), and the

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Guarantor will pay or reimburse the Trust Preferred Guarantee Trustee upon its
request for all reasonable expenses, disbursements and advances incurred or
made by the Trust Preferred Guarantee Trustee in accordance with any of the
provisions of this Trust Preferred Securities Guarantee (including the
reasonable compensation and the expenses and disbursements of its counsel and
all Persons not regularly in its employ), except any such expense, disbursement
or advance as may arise from its negligence or bad faith. The Guarantor also
agrees to indemnify each Indemnified Person for, and to hold each Indemnified
Person harmless against, any and all loss, liability, damage, claim or expense
incurred without negligence or bad faith on its part, arising out of or in
connection with the acceptance or administration of the trust or trusts
hereunder, including the costs and expenses (including reasonable legal fees
and expenses) of defending itself against, or investigating, any claim or
liability in connection with the exercise or performance of any of its powers
or duties hereunder. The obligations of the Guarantor under this Section 9.2
shall survive the termination of this Trust Preferred Securities Guarantee or
the earlier resignation or removal of the Trust Preferred Guarantee Trustee.

ARTICLE X
MISCELLANEOUS

Section 10.1 Successors and Assigns.

All guarantees and agreements contained in this Trust Preferred
Securities Guarantee shall bind the successors, assigns, receivers, trustees
and representatives of the Guarantor and shall inure to the benefit of the
Holders of the Trust Preferred Securities then outstanding.

Section 10.2 Amendments.

Except with respect to any changes that do not materially
adversely affect the rights of Holders (in which case no consent of Holders
will be required), this Trust Preferred Securities Guarantee may only be
amended with the prior approval of the Holders of at least a Majority in
Liquidation Amount of the Trust Preferred Securities. The provisions of the
Declaration with respect to consents to amendments (whether at a meeting or
otherwise) and meetings of Holders shall apply to the giving of such approval.

Section 10.3 Holding Company Formation, Consolidations and Mergers.

Notwithstanding anything to the contrary in this Agreement, the
Guarantor may form a holding company by merger with or into a single direct or
indirect wholly owned subsidiary of the Guarantor, whether under Section 251(g)
of the General Corporation Law of Delaware or otherwise, and in connection
therewith the Guarantor may sell, transfer or lease any of its properties and
assets to such holding company. Upon any consolidation of the Guarantor with,
or merger of the Guarantor into, any other Person or any sale, transfer or
lease of the properties and assets of the Guarantor as, or substantially as, an
entirety by the Guarantor or upon any holding company formation in

- 19 -
<PAGE> 23
accordance with the preceding sentence, the successor Person formed by such
consolidation or into which the Guarantor is merged or to which such sale,
transfer or lease is made, or which constitutes the holding company formed as
contemplated in the preceding sentence, shall execute and deliver to the Trust
Preferred Guarantee Trustee an instrument of assumption in form satisfactory to
the Trust Preferred Guarantee Trustee whereby such successor expressly assumes
the due and punctual performance and observance of all of the covenants and
conditions of this Trust Preferred Securities Guarantee to be performed by the
Guarantor and such successor Person shall thereupon succeed to, and be
substituted for, and may exercise every right and power of, the Guarantor under
this Trust Preferred Securities Guarantee with the same effect as if such
successor Person had been named originally as the Guarantor herein, and
thereafter, except in the case of a lease, the predecessor Person shall be
relieved of all obligations and covenants under this Trust Preferred Securities
Guarantee. Notwithstanding the foregoing, the predecessor Person may elect, at
its option, not to be so relieved of such obligations and covenants, provided
that the predecessor Person and the successor Person shall agree in writing to
be co-obligors jointly and severally with respect to all such obligations and
covenants. Concurrently with the delivery to the Trust Preferred Guarantee
Trustee of such instrument of assumption, the Guarantor shall deliver to the
Trust Preferred Guarantee Trustee an Officers' Certificate and an Opinion of
Counsel, each stating that such consolidation, merger, transfer, sale or lease
or the formation of such holding company and the transactions effected in
connection therewith and the related instrument of assumption comply with this
Article and that all conditions precedent herein provided relating to such
transaction and assumption have been complied with.

Section 10.4 Notices.

All notices provided for in this Trust Preferred Securities
Guarantee shall be in writing, duly signed by the party giving such notice, and
shall be delivered, telecopied or mailed by first class mail, as follows:

(a) If given to the Trust Preferred Guarantee Trustee, at the
Trust Preferred Guarantee Trustee's Corporate Trust Office, Attention:
Corporate Trustee, Administration Department.

(b) If given to the Guarantor, at the Guarantor's mailing
address set forth below (or such other address as the Guarantor may give notice
of to the Holders of the Trust Preferred Securities and the Trust Preferred
Guarantee Trustee):

KBK Capital Corporation
2200 City Center II
301 Commerce Street
Fort Worth, Texas 76102
Attention: Vice President and Controller

- 20 -
<PAGE> 24
(c) If given to any Holder of Trust Preferred Securities, at
the address set forth on the books and records of the Issuer.

All such notices shall be deemed to have been given when received
in person, telecopied with receipt confirmed, or mailed by first class mail,
postage prepaid, except that if a notice or other document is refused delivery
or cannot be delivered because of a changed address of which no notice was
given, such notice or other document shall be deemed to have been delivered on
the date of such refusal or inability to deliver.

Section 10.5 Benefit.

This Trust Preferred Securities Guarantee is solely for the
benefit of the Holders of the Trust Preferred Securities and, subject to
Section 3.1(a), is not separately transferable from the Trust Preferred
Securities.

Section 10.6 Governing Law.

THIS TRUST PREFERRED SECURITIES GUARANTEE SHALL BE GOVERNED BY,
AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK, WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES THEREOF.

THIS TRUST PREFERRED SECURITIES GUARANTEE is executed as of the
day and year first above written.

KBK CAPITAL CORPORATION,
as Guarantor

By:
--------------------------------
Jay K. Turner
Executive Vice President and
Chief Financial Officer

THE FIRST NATIONAL BANK OF CHICAGO,
as Trust Preferred Guarantee Trustee

By:
--------------------------------
Name:
-----------------------
Title:
----------------------

- 21 -

<PAGE> 1
EXHIBIT 5.1

[LSZH&L Letterhead]

October 23, 1998

Board of Directors
KBK Capital Corporation
2200 City Center II
301 Commerce Street
Fort Worth, Texas 76102

KBK Capital Trust I
c/o KBK Capital Corporation
2200 City Center II
301 Commerce Street
Fort Worth, Texas 76102

Ladies and Gentlemen:

We have acted as counsel to KBK Capital Corporation, a Delaware
corporation (the "Company"), and KBK Capital Trust I, a Delaware statutory
business trust (the "Trust"), in connection with the preparation of a
Registration Statement on Form S-2 (Registration Nos. 333-65041 and
333-65041-01) filed by the Company and the Trust with the Securities and
Exchange Commission (the "SEC") (such Registration Statement, as amended, the
"Registration Statement") for the purpose of registering under the Securities
Act of 1933, as amended, up to $28,750,000 principal amount of Subordinated
Debentures Due 2028 of the Company (the "Subordinated Debentures") (including
$3,750,000 principal amount of Subordinated Debentures issuable upon the
exercise of the underwriters' over-allotment option), up to 1,150,000 Trust
Preferred Securities of the Trust (the "Trust Preferred Securities") (including
150,000 Trust Preferred Securities subject to the underwriters' over-allotment
option), and the guarantee of the Company pursuant to the Trust Preferred
Securities Guarantee Agreement between the Company and The First National Bank
of Chicago, a national banking association (the "Guarantee").

In connection with this opinion, we have examined originals or copies,
certified or otherwise identified to our satisfaction, of (i) the Registration
Statement, as amended to the date hereof, including the form of prospectus
included therein and the documents incorporated by reference therein; (ii) the
Certificate of Trust (the "Certificate of Trust") filed with the Secretary of
State of

1
<PAGE> 2
October 23, 1998
Page 2

the State of Delaware on September 29, 1998; (iii) the form of Amended and
Restated Declaration of Trust (the "Declaration"); (iv) the form of Guarantee;
(v) the form of Subordinated Debenture; and (vi) the form of Subordinated
Indenture (the "Indenture") to be entered into between the Company and The First
National Bank of Chicago, as trustee. We have also examined originals or copies,
certified, or otherwise identified to our satisfaction, of such other documents,
certificates, and records as we have deemed necessary or appropriate as a basis
for the opinions set forth herein.

