KBK CAPITAL CORP, DEF 14A, 1999-06-16

KBK CAPITAL CORP
DEF 14A, 1999-06-16
SHORT-TERM BUSINESS CREDIT INSTITUTIONS

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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 LETTERHEAD]

June 22, 1999

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, July 21, 1999. A formal
notice setting forth the business to come before the meeting and a proxy
statement are enclosed. The meeting will be held at the offices of the Company,
2200 City Center II, 301 Commerce Street, Fort Worth, Texas. Parking is
available in the Calhoun Street garage located adjacent to the City Center II
building.

At the meeting, you will be asked to elect three directors to serve for a
term of three years, amend the Company's 1996 Long-Term Incentive Plan, and
ratify the selection by the Board of Directors of KPMG 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,

/s/ROBERT J. MCGEE
Robert J. McGee
Chairman of the Board and
Chief Executive Officer
<PAGE>
[KBK LOGO] 301 Commerce Street, 2200 City Center II, Fort Worth, Texas 76102

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

TO BE HELD ON JULY 21, 1999

To the Stockholders:

The 1999 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, July 21, 1999, at 10:00 a.m., local time, for
the following purposes:

1. To elect three directors to serve for a term of three years;
2. To amend the company's 1996 Long-Term Incentive Plan, increasing the
number of shares of Common Stock subject to the 1996 Plan from
325,000 to 675,000;
3. To ratify the selection by the Board of Directors of KPMG LLP as
independent auditors for the year ending December 31, 1999; and
4. To consider and act upon any other business that may properly be
brought before the meeting.

The close of business on June 16, 1999 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/DEBORAH B. WILKINSON
Deborah B. Wilkinson
Assistant Secretary

June 22, 1999
Fort Worth, Texas
<PAGE>
KBK CAPITAL CORPORATION
301 COMMERCE
2200 CITY CENTER II
FORT WORTH, TEXAS 76102

- ----------------------------------------------------------------------------
PROXY STATEMENT
- ----------------------------------------------------------------------------

ANNUAL MEETING OF STOCKHOLDERS

JULY 21, 1999

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, July 21, 1999 at 10:00
a.m., local time, at 301 Commerce Street, 2200 City Center II, 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 June 22, 1999.

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 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 three directors to serve
for a term of three years, FOR the amendment of the Company's 1996 Long-Term
Incentive Plan, and FOR the ratification of the selection of KPMG 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 June 16, 1999,
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, 340,000 shares
of the Company's common stock were subject to issuance upon exercise of
warrants, and there were outstanding 3,194,398 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 (whether in person or by proxy), 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 to amend
the Company's 1996 Long-Term Incentive Plan and for the approval of the
ratification of KPMG LLP as

1
<PAGE>
independent auditors. With respect to the election of Directors, the three
nominees who receive the most votes at the meeting will be elected.

A copy of the Company's 1998 Annual Report, which includes the
consolidated financial statements of the Company for the year ended December 31,
1998, 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.

THREE DIRECTORS WILL BE ELECTED AT THE ANNUAL MEETING AS CLASS III
DIRECTORS. THE REMAINING FIVE DIRECTORS NAMED BELOW ARE NOT REQUIRED TO STAND
FOR ELECTION AT THE ANNUAL MEETING BECAUSE THEIR PRESENT TERM EXPIRES IN EITHER
2000 OR 2001. THE BOARD OF DIRECTORS HAS NOMINATED THE FOLLOWING INDIVIDUALS,
EACH OF WHOM IS AN INCUMBENT DIRECTOR, TO SERVE AS CLASS III DIRECTORS UNTIL THE
ANNUAL MEETING OF SHAREHOLDERS IN 2002 AND UNTIL SUCH TIME AS THEIR RESPECTIVE
SUCCESSORS ARE ELECTED AND QUALIFY.

