SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss. 240.14a-11(c) or ss. 240.14a-12
KBK CAPITAL CORPORATION
(Name of Registrant as Specified in its Charter)
_____________________________________________________________________
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1. Title of each class of securities to which transaction applies:
2. Aggregate number of securities to which transaction applies:
3. Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
4. Proposed maximum aggregate value of transaction:
5. Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1. Amount Previously Paid:
2. Form, Schedule or Registration Statement No.:
3. Filing Party:
4. Date Filed:
<PAGE>
KBK CAPITAL CORPORATION
ROBERT J. MCGEE 2200 CITY CENTER II
CHAIRMAN OF THE BOARD AND 301 COMMERCE STREET
CHIEF EXECUTIVE OFFICER FORT WORTH, TEXAS 76102
(817) 258-6000
April 6, 1998
Dear Fellow Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders of
KBK Capital Corporation at 10:00 a.m. on Wednesday, May 6, 1998. A formal notice
setting forth the business to come before the meeting and a proxy statement are
enclosed. The meeting will be held at the offices of the Company, 2200 City
Center II, 301 Commerce Street, Fort Worth, Texas. Parking is available in the
Calhoun Street garage located adjacent to the City Center II building.
At the meeting, you will be asked to elect two directors to serve for a
term of three years, to approve the KBK Capital Corporation 1998 Employee Stock
Purchase Plan, and to ratify the selection by the Board of Directors of KPMG
Peat Marwick LLP as independent accountants. These matters are described in
detail in the enclosed Proxy Statement. Your Board of Directors recommends that
you vote FOR each proposal.
I encourage you to attend the meeting in person. Whether or not you are
able to attend, please take a moment now to read the enclosed Proxy Statement
and then sign, date and mail the enclosed proxy in the postage-paid envelope so
that your vote may be counted. Regardless of the number of shares you own, it is
very important that you be represented at the Annual Meeting.
Thank you for your cooperation and continued support.
Sincerely,
Robert J. McGee
Chairman of the Board and
Chief Executive Officer
<PAGE>
[KBK CAPITAL LOGO]
301 Commerce Street, 2200 City Center II, Fort Worth, Texas 76102
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 6, 1998
To the Stockholders:
The 1998 Annual Meeting of Stockholders of KBK Capital Corporation will be
held at the offices of the Company, 2200 City Center II, 301 Commerce Street,
Fort Worth, Texas on Wednesday, May 6, 1998, at 10:00 a.m., local time, for the
following purposes:
1. To elect two directors to serve for a term of three years;
2. To approve the KBK Capital Corporation 1998 Employee Stock Purchase Plan;
3. To ratify the selection by the Board of Directors of KPMG Peat Marwick LLP
as independent auditors for the year ending December 31, 1998; and
4. To consider and act upon any other business that may properly be brought
before the meeting.
The close of business on March 11, 1998 has been fixed as the record date
for determining the stockholders entitled to notice of and to vote at the Annual
Meeting or any adjournment thereof. A list of stockholders as of the record date
will be available for examination by any stockholder at the Annual Meeting and
at the principal executive offices of the Company for the ten days prior to the
Annual Meeting.
IT IS IMPORTANT THAT YOUR STOCK BE REPRESENTED AT THE ANNUAL MEETING, NO MATTER
HOW MANY SHARES YOU OWN. PLEASE PROMPTLY COMPLETE, SIGN AND MAIL THE ENCLOSED
PROXY OR VOTING INSTRUCTION CARD IN THE ACCOMPANYING ENVELOPE, WHETHER OR NOT
YOU INTEND TO BE PRESENT AT THE ANNUAL MEETING.
By Order of the Board of Directors
/s/ JEFFREY P. KASSING
Secretary
April 6, 1998
Fort Worth, Texas
<PAGE>
KBK CAPITAL CORPORATION
301 COMMERCE
2200 CITY CENTER II
FORT WORTH, TEXAS 76102
----------------------------------------------------------------------------
PROXY STATEMENT
----------------------------------------------------------------------------
ANNUAL MEETING OF STOCKHOLDERS
MAY 6, 1998
PROXY SOLICITATION AND VOTING OF PROXIES
This Proxy Statement and the accompanying proxy card are being furnished
to the stockholders of KBK Capital Corporation, a Delaware corporation (the
"Company"), in connection with the solicitation on behalf of the Board of
Directors of the Company of proxies for use at the Annual Meeting of
Stockholders of the Company to be held on Wednesday, May 6, 1998 at 10:00 a.m.,
local time, at 301 Commerce Street, Suite 2200, Fort Worth, Texas, and at any
adjournment thereof. This Proxy Statement and the accompanying proxy card are
being first mailed to stockholders on or about April 6, 1998.
A proxy card is enclosed for your use. YOU ARE REQUESTED BY THE BOARD OF
DIRECTORS TO SIGN, DATE AND RETURN THE PROXY CARD IN THE ACCOMPANYING ENVELOPE,
which is postage-paid if mailed in the United States.
You may revoke your proxy at any time before it is actually voted at the
Annual Meeting by delivering written notice of revocation to the Assistant
Secretary of the Company, by submitting a subsequently dated proxy, or by
attending the meeting and voting in person. Attendance at the Annual Meeting
will not automatically revoke the proxy. Each properly executed unrevoked proxy
will be voted as indicated thereon. Where specific instructions are not
indicated, the proxy will be voted FOR the approval of the election of two
directors to serve for a term of three years, FOR the approval of the KBK
Capital Corporation 1998 Employee Stock Purchase Plan, FOR the ratification of
the selection of KPMG Peat Marwick LLP as independent auditors, and in the
discretion of the persons named as proxies with respect to any other matters
that may properly be brought before the meeting.
The Board of Directors has fixed the close of business on March 11, 1998,
as the record date (the "Record Date") for determining holders of outstanding
shares of the Company's Common Stock entitled to notice of and to vote at the
Annual Meeting or any adjournment thereof. As of the Record Date, 500,000 shares
of the Company's common stock were subject to issuance upon exercise of
warrants, and there were outstanding 3,282,633 shares of the Company's Common
Stock. Each share of Common Stock is entitled to one vote. The Company's Common
Stock is the only class of outstanding securities of the Company entitled to
notice of and to vote at the Annual Meeting. The expense of preparing, printing
and mailing this Proxy Statement will be paid by the Company. Proxies may be
solicited by personnel of the Company in person, by telephone, or through other
forms of communication. The Company's personnel will not be compensated for such
solicitation.
The Company's Bylaws provide that a majority of all of the shares of
Common Stock entitled to vote, whether present in person or represented by
proxy, shall constitute a quorum for the transaction of business at the meeting.
Votes for and against, abstentions and "broker non-votes" will each be counted
as present for purposes of determining the presence of a quorum. To determine
whether a specific proposal has received sufficient votes to be passed, for
shares deemed present, an abstention will have the same effect as a vote
"against" the proposal. Broker non-votes will not be included in vote totals and
will have no effect on the outcome of the vote. The affirmative vote by the
holders of a majority of the shares present (whether in person or by proxy) at
the meeting will be required for the approval of the ratification of KPMG Peat
Marwick LLP as independent auditors and the approval of the KBK Capital
Corporation 1998 Employee Stock Purchase Plan.
1
<PAGE>
With respect to the election of Directors, the two nominees who receive the most
votes at the meeting will be elected.
A copy of the Company's 1997 Annual Report, which includes the
consolidated financial statements of the Company for the year ended December 31,
1997, accompanies this Proxy Statement. The annual report does not constitute a
part of the proxy soliciting material.
AGENDA ITEM 1:
ELECTION OF DIRECTORS
THE BOARD OF DIRECTORS OF THE COMPANY IS DIVIDED INTO THREE CLASSES (CLASS
I, CLASS II AND CLASS III). AT EACH ANNUAL MEETING OF STOCKHOLDERS, DIRECTORS
CONSTITUTING ONE CLASS ARE ELECTED FOR A THREE-YEAR TERM. THE BOARD OF DIRECTORS
CURRENTLY CONSISTS OF EIGHT MEMBERS.
TWO DIRECTORS WILL BE ELECTED AT THE ANNUAL MEETING AS CLASS II DIRECTORS.