In our examination, we have assumed the legal capacity of all natural
persons, the genuineness of all signatures, the authenticity of all documents
submitted to us as originals, the conformity to original documents of all
documents submitted to us as certified or photostatic copies and the
authenticity of the originals of such copies. In conducting our examination of
documents executed by parties other than the Company or the Trust, we have
assumed that such parties had the power, corporate or other, to enter into and
perform all obligations thereunder and have also assumed the due authorization
by all requisite action, corporate or other, and execution and delivery by such
parties of such documents and that such documents constitute valid and binding
obligations of such parties. We have assumed that the Declaration, the Trust
Preferred Securities, the Guarantee, the Subordinated Debentures and the
Indenture, when executed, will be executed in substantially the form reviewed by
us. In addition, we have assumed the receipt by each person to whom a Trust
Preferred Security is to be issued by the Trust (collectively, the "Preferred
Security Holders") of a certificate for such Preferred Security or the issuance
of a global certificate to the Depository Trust Company, acting as agent, and
the payment for the Preferred Security so acquired, in accordance with the
Declaration and the Registration Statement, and that the Preferred Securities
are issued and sold to the Preferred Security Holders in accordance with the
Declaration and the Registration Statement. As to any facts material to the
opinions expressed herein which were not independently established or verified,
we have relied upon oral or written statements and representations of officers,
trustees, and other representatives of the Company, the Trust, and others.

Based upon and subject to the foregoing and to other qualifications and
limitations set forth herein, we are of the opinion that:

1. When the Indenture has been duly qualified under the Trust Indenture
Act of 1939, as amended, and duly executed and delivered, the Subordinated
Debentures, when duly executed, authenticated, issued and delivered in
accordance with the Indenture and delivered and paid for as contemplated by the
Registration Statement, will be valid and binding obligations of the Company,
entitled to the benefits of the Indenture and enforceable against the Company in
accordance with their terms, except to the extent that enforcement thereof may
be limited by (i) bankruptcy, insolvency, reorganization, moratorium, or other
similar laws now or hereafter in effect relating to creditors' rights generally,
and (ii) general principles of equity (regardless of whether enforceability is
considered in a proceeding at law or in equity).

2
<PAGE> 3
October 23, 1998
Page 3

2. The Guarantee, when the Trust Preferred Securities are duly
executed, authenticated, issued and delivered by the parties thereto as
contemplated in the Guarantee and the Registration Statement, will be a valid
and binding agreement of the Company, enforceable against the Company in
accordance with its terms, except to the extent that enforcement thereof may be
limited by (i) bankruptcy, insolvency, reorganization, moratorium, or other
similar laws now or hereafter in effect relating to creditors rights generally,
and (ii) general principles of equity (regardless of whether enforceability is
considered in a proceeding at law or in equity).

The opinions set forth above are limited in all respects to the federal
laws of the United States of America, the Delaware Business Trust Act, the
Delaware General Corporation Law and the laws of the States of Texas and New
York.

We hereby consent to the reference to us under the caption "LEGAL
MATTERS" in the prospectus which forms a part of the Registration Statement. In
giving this consent, we do not thereby admit that we are within the category of
persons whose consent is required under Section 7 of the Securities Act of 1933,
as amended, or under the rules and regulations of the Securities and Exchange
Commission relating thereto.

Very truly yours,

/s/ Liddell, Sapp, Zivley, Hill & LaBoon, L.L.P.

<PAGE> 1
EXHIBIT 5.2

October 23, 1998

To Each of the Persons Listed
on Schedule I Attached Hereto

Re: KBK Capital Trust I

Ladies and Gentlemen:

We have acted as special Delaware counsel for KBK Capital
Trust I, a Delaware business trust (the "Trust") in connection with the proposed
issuance of its Trust Preferred Securities (the "Trust Preferred Securities")
pursuant to a form of Amended and Restated Declaration of Trust (the
"Declaration") to be entered into by and among KBK Capital Corporation, as
Sponsor, The First National Bank of Chicago, as Property Trustee, Wilmington
Trust Company, as Delaware Trustee, and the Administrative Trustees named
therein. Initially capitalized terms used herein and not otherwise defined are
used herein as defined in the Declaration.

For purposes of giving the opinions hereinafter set forth, we
have examined only the following documents and have conducted no independent
factual investigations of our own:

1. The Certificate of Trust for the Trust, dated as of
September 29, 1998 (the "Certificate"), as filed in the Office of the Secretary
of State of the State of Delaware (the "Secretary of State") on September 29,
1998;

2. The original Declaration of the Trust, dated as of
September 29, 1998, by and between KBK Capital Corporation, as Sponsor,
Wilmington Trust Company, as Delaware Trustee, and the Administrative Trustees
named therein (the "Original Agreement");

<PAGE> 2
To each of the persons on
Schedule I attached hereto
October 23, 1998
Page 2

3. The Declaration;

4. A Certificate of Good Standing for the Trust, dated
October 23, 1998, obtained from the Secretary of State;

5. The registration statement on Form S-2 initially filed
with the Securities and Exchange Commission on September 30, 1998, pursuant to
the Securities Act, as amended, covering, among other securities, the Trust
Preferred Securities, including Amendment No.1 thereto (the "Registration
Statement"); and

The documents referred to in (2) and (3) are collectively
referred to as the "Agreements" and individually as an "Agreement."

For purposes of this opinion, we have not reviewed any
documents other than the documents listed in (1) through (5) above. In
particular, we have not reviewed any document (other than the documents listed
in (1) through (5) above) that is referred to or incorporated by reference into
the documents reviewed by us. We have assumed that there exists no provision in
any document that we have not reviewed that is inconsistent with the opinions
stated herein.

In addition, we have conducted no independent factual
investigation of our own but rather have relied solely on the foregoing
documents, the statements and information set forth therein and the additional
matters related or assumed therein, all of which we have assumed to be true,
complete and accurate.

Based upon the foregoing, and subject to the assumptions,
qualifications, limitations and exceptions set forth herein, we are of the
opinion that:

1. The Trust has been duly created and is validly existing in
good standing as a business trust under the Delaware Business Trust Act.

2. When (a) appropriate action has been taken to duly
authorize the issuance

<PAGE> 3
To each of the persons on
Schedule I attached hereto
October 23, 1998
Page 3

and fix the terms of the Trust Preferred Securities and the Trust Common
Securities under the Declaration, and (b) the Declaration has been duly
authorized, executed and delivered by the Sponsor and the Trustees,
respectively, the Declaration will constitute a valid and binding obligation of
the Sponsor and the Trustees, respectively, enforceable against the Sponsor and
the Trustees, respectively, in accordance with its terms.

3. When and if the actions referred to in paragraph 2 have
occurred, subject to the other qualifications set forth herein (including,
without limitation, paragraph 4 below), the Trust Preferred Securities will have
been duly authorized and when the Trust Preferred Securities with the terms so
fixed shall have been duly executed and authenticated under the Declaration, and
otherwise issued and sold in accordance with the Declaration and the
Registration Statement, and in a manner consistent therewith, such Trust
Preferred Securities will be validly issued, fully paid, and non-assessable
undivided beneficial interests in the assets of the Trust.

4. When and if the actions referred to in paragraphs 2 and 3
have occurred, the Holders of Trust Preferred Securities as beneficial owners of
Trust Preferred Securities of the Trust will be entitled to the same limitation
of personal liability extended to stockholders of private corporations for
profit organized under the General Corporation Law of the State of Delaware,
except that such Holders of Trust Preferred Securities may be obligated to
provide (a) indemnity or security in connection with, and pay taxes or
governmental charges arising from, transfers or exchanges of Trust Preferred
Securities Certificates and the issuance of replacement Trust Preferred
Securities Certificates, and (b) security and indemnity in connection with
requests of or directions to the Property Trustee to exercise its rights and
powers under the Declaration.

All of the foregoing opinions contained herein are subject to
the following assumptions, qualifications, limitations and exceptions:

a. The foregoing opinions are limited to the laws,
rules, regulations and orders of the State of Delaware presently in effect,
excluding the securities laws thereof. We have not considered and express no
opinion on the laws of any other jurisdiction, including, without limitation,
federal laws and rules and regulations relating thereto.