ROBERT J. MCGEE - CLASS III - THREE YEAR TERM
DANIEL R. FEEHAN - CLASS III - THREE YEAR TERM
THOMAS L. HEALEY - CLASS III - 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 three
nominees for election as a director under Class III, as well as each of the
other directors of the Company:

CLASS I DIRECTORS - TERM TO EXPIRE 2000:

KENNETH H. JONES, JR., 64, 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 shareholder in 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, 65, 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, 62, 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 DIRECTORS - TERM TO EXPIRE 2001:

THOMAS M. SIMMONS, 46, 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, 49, has served as a Director of the Company since May
1996 and is a director of CCNG, Inc., a privately held oil and natural
gas exploration and production company, which also owns and operates
mid-stream natural gas assets. Mr. Kaffie is also 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 NOMINEES - TERM TO EXPIRE 2002:

ROBERT J. MCGEE, 44, 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, 48, 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, 65, 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. Feehan (Chairman), Mr. Cox, Mr. Healey, Mr. McGee, and
Mr. Jones, 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
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
1998.

3
<PAGE>
AUDIT COMMITTEE. The Audit Committee, which is currently comprised of
Mr. Healey (Chairman), Mr. Feehan, Mr. Simmons, and Mr. McGee, 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 1998, the Audit Committee held two
meetings.

COMPENSATION COMMITTEE. The Compensation Committee, which is currently
comprised of Mr. Simmons (Chairman), Mr. Feehan, and Mr. McGee,
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 two
meetings during 1998.

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 eight meetings during 1998.

MARKETS COMMITTEE. The Markets Committee, which is currently comprised
of Mr. Kaffie (Chairman), Ms. Leonard, Mr. Cox, Mr. McGee, and Mr.
Jones, 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 twelve meetings in 1998.

NOMINATING COMMITTEE. The Nominating Committee, which is currently
comprised of Mr. Simmons (Chairman), Mr. Jones, and Mr. McGee,
provides recommendations to the Board for nominees to serve as
Directors of the Company. The Nominating Committee met once during
1998.

ATTENDANCE AND FEES

The Company's Board of Directors held five meetings in 1998. 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 election as
a director, which option vests six months after the date of grant. Pursuant to
the 1994 Stock Option Plan, each of Mr. Kaffie and Mr. Simmons received grants
during 1998 to purchase 5,000 shares of Common Stock with an exercise price of
$12.00 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 operating subsidiary could, subject to certain limitations,
borrow funds from the Company's operating subsidiary to enable them to hold
Common Stock or purchase Common Stock of the Company in the open market or
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 principal amount outstanding under such program during 1998 of $310,318,
and the amount outstanding as of March 11, 1999, was $337,096, including $26,778
of interest accrued in 1998 and added to principal in 1999. Kenneth H. Jones,
Vice Chairman of the Board of the Company, had a maximum amount outstanding
under such program during 1998 of $50,000, and the amount outstanding as of
March 11, 1999, was zero. Mr. Jones paid $7,489 in interest during 1998.

During 1998, the Company reinstated its commercial paper program (CP
Program). Under the CP Program, certificates may be issued for terms ranging
from 30 to 270 days at interest rates comparable to the Company's alternative
unsecured funding sources. Pursuant to this program, the Company had a maximum
balance of $1,000,000 issued to Mr. Jones and a maximum balance of $2,000,000
issued to Harris Kaffie, Director of the Company. The rates paid to Mr. Jones
and Mr. Harris were consistent with the rates paid to other participants for
similar terms.

SHARE OWNERSHIP OF DIRECTORS, EXECUTIVE OFFICERS
AND CERTAIN BENEFICIAL OWNERS

The following table sets forth the beneficial ownership of Common Stock
as of June 16, 1999, 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) 702,500 19.3%
Harris A. Kaffie (2) (4) 313,400 8.6%
Daniel R. Feehan (2) (3) 205,000 5.6%
Kenneth H. Jones, Jr. (2) 121,500 3.3%
Jack R. Roper (2) 34,920 *
Thomas M. Simmons (2) 22,900 *

Thomas L. Healey (2) 20,000 *
R. Earl Cox, III (2) 16,950 *
Martha V. Leonard (2) 16,000 *
J. Dugan Smith (2) 15,554 *
Jay K. Turner (2) 8,438 *
L. Allen Jarboe (2) 4,844 *
All directors and executive officers
as a group (14 persons) (1)(2)(3)(4) 1,481,827 40.6%
Orbis Pension Trustee Limited (5) 280,000 7.7%
Derby Trust plc (5) 120,000 3.3%
Dimensional Fund Advisors, Inc. (6) 250,000 6.9%

* Less than one percent

5
<PAGE>
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 2200 City Center II, 301 Commerce Street, Fort Worth,
Texas 76102.