THE REMAINING SIX DIRECTORS NAMED BELOW ARE NOT REQUIRED TO STAND FOR ELECTION
AT THE ANNUAL MEETING BECAUSE THEIR PRESENT TERM EXPIRES IN EITHER 1999 OR 2000.
THE BOARD OF DIRECTORS HAS NOMINATED THE FOLLOWING INDIVIDUALS, EACH OF WHOM IS
AN INCUMBENT DIRECTOR, TO SERVE AS CLASS II DIRECTORS UNTIL THE ANNUAL MEETING
OF SHAREHOLDERS IN 2001 AND UNTIL SUCH TIME AS THEIR RESPECTIVE SUCCESSORS ARE
ELECTED AND QUALIFY.
HARRIS A. KAFFIE - CLASS II - THREE YEAR TERM
THOMAS M. SIMMONS - CLASS II - THREE YEAR TERM
Shareholders may not cumulate their votes in the election of directors.
Although the Board of Directors has no reason to believe that any of the
nominees will be unable to serve, should any of the nominees become unable to
serve prior to the Annual Meeting, the proxies will be voted for the election of
such other persons, if any, as may be nominated by the Board of Directors.
THE BOARD OF DIRECTORS RECOMMENDS YOU VOTE FOR THE ELECTION OF THE NOMINEES
LISTED ABOVE AND YOUR PROXY WILL BE SO VOTED UNLESS YOU SPECIFY OTHERWISE.
BOARD AND NOMINEE BIOGRAPHICAL INFORMATION
Set forth below is the name and certain information regarding each of the two
nominees for election as a director under Class II, as well as each of the other
directors of the Company:
CLASS I DIRECTORS - TERM TO EXPIRE 2000:
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.
R. EARL COX, III, 64, has served as a Director of the Company since May
1996 and is Chairman of Tandy Crafts, Inc., a retail specialty chain
headquartered in Fort Worth, Texas. Mr. Cox is also a co-owner of Ofco
Office Furniture Stores, Inc., a chain of retail office furniture stores
and President of R.E. Cox Realty Company, a property management company.
Mr. Cox is a director of Inspire Insurance Solutions.
2
<PAGE>
MARTHA V. LEONARD, 61, has served as a Director of the Company since May
1996 and manages her private investment portfolio. Ms. Leonard built and
developed Leonard Golf Links, a teaching/practice facility which she
recently sold. Ms. Leonard serves as a director on various charitable
and civic boards.
CLASS II NOMINEES - TERM TO EXPIRE 2001:
THOMAS M. SIMMONS, 45, has served as a Director since October 1995. Mr.
Simmons is the Managing Director in the Houston office of SpencerStuart
& Co., an executive search firm. Prior to joining SpencerStuart, Mr.
Simmons was President and Chief Executive Officer of Transamerica Fund
Management Company with assets under management in excess of $3 billion.
HARRIS A. KAFFIE, 48, has served as a Director of the Company since May
1996 and is a partner in Kaffie Brothers, a private investment
partnership, and is a director of Blue Dolphin Energy Company, a
publicly-held company engaged in the exploration, acquisition,
development and operation of oil and gas properties and in oil and gas
transportation and marketing.
CLASS III DIRECTORS - TERM TO EXPIRE 1999:
ROBERT J. MCGEE, 43, has served as Chairman of the Board, Director and
Chief Executive Officer of the Company since he founded the Company in
February 1992 and was elected President in January 1994. Prior to his
association with the Company, Mr. McGee was Chairman of the Board of
Texas Commerce Bank, Fort Worth, National Association from September
1989 to April 1992.
DANIEL R. FEEHAN, 47, has served as a Director of the Company since
February 1992. Mr. Feehan is President and Chief Operating Officer and a
Director of Cash America International, Inc., a consumer lending
corporation, and has served in such capacities since January 1990. He
has been associated with Cash America International, Inc. since 1988.
THOMAS L. HEALEY, 64, was first elected as a Director of the Company in
April 1994. Mr. Healey retired from the law firm of Andrews & Kurth LLP
in 1993 after having been a partner or of counsel at such firm since
1974. Since his retirement from Andrews & Kurth, Mr. Healey has been a
private investor.
COMMITTEES
The Board of Directors has established the following standing
committees:
ASSET QUALITY COMMITTEE. The Asset Quality Committee, which is currently
comprised of Mr. Healey (Chairman), Mr. Cox, and Mr. Feehan, is entitled
to exercise all of the powers of the Board of Directors of the Company
with respect to the oversight and assessment of the credit quality of
the Company's earning asset portfolio and the review and monitoring of
the adequacy of the Company's allowance for possible credit losses for
any and all classes of earning assets. This committee is responsible for
the review and approval of all financing, purchase or loan commitments
that exceed the Company's house or concentration limits, as that limit
stands from time to time as established by the full Board provided that
in the exercise of such powers such committee shall be limited by
applicable law, the Restated Certificate of Incorporation and Bylaws of
the Company and as the full Board may otherwise direct. The Asset
Quality Committee held four meetings during 1997.
3
<PAGE>
AUDIT COMMITTEE. The Audit Committee, which is currently comprised of
Mr. Feehan (Chairman), Mr. Healey, and Mr. Simmons, meets separately
with representatives of the Company's independent auditors and with
representatives of senior management in performing its functions. The
Audit Committee reviews the general scope of audit coverages, the fees
charged by the independent auditors, matters relating to the Company's
internal control systems and other matters related to audit functions.
During 1997, the Audit Committee held two meetings.
COMPENSATION COMMITTEE. The Compensation Committee, which is currently
comprised of Mr. Simmons (Chairman) and Mr. Feehan, administers the
Company's 1994 Stock Option Plan and the 1996 Long-Term Incentive Plan
and has responsibility for making recommendations to the Board of
Directors with respect to the compensation of the Company's Chief
Executive Officer and its other executive officers, and the
establishment of policies dealing with various compensation and employee
benefit matters for the Company. The Compensation Committee held one
meeting during 1997.
EXECUTIVE COMMITTEE. The Executive Committee, which is currently
comprised of Mr. McGee (Chairman), Mr. Feehan, Mr. Simmons, Mr. Healey,
and Mr. Kaffie, is entitled to exercise all of the powers of the Board
of Directors of the Company in the management of the property, business
and affairs of the Company to the extent permitted by law, the Restated
Certificate of Incorporation and the Bylaws of the Company and such
limits as the full Board may otherwise direct. The Executive Committee
held ten meetings during 1997.
MARKETS COMMITTEE. The Markets Committee, which is currently comprised
of Mr. Kaffie (Chairman), Ms. Leonard, and Mr. Cox, reviews and approves
new products, the establishment of geographic markets, new offices,
pricing and strategy relative to the marketing of the Company's
products, the maintenance and improvement of the Company's competitive
position in the financial services industry generally and all matters
incidental or relating to the foregoing. The Markets Committee held
eleven meetings in 1997.
NOMINATING COMMITTEE. The Nominating Committee, which is currently
comprised of Mr. McGee (Chairman) and Mr. Simmons, provides
recommendations to the Board for nominees to serve as Directors of the
Company. The Nominating Committee met once during 1997.
ATTENDANCE AND FEES
The Company's Board of Directors held five meetings in 1997. Each
director attended at least 75% of the total number of meetings of the Board of
Directors and the committees on which he served.
Each director who is not also an officer or employee of the Company
receives a fee of $1,500 per board meeting, $500 per committee meeting, and
reimbursement for out-of-pocket expenses incurred in connection with attendance
at meetings of the Board of Directors or committees thereof. In addition,
pursuant to the terms of the Company's 1994 Stock Option Plan, each non-employee
director automatically receives a ten-year option to purchase 5,000 shares of
Common Stock at fair market value at the date of grant each year of service as a
director, which option vests six months after the date of grant. Pursuant to the
1994 Stock Option Plan, each of Mr. Feehan, Mr. Cox, Ms. Leonard, Mr. Kaffie,
Mr. Simmons and Mr. Healey received grants to purchase 5,000 shares of Common
Stock during 1997 with an exercise price of $5.00 per share.