<PAGE> 4
To each of the persons on
Schedule I attached hereto
October 23, 1998
Page 4

b. The foregoing opinions in paragraph 2 are subject
to (i) applicable bankruptcy, insolvency, moratorium, fraudulent conveyance,
fraudulent transfer and similar laws relating to or affecting creditors rights
generally including, without limitation, the Delaware Uniform Fraudulent
Conveyance Act, the provisions of the United States Bankruptcy Code and the
Delaware insolvency statutes, (ii) principles of equity including, without
limitation, concepts of materiality, good faith, fair dealing, conscionability
and reasonableness (regardless of whether such enforceability is considered in a
proceeding in equity or at law), (iii) applicable law relating to fiduciary
duties, (iv) public policy limitations with respect to exculpation, contribution
and indemnity provisions, and (v) the limitation that a court applying Delaware
law will enforce a liquidated damages provision in a contract only where, at the
time of contract, actual damages may be difficult to determine and the
stipulated sum is not so grossly disproportionate to the probable anticipated
loss as to be a penalty.

c. We have assumed the due execution and delivery by
each party listed as a party to each document examined by us. We have assumed
further the due authorization by each party thereto (exclusive of the
Administrative Trustees) of each document examined by us, and that each of such
parties (exclusive of the Trust and the Administrative Trustees) has the full
corporate, or trust or banking, power, authority, and legal right to execute,
deliver and perform each such document. We also have assumed that each of the
parties to each of the Agreements (exclusive of the Trust and the Administrative
Trustees) is a corporation, bank, national banking association or trust company,
validly existing and in good standing under the laws of their respective
jurisdictions of organization and that the Agreements to which they are a party
do not result in the breach of the terms of, and do not contravene their
respective constituent documents, any contractual restriction binding on them or
any law, rule or regulation applicable to them. In addition, we have assumed the
legal capacity of any natural persons who are parties to any of the documents
examined by us.

d. We have assumed that all signatures on documents
examined by us are genuine, that all documents submitted to us as originals are
authentic and that all documents submitted to us as copies conform with the
originals.

e. We have assumed that the Original Declaration and
once executed and delivered, the Declaration, collectively, as applicable
constitute the entire agreement among each of the respective parties thereto
with respect to the subject matter thereof, including with respect to the
creation, operation, dissolution and winding up of the Trust.

<PAGE> 5
To each of the persons on
Schedule I attached hereto
October 23, 1998
Page 5

f. We have assumed that on the date the actions
referred to in paragraphs 2, 3 and 4 above occur, the Trust will remain in good
standing and no provision of the laws of the State of Delaware will have changed
in a manner that affects the opinions set forth herein.

g. Notwithstanding any provision in the Declaration
to the contrary, we note that upon the occurrence of an event set forth in
Article 9 thereof that causes the dissolution of the Trust, the Trust cannot
make any payments or distributions to the Holders of Trust Securities until
creditors' claims are either paid in full or reasonable provision for payment
thereof has been made.

h. We have assumed that no event set forth in
Section 5.2 of the Original Agreement has occurred and that no event set forth
in Article 9 has occurred to the same extent as if the Declaration were in
effect on the date hereof.

i. With respect to the enforceability of any
provision of the Declaration wherein the parties provide for the appointment of
a liquidator, we note that upon the application of any beneficial owner, the
Delaware Court of Chancery has the power, upon cause shown, to wind up the
affairs of a Delaware business trust and in connection therewith to appoint a
liquidating trustee other than the one agreed to by the beneficial owners
thereof.

j. We express no opinion on the enforceability of
Section 15.2 of the Declaration to the extent it may require matters of the
internal governance of a Delaware business trust to be governed by the same
substantive laws of the jurisdiction of incorporation of the Property Trustee.

k. We note that we do not assume responsibility for
the contents of the Registration Statement.

l. Pursuant to the Declaration the Sponsor, as
Holder of the Trust Common Securities, is liable for all of the debts and
obligations of the Trust (other than with respect to the Trust Securities) to
the extent not satisfied out of the Trust's assets.

This opinion is rendered solely for your benefit in connection
with the matters set forth herein and, without our prior written consent, may
not be furnished to, or quoted or relied upon by, any other person or entity for
any purpose. Andrews & Kurth L.L.P. and Liddell, Sapp,

<PAGE> 6
To each of the persons on
Schedule I attached hereto
October 23, 1998
Page 6

Zivley, Hill & LaBoon, L.P. may rely on this opinion in connection with the
opinions it is delivering on the date hereof with respect to the matters set
forth herein.

<PAGE> 7
To each of the persons on
Schedule I attached hereto
October 23, 1998
Page 7

We consent to the filing of this opinion with the Securities
and Exchange Commission as an exhibit to the Registration Statement and to the
use of our name under the heading "Legal Matters" in the Prospectus included in
the Registration Statement. In giving the foregoing consents, we do not thereby
admit that we come within the category of Persons whose consent is required
under Section 7 of the Securities Act, as amended, or the rules and regulations
of the Securities and Exchange Commission thereunder.

Very truly yours,

/s/ POTTER ANDERSON & CORROON LLP
<PAGE> 8
To each of the persons on
Schedule I attached hereto
October 23, 1998
Page 8

Schedule I

FRIEDMAN, BILLINGS, RAMSEY & CO., INC.

J. J. B. HILLIARD, W. L. LYONS, INC.

KBK CAPITAL CORPORATION

THE FIRST NATIONAL BANK OF CHICAGO

<PAGE> 1
EXHIBIT 8.1

[LSZH & L LETTERHEAD]

October 23, 1998

Board of Directors
KBK Capital Corporation
2200 City Center II
301 Commerce Street
Fort Worth, Texas 76102

KBK Capital Trust I
c/o KBK Capital Corporation
2200 City Center II
301 Commerce Street
Fort Worth, Texas 76102

Ladies and Gentlemen:

We have acted as counsel to KBK Capital Corporation, a Delaware
corporation (the "Company"), and KBK Capital Trust I, a Delaware statutory
business trust (the "Trust"), in connection with the preparation of a
Registration Statement on Form S-2 (Registration No. 333-65041 and
333-675041-01) and the form of prospectus included therein (the "Prospectus")
filed by the Company and the Trust with the Securities and Exchange Commission
(the "SEC") (such Registration Statement, as amended, the "Registration
Statement") for the purpose of registering under the Securities Act of 1933, as
amended (the "Act"), up to $28,750,000 principal amount of Subordinated
Debentures Due 2028 of the Company (the "Subordinated Debentures") (including
$3,750,000 principal amount of Subordinated Debentures issuable upon the
exercise of the underwriters' over-allotment option), up to 1,150,000 Trust
Preferred Securities of the Trust (the "Trust Preferred Securities") (including
150,000 Trust Preferred Securities subject to the underwriters' over-allotment
option), and the guarantee of the Company pursuant to the Trust Preferred
Securities Guarantee Agreement between the Company and The First National Bank
of Chicago, a national banking association (the "Guarantee"). In connection
therewith, we have participated in the preparation of the discussion set forth
under the caption "Certain Federal Income Tax Consequences" (the "Tax
Discussion") in the Registration Statement. Except as otherwise indicated, the
terms utilized herein have the meanings ascribed to them in the Registration
Statement.

In connection with this opinion, we have examined originals or copies,
certified or otherwise identified to our satisfaction, of (i) the Registration
Statement, as amended to the date hereof,

<PAGE> 2
October 23, 1998
Page 2

including the Prospectus and the documents incorporated by reference therein;
(ii) the Certificate of Trust (the "Certificate of Trust") filed with the
Secretary of State of the State of Delaware on September 29, 1998; (iii) the
form of Amended and Restated Declaration of Trust (the "Declaration"); (iv) the
form of Guarantee; (v) the form of Subordinated Debenture; and (vi) the form of
Subordinated Indenture (the "Indenture") to be entered into between the Company
and The First National Bank of Chicago, as trustee. We have also examined
originals or copies, certified, or otherwise identified to our satisfaction, of
such other documents, certificates, and records as we have deemed necessary or
appropriate as a basis for the opinions set forth herein.