2. Includes shares issuable upon exercise of stock options exercisable within 60
days as follows: Mr. McGee - 12,000; Mr. Kaffie - 15,000; Mr. Feehan -
25,000; Mr. Jones - 100,000; Mr. Roper - 34,000; Mr. Simmons - 15,000; Mr.
Healey - 20,000; Mr. Cox - 10,000; Ms. Leonard - 10,000; Mr. Smith - 10,000;
Mr. Turner - 5,000; Mr. Jarboe - 4,000; all directors and executive officers
as a group - 260,800.

3. 180,000 of the shares shown are issuable upon exercise of warrants (including
40,000 shares issuable upon exercise of warrants owned by trusts for the
benefit of Mr. Feehan's children). Mr. Feehan's address is 1600 W. 7th
Street, Suite 900, Fort Worth, Texas 76102.

4. 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.

5. 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.

6. The address of Dimensional Fund Advisors, Inc. is 1299 Ocean Avenue, 11th
Floor, Santa Monica, CA 90401.

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.

6
<PAGE>
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 44 Director, Chairman of the
Board and Chief Executive Officer

Kenneth H. Jones, Jr. 64 Director and Vice Chairman

Jack R. Roper 45 Executive Vice President-Systems
and Administration

L. Allen Jarboe 46 Executive Vice President and
Chief Credit Officer

Deborah B. Wilkinson 48 Vice President, Controller and
Assistant Secretary

ROBERT J. MCGEE - see "ELECTION OF DIRECTORS" above.

KENNETH H. JONES, JR. - see "ELECTION OF DIRECTORS" above.

JACK R. ROPER has served as Executive Vice President of Operations for KBK
since January, 1994. He has been an executive officer of the Company's
operating subsidiary, KBK Financial, Inc., since 1989. From 1986 through
1989, Mr. Roper was senior consultant with KPMG LLP. Prior to 1986, Mr.
Roper served as regional President for U-Haul and was self employed.

L. ALLEN JARBOE was named Executive Vice President and Chief Credit
Officer of KBK Capital Corporation and the Company's operating subsidiary
effective April 1998. Prior to joining the Company, Mr. Jarboe served as
Director of Corporate/Commercial Assets for Barnett Banks, Inc. in
Jacksonville, Florida from 1991 to 1998.

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.

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.

7
<PAGE>
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION AWARDS
---------------------------------------------------------- SECURITIES UNDERLYING
OTHER ANNUAL STOCK OPTIONS
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION (NUMBER OF SHARES)
- --------------------------- ---- -------- -------- ------------ ---------------------
<S> <C> <C> <C> <C>
Robert J. McGee 1998 $247,833 $100,000 * 6,000
Chairman of the Board, 1997 $224,000 -- * --
and Chief Executive Officer 1996 $224,000 $ 50,000 (1) * 20,000
J. Dugan Smith (2) 1998 $218,333 $ 75,000 * 9,760
Executive Vice President 1997 $176,667 -- * 60,716
1996 $103,125 -- * 25,000
Jack R. Roper 1998 $148,750 $ 20,000 $14,609 (3) 4,880
Executive Vice President 1997 $135,504 -- $15,000 (3) 17,858
of Servicing 1996 $99,400 $ 8,000 $15,000 (3) 10,000
L. Allen Jarboe (4) 1998 $125,019 $ 50,000 (5) * 41,000
Executive Vice President
and Chief Credit Officer
Jay K. Turner (6) 1998 $156,490 $ 25,000 (5) * 41,000
Executive Vice President
and Chief Financial Officer
Michael D. Magill (7) 1997 $97,462 -- * 20,000
Executive Vice President 1996 $168,000 $ 50,000 (1) * 20,000
and Chief Financial Officer
</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 and resigned in June 1999.

(3) Mr. Roper received a pro-rated moving allowance during 1996 - 1998.

(4) Mr. Jarboe joined the Company in April 1998.

(5) Mr. Jarboe and Mr. Turner received signing bonuses upon employment with
the Company.

(6) Mr. Turner joined the Company in February 1998 and resigned from the
Company in May 1999.

(7) Mr. Magill resigned from the Company in July 1997.