4
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
In 1994, the Company adopted a program pursuant to which officers of the
Company and its subsidiary could, subject to certain limitations, borrow funds
from the Company's operating subsidiary to enable them to purchase Common Stock
in the open market or exercise stock options, which loans are secured by pledges
of the Common Stock purchased, or for holding Common Stock of the Company. The
total amount of loans available under the program may not exceed $499,000, and
no more than $199,000 of loans may be extended during any calendar quarter. Such
loans bear interest at a published prime rate plus 1% (which interest may be
added to principal under certain circumstances), and are payable prior to
termination of employment under certain conditions, and in any event must be
repaid within 60 days after termination of employment. Pursuant to this program,
Robert J. McGee, the Chairman of the Board and Chief Executive Officer of the
Company, had a maximum amount outstanding under such program during 1997 of
$248,767, and the amount outstanding as of March 11, 1998, was $285,318,
including $18,041 of interest added to principal in 1998. Kenneth H. Jones, Vice
Chairman of the Board of the Company, had a maximum amount outstanding under
such program during 1997 of $55,000, and the amount outstanding as of March 11,
1998, was $50,000. Mr. Jones paid $5,038 in interest during 1997.
SHARE OWNERSHIP OF DIRECTORS, EXECUTIVE OFFICERS
AND CERTAIN BENEFICIAL OWNERS
The following table sets forth the beneficial ownership of Common Stock
as of March 11, 1998, for each director and director nominee, each executive
officer named in the Summary Compensation Table included under the heading
"Information Concerning Executive Officers," all directors and executive
officers of the Company as a group and each person known by the Company to own
beneficially more than 5% of the Company's outstanding Common Stock. Except as
otherwise indicated, the persons listed below have sole voting and investment
power over the shares beneficially owned by them.
SHARES OWNED BENEFICIALLY
-------------------------
NAME NUMBER PERCENT
- - ---- ----------- ------------
Robert J. McGee (1) (2) 798,500 21.8%
Jack R. Roper (2) 26,900 *
Daniel R. Feehan (2) (3) 205,000 5.6%
J. Dugan Smith (2) 10,000 *
Thomas L. Healey (2) 20,000 *
Kenneth H. Jones, Jr.(2) (4) 160,500 4.4%
Thomas M. Simmons (2) 17,900 *
R. Earl Cox, III (2) 15,000 *
Harris A. Kaffie (2) (5) 282,600 7.7%
Martha V. Leonard (2) 16,000 *
Jeffrey P. Kassing (2) 400 *
Deborah B. Wilkinson 0 *
All directors and executive officers
as a group (12 persons)(1)(2)(3)(4)(5) 1,552,800 42.3%
Orbis Pension Trustee Limited (6) 280,000 7.6%
Derby Trust plc (6) 120,000 3.3%
Wellington Management Co. (7) 292,000 8.0%
- - ----------
* Less than one percent
1. Includes 100,000 shares owned by trusts for the benefit of Mr. McGee's
children, as to which shares Mr. McGee disclaims beneficial ownership. Mr.
McGee's address is 301 Commerce Street, 2200 City Center II, Fort Worth,
Texas 76102.
5
<PAGE>
2. Includes shares issuable upon exercise of stock options exercisable within 60
days as follows: Mr. McGee - 8,000; Mr. Roper - 26,800; Mr. Smith - 5,000;
Mr. Kassing - 400; Mr. Feehan - 25,000; Mr. Healey - 20,000; Mr. Jones -
80,000; Mr. Simmons - 10,000; Mr. Cox - 10,000; Mr. Kaffie - 10,000; Ms.
Leonard - 10,000; all directors and executive officers as a group - 205,200.
3. 180,000 of the shares shown are issuable upon exercise of warrants (including
40,000 shares issuable upon exercise of warrants owned by trusts for the
benefit of Mr. Feehan's children). Mr. Feehan's address is 1600 W. 7th
Street, Suite 900, Fort Worth, Texas 76102.
4. 60,000 of the shares shown are issuable upon exercise of warrants owned by
trusts for the benefit of Mr. Jack Daugherty's children of which Mr. Jones is
trustee as to which Mr. Jones disclaims beneficial ownership. Mr. Daugherty
was previously a director of the Company.
5. 10,000 of such shares are owned by a trust for the benefit of Mr. Kaffie's
child of which Mr. Kaffie is trustee and as to which Mr. Kaffie disclaims
beneficial ownership.
6. The address of the Orbis Pension Trustees Limited and Derby Trust plc is 1
Connaught Place, London, W2 2DY. Orbis Pension Trustees Limited and Derby
Trust plc are managed by Chatsworth Management Services Limited, at the same
address, and may, for the purposes of the rules and regulations of the
Securities and Exchange Commission, be deemed to beneficially own these
shares.
7. The address of Wellington Management Co. is 75 State Street, Boston,
Massachusetts 02109.
Pursuant to an agreement with certain former holders of the capital stock of
Coastal Financial Resources, Inc. under which the Company acquired such holders'
capital stock of Coastal Financial Resources, Inc. and issued in connection
therewith 500,000 shares of Common Stock of the Company, each such holder has
agreed for a ten-year period commencing December 30, 1994 to vote all Common
Stock beneficially owned by such holder, with respect to each matter submitted
to the stockholders of the Company, in the same proportion as the stockholders
of the Company (other than such holders) vote their shares of Common Stock. As a
result, approximately 15% of the outstanding Common Stock of the Company will be
voted at the Annual Meeting with respect to each matter in the same proportion
as the stockholders of the Company (other than such holders) vote their shares.
INFORMATION CONCERNLNG EXECUTIVE OFFICERS
EXECUTIVE OFFICERS
The following table sets forth certain information about the executive
officers of the Company:
NAME AGE POSITION
---- --- --------
Robert J. McGee 43 Director, Chairman of the
Board and Chief Executive Officer
Kenneth H. Jones, Jr. 63 Director and Vice Chairman
J. Dugan Smith 38 Executive Vice President
6
<PAGE>
Jack R. Roper 44 Executive Vice President-Systems
and Administration
Jay K. Turner 43 Executive Vice President and
Chief Financial Officer
Jeffrey P. Kassing 39 Secretary
Deborah B. Wilkinson 47 Vice President, Controller and
Assistant Secretary
ROBERT J. MCGEE - see "ELECTION OF DIRECTORS" above.
KENNETH H. JONES, JR. - see "ELECTION OF DIRECTORS" above.
J. DUGAN SMITH has served as President of the Company's operating
subsidiary since September 1997. He joined the Company's operating
subsidiary 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.
JACK R. ROPER has served as Executive Vice President of Servicing of the
Company since January 1994, and has been an executive officer of the
Company's operating subsidiary since 1989.
JEFFREY P. KASSING joined the Company's operating subsidiary in September
1996 as Vice President and General Counsel of the Company. Prior to
joining the Company, Mr. Kassing was Vice President and Staff Attorney for
Bank One, Texas, N.A., in Dallas, Texas from 1990 to September 1996.
DEBORAH B. WILKINSON joined the Company's operating subsidiary in March
1997 as Vice President and Controller of the Company. Prior to joining the
Company, Ms. Wilkinson was Senior Vice President and Controller for First
State Bank of Texas in Denton, Texas from 1990 to March 1997.
JAY K. TURNER joined the Company in February 1998 as Executive Vice
President and Chief Financial Officer. Prior to joining the Company, Mr.
Turner was Director of Investment Banking with Rauscher Pierce Refsnes in
Dallas, Texas for two years and prior to that served as Managing Director
of Corporate Finance for KPMG Peat Marwick in New York and Texas.
The Company's executive officers are elected annually by, and serve at the
discretion of, the Board of Directors.
COMPENSATION OF EXECUTIVE OFFICERS
The table below sets forth the compensation paid or accrued for services
rendered in all capacities to the Company during the last three fiscal years to
the Company's Chief Executive Officer and each of the Company's most highly
compensated executive officers (the "Named Executives") who earned more than
$100,000 in combined salary and bonus in 1997.