In our examination, we have assumed the legal capacity of all natural
persons, the genuineness of all signatures, the authenticity of all documents
submitted to us as originals, the conformity to original documents of all
documents submitted to us as certified or photostatic copies and the
authenticity of the originals of such copies. In making our examination of
documents executed by parties other than the Company or the Trust, we have
assumed that such parties had the power, corporate or other, to enter into and
perform all obligations thereunder and have also assumed the due authorization
by all requisite action, corporate or other, and execution and delivery by such
parties of such documents and that such documents constitute valid and binding
obligations of such parties. In addition, we have assumed that the Declaration,
the Trust Preferred Securities, the Guarantee, the Subordinated Debentures and
the Indenture, when executed, will be executed in substantially the form
reviewed by us. In addition, we have assumed the receipt by each person to whom
a Trust Preferred Security is to be issued by the Trust (collectively, the
"Preferred Security Holders") of a certificate for such Trust Preferred Security
or the issuance of a global certificate to the Depository Trust Company, acting
as agent, and the payment for the Trust Preferred Security so acquired, in
accordance with the Declaration and the Registration Statement, and that the
Trust Preferred Securities are issued and sold to the Preferred Security Holders
in accordance with the Declaration and the Registration Statement. As to any
facts material to the opinions expressed herein which were not independently
established or verified, we have relied upon oral or written statements and
representations of officers, trustees, and other representatives of the Company,
the Trust and others.

We hereby confirm that, although the Tax Discussion set forth in the
Registration Statement does not purport to discuss all possible United States
federal income tax consequences of the purchase, ownership and disposition of
the Trust Preferred Securities, in our opinion, such discussion constitutes, in
all material respects, a fair and accurate summary of the United States federal
income tax consequences of the purchase, ownership and disposition of the Trust
Preferred Securities, based upon current law as they relate to holders
described therein. It is possible that contrary positions with regard to the
purchase, ownership and disposition of the Trust Preferred Securities may be
taken by the Internal Revenue Service (the "Service") and that a court may
agree with such contrary positions.

<PAGE> 3
October 23, 1998
Page 3

Additionally, based upon the facts, assumptions and representations
set forth or referred to herein, and the accuracy of such facts, assumptions
and representations as of the date hereof, and assuming full compliance with
the terms of the Declaration and the Indenture, it is our opinion that the
Trust will be classified for United States federal income tax purposes as a
grantor trust and not as an association taxable as a corporation. Accordingly,
each holder of Trust Preferred Securities will be treated as owning an
undivided beneficial interest in the Subordinated Debentures.

The opinions expressed herein are based on the Internal Revenue Code
of 1986, as amended, the Income Tax Regulations promulgated by the Treasury
Department thereunder and judicial authority reported as of the date hereof. We
have also considered the position of the Service reflected in published and
private rulings. Although we are not aware of any pending changes to these
authorities that would alter our opinions, there can be no assurances that
future legislation or administrative changes, court decisions or Service
interpretations will not significantly modify the statements or opinions
expressed herein.

Our opinions are limited to those federal income tax issues
specifically considered herein and are addressed to and are only for the
benefit of the Company and the Trust in connection with the filing of the
Registration Statement and, except as set forth below, is not to be used,
circulated, quoted or otherwise referred to for any other purpose or relied
upon by any other person for any purpose without our written consent. We do not
express any opinion as to any other United States federal income tax issues, or
any foreign, state or local tax issues. Although the opinions herein are based
upon our best interpretation of existing sources of law and expresses what we
believe a court would properly conclude if presented with these issues, no
assurance can be given that such interpretations would be followed if they were
to become the subject of judicial or administrative proceedings.

We hereby consent to the use of our name under the captions "CERTAIN
FEDERAL INCOME TAX CONSEQUENCES" and "LEGAL MATTERS" in the Prospectus forming
a part of the Registration Statement and the filing of this opinion with the
SEC as an exhibit to the Registration Statement. In giving this consent, we do
not hereby concede that we are within the category of persons whose consent is
required under Section 7 of the Act or the rules and regulations of the SEC
promulgated thereunder. This opinion is expressed as of the date hereof and
applies only to the disclosures set forth in the Prospectus and the
Registration Statement. We disclaim any undertaking to advise you of any
subsequent changes of the facts stated or assumed herein or any subsequent
changes in applicable law.

Very truly yours,

/s/ LIDDELL, SAPP, ZIVLEY,
HILL & LABOON, L.L.P.

<PAGE> 1
EXHIBIT 10.11

FIRST AMENDMENT TO THIRD
AMENDED AND RESTATED LOAN AGREEMENT

THIS FIRST AMENDMENT TO THIRD AMENDED AND RESTATED CREDIT
AGREEMENT (the "Amendment") is made and entered into effective the 15th day of
May, 1998, by and between KBK FINANCIAL, INC., a Delaware corporation (herein
called "Borrower"); BANK ONE, TEXAS, N.A., a national banking association, as
Agent for itself and the other Lenders (in such capacity, the "Agent"), WELLS
FARGO BANK (TEXAS), N.A., a national banking association (successor in interest
to First Interstate Bank of Texas, N.A., a national banking association); FLEET
BANK, N.A., a national banking association, OVERTON BANK AND TRUST, N.A., a
national banking association; and BANK OF AMERICA TEXAS, N.A., a national
banking association (collectively, "Lenders"), in connection with the credit
facility more fully described in the Third Amended and Restated Credit
Agreement, as amended by this Amendment (collectively, the "Credit Facility").

R E C I T A L S:

WHEREAS, Borrower and Lenders entered into a Third Amended and Restated
Loan Agreement dated August 21, 1997 (which, as the same may be amended from
time to time, is herein called the "Loan Agreement"); the terms defined unless
otherwise defined herein; and

WHEREAS, Borrower and Lender desire to amend certain terms and
provisions of the Loan Agreement to (i) permit the extension of the maturity
date of the Revolving Credit Notes (Over-Advance); (ii) permit the execution of
Revolving Credit Notes (Bridge Loan) aggregating $5,000,000.00 to the Lenders;
and (iii) amend certain terms and provisions of the Loan Agreement.

A G R E E M E N T:

1. Amendments to the Loan Agreement. The Loan Agreement is, effective
the date hereof, and subject to the satisfaction of the conditions precedent set
forth in Section 2 hereof, hereby amended as follows:

(a) Section 1, Credit Facility, Paragraph B(c), is hereby amended by
deleting the reference to the Over-Advance Maturity Date of "AUGUST 19,
1998 [364 DAYS FROM CLOSING]" and substituting "MAY 14, 1999" therefor.

(b) Section 1, Credit Facility. An additional Paragraph C entitled
"Bridge Notes," is hereby added as follows:

"C. Bridge Notes.

(a) Bridge Notes: Borrower's obligation to repay the
portion of the indebtedness advanced by the Lenders under the
Credit Facility (the "Bridge Credit Facility") shall be
evidenced by its execution of a promissory note (the "Bank One
Note") dated of even date herewith in the form attached hereto
as Exhibit "A-1", a promissory note (the "Wells Fargo Note")
dated of even date herewith in the form

<PAGE> 2
attached hereto as Exhibit "A-2", a promissory note (the
"Bank of America Note") dated of even date herewith in the
form attached hereto as Exhibit "A-3", a promissory note (the
"Fleet Note") dated of even date herewith in the form attached
hereto as Exhibit "A-4" and a promissory note (the "Overton
Note") dated of even date herewith in the form attached hereto
as Exhibit "A-5" (collectively, the "Bridge Notes").

(b) Maximum Bridge Credit Facility Availability;
Advance Procedure: $5,000,000.00, subject to the limitations
set forth in this Amendment, and the face amount of the
note(s) payable to each of the Lenders based on its pro-rata
participation interest to be distributed by each of the
Lenders. Borrower may request advances pursuant to the Bridge
Credit Facility from Agent by telephone at least one (1)
Business Day (as defined in the Loan Agreement) prior to the
requested date of advance for advances accruing interest at
the Prime Rate (as defined in the Loan Agreement). Agent shall
request each Lender to make available to Agent such Lender's
portion of the requested advance, as described in Section
10(k) of the Loan Agreement. Agent shall advance to Borrower
all funds delivered by the Lenders to Agent for the purpose of
funding such requested advance to Borrower.

(d) Rate: The Prime Rate (as defined in the Loan
Agreement) plus, one and one-quarter percent (1-1/4%) (the
"Index Rate"), not to exceed the maximum non-usurious rate
permitted by applicable law (the "Maximum Rate").