8
<PAGE>
STOCK OPTION GRANTS IN 1998

The following table contains certain information concerning stock options
granted to the Named Executives in 1998.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
- ----------------------------------------------------------------------------------------------------------------------------

NUMBER OF PERCENT OF TOTAL
SECURITIES OPTIONS GRANTED TO
UNDERLYING EMPLOYEES IN EXERCISE PRICE GRANT
NAME OPTIONS GRANTED FISCAL YEAR (PER SHARE) DATE EXPIRATION DATE
- ---------------------------- ------------------- -------------------- ------------------ ----------------- -----------------
<S> <C> <C> <C> <C> <C> <C> <C>
Robert J. McGee 6,000 3.3% $9.38 10/27/98 10/27/08
J. Dugan Smith 3,760 2.0 $5.06 6/1/98 5/21/07
6,000 3.3 $9.38 10/27/98 10/27/08
L. Allen Jarboe 20,000 10.8 $11.25 4/6/98 4/6/08
6,000 3.3 $9.38 10/27/98 10/27/08
15,000 8.1 $5.06 11/3/98 5/21/07
Jack R. Roper 1,880 1.0 $5.06 6/1/98 5/21/07
3,000 1.6 $9.38 10/27/98 10/27/08
Jay K. Turner 25,000 13.5 $11.75 2/9/98 2/9/08
10,000 5.4 $5.06 2/9/98 5/21/07
6,000 3.3 $9.38 10/27/98 10/27/08
</TABLE>
STOCK OPTION EXERCISES IN 1998; VALUE OF UNEXERCISED STOCK OPTIONS

The following table contains certain information concerning the value of
unexercised options at December 31, 1998. No stock options were exercised by the
Named Executives in 1998.

<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 8,000/18,000 18,480/27,720

J. Dugan Smith 5,000/65,476 20,950/249,204

Jack R. Roper 30,800/33,938 89,940/111,862

Jay K. Turner 0/41,000 0/41,900
</TABLE>
(1)Based upon the difference between the closing price of the Company's Common
Stock of $9.25 on December 31, 1998 (the last trading day of 1998) and the
exercise price.

9
<PAGE>
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 Jarboe, 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.

AGENDA ITEM 2:

AMENDMENT OF 1996 LONG-TERM INCENTIVE PLAN

The Board of Directors, by unanimous vote, has adopted resolutions
approving and submitting to a vote of the stockholders amendments to the
Company's 1996 Long-Term Incentive Plan (the "1996 Plan") to increase the number
of shares of Common Stock subject to the 1996 Plan from 325,000 to 675,000. The
full text of the 1996 Plan as amended hereby is attached to this proxy statement
as Exhibit A.

Except for such amendment, if approved, the 1996 Plan will remain
unchanged.

STOCK OPTIONS

As of March 31, 1999, under the 1996 Plan, an aggregate of 210,000 shares
of Common Stock (i) have been issued pursuant to Options or Stock Appreciation
Rights, or as Performance Shares, Restricted Stock, Restricted Stock Units, or
Stock Unit Awards (all as defined in the 1996 Plan and referred to herein as
"Awards") or (ii) are available for issuance pursuant to Awards that have been
granted, leaving 115,000 shares of Common Stock available for use by the
Company. Neither the number nor value of future option awards to particular
participants or groups of participants is presently determinable.

On March 31, 1999, the per share market value of the Common Stock was
$7.00.

SUMMARY OF THE 1996 PLAN

This summary is qualified in its entirety by reference to the 1996 Plan
which is attached hereto as Exhibit A.

10
<PAGE>
BACKGROUND INFORMATION

In February 1996, the Board of Directors adopted, subject to stockholder
approval, the 1996 Plan. At the Company's 1996 Annual Meeting, the stockholders
approved and adopted the 1996 Plan. The purpose of the 1996 Plan is to promote
the interests of the Company and its stockholders by (i) attracting and
retaining executive, other key employees, consultants and advisors of
outstanding ability; (ii) motivating executives, other key employees,
consultants and advisors, by means of performance-related incentives, to achieve
longer-range performance goals; and (iii) enabling such executive, key
employees, consultants and advisors to participate in the long-term growth and
financial success of the Company.