7
<PAGE>
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION AWARDS
ANNUAL COMPENSATION ---------------------
------------------------------------------------------------ SECURITIES UNDERLYING
OTHER ANNUAL STOCK OPTIONS
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION (NUMBER OF SHARES)
- - --------------------------- ---- -------- ----- ------------ ------------------
<S> <C> <C> <C> <C> <C>
Robert J. McGee 1997 $224,000 -- * --
Chairman of the Board, 1996 $224,000 $ 50,000(1) * 20,000
and Chief Executive Officer 1995 $200,000 -- * --
J. Dugan Smith (2) 1997 $176,667 -- * 60,716
President 1996 $103,125 -- * 25,000
Michael D. Magill (3) 1997 $ 97,462 -- * 20,000
Executive Vice President 1996 $168,000 $ 50,000(1) * 20,000
and Chief Financial Officer 1995 $150,000 $ 50,000(4) * 5,000
Jack R. Roper 1997 $135,000 -- * 17,858
Executive Vice President 1996 $106,000 $ 8,000 $15,000(5) 10,000
of Servicing 1995 $105,071 -- * 20,000
Jeffrey P. Kassing (6) 1997 $106,250 $ 10,000 * 11,904
Secretary 1996 $ 39,596 -- * 2,000
Deborah B. Wilkinson (7) 1997 $ 85,417 -- * 11,904
</TABLE>
- - ------------
* Less than 10% of combined salary and bonus.
(1) Mr. McGee and Mr. Magill were awarded 1995 annual bonuses contingent upon
achieving a certain level of net income in the first quarter of 1996, which
was met. These bonus payments had no financial impact to the Company in
1996.
(2) Mr. Smith joined the Company in May 1996.
(3) Mr. Magill joined the Company in January 1995 and resigned from the Company
in July 1997.
(4) Mr. Magill received a signing bonus upon his employment with the Company.
(5) Mr. Roper received a moving allowance during 1996.
(6) Mr. Kassing joined the Company in September 1996.
(7) Ms. Wilkinson joined the Company in March 1997.
STOCK OPTION GRANTS IN 1997
The following table contains certain information concerning stock options
granted to the Named Executives in 1997. All of the stock options were granted
in May 1997.
<TABLE>
<CAPTION>
Individual Grants
- - ----------------------------------------------------------------------------------------------------------
Number of Percent of Total
Securities Options Granted to
Underlying Employees in Exercise Price
Name Options Granted Fiscal Year (Per Share) Expiration Date
- - ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Jeffrey P. Kassing 11,904 9.5% $5.06 5/20/07
Jack R. Roper 17,858 14.3% $5.06 5/20/07
J. Dugan Smith 35,716 28.6% $5.06 5/20/07
Deborah B. Wilkinson 11,904 9.5% $5.06 5/20/07
</TABLE>
8
<PAGE>
STOCK OPTION EXERCISES IN 1997; VALUE OF UNEXERCISED STOCK OPTIONS
The following table contains certain information concerning the value of
unexercised options at December 31, 1997. No stock options were exercised by the
Named Executives in 1997.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES UNDERLYING VALUE ($) OF UNEXERCISED IN-THE-MONEY
UNEXERCISED OPTIONS AT YEAR-END OPTIONS AT YEAR-END(1)
EXERCISABLE/ EXERCISABLE/
NAME UNEXERCISABLE UNEXERCISABLE
- - ---- ------------- -------------
<S> <C> <C>
Robert J. McGee 4,000/16,000 20,240/80,960
Jeffrey P. Kassing 400/13,504 3,176/94,004
Jack R. Roper 22,400/37,458 127,720/228,843
J. Dugan Smith 5,000/55,716 34,700/382,725
Deborah B. Wilkinson 0/11,904 0/81,300
</TABLE>
1. Based upon the difference between the closing price of the Company's Common
Stock of $12.00 on December 31, 1997 (the last trading day of 1997) and the
exercise price.
CHANGE OF CONTROL EMPLOYMENT AGREEMENTS
The Company has entered into Change of Control Employment Agreements with
three of its executive officers, Messrs. McGee, Roper, and Smith, which provide
that from and after a Change of Control (as defined therein) until the second
anniversary of the Effective Date of the Change of Control, if (i) the Company
terminates employment of the executive for any reason other than for Cause (as
defined therein), death or disability, (ii) the executive terminates employment
for Good Reason (as defined therein), or (iii) the executive terminates
employment after the first anniversary for any reason or no reason, such
executive will be entitled to a payment equal to two years' base salary,
continued health coverage for one year from the date of termination or through
the end of the second anniversary of the Effective Date of the Change of
Control, whichever is longer, and the extension of certain rights under the
Consolidated Omnibus Budget Reconciliation Act of 1985, as amended ("COBRA").
For purposes of the Change of Control Employment Agreements, a Change of Control
occurs if (i) the Company is not the surviving entity in any merger or
consolidation (or survives only as a subsidiary of an entity other than a
previously wholly-owned subsidiary of the Company), (ii) the Company sells,
leases or exchanges or agrees to sell, lease or exchange all or substantially
all of its assets to any other person or entity (other than a wholly-owned
subsidiary of the Company), (iii) the Company is to be dissolved and liquidated,
(iv) any person or entity, including a group as contemplated by Section 13(d)(3)
of the Securities Exchange Act of 1934, as amended, acquires or gains ownership
or control (including, without limitation, power to vote) of more than 50% of
the outstanding shares of capital stock of the Company, or (v) as a result of or
in connection with any cash tender or exchange offer, merger or other business
combination, sale of assets or a contested election for the Board of Directors,
or any combination of the foregoing transactions (a "Transaction"), the persons
who were directors of the Company before such Transaction shall cease to
constitute a majority of the Board.
9
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AGENDA ITEM 2:
APPROVAL OF THE 1998 EMPLOYEE STOCK PURCHASE PLAN OF
KBK CAPITAL CORPORATION
On April 18, 1998, the Board of Directors adopted, subject to shareholder
approval, the 1998 Employee Stock Purchase Plan of KBK Capital Corporation (the
"PLAN"), attached as Appendix A to this proxy statement. If approved by
shareholders, the Plan provides eligible employees (defined below) with an
opportunity to purchase Common Stock through payroll deductions. The Plan is
intended to assist eligible employees in acquiring a stock ownership interest in
the Company pursuant to a plan that is intended to qualify as an "employee stock
purchase plan" under Section 423 of the Internal Revenue Code of 1986, as
amended (the "CODE"), to help eligible employees provide for their future
security and to encourage them to remain in the employment of the Company and
the Company's operating subsidiary, KBK Financial, Inc.
SHARES RESERVED FOR THE PLAN
The aggregate number of shares of Common Stock which may be purchased
under the Plan shall not exceed 150,000, subject to adjustment in the event of
stock dividends, stock splits, combination of shares, recapitalizations, or
other changes in the outstanding Common Stock. Any such adjustment will be made
by the Board of Directors. Shares issued under the Plan may consist, in whole or
in part, of authorized and unissued shares or treasury shares.
ELIGIBLE PARTICIPANTS
Full-time employees of the Company and the Company's operating subsidiary
are eligible if they meet certain conditions. To be eligible, the employee's
customary employment must be greater than 20 hours per week and more than five
months in a calendar year.
Approximately 65 employees would have been eligible to participate as of
December 31, 1997.
MATERIAL FEATURES OF THE PLAN
Beginning July 1, 1998, the Company may make grants of options on January
1, April 1, July 1 and October 1 of each year the Plan is in effect (the
"OFFERING DATE") or on such other date as the Board of Directors shall
designate. Each option period shall last for three months ending on the March
31, June 30, September 30 or December 31 immediately following the grant of
options or on such dates as the Board determines.
Each eligible employee on a date of exercise shall be entitled to purchase
shares of Common Stock at a purchase price equal to the lower of: (i) 90% (or
such other percentage as determined from time to time by the Board of Directors,
but in no event will such percentage be less than 85%) (the "APPLICABLE
PERCENTAGE") multiplied by the fair market value of a share of the Common Stock
of the Company on the Offering Date; or (ii) the Applicable Percentage
multiplied by the fair market value of a share of the Common Stock of the
Company on the date of exercise. Dates of exercise shall take place on the last
day of the applicable option period.
Payment for shares of Common Stock purchased under the Plan will be made
by authorized payroll deductions from an eligible employee's Compensation.
"COMPENSATION" means an eligible employee's regular straight-time earnings
excluding payments for overtime, bonuses and other special payments, commissions
and other incentive payments payable from the Company or the Company's operating
subsidiary during an option period.