(e) Repayment Terms: Accrued and unpaid interest
shall be due and payable on the last day of each calendar
month with the balance of unpaid principal and accrued and
unpaid interest due and payable on the Bridge Maturity Date;
provided, however, Borrower shall apply the net proceeds
received by it from (i) the sale of any equity securities of
Borrower, or any warrant, option or other right to acquire any
equity securities of Borrower (and any proceeds resulting from
the exercise thereof), or (ii) the sale of any debt securities
of Borrower which are subordinate in right of payment to the
Bridge Notes, or any warrant, option or other right to acquire
such debt securities (and any proceeds resulting from the
exercise thereof), to the repayment of all amounts owing under
the Bridge Notes before such proceeds are used for any other
purpose(s). To the extent any such proceeds are insufficient
to repay the Bridge Notes in full, the foregoing covenant
shall continue in effect with respect to any proceeds received
from any such events until all amounts owing thereon have been
repaid in full.

(f) Purpose: To enable Borrower to finance certain
mezzanine loans.

"(j) The Bridge Notes shall accrue interest at
the rate set forth in Section 1(c)(d) hereof."

-2-
<PAGE> 3
(d) Section 4, Reporting Requirements, Paragraph (b), Quarterly
Financial Statements, reference to "Exhibit 'D' annexed hereto" is
hereby replaced and substituted with Exhibit "D" attached to and made a
part of this Amendment.

(e) Section 5, Affirmative Covenants, Paragraph (c), Current Committed
Amount, the reference to "Exhibit 'E' annexed hereto" is hereby
replaced and substituted with that Exhibit "E" attached to and made a
part of this Amendment.

(f) Section 5, Affirmative Covenants, Paragraph (d), Borrowing Base,
Subparagraph (2), is hereby amended by adding the following provisional
covenant at the end of Subparagraph (2):

"However, the ten percent (10%) limitation for the
Over-Advance Facility shall be eliminated until the Bridge
Maturity Date. In addition, until the Bridge Maturity Date,
loans to and accounts purchased from Bender Shipbuilding and
Ponder Industries shall not be excluded from the Over-Advance
Borrowing Base because of non-compliance with Subsection (F)
of Section 5(e) below."

(g) Section 5, Affirmative Covenants, Paragraph (d), Borrowing Base, is
hereby amended by adding the following Subparagraph (4) at the end of
Paragraph (d):

"(4) The borrowing base for the Bridge Facility (the
"Bridge Borrowing Base") shall be the sum of Borrower's
acceptable "mezzanine loans" as determined by the Agent, in
its sole discretion, not to exceed $5,000,000.00. If at any
time the amount outstanding under the Bridge Note is greater
than the Bridge Borrowing Base at such time, Borrower shall
immediately make a prepayment on the Bridge Note in an amount
to reduce the aggregate outstanding amounts thereof to an
amount not more than the Bridge Borrowing Base."

(h) Section 6, Negative Covenants, Paragraph (e), Indebtedness,
Subparagraph (ii), is hereby amended by deleting the reference to "(ii)
INCUR FUNDED DEBT SO LONG AS THE AGGREGATE OF ALL OUTSTANDING FUNDED
DEBT OF BORROWER AND GUARANTOR DOES NOT EXCEED $1,000,000.00," and
substituting "(ii) INCUR FUNDED DEBT SO LONG AS THE AGGREGATE OF ALL
OUTSTANDING FUNDED DEBT OF BORROWER AND GUARANTOR IS UNSECURED AND DOES
NOT EXCEED $5,000,000.00," therefor.

2. Conditions of Effectiveness. This Amendment shall become effective
when, and only when, Lender shall have received counterparts of this Amendment
executed by Borrower and Section 1 hereof shall become effective when, and only
when, Lender shall have additionally received all of the follow ing documents,
each document (unless otherwise indicated) being dated the date of receipt
thereof by Lender (which date shall be the same for all such documents), in form
and substance satisfactory to the Lender:

(a) $5,000,000.00 Bridge Note(s), on a pro-rata amount payable
to Lenders in accordance with their participation interest in the
Credit Facility;

-3-
<PAGE> 4
(b) A certificate of the Board of Directors of Borrower and
KBK Capital Corporation ("Guarantor") authorizing the execution,
delivery and performance of this Amendment, and the matters
contemplated hereby;

(d) Fifth Amendment to Amended and Restated Accounts
Receivable and Inventory Security Agreement;

(e) The Current Commitment Letter stipulating amounts agreed
to by all Lenders;

(f) A loan commitment fee equal to $12,500.00; and

(g) Any and all other documentation as Lender may reasonably
require.

3. Representations and Warranties of Borrower. Borrower represents and
warrants as follows:

(a) Borrower is duly authorized and empowered to execute,
deliver and perform this Amendment and all other instruments referred
to or mentioned herein to which it is a party, and all action on its
part requisite for the due execution, delivery and the performance of
this Amendment has been duly and effectively taken. This Amendment,
when executed and delivered, will constitute valid and binding
obligations of Borrower enforceable in accordance with its terms. This
Amendment does not violate any provisions of Borrower's Articles of
Incorporation, By-Laws, or any contract, agreement, law or regulation
to which Borrower is subject, and does not require the consent or
approval of any regulatory authority or governmental body of the United
States or any state.

(b) The representations and warranties made by Borrower in the
Loan Agreement are true and correct as of the date of this Amendment.

(c) No event has occurred and is continuing which constitutes
an Event of Default or would constitute an Event of Default but for the
requirement that notice be given or time elapse or both.

4. Reference to and Effect on the Loan Documents.

(a) Upon the effectiveness of Section 1 hereof, on and after
the date hereof, each reference in the Loan Agreement to "this
Agreement", "hereunder", "hereof", "herein" or words of like import,
and each reference in the Security Documents shall mean and be a
reference to the Loan Agreement as amended hereby.

(b) Except as specifically amended above, the Loan Agreement,
the Notes and the Security Documents shall remain in full force and
effect and are hereby ratified and confirmed. Without limiting the
generality of the foregoing, the Security Documents and all collateral
described therein do and shall continue to secure the payment of all
obligations of Borrower

-4-
<PAGE> 5

under the Loan Agreement and the Notes, as amended hereby and under
the other Security Documents.

(c) The execution, delivery and effectiveness of this
Amendment shall not, except as expressly provided herein, operate as a
waiver of any right, power or remedy of Lender under any of the
Security Documents, nor constitute a waiver of any provision of any of
the Security Documents.

5. Waiver. As additional consideration for the execution, delivery and
performance of this Amendment by the parties hereto and to induce Lender to
enter into this Amendment, Borrower warrants and represents to Lender that no
facts, events, statuses or conditions exist or have existed which,
either now or with the passage of time or giving of notice, or both, constitute
or will constitute a basis for any claim or cause of action against Lender or
any defense to (i) the payment of any obliga tions and indebtedness under the
Notes and/or the Security Documents or (ii) the performance of any of its
obligations with respect to the Notes and/or the Security Documents, and in the
event any such facts, events, statuses or conditions exist or have existed,
Borrower unconditionally and irrevocably waives any and all claims and causes of
action against Lender and any defenses to its payment and performance
obligations in respect to the Notes and the Security Documents.

6. Costs and Expenses. Borrower agrees to pay on demand all costs and
expenses of Lender in connection with the preparation, reproduction, execution
and delivery of this Amendment and the other instruments and documents to be
delivered hereunder, including the reasonable fees and out-of-pocket expenses of
counsel for Lender. In addition, Borrower shall pay any and all fees payable or
determined to be payable in connection with the execution and delivery, filing
or recording of this Amendment and the other instruments and documents to be
delivered hereunder, and agrees to save Lender harmless from and against any and
all liabilities with respect to or resulting from any delay in paying or
omission to pay such fees.

7. Execution in Counterparts. This Amendment may be executed in any
number of counterparts and by different parties hereto in separate counterparts,
each of which when so executed and delivered shall be deemed to be an original
and all of which taken together shall constitute but one and the same
instrument.

8. Governing Law. This Amendment shall be governed by and construed in
accordance with the laws of the State of Texas.

9. Final Agreement. THIS WRITTEN AMENDMENT REPRESENTS THE FINAL
AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

-5-
<PAGE> 6

IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be duly executed in multiple counterparts, each of which is an original
instrument for all purposes, all as of the day and year first above written.

"BORROWER"

KBK FINANCIAL, INC.