GENERAL ADMINISTRATION OF THE PLAN

The 1996 Plan is administered by the Compensation Committee of the Board
of Directors (the "Committee"). The Committee is authorized to grant to key
employees, consultants and advisors of the Company and its subsidiaries and
affiliates awards in the form of Options, Performance Shares, and Restricted
Stock. In addition, the Committee has the authority to grant other stock-based
awards in the form of Stock Appreciation Rights, Restricted Stock Units, and
Stock Unit Awards. The 1996 Plan became effective on February 22, 1996 and will
expire ten years from such effective date unless terminated earlier or extended
by the Board of Directors.

Each member of the Committee must be a "disinterested person" within the
meaning of the Securities Exchange Act of 1934, as amended (the "Exchange Act")
and an "outside director" within the meaning of Section 162(m) of the Internal
Revenue Code of 1986, as amended (the "Code"). The Committee will select persons
to receive grants from among the eligible employees, consultants and advisors;
determine the types of grants and number of shares to be awarded to grantees;
and set the terms, conditions, and provisions of the grants consistent with the
1996 Plan. The Committee may also establish rules for administration of the 1996
Plan.

ELIGIBILITY

The Committee will select grantees from among the key employees, advisors
and consultants (other than members of the Committee) of the Company,
subsidiaries and affiliates. For purposes of the 1996 Plan, (i) a subsidiary of
the Company is any business entity in which the Company possesses directly or
indirectly 50% or more of the total combined voting power and (ii) an affiliate
of the Company is any other entity in which the Company possesses a direct or
indirect ownership interest and has representation on the board of directors or
any similar governing body. The eligible participants will be those who, in the
opinion of the Committee, have the capacity for contributing in a substantial
measure to the successful performance of the Company.

SHARES SUBJECT TO THE PLAN

Subject to adjustment as described below, a maximum of 675,000 shares of
Common Stock may be issued under the 1996 Plan. The shares may be authorized and
unissued shares or treasury shares. In the event of a stock split, stock
dividend, spin-off, or other relevant change affecting the Company's Common
Stock, the Committee may make appropriate adjustments to the number of shares
available for grants and to the number of shares and price under outstanding
grants made before the event.

TYPES OF AWARDS UNDER THE 1996 PLAN

STOCK OPTIONS

The Committee may grant awards in the form of options to purchase shares
of the Company's Common Stock. With regard to each such Option, the Committee
will determine the number of shares subject to the Option, the manner and time
of the exercise of the Option, and the exercise price per share of stock subject
to the Option. The Committee will designate each Option as a non-qualified
Option or an "Incentive Stock Option" (as defined in the 1996 Plan). The
exercise price may, at the discretion of the Committee, be paid by a participant
in cash, shares of Common Stock or a combination thereof. The effect of a
grantee's termination of employment

11
<PAGE>
by reason of death, retirement, disability, or otherwise will be specified in
the option agreement evidencing the grant of the Option. No individual may be
granted Options or Stock Appreciation Rights for more than 200,000 shares of the
Company's Common Stock in the aggregate during the ten-year period beginning on
the effective date of the Plan. The 200,000 share limitation is subject to
adjustment by the Committee in the event of stock splits, stock dividends, and
other changes affecting the Company's Common Stock.

STOCK APPRECIATION RIGHTS

The 1996 Plan also authorizes the Committee to grant Stock Appreciation
Rights either independent of, or in connection with, an Option. Upon exercising
a Stock Appreciation Right, the holder receives for each share with respect to
which the Stock Appreciation Right is exercised, an amount equal to the
difference between the exercise price (which may not be less than the fair
market value of such share on the date of grant) and the fair market value of
the Common Stock on the date of exercise. At the Committee's discretion, payment
of such amount may be made in cash, shares of Common Stock, or a combination
thereof. Stock Appreciation Rights will not be exercisable within six months of
the date of grant. Each Stock Appreciation Right granted will be evidenced by an
agreement specifying the terms and conditions of the award, including the effect
of termination of employment (by reason of death, disability, retirement or
otherwise) on the exercisability of the Stock Appreciation Right.

PERFORMANCE SHARES

The 1996 Plan permits the Committee to grant awards of Performance Shares
to eligible employees, consultants and advisors from time to time. These awards
are contingent upon the achievement of certain performance goals established by
the Committee. The length of time over which performance will be measured, the
performance goals, and the criteria to be used in determining whether and to
what degree the goals have been attained will be determined by the Committee.
The Committee will also determine the effect of termination of employment of a
grantee (by reason of death, retirement, disability or otherwise) during the
performance period.