Eligible employees who elect to participate in the Plan will designate up
to 15% of their Compensation to be deposited into a periodic deposit account. On
each date of exercise, the entire periodic deposit account of each participant
in the Plan is used to purchase the appropriate maximum number of whole, but not
fractional, shares of Common Stock. The Company shall arrange for the delivery
to each participant, as appropriate, of a certificate representing the shares
purchased upon exercise of his option. No employee shall be granted an
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<PAGE>
option under the Plan (i) if, immediately after the grant, such employee (or any
other person whose stock would be attributed to such employee pursuant to
Section 424(d) of the Code) would own stock and/or hold outstanding options to
purchase stock possessing five percent (5%) or more of the total combined voting
power or value of all classes of stock of the Company, or (ii) which permits his
rights to purchase stock under all employee stock purchase plans (described in
Section 423 of the Code) of the Company and its subsidiaries to accrue at a rate
which exceeds $25,000 of fair market value of such stock (determined at the time
such option is granted) for each calendar year in which such option is
outstanding at any time.
All funds received by the Company from the sale of Common Stock under the
Plan may be used for any corporate purpose.
NEW PLAN BENEFITS
It is not possible to determine how many eligible employees will
participate in the Plan in the future. Therefore, it is not possible to
determine with certainty the dollar value or number of shares of Common Stock
that will be distributed under the Plan. Based on a per share price of $12.00
(the closing sale price for Common Stock on the American Stock Exchange on
December 31, 1997), the benefits of the Plan for the Named Executives during
1997 (assuming maximum participation) would have been as follows:
1998 EMPLOYEE STOCK PURCHASE PLAN OF KBK CAPITAL CORPORATION
NAME DOLLAR VALUE ($) NUMBER OF SHARES
---- ---------------- ----------------
Robert J. McGee(1) 0 0
Jeffrey P. Kassing 1,594 1,328
Jack R. Roper 2,025 1,688
J. Dugan Smith 2,500 2,083
Deborah B. Wilkinson 1,281 1,067
Executive Group 8,525 7,104
Non-Executive Officer
Employee Group 42,629 35,524
(1)Mr. McGee cannot participate in the Plan because he beneficially owns more
than 5% of the Common Stock.
TAX TREATMENT
The following is a general discussion of certain of the federal income tax
consequences of the grant and exercise of options and the subsequent sale or
exchange of the related Common Stock.
It is intended that options issued pursuant to the Plan will qualify as
options under an "employee stock purchase plan" under Section 423 of the Code.
If an option is classified as such, the officer or employee (the "optionee")
will not recognize income upon the grant or exercise of the option; however, an
optionee subject to the alternative minimum tax (the "AMT") must include in AMT
income the difference between the exercise price of the option and the fair
market value of the Common Stock at the time the option is exercised (the
"BARGAIN PURCHASE ELEMENT"). The sale or exchange of any Common Stock by the
optionee will be treated as a long-term capital gain only if such sale or
exchange occurs at least two years after the grant of the option and one year
after the receipt of the Common Stock by the optionee pursuant to the optionee's
exercise of the option. If either of these holding periods prior to the
disposition of the Common Stock acquired pursuant to an exercise of the option
are not satisfied (a "DISQUALIFYING DISPOSITION") the optionee will recognize
ordinary income equal to the difference between the exercise price of the option
and the lower of the fair market value of such Common Stock on the date the
option is exercised or the sales price of such Common Stock. Any gain recognized
by an optionee on a disqualifying disposition above the ordinary income computed
in the previous sentence will be a long-term capital gain. It should be noted
that legislative proposals are introduced from time to time that affect tax
rates and could affect differences at which ordinary and capital gains are
taxed. It is important to note that an
11
<PAGE>
option under an employee stock purchase plan may not be granted to a participant
who, immediately after such option is granted, is a five percent shareholder of
the Company unless certain more stringent qualification rules are satisfied.
The Company may not take a deduction for federal income tax purposes upon
the grant or exercise of an employee stock purchase option. The Company may take
a deduction in the year of such disqualifying disposition for the amount that
the participant recognizes as ordinary income due to such disqualifying
disposition. The Company must generally furnish a statement containing specified
information to the participant who exercises an option under the employee stock
purchase plan on or before January 31 of the year following the exercise of such
option.
If the option does not qualify as an option under an employee stock
purchase plan, then it is a "nonstatutory option" and the optionee will not
recognize income upon the grant of such option; however, such optionee will
recognize ordinary income upon the exercise of such option by the amount of the
bargain purchase element. In certain circumstances, in cases in which the Common
Stock is subject to a substantial risk of forfeiture when acquired or if the
optionee is an officer, director or 10% shareholder of the Company, the date of
taxation may be deferred unless the optionee files an election with the Internal
Revenue Service under Section 83(b) of the Code. Upon the later sale or exchange
of the Common Stock by the optionee, any difference between the sales price and
the exercise price will be treated as capital gain or loss to the extent not
recognized as ordinary income as provided above, and will be long-term if the
Common Stock have been held for the applicable period.
The federal income tax consequences to the Company regarding whether, and
to what extent, it will obtain any deduction from the grant or exercise of a
nonstatutory option as well as whether any gain or loss will be triggered
depends upon complex rules beyond the scope of this discussion. Income
recognized by an optionee of a nonstatutory option will be subject to
withholding by the Company.
The foregoing discussion relates only to federal income taxes; the Company
and participants may be subject to state and local taxation. The Company and
participants should consult their tax advisers regarding potential state and
local taxation with respect to their participation in the Plan.
PLAN ADMINISTRATION AND TERMINATION
The Plan will be administered by the Board of Directors or a committee of
members of the Board appointed by the Board. The administration, interpretation
or application of the Plan by the Board or its committee will be final,
conclusive and binding upon all participants. Members of the Board who are
eligible employees are permitted to participate in the Plan, PROVIDED that: (a)
members of the Board who are eligible to participate in the Plan may not vote on
any matter affecting the administration of the Plan or the grant of any option
pursuant to the Plan, and (b) if a committee is established to administer the
Plan, no member of the Board who is eligible to participate in the Plan may be a
member of the committee.
The Board of Directors of the Company may at any time terminate or amend
the Plan. Except in the case of changes in the capitalization of the Company,
such as stock splits, and certain extraordinary corporate events, no such
termination can affect options previously granted, nor may an amendment make any
change in any option theretofore granted which adversely affects the rights of
any participant, nor may an amendment be made without prior approval of the
shareholders of the Company if such amendment would increase the number of
shares that may be issued under the Plan.
Adoption of this proposal requires an affirmative vote by a majority of
the votes cast thereon. Abstentions have the effect of a negative vote, while
broker non-votes have no impact on the vote.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR APPROVAL OF THE KBK
CAPITAL CORPORATION 1998 EMPLOYEE STOCK PURCHASE PLAN AND YOUR PROXY WILL BE SO
VOTED UNLESS YOU SPECIFY OTHERWISE.
12
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AGENDA ITEM 3:
RATIFICATION OF THE SELECTION OF INDEPENDENT AUDLTORS
The stockholders are asked to ratify the Board of Directors' appointment
of KPMG Peat Marwick LLP ("KPMG"), an independent certified public accounting
firm, to audit the consolidated financial statements of the Company for 1998.
KPMG has audited the books of the Company since its inception in 1992 and has
audited the books of the Company's operating subsidiary since 1962.
Representatives of KPMG are expected to be at the Annual Meeting with the
opportunity to make a statement if they desire, and will also be available to
answer appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE RATIFICATION OF
THE SELECTION OF KPMG PEAT MARWICK LLP AS THE INDEPENDENT AUDITORS AND YOUR
PROXY WILL BE SO VOTED UNLESS YOU SPECIFY OTHERWISE.
STOCKHOLDER PROPOSALS AND DIRECTOR NOMINATIONS
Stockholders may propose matters to be presented at stockholders' meetings
and may also nominate persons to be directors, subject to the formal procedures
that have been established by the Company and by the rules of the Securities and
Exchange Commission.
PROPOSALS FOR THE 1999 ANNUAL MEETING
Pursuant to rules promulgated by the Securities and Exchange Commission,
any proposals of holders of the Company's Common Stock intended to be presented
at the Annual Meeting of Stockholders of the Company to be held in 1999 and
included in the Company's proxy statement and form of proxy relating to that
meeting must be received by the Company, addressed to Jeffrey P. Kassing,
Secretary, 301 Commerce Street, 2200 City Center II Fort Worth, Texas 76102, no
later than December 5, 1998. Such proposals must be in conformity with all
applicable legal provisions, including Rule 14a-8 of the General Rules and
Regulations under the Securities Exchange Act of 1934, as amended.