By: /s/ DEBORAH B. WILKINSON
---------------------------------
Name: Deborah B. Wilkinson
---------------------------------
Title: Vice President and Controller
-------------------------------

Address for Notice:

2200 City Center II
301 Commerce Street
Fort Worth, Texas 76102
Attention: Robert J. McGee
Telephone No.: 817/258-6020
Telecopy No.: 817/258-6110

ACCEPTED AND AGREED TO:

BANK ONE, TEXAS, N.A.

By: /s/ BARRY A. KELLY
--------------------------------------
Barry A. Kelly, Senior Vice President

Address for Notice:

910 Travis
Houston, Texas 77002
Telephone No.: 713-751-3831
Telecopy No.: 713-751-6199

WELLS FARGO BANK (TEXAS), N.A.

By: /s/ JOHN R. PELOUBET
----------------------------
Name: John R. Peloubet
--------------------------
Title: Vice President
-------------------------

-6-
<PAGE> 7

Address for Notice:

505 Main Street, Suite 300
Fort Worth, Texas 76102
Telephone No.: ________________
Telecopy No.: 817/347-0056

FLEET BANK, N.A.

By: /s/ ANDREA H. LEE
----------------------------
Name: Andrea H. Lee
--------------------------
Title: Vice President
-------------------------

Address for Notice:

592 Fifth Avenue
Mail Stop NYNYF16E
1185 Avenue of the Americas
New York, New York 10036
Telephone No.: (212) 319-6130
Telecopy No.: (212) 819-6212

OVERTON BANK AND TRUST, N.A.

By: /s/ PAM R. DRENNER
--------------------------------------
Pam R. Drenner, Senior Vice President

Address for Notice:

777 Main Street
Fort Worth, Texas 76102
Telephone No.: (817) 377-5046
Telecopy No.: (817) 336-5615

-7-
<PAGE> 8
BANK OF AMERICA, TEXAS, N.A.

By: /s/ GEORGE M. SMITH
--------------------------------------
George M. Smith, Vice President

Address for Notice:

333 Clay, Suite 3600
Houston, Texas 77002
Telephone No.: 713-652-3615
Telecopy No.: 713-652-3619

GUARANTOR:

By execution hereof the undersigned Guarantor consents to the terms of
this Agreement including, without limitation, the obligations imposed pursuant
to Section 4 hereof and the waivers set forth in Section 5 hereof.

"Borrower"

KBK FINANCIAL, INC.

By: /s/ DEBORAH B. WILKINSON
---------------------------------
Name: Deborah B. Wilkinson
---------------------------------
Title: Vice President and Controller
-------------------------------

Address for Notice:
2200 City Center II
301 Commerce Street
Forth Worth, Texas 76102

-8-
<PAGE> 9
CONSENT OF GUARANTOR

Dated Effective as of May 15, 1998

The undersigned, KBK CAPITAL CORPORATION, as the Guarantor referred to
in the foregoing Amendment to which this Consent is annexed (the "Amendment"),
hereby consents to the foregoing Amendment and hereby confirms to and agrees
with each Lender that (i) the guaranties in effect on the date hereof to which
Guarantor is a party are, and shall continue to be, in full force and effect and
is hereby confirmed and ratified in all respects except that, upon the
effectiveness of, and on and after the date of, the Amendment, all references in
the guaranties to the Loan Agreement, shall mean the Loan Documents, the
Security Documents and Notes, as modified, extended and amended by the
Amendment, and (ii) the guaranties do, and shall continue to, guarantee the
payment by the Borrower to each Lender of its obligations under the Loan
Agreement, the Loan Documents, the Security Documents and the Notes, as
modified, extended and amended by this Amendment, including, without limitation,
the $5,000,000.00 Bridge Note(s).

KBK FINANCIAL, INC.

By: /s/ DEBORAH B. WILKINSON
---------------------------------
Name: Deborah B. Wilkinson
---------------------------------
Title: Vice President and Controller
-------------------------------

<PAGE> 10
EXHIBIT "D"
[FORM OF]
COMPLIANCE CERTIFICATE

<TABLE>
<CAPTION>
Financial Covenant Required Ratio/Amount Actual
- ------------------ --------------------- Ratio/Amount
------------
<S> <C> <C>
Tangible Net Worth $10,000,000.00
-----------
Ratio of Funded Debt to
Primary Capital Not greater than 3.00 to 1.00
-----------
Amount of other funded Not greater than $5,000,000
indebtedness -----------

Interest Coverage Ratio Not less than 1.50 to 1.00
-----------
</TABLE>

I further certify to the Agent that (a) no default under the Agreement
is existing on the date of this certificate, and (b) the foregoing report is
true and correct as of the date hereof. Capitalized terms used herein and not
otherwise defined herein shall have the respective meanings given thereto in the
Agreement.

By:
---------------------------------
Name:
---------------------------------
Title: Authorized Financial
Officer of KBK Financial, Inc.

<PAGE> 11
EXHIBIT "E"
[FORM OF]
CURRENT COMMITMENT LETTER

May _____, 1998

KBK Financial, Inc.
2200 City Center II
301 Commerce Street
Fort Worth, Texas 76102

Re: First Amendment to Third Amended and Restated Loan Agreement
of even date herewith (the "Loan Agreement"), among KBK
Financial, Inc. ("Borrower"), Bank One, Texas, N.A., Wells
Fargo Bank (Texas), N.A., Bank of America Texas, N.A., Overton
Bank & Trust, N.A., and Fleet Bank, N.A. (collectively, the
"Banks")

Gentlemen:

In accordance with Section 5(c) of the Loan Agreement, the Borrower has
requested and the Banks hereby agree that, effective this date, the Current
Committed Amount(s) allowable under the Credit Facility shall be as follows:

<TABLE>
<S> <C>
Current Committed Revolving Amount $40,000,000

Current Committed Over-Advance Amount $ 5,000,000

Current Committed Bridge Amount $ 5,000,000
</TABLE>

All capitalized terms used herein which have been defined in the Loan Agreement
have been used in accordance with the definitions ascribed to them in the Loan
Agreement.

Yours very truly,

BANK ONE, TEXAS, N.A.,

By:
---------------------------------
Name:
--------------------------------
Title:
-------------------------------
<PAGE> 12

WELLS FARGO BANK (TEXAS),
N.A.

By: /s/ JOHN R. PELOUBET
---------------------------------
Name: John R. Peloubet
--------------------------------
Title: Vice President
-------------------------------

BANK OF AMERICA, TEXAS, N.A.

By: /s/ GEORGE M. SMITH
---------------------------------
Name: George M. Smith
--------------------------------
Title: Vice President
-------------------------------

FLEET BANK, N.A.

By: /s/ ANDREA H. LEE
---------------------------------
Name: Andrea H. Lee
--------------------------------
Title: Vice President
-------------------------------

OVERTON BANK & TRUST, N.A.

By: /s/ PAM R. DRENNER
---------------------------------
Name: Pam R. Drenner
--------------------------------
Title: Senior Vice President
-------------------------------

ACKNOWLEDGED AND AGREED TO:

"BORROWER"

KBK FINANCIAL, INC.

By: /s/ DEBORAH B. WILKINSON
----------------------------------
Name: Deborah B. Wilkinson
---------------------------------
Title: Vice President and Controller
---------------------------------

<PAGE> 13

"GUARANTOR"

KBK CAPITAL CORPORATION

By:
---------------------------------
Name:
--------------------------------
Title:
--------------------------------

<PAGE> 1
EXHIBIT 11.1

Earnings per share has been calculated in conformity with SFAS No. 128
"Earnings Per Share" and all prior periods have been restated. A
reconciliation between the weighted average shares outstanding used in the
basic and diluted EPS computations is as follows:

Nine Months Ended
September 30, 1998
------------------
Net Income $ 2,143,678
============

Weighted average shares outstanding - Basic 3,285,572
============

Earnings per share - Basic $ .65
============

Weighted average shares outstanding - Basic 3,285,572

Effect of dilutive securities
Assumed exercise of stock options and warrants 499,832
------------
Weighted average shares outstanding - Diluted 3,785,404
============
Earnings per share - Diluted $ .57
============

<PAGE> 1
EXHIBIT 12.1

KBK Capital Corporation
Computation of Ratio of Earnings to Fixed Charges

Nine Months Ended
September 30, Year Ended December 31,
----------------- ----------------------------------------------
1998 1997 1997 1996 1995 1994 1993
------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Income before income
taxes $3,255 $2,355 $3,452 $2,457 $3,025 $2,494 $2,218

Interest Expense 2,004 2,206 2,666 2,590 1,652 806 762
------ ------ ------ ------ ------ ------ ------
Earnings $5,259 $4,561 $6,118 $5,047 $4,677 $3,300 $2,980
====== ====== ====== ====== ====== ====== ======

Interest Expense $2,004 $2,206 $2,666 $2,590 $1,652 $ 806 $ 762
====== ====== ====== ====== ====== ====== ======

Ratio of earnings
to fixed charges 2.6x 2.1x 2.3x 1.9x 2.8x 4.1x 3.9x
====== ====== ====== ====== ====== ====== ======
</TABLE>

<PAGE> 1

EXHIBIT 23.1

INDEPENDENT AUDITORS' CONSENT

The Board of Directors
KBK Capital Corporation:

We consent to the use of our reports incorporated herein by reference and to
the reference to our firm under the heading "Experts" in the prospectus.