RESTRICTED STOCK

Under the 1996 Plan, the Committee may award shares of the Company's
Common Stock to eligible employees, consultants and advisors from time to time
and subject to certain restrictions as determined by the Committee. The nature
and extent of restrictions on such shares, the duration of such restrictions,
and any circumstances which could cause the forfeiture of such shares shall be
determined by the Committee. The Committee will also determine the effect of the
termination of employment of a recipient of Restricted Stock (by reason of
retirement, disability, death or otherwise) prior to the lapse of any applicable
restrictions.

OTHER STOCK BASED AWARDS

In addition, the Committee will have authority under the 1996 Plan to
grant Stock Unit Awards, which can be in the form of Common Stock or units, the
value of which is based, in whole or in part, on the value of the Company's
Common Stock. Such Stock Unit Awards will be subject to such terms,
restrictions, conditions, vesting requirements and payment rules as the
Committee may determine. Stock Unit Awards may not be assigned, sold,
transferred, pledged or otherwise encumbered prior to the date shares are issued
or, if later, the date provided by the Committee at the time of grant of the
Stock Unit Award. Stock Unit Awards may relate in whole or in part to certain
performance criteria established by the Committee at the time of grant. The
Committee will also determine the effect of termination of employment of a Stock
Unit Award recipient (by reason of death, retirement, disability or otherwise)
during any applicable vesting period.

AMENDMENT OF THE 1996 PLAN

The Board of Directors may amend, suspend or terminate the 1996 Plan or
any portion thereof at any time, provided that no amendment shall be made
without shareholder approval if such approval is necessary to comply with any
tax or regulatory requirement, including any approval requirement which is a
prerequisite for exemptive relief under Section 16(b) of the Exchange Act.

12
<PAGE>
CHANGE IN CONTROL

In order to preserve the rights of participation in the event of a Change
in Control (as defined in the 1996 Plan), the Committee in its discretion may,
at the time a grant is made or at any time thereafter, take one or more of the
following actions: (i) provide for the acceleration of any time period relating
to the exercise of an Award, (ii) provide for the purchase of the Award upon the
participant's request for an amount of cash or other property that could have
been received upon the exercise or realization of the Award had the Award been
currently exercisable or payable, (iii) adjust the terms of the Award in the
manner determined by the Committee to reflect the Change in Control, (iv) cause
the Award to be assumed, or new rights substituted therefor, by another entity,
or (v) make such other provisions as the Committee may consider equitable and in
the best interests of the Company.

FEDERAL INCOME TAX CONSEQUENCES

Under current U.S. Federal tax law, the following are the U.S. Federal
income tax consequences generally arising with respect to award under the 1996
Plan.

A participant who is granted an Incentive Stock Option does not realize
any taxable income at the time of the grant or at the time of exercise (but in
some circumstances may be subject to an alternative minimum tax as a result of
the exercise). Similarly, the Company is not entitled to any deduction at the
time of grant or at the time of exercise. If the participant makes no
disposition of the shares acquired pursuant to an Incentive Stock Option before
the later of two years from the date of grant or one year from the date of
exercise, any gain or loss realized on a subsequent disposition of the shares
will be treated as a long-term capital gain or loss. Under such circumstances,
the Company will not be entitled to any deduction for Federal income tax
purposes. If the participant fails to hold the shares for the foregoing period,
the disposal is treated as a disqualifying disposition. The gain on such
disposition is ordinary income to the participant to the extent of the lesser of
(i) the difference between the option price and the fair market value of the
shares on the exercise date, and (ii) the amount of gain recognized upon
disposition of the shares. Any excess gain is long-term or short-term capital
gain, depending on the holding period of the shares. Under such circumstances,
the Company will be entitled to a tax deduction equal to the ordinary income
amount the participant recognizes in a disqualifying disposition.

A participant who is granted a non-qualified Option does not have taxable
income at the time of grant, but generally does have taxable income at the time
of exercise equal to the difference between the exercise price of the shares and
the market value of the shares on the date of exercise. Subject to the
application of Section 162(m) of the Code (as discussed below), the Company is
entitled to a corresponding tax deduction for the same amount for its taxable
year within which the participant recognizes such taxable income.