In addition to the Securities and Exchange Commission rules described in
the preceding paragraph, the Company's bylaws provide that, at any annual
meeting of stockholders, only such business shall be conducted as shall have
been properly brought before the annual meeting. To be properly brought before
an annual meeting, business must be (i) specified in the notice of meeting (or
any supplement thereto) given by or at the direction of the Board of Directors,
(ii) otherwise properly brought before the meeting by or at the direction of the
Board of Directors, or (iii) otherwise properly brought before the meeting by a
stockholder of the Company who is a stockholder of record at the time of giving
of the required notice described below, who shall be entitled to vote at such
meeting and who complies with the following notice procedures. For business to
be properly brought before an annual meeting by a stockholder, the stockholder,
in addition to any other applicable requirements, must have given timely notice
thereof in writing to the Secretary of the Company. TO BE TIMELY FOR THE 1999
ANNUAL MEETING, A STOCKHOLDER'S NOTICE MUST BE DELIVERED TO OR MAILED AND
RECEIVED AT THE PRINCIPAL EXECUTIVE OFFICES OF THE COMPANY AT 301 COMMERCE
STREET, 2200 CITY CENTER II, FORT WORTH, TEXAS 76102 ON OR BEFORE FEBRUARY 5,
1999. A stockholder's notice to the Secretary shall set forth as to each matter
the stockholder proposes to bring before the annual meeting: (a) a brief
description of the business desired to be brought before the annual meeting and
the reasons for conducting such business at the annual meeting, (b) the name and
address, as they appear on the Company's books, of the stockholder proposing
such business, (c) the class and number of shares of voting stock of the Company
which are beneficially owned by the stockholder, (d) a representation that the
stockholder intends to appear in person or by proxy at the meeting to bring the
proposed business before the annual meeting, and (e) a description of any
material interest of the stockholder in such business. A stockholder must also
comply with all applicable requirements of the Securities Exchange Act of 1934,
as amended, and the rules and regulations thereunder with respect to any such
proposal.
13
<PAGE>
NOMINATIONS FOR THE 1999 ANNUAL MEETING AND SPECIAL MEETINGS
Pursuant to the Company's bylaws, only persons who are nominated in
accordance with the procedures set forth in the bylaws and who are less than 70
years of age at the time of nomination or election are eligible for election as
directors. Nominations of persons for election to the Board of Directors of the
Company may be made at a meeting of stockholders (a) by or at the direction of
the Board of Directors or (b) by any stockholder of the Company who is a
stockholder of record at the time of giving of notice described below, who shall
be entitled to vote for the election of directors at the meeting and who
complies with the notice procedures described below. Such nominations, other
than those made by or at the direction of the Board of Directors, shall be made
pursuant to timely notice in writing to the Secretary of the Company. TO BE
TIMELY, A STOCKHOLDER'S NOTICE SHALL BE DELIVERED TO OR MAILED AND RECEIVED AT
THE PRINCIPAL EXECUTIVE OFFICES OF THE COMPANY AT 301 COMMERCE STREET, 2200 CITY
CENTER II, FORT WORTH, TEXAS 76102 (I) WITH RESPECT TO AN ELECTION TO BE HELD AT
THE 1999 ANNUAL MEETING OF THE STOCKHOLDERS OF THE COMPANY, ON OR BEFORE
FEBRUARY 5, 1999, and (ii) with respect to an election to be held at a special
meeting of stockholders of the Company for the election of directors not later
than the close of business on the tenth (l0th) day following the day on which
notice of the date of the special meeting was mailed to stockholders of the
Company or public disclosure of the date of the special meeting was made,
whichever first occurs. Such stockholder's notice to the Secretary shall set
forth (x) as to each person whom the stockholder proposes to nominate for
election or re-election as a director, all information relating to such person
that is required to be disclosed in solicitations of proxies for election of
directors, or is otherwise required, pursuant to Regulation 14A under the
Securities Exchange Act of 1934, as amended (including such person's written
consent to being named in the proxy statement as a nominee and to serve as a
director, if elected), and (y) as to the stockholder giving the notice (i) the
name and address, as they appear on the Company's books, of such stockholder and
(ii) the class and number of shares of voting stock of the Company which are
beneficially owned by such stockholder. At the request of the Board of
Directors, any person nominated by the Board of Directors for election as a
director shall furnish to the Secretary of the Company that information required
to be set forth in a stockholder's notice of nomination which pertains to the
nominee. A stockholder must also comply with all applicable requirements of the
Securities Exchange Act of 1934, as amended, and the rules and regulations
thereunder with respect to nominations of directors.
SECTION 16(a) BENEFCIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's executive officers and directors, and persons who own more than
10% of the Common Stock of the Company, to file with the Securities and Exchange
Commission initial reports of ownership and reports of changes in ownership of
Common Stock and other equity securities of the Company. Such persons are
required also to furnish to the Company copies of all such forms filed. Due to
incomplete record-keeping, the Company has been unable to determine if a Form 3
Initial Statement of Beneficial Ownership of Securities was filed by Mr. Smith,
Mr. Cox, Ms. Leonard or Mr. Simmons. In order to assure that the proper
information has been disclosed, a Form 5 Annual Statement of Changes in
Beneficial Ownership, has been filed by each of such individuals reporting their
holdings as of the date the Form 3 was required. Form 3 was filed late by Mr.
Kaffie, Ms. Wilkinson and Mr. Kassing. To the Company's knowledge, based solely
on review of the copies of such reports furnished to the Company or on written
representations from certain reporting persons that no other reports were
required for such persons, all of the Company's executive officers, directors
and more than 10% stockholders timely made all required filing under Section
16(a) of the Securities Exchange Act of 1934, as amended, except for those
exceptions previously discussed.
GENERAL
The Board of Directors knows of no other matters to be brought before the
Annual Meeting. However, if other matters should properly be brought before the
Annual Meeting, the persons named in the accompanying proxy will vote such proxy
in accordance with their judgment on such matters. A copy of the Company's Form
10-KSB as filed with the Securities and Exchange Commission may be obtained
without charge (except for exhibits to the report) by written request made to
the Corporate Secretary, KBK Capital Corporation, 301 Commerce Street, 2200 City
Center II, Fort Worth, Texas 76102.
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APPENDIX A
1998 EMPLOYEE STOCK PURCHASE PLAN OF
KBK CAPITAL CORPORATION
SECTION 1. PURPOSE. The purpose of the Plan is to provide employees of
the Company and its Designated Subsidiaries with an opportunity to purchase
Common Stock of the Company. It is the intention of the Company to have the Plan
qualify as an "Employee Stock Purchase Plan" under Section 423 of the Code. The
provisions of the Plan shall, accordingly, be construed so as to extend and
limit participation in a manner consistent with the requirements of that section
of the Code.
SECTION 2. DEFINITIONS.
(a) "BOARD" shall mean the Board of Directors of the Company.
(b) "CODE" shall mean the Internal Revenue Code of 1986, as amended.
(c) "COMMON STOCK" shall mean the Common Stock, $.01 par value, of the
Company.
(d) "COMPANY" shall mean KBK Capital Corporation, a Delaware
corporation.
(e) "COMPENSATION" shall mean regular straight-time earnings excluding
payments for overtime, bonuses and other special payments, commissions and other
incentive payments.
(f) "CONTINUOUS STATUS AS AN EMPLOYEE" shall mean the absence of any
interruption or termination of service as an Employee. Continuous Status as an
Employee shall not be considered interrupted in the case of a leave of absence
agreed to in writing by the Company, PROVIDED that such leave is for a period of
not more than ninety (90) days or re-employment upon the expiration of such
leave is guaranteed by contract or statute.
(g) "DESIGNATED SUBSIDIARIES" shall mean KBK Financial, Inc., a Delaware
corporation, and any other Subsidiaries which have been designated by the Board
from time to time in its sole discretion as eligible to participate in the Plan.
(h) "EMPLOYEE" shall mean any person, including an officer, who is
customarily employed for at least twenty (20) hours per week and more than five
(5) months in a calendar year by the Company or one of its Designated
Subsidiaries.
(i) "EXERCISE DATE" shall mean the last day of each offering period of
the Plan.
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<PAGE>
(j) "OFFERING DATE" shall mean the first day of each offering period of
the Plan.