/s/ KPMG Peat Marwick LLP
KPMG Peat Marwick LLP

Fort Worth, Texas
October 23, 1993

<PAGE> 1
EXHIBIT 25.1

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM T-1

STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939
OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE

CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY
OF A TRUSTEE PURSUANT TO SECTION 305(b)(2)______

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

THE FIRST NATIONAL BANK OF CHICAGO
(EXACT NAME OF TRUSTEE AS SPECIFIED IN ITS CHARTER)

A NATIONAL BANKING ASSOCIATION 36-0899825
(I.R.S. EMPLOYER
IDENTIFICATION NUMBER)

ONE FIRST NATIONAL PLAZA, CHICAGO, ILLINOIS 60670-0126
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)

THE FIRST NATIONAL BANK OF CHICAGO
ONE FIRST NATIONAL PLAZA, SUITE 0286
CHICAGO, ILLINOIS 60670-0286
ATTN: LYNN A. GOLDSTEIN, LAW DEPARTMENT (312) 732-6919
(NAME, ADDRESS AND TELEPHONE NUMBER OF AGENT FOR SERVICE)

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

KBK CAPITAL CORPORATION
(EXACT NAME OF OBLIGOR AS SPECIFIED IN ITS CHARTER)

DELAWARE 75-2416103
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)

301 COMMERCE STREET, SUITE 2200
FORT WORTH, TEXAS 76102
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)

SUBORDINATED DEBENTURES
GUARANTEE OF KBK CAPITAL CORPORATION WITH RESPECT TO TRUST PREFERRED SECURITIES
(TITLE OF INDENTURE SECURITIES)
<PAGE> 2

ITEM 1. GENERAL INFORMATION. FURNISH THE FOLLOWING INFORMATION AS TO THE
TRUSTEE:

(a) NAME AND ADDRESS OF EACH EXAMINING OR SUPERVISING AUTHORITY
TO WHICH IT IS SUBJECT.

Comptroller of Currency, Washington, D.C., Federal Deposit Insurance
Corporation, Washington, D.C., The Board of Governors of the Federal
Reserve System, Washington, D.C.

(b) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS.

The trustee is authorized to exercise corporate trust powers.

ITEM 2. AFFILIATIONS WITH THE OBLIGOR. IF THE OBLIGOR IS AN AFFILIATE OF THE
TRUSTEE, DESCRIBE EACH SUCH AFFILIATION.

No such affiliation exists with the trustee.

ITEM 16. LIST OF EXHIBITS. LIST BELOW ALL EXHIBITS FILED AS A PART OF THIS
STATEMENT OF ELIGIBILITY.

1. A copy of the articles of association of the trustee now in
effect.*

2. A copy of the certificates of authority of the trustee to
commence business.*

3. A copy of the authorization of the trustee to exercise
corporate trust powers.*

4. A copy of the existing by-laws of the trustee.*

5. Not Applicable.

6. The consent of the trustee required by Section 321(b) of the
Act.

<PAGE> 3

7. A copy of the latest report of condition of the trustee
published pursuant to law or the requirements of its
supervising or examining authority.

8. Not Applicable.

9. Not Applicable.

Pursuant to the requirements of the Trust Indenture Act of 1939, as amended,
the trustee, The First National Bank of Chicago, a national banking
association organized and existing under the laws of the United States of
America, has duly caused this Statement of Eligibility to be signed on its
behalf by the undersigned, thereunto duly authorized, all in the City of
Chicago and State of Illinois, on the 13th day of October, 1998.

THE FIRST NATIONAL BANK OF CHICAGO,
TRUSTEE

BY /s/ SANDRA L. CARUBA
--------------------------
SANDRA L. CARUBA
VICE PRESIDENT

* Exhibits 1, 2, 3 and 4 are herein incorporated by reference to Exhibits
bearing identical numbers in Item 16 of the Form T-1 of The First National Bank
of Chicago, filed as Exhibit 25 to the Registration Statement on Form S-3 of U S
WEST Capital Funding, Inc. filed with the Securities and Exchange Commission on
May 6, 1998 (Registration No. 333-51907-01).

<PAGE> 4

EXHIBIT 6

THE CONSENT OF THE TRUSTEE REQUIRED
BY SECTION 321(b) OF THE ACT

October 13, 1998

Securities and Exchange Commission
Washington, D.C. 20549

Ladies and Gentlemen:

In connection with the qualification of an indenture between KBK Capital
Corporation and The First National Bank of Chicago, the undersigned, in
accordance with Section 321(b) of the Trust Indenture Act of 1939, as amended,
hereby consents that the reports of examinations of the undersigned, made by
Federal or State authorities authorized to make such examinations, may be
furnished by such authorities to the Securities and Exchange Commission upon its
request therefor.

Very truly yours,

THE FIRST NATIONAL BANK OF CHICAGO

BY: /s/ SANDRA L. CARUBA
-----------------------------------
SANDRA L. CARUBA
VICE PRESIDENT

<PAGE> 5
EXHIBIT 7

<TABLE>
<S> <C> <C> <C>
Legal Title of Bank: The First National Bank of Chicago Call Date: 06/30/98 ST-BK: 17-1630 FFIEC 031
Address: One First National Plaza, Ste 0460 Page RC-1
City, State Zip: Chicago, IL 60670
FDIC Certificate No.: 0/3/6/1/8
</TABLE>

CONSOLIDATED REPORT OF CONDITION FOR INSURED COMMERCIAL
AND STATE-CHARTERED SAVINGS BANKS FOR JUNE 30, 1998

All schedules are to be reported in thousands of dollars. Unless otherwise
indicated, report the amount outstanding of the last business day of the
quarter.

SCHEDULE RC--BALANCE SHEET

<TABLE>
<CAPTION>
DOLLAR AMOUNTS IN THOUSANDS C400
----
RCFD THOUSANDS RCFD
---- --------- ----
<S> <C> <C> <C>
ASSETS
1. Cash and balances due from depository institutions (from Schedule RC-A):
a. Noninterest-bearing balances and currency and coin(1)................... 0081 4,490,272 1.a
b. Interest-bearing balances(2)............................................ 0071 5,586,990 1.b

2. Securities
a. Held-to-maturity securities (from Schedule RC-B, column A).............. 1754 0 2.a
b. Available-for-sale securities (from Schedule RC-B, column D)............ 1773 8,974,952 2.b

3. Federal funds sold and securities purchased under agreements to resell..... 1350 5,558,583 3.

4. Loans and lease financing receivables:
RCFD
----
a. Loans and leases, net of unearned income (from Schedule RC-C)........... 2122 28,257,868 4.a
b. LESS: Allowance for loan and lease losses............................... 3123 413,742 4.b
c. LESS: Allocated transfer risk reserve................................... 3128 0 4.c
RCFD
d. Loans and leases, net of unearned income, allowance, and reserve ----
(item 4.a minus 4.b and 4.c)............................................ 2125 27,844,126 4.d

5. Trading assets (from Schedule RD-D)........................................ 3545 6,073,169 5.

6. Premises and fixed assets (including capitalized leases)................... 2145 721,430 6.

7. Other real estate owned (from Schedule RC-M)............................... 2150 6,827 7.

8. Investments in unconsolidated subsidiaries and associated companies
(from Schedule RC-M)....................................................... 2130 184,515 8.