(k) "PLAN" shall mean this 1998 Employee Stock Purchase Plan of KBK
Capital Corporation.
(1) "SUBSIDIARY" shall mean a corporation, domestic or foreign, of
which not less than fifty percent (50%) of the voting shares are held by the
Company or a Subsidiary, whether or not such corporation now exists or is
hereafter organized or acquired by the Company or a Subsidiary.
SECTION 3. ELIGIBILITY. (a) Any person who is an Employee as of the
Offering Date of the first offering period shall be eligible to participate in
such offering period under the Plan; thereafter, any person who is an Employee
fifteen (15) days prior to the Offering Date of a given offering period shall be
eligible to participate in such offering period under the Plan. The eligibility
criteria set forth in this paragraph 3(a) is subject to the requirements of the
paragraph 5 and the limitations imposed by Section 423(b) of the Code.
(b) Any provisions of the Plan to the contrary notwithstanding, no
Employee shall be granted an option under the Plan (i) if, immediately after the
grant, such Employee (or any other person whose stock would be attributed to
such Employee pursuant to Section 424(d) of the Code) would own stock and/or
hold outstanding options to purchase stock possessing five percent (5%) or more
of the total combined voting power or value of all classes of stock of the
Company or of any subsidiary of the Company, or (ii) which permits his rights to
purchase stock under all employee stock purchase plans (described in Section 423
of the Code) of the Company and its subsidiaries to accrue at a rate which
exceeds Twenty Five Thousand Dollars ($25,000) of fair market value of such
stock (determined at the time such option is granted) for each calendar year in
which such option is outstanding at any time.
SECTION 4. OFFERING PERIODS. The Plan shall be implemented by one
offering during each three month period (a calendar quarter) of the Plan. The
first offering period shall commence on July 1, 1998 and shall terminate on
September 30, 1998. Subsequent offering periods shall continue until the Plan is
terminated in accordance with paragraph 19 hereof. The Board of Directors of the
Company shall have the power to change the duration of offering periods with
respect to future offerings without shareholder approval if such change is
announced at least fifteen (15) days prior to the scheduled beginning of the
first offering period to be affected.
SECTION 5. PARTICIPATION. An eligible Employee may become a participant
in the Plan by completing a subscription agreement on the form provided by the
Company and filing it with the Company fifteen (15) days prior to the applicable
Offering Date, unless a later time for filing the subscription agreement is set
by the Board for all eligible Employees with respect to a given offering.
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<PAGE>
SECTION 6 . GRANT OF OPTION. (a) On the Offering Date of each offering
period, each eligible Employee participating in the Plan shall be granted an
option to purchase (at the per share option price) up to a number of whole
shares of the Company's Common Stock determined by dividing the subscription
amount designated on the Employee's subscription agreement (not to exceed an
amount equal to fifteen percent (15%) of his Compensation as of the date of the
commencement of the applicable offering period or another percentage as
determined from time to time by the Board; provided however, such percentage
shall not in any event exceed fifteen percent (15%) of a participant's
compensation) by ninety percent (90%) of the fair market value of a share of the
Company's Common Stock on the Offering Date or another percentage as determined
from time to time by the Board; provided however, such percentage shall not in
any event be less than eighty-five percent (85%) (the "Applicable Percentage"),
subject to the limitations set forth in Section 3(b) and 10 hereof. Fair market
value of a share of the Company's Common Stock shall be determined as provided
in Section 6(b) herein.
(b) The option price per share of the shares offered in a given
offering period shall be the lower of: (i) the Applicable Percentage multiplied
by the fair market value of a share of the Common Stock of the Company on the
Offering Date; or (ii) the Applicable Percentage multiplied by the fair market
value of a share of the Common Stock of the Company on the Exercise Date. The
fair market value of the Company's Common Stock on a given date shall be
determined by the Board in its discretion; PROVIDED, HOWEVER, that where there
is a public market for the Common Stock, the fair market value per Share shall
be the mean of the bid and asked prices of the Common Stock for such date, as
reported in the WALL STREET JOURNAL or, in the event the Common Stock is listed
on a stock exchange, the fair market value per Share shall be the closing price
on such exchange on such date, as reported in the WALL STREET JOURNAL.
SECTION 7. EXERCISE OF OPTION. (a) Unless a participant withdraws from
the Plan as provided in paragraph 9, his option for the purchase of shares will
be exercised automatically on the Exercise Date of the offering period, and the
maximum number of full shares subject to the option will be purchased for him at
the applicable option price. The shares purchased upon exercise of an option
hereunder shall be deemed to be transferred to the participant on the Exercise
Date. During his lifetime, a participant's option to purchase shares hereunder
is exercisable only by him.
(b) Fractional shares will not be issued under the Plan and any
accumulated payroll deductions which would have been used to purchase fractional
shares will be returned to the Employee promptly following the end of the
offering period, without interest.
SECTION 8 . DELIVERY. Within 30 days after the Exercise Date of each
offering period, the Company shall arrange the delivery to each participant, as
appropriate, of a certificate representing the shares purchased upon exercise of
his option in exchange for payment in full by the Employee, on or before such
date as shall be determined by the Board or its committee, of the option price
for all shares so purchased.
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<PAGE>
SECTION 9 . WITHDRAWAL; TERMINATION OF EMPLOYMENT. (a) A participant
may withdraw from participation in the Plan by giving written notice to the
Company within fifteen (15) days prior to the Exercise Date, whereupon his
option for the current period will be automatically terminated.
(b) Upon termination of the participant's Continuous Status as an
Employee prior to the Exercise Date of the offering period for any reason,
including retirement or death, his option will be automatically terminated.
(c) In the event an Employee fails to remain in Continuous Status as an
Employee of the Company for at least twenty (20) hours per week during the
offering period in which the employee is a participant, he will be deemed to
have elected to withdraw from the Plan and his option terminated.
(d) A participant's withdrawal from an offering will not have any
effect upon his eligibility to participate in a succeeding offering or in any
similar plan which may hereafter be adopted by the Company.
(e) If a participant withdraws from the Plan under this Section 9, his
payroll deductions will be paid to him promptly after he withdraws, and no
further payroll deductions will be made from his pay during such offering
period.
SECTION 10. STOCK. (a) The maximum number of shares of the Company's
Common Stock which shall be made available for sale under the Plan shall be
150,000 shares, subject to adjustment upon changes in capitalization of the
Company as provided in paragraph 14. If the total number of shares which would
otherwise be subject to options granted pursuant to Section 6 hereof on the
Offering Date of an offering period exceeds the number of shares then available
under the Plan (after deduction of all shares for which options have been
exercised or are then outstanding), the Company shall make a pro rata allocation
of the shares remaining available for option grant in as uniform a manner as
shall be practicable and as it shall determine to be equitable. In such event,
the Company shall give written notice of such reduction of the number of shares
subject to the option to each Employee affected thereby.
(b) The participant will have no interest, voting right or dividend
right or any other right in shares covered by his option until such option has
been exercised.
(c) Shares to be delivered to a participant under the Plan will be
registered in the name of the participant or in the name of the participant and
his spouse.
SECTION 11. ADMINISTRATION. The Plan shall be administered by the Board
of the Company or a committee of members of the Board appointed by the Board.
The administration, interpretation or application of the Plan by the Board or
its committee shall be final, conclusive and binding upon all
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<PAGE>
participants. Members of the Board who are eligible Employees are permitted to
participate in the Plan, PROVIDED that:
(a) Members of the Board who are eligible to participate in
the Plan may not vote on any matter affecting the administration of the
Plan or the grant of any option pursuant to the Plan.
(b) If a Committee is established to administer the Plan, no
member of the Board who is eligible to participate in the Plan may be a
member of the Committee.
SECTION 12. TRANSFERABILITY. No rights with regard to the exercise of
an option or to receive shares under the Plan may be assigned, transferred,
pledged or otherwise disposed of in any way (other than by will or the laws of
descent and distribution) by the participant. Any such attempt at assignment,
transfer, pledge or other disposition shall be without effect, except that the
Company may treat such act as an election to withdraw from the Plan in
accordance with paragraph 9.
SECTION 13. REPORTS. Individual accounts will be maintained for each
participant in the Plan. Statements of account will be given to participating
Employees promptly following the Exercise Date, which statements will set forth
the per share purchase price, the number of shares purchased, the amount paid to
the Company in payment of the option shares pursuant to paragraph 8 and the
amount returned to the employee, if any, pursuant to Section 7(b).
SECTION 14. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION. Subject to any
required action by the shareholders of the Company, the number of shares of
Common Stock covered by each option under the Plan which has not yet been
exercised and the number of shares of Common Stock which have been authorized
for issuance under the Plan but have not yet been placed under option
(collectively, the "RESERVES"), as well as the price per share of Common Stock
covered by each option under the Plan which has not yet been exercised, shall be
proportionately adjusted for any increase or decrease in the number of issued
shares of Common Stock resulting from a stock split, reverse stock split, stock
dividend, combination or reclassification of the Common Stock, or any other
increase or decrease in the number of shares of Common Stock effected without
receipt of consideration by the Company; PROVIDED, HOWEVER, that conversion of
any convertible securities of the Company shall not be deemed to have been
"effected without receipt of consideration." Such adjustment shall be made by
the Board, whose determination in that respect shall be final, binding and
conclusive. Except as expressly provided herein, no issue by the Company of
shares of stock of any class, or securities convertible into shares of stock of
any class, shall affect, and no adjustment by reason thereof shall be made with
respect to, the number or price of shares of Common Stock subject to an option.
In the event of the proposed dissolution or liquidation of the Company,
the offering period will terminate immediately prior to the consummation of such
proposed action, unless otherwise provided by
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<PAGE>
the Board. In the event of a proposed sale of all or substantially all of the
assets of the Company, or the merger of the Company with or into another
corporation, each option under the Plan shall be assumed or an equivalent option
shall be substituted by such successor corporation or a parent or subsidiary of
such successor corporation, unless the Board determines, in the exercise of its
sole discretion and in lieu of such assumption or substitution, that the
participant shall have the right to exercise the option as to all of the
optioned stock, including shares as to which the option would not otherwise be
exercisable. If the Board makes an option fully exercisable in lieu of
assumption or substitution in the event of a merger or sale of assets, the Board
shall notify the participant that the option shall be fully exercisable for a
period of fifteen (15) days from the date of such notice, and the option will
terminate upon the expiration of such period.
The Board may, if it so determines in the exercise of its sole
discretion, also make provision for adjusting the Reserves, as well as the price
per share of Common Stock covered by each outstanding option, in the event that
the Company effects one or more reorganizations, recapitalizations, rights
offerings or other increases or reductions of shares of its outstanding Common
Stock, and in the event of the Company being consolidated with or merged into
any other corporation.
SECTION 15. AMENDMENT OR TERMINATION. The Board of Directors of the
Company may at any time terminate or amend the Plan. Except as provided in
paragraph 14, no such termination can affect options previously granted, nor may
an amendment make any change in any option theretofore granted which adversely
affects the rights of any participant, nor may an amendment be made without
prior approval of the shareholders of the Company (obtained in the manner
described in paragraph 17) if such amendment would increase the number of shares
that may be issued under the Plan.
SECTION 16. NOTICES. All notices or other communications by a
participant to the Company under or in connection with the Plan shall be deemed
to have been duly given when received in the form specified by the Company at
the location, or by the person, designated by the Company for the receipt
thereof.
SECTION 17. SHAREHOLDER APPROVAL. (a) Any required approval of the
shareholders of the Company shall be solicited substantially in accordance with
Section 14(a) of the Exchange Act and the rules and regulations promulgated
thereunder.
(b) If any required approval by the shareholders of the Plan itself or
of any amendment to increase the number of shares reserved for issuance under
the Plan is solicited at any time other than in the manner described in
paragraph 17(a) hereof, then the Company shall, at or prior to the first annual
meeting of shareholders held subsequent to the granting of an option hereunder
to an officer or director do the following:
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<PAGE>
(i) furnish in writing to the holders entitled to vote for the
Plan substantially the same information which would be required (if
proxies to be voted with respect to approval or disapproval of the Plan
or amendment were then being solicited) by the rules and regulations in
effect under Section 14(a) of the Exchange Act at the time such
information is furnished; and
(ii) file with, or mail for filing to, the Securities and
Exchange Commission four copies of the written information referred to
in subsection (ii) hereof not later than the date on which such
information is first sent or given to shareholders.
SECTION 18. CONDITIONS UPON ISSUANCE OF SHARES. Shares shall not be
issued with respect to an option unless the exercise of such option and the
issuance and delivery of such shares pursuant thereto shall comply with all
applicable provisions of law, domestic or foreign, including without limitation,
the Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as
amended, the rules and regulations promulgated thereunder, and the requirements
of any stock exchange upon which the shares may then be listed, and shall be
further subject to the approval of counsel for the Company with respect to such
compliance.
As a condition to the exercise of an option, the Company may require
the person exercising such option to represent and warrant at the time of any
such exercise that the shares are being purchased only for investment and
without any present intention to sell or distribute such shares if, in the
opinion of counsel for the Company, such a representation is required by any of
the aforementioned applicable provisions of law.
SECTION 19 . TERM OF PLAN. The Plan shall become effective upon its
adoption by the Board of Directors and approval by the shareholders of the
Company. It shall continue in effect for a term of twenty (20) years unless
sooner terminated under paragraph 15.
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<PAGE>
FRONT:
KBK CAPITAL CORPORATION
301 COMMERCE, 2200 CITY CENTER II
FORT WORTH, TEXAS 76102
PROXY FOR 1998 ANNUAL MEETING
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR THE
ANNUAL MEETING OF STOCKHOLDERS ON MAY 6, 1998. THIS PROXY WILL BE VOTED IN THE
MANNER DIRECTED. IN THE ABSENCE OF DIRECTION, THIS PROXY WILL BE VOTED "FOR"
ITEMS 1, 2, AND 3 BELOW AND IN THE DISCRETION OF THE PERSONS VOTING THE PROXY
WITH RESPECT TO ANY OTHER MATTERS THAT MAY PROPERLY BE PRESENTED AT THE MEETING
OR ANY ADJOURNMENTS THEREOF.
As evidenced by the signatures hereon, the undersigned hereby appoints
Robert J. McGee and Jeffrey P. Kassing, or any one of them, as proxies, each
with full power of substitution, to represent and vote all shares of Common
Stock of KBK Capital Corporation (the "Company") that the undersigned is
entitled to vote at the 1998 Annual Meeting of Stockholders of the Company to be
held in Fort Worth, Texas on May 6, 1998, at 10:00 a.m., (local time), and all
adjournments and postponements thereof. Said proxies are directed to vote as
instructed herein on the matters set forth and otherwise at their discretion.
Receipt of a copy of the Notice of the 1998 Annual Meeting and Proxy Statement
is hereby acknowledged.
CONTINUED AND TO BE SIGNED AND DATED ON REVERSE SIDE
<PAGE>
BACK:
1. Election of Directors
FOR all nominees [ ] WITHHOLD AUTHORITY to vote [ ]
for all nominees listed below.
*EXCEPTIONS [ ]
Nominees: Class II - Term to expire 2001:
Harris A. Kaffie and Thomas M. Simmons
(INSTRUCTIONS: To withhold authority to vote for any individual nominee, mark
the "Exceptions" box and write that nominee's name in the space provided below.)
*Exceptions_____________________________________________________________________
2. Ratification of the KBK Capital Corporation 1998 Employee Stock Purchase Plan
FOR [ ] AGAINST [ ] ABSTAIN [ ]
3. Ratification of the selection of KPMG Peat Marwick LLP as independent
auditors for the fiscal year ending December 31, 1998
FOR [ ] AGAINST [ ] ABSTAIN [ ]
4. In their discretion, upon any other business which may properly come before
said meeting.
CHANGE OF ADDRESS OR
COMMENTS MARK HERE [ ]
Please sign exactly as name appears hereon. Joint owners must
each sign. When signing as attorney, executor, administrator,
trustee or guardian, please give full title as it appears
hereon. If held by a corporation, please sign in full corporate
name by the president or other authorized officer.
Dated:____________________________________________________,1998
_______________________________________________________________
Signature(s) of Stockholders(s)
_______________________________________________________________
Signature(s) of Stockholders(s)
Please sign exactly as your name appears, mark any address correction, date and
return this proxy using the enclosed envelope.
Votes must be indicated
(X) in Black or Blue ink. [ ]