9. Customers' liability to this bank on acceptances outstanding............... 2155 310,026

10. Intangible assets (from Schedule RC-M)..................................... 2143 302,859 10.

11. Other assets (from Schedule RC-F).......................................... 2160 2,137,491 11.

12. Total assets (sum of items 1 through 11)................................... 2170 62,191,240 12.
</TABLE>

- -------------
(1) Includes cash items in process of collection and unposted debits.
(2) Includes time certificates of deposit not held for trading.

<PAGE> 6

<TABLE>
<S> <C> <C> <C>
Legal Title of Bank: The First National Bank of Chicago Call Date: 06/30/98 ST-BK: 17-1630 FFIEC 031
Address: One First National Plaza, Ste 0460 Page RC-2
City, State Zip: Chicago, IL 60670
FDIC Certificate No.: 0/3/6/1/8
</TABLE>

SCHEDULE RC-CONTINUED

<TABLE>
<CAPTION>
DOLLAR AMOUNTS IN THOUSANDS
<S> <C> <C> <C>
LIABILITIES

13. Deposits:
a. In domestic offices (sum of totals of columns A and C RCON
from Schedule RC-E, part 1)............................................. 2200 21,810,607 13.a
(1) Noninterest-bearing(1) ............................................ 6631 9,864,956 13.a1
(2) Interest-bearing................................................... 6636 11,945,651 13.a2

b. In foreign offices, Edge and Agreement subsidiaries, and RCFN
IBFs (from Schedule RC-E, part II)...................................... 2200 15,794,963 13.b
(1) Noninterest bearing................................................. 6631 482,528 13.b1
(2) Interest-bearing.................................................... 6636 5,312,435 13.b2

14. Federal funds purchased and securities sold under agreements
to repurchase: ............................................................ RCFD 2800 3,858,711 14

15. a. Demand notes issued to the U.S. Treasury ............................... RCON 2840 1,444,748 15.a
b. Trading Liabilities (from Schedule RC-D)................................ RCFD 3548 5,661,633 15.b

16. Other borrowed money: RCFD
a. With original maturity of one year or less.............................. 2332 4,356,061 16.a
b. With original maturity of more than one year........................... A547 385,550 16.b
c. With original maturity of more than three years......................... A548 320,386 16.c

17. Not applicable

18. Bank's liability on acceptance executed and outstanding.................... 2920 310,026 18.

19. Subordinated notes and debentures.......................................... 3200 2,200,000 19.

20. Other liabilities (from Schedule RC-G)..................................... 2930 1,176,564 20.

21. Total liabilities (sum of items 13 through 20)............................. 2948 57,319,249 21.

22. Not applicable

EQUITY CAPITAL

23. Perpetual preferred stock and related surplus.............................. 3838 0 23.

24. Common stock............................................................... 3230 200,858 24.

25. Surplus (exclude all surplus related to preferred stock)................... 3839 3,188,187 25.

26. a. Undivided profits and capital reserves.................................. 3632 1,467,324 26.a
b. Net unrealized holding gains (losses) on available-for-sale
securities.............................................................. 8434 18,040 26.b

27. Cumulative foreign currency translation adjustments........................ 3284 (2,418) 27.

28. Total equity capital (sum of items 23 through 27).......................... 3210 4,871,991 28.

29. Total liabilities, limited-life preferred stock, and equity
capital (sum of items 21, 22, and 28)...................................... 3300 62,191,240 29.
</TABLE>

Memorandum

To be reported only with the March Report of Condition.

1. Indicate in the box at the right the number of
the statement below that best describes the most
comprehensive level of auditing work performed
for the bank by independent external auditors Number
as of any date during 1996....................... RCFD 6724..... N/A M.1.

1 = Independent audit of the bank conducted in accordance with generally
accepted auditing standards by a certified public accounting firm which
submits a report on the bank

2 = Independent audit of the bank's parent holding company conducted in
accordance with generally accepted auditing standards by a certified public
accounting firm which submits a report on the consolidated holding company
(but not on the bank separately)

3 = Directors' examination of the bank conducted in accordance with generally
accepted auditing standards by a certified public accounting firm (may be
required by state chartering authority)

4 = Directors' examination of the bank performed by other external auditors
(may be required by state chartering authority)

5 = Review of the bank's financial statements by external auditors

6 = Compilation of the bank's financial statements by external auditors

7 = Other audit procedures (excluding tax preparation work)

8 = No external audit work

- -----------
(1) Includes total demand deposits and noninterest-bearing time and savings
deposits.

<PAGE> 1
EXHIBIT 25.2

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM T-1

STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939
OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE

CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY
OF A TRUSTEE PURSUANT TO SECTION 305(b)(2)______

THE FIRST NATIONAL BANK OF CHICAGO
(EXACT NAME OF TRUSTEE AS SPECIFIED IN ITS CHARTER)

A NATIONAL BANKING ASSOCIATION 36-0899825
(I.R.S. EMPLOYER
IDENTIFICATION NUMBER)

ONE FIRST NATIONAL PLAZA, CHICAGO, ILLINOIS 60670-0126
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)

KBK CAPITAL TRUST I
(EXACT NAME OF OBLIGOR AS SPECIFIED IN ITS CHARTER)

DELAWARE APPLIED FOR
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)

301 COMMERCE STREET, SUITE 2200
FORT WORTH, TEXAS 76102
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)

TRUST PREFERRED SECURITIES
(TITLE OF INDENTURE SECURITIES)

<PAGE> 2

ITEM 1. GENERAL INFORMATION. FURNISH THE FOLLOWING INFORMATION AS TO THE
TRUSTEE:

(a) NAME AND ADDRESS OF EACH EXAMINING OR SUPERVISING AUTHORITY TO
WHICH IT IS SUBJECT.

Comptroller of Currency, Washington, D.C., Federal Deposit Insurance
Corporation, Washington, D.C., The Board of Governors of the Federal
Reserve System, Washington, D.C.

(b) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS.

The trustee is authorized to exercise corporate trust powers.

ITEM 2. AFFILIATIONS WITH THE OBLIGOR. IF THE OBLIGOR IS AN AFFILIATE OF THE
TRUSTEE, DESCRIBE EACH SUCH AFFILIATION.

No such affiliation exists with the trustee.

ITEM 16. LIST OF EXHIBITS. LIST BELOW ALL EXHIBITS FILED AS A PART OF THIS
STATEMENT OF ELIGIBILITY.

1. A copy of the articles of association of the trustee now in
effect.*

2. A copy of the certificates of authority of the trustee to
commence business.*

3. A copy of the authorization of the trustee to exercise
corporate trust powers.*

4. A copy of the existing by-laws of the trustee.*

5. Not Applicable.

6. The consent of the trustee required by Section 321(b) of the
Act.

<PAGE> 3

7. A copy of the latest report of condition of the trustee
published pursuant to law or the requirements of its
supervising or examining authority.

8. Not Applicable.

9. Not Applicable.

Pursuant to the requirements of the Trust Indenture Act of 1939, as
amended, the trustee, The First National Bank of Chicago, a national
banking association organized and existing under the laws of the United
States of America, has duly caused this Statement of Eligibility to be
signed on its behalf by the undersigned, thereunto duly authorized, all in
the City of Chicago and State of Illinois, on the 13th day of October,
1998.

THE FIRST NATIONAL BANK OF CHICAGO,
TRUSTEE

BY /s/ SANDRA L. CARUBA
--------------------------
SANDRA L. CARUBA
VICE PRESIDENT

<PAGE> 4

EXHIBIT 6

THE CONSENT OF THE TRUSTEE REQUIRED
BY SECTION 321(b) OF THE ACT

October 13, 1998

Securities and Exchange Commission
Washington, D.C. 20549

Ladies and Gentlemen:

In connection with the qualification of an indenture between KBK Capital Trust I
and The First National Bank of Chicago, the undersigned, in accordance with
Section 321(b) of the Trust Indenture Act of 1939, as amended, hereby consents
that the reports of examinations of the undersigned, made by Federal or State
authorities authorized to make such examinations, may be furnished by such
authorities to the Securities and Exchange Commission upon its request therefor.

Very truly yours,

THE FIRST NATIONAL BANK OF CHICAGO

BY: /s/ SANDRA L. CARUBA
--------------------------
SANDRA L. CARUBA
VICE PRESIDENT