The grant of a Stock Appreciation Right will produce no U.S. Federal tax
consequences for the participant or the Company. The exercise of a Stock
Appreciation Right results in taxable income to the participant in an amount
equal to the difference between the exercise price of the shares and the market
price of the shares on the date of exercise, and a corresponding tax deduction
to the Company.

A participant who has been granted an award of Restricted Stock will not
realize taxable income at the time of grant, and the Company will not be
entitled to a tax deduction at the time of grant, unless the participant makes
an election to be taxed at the time of the award. When the restrictions lapse,
the participant will recognize taxable income in an amount equal to the excess
of the fair market value of the shares at such time over the amount, if any,
paid for such shares. Subject to the application of Section 162(m) of the Code
(as discussed below), the Company will be entitled to a corresponding tax
deduction. The holder of a Restricted Stock award may elect to be taxed at the
time of the Restricted Stock award on the market value of the shares, in which
case (1) subject to the application of Section 162(m) of the Code, the Company
will be entitled to a deduction at the same time and in the same amount, and (2)
there will be no further income tax consequences when the restrictions lapse.

13
<PAGE>
A participant who has been granted a Performance Share Award will not
realize taxable income at the time of the grant, and the Company will not be
entitled to a tax deduction at such time. A participant will realize ordinary
income at the time the award is paid equal to the amount of cash paid or the
value of shares delivered, and the Company will have a corresponding tax
deduction.

The grant of a Stock Unit Award produces no U.S. Federal income tax
consequences for the participant or the Company. The payment of Stock Unit
Awards results in taxable income to the participant equal to the amount of the
payment received, valued with reference to the fair market value of the Common
Stock on the payment date. Subject to the application of Section 162(m) of the
Code, the Company is entitled to a corresponding tax deduction for the same
amount.

Section 162(m) of the Code, which was enacted in 1993, precludes a public
corporation from taking a deduction in 1994 or subsequent taxable years for
compensation in excess of $1 million paid to its chief executive officer or any
of its four other highest-paid officers. However, compensation that qualifies
under Section 162(m) of the Code as "performance-based" is specifically exempt
from the deduction limit. Based on Section 162(m) of the Code and the
regulations issued thereunder, the Company's ability to deduct compensation
income generated in connection with the exercise of Stock Appreciation Rights
and Options granted under the 1996 Plan that have an exercise price equal to or
greater than the fair market value of the shares on the date of grant should not
be limited by Section 162(m) of the Code. However, Section 162(m) of the Code
could limit the Company's deduction with respect to compensation income
generated in connection with the exercise of an Option that had an exercise
price less than the fair market value of the shares on the date of grant.
Further, compensation earned in connection with all other Awards under the 1996
Plan will not qualify as performance-based compensation under Section 162(m) of
the Code. Accordingly, the compensation expense deductions relating to such
other Awards will be subject to the Section 162(m) deduction limitation.

THE BOARD OF DIRECTORS RECOMMENDS YOU VOTE FOR THE AMENDMENT OF THE 1996
LONG-TERM INCENTIVE PLAN AND YOUR PROXY WILL BE SO VOTED UNLESS YOU SPECIFY
OTHERWISE.

AGENDA ITEM 3:

RATIFICATION OF THE SELECTION OF INDEPENDENT AUDITORS

The stockholders are asked to ratify the Board of Directors' appointment
of KPMG LLP, an independent certified public accounting firm, to audit the
consolidated financial statements of the Company for 1999. KPMG LLP 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 LLP
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 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 2000 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

14
<PAGE>
to be held in 2000 and included in the Company's proxy statement and form of
proxy relating to that meeting must be received by the Company, addressed to
Deborah B. Wilkinson, Assistant Secretary, 301 Commerce Street, 2200 City Center
II, Fort Worth, Texas 76102, NO LATER THAN DECEMBER 3, 1999. 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 Assistant Secretary of the Company. TO BE TIMELY FOR
THE 2000 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 4,
2000. A stockholder's notice to the Assistant Secretary shall set forth as to
each matter the stockholder proposes to bring before the annual meeting: (a) a
brief description of the business desired to be brought before the annual
meeting and the reasons for conducting such business at the annual meeting, (b)
the name and address, as they appear on the Company's books, of the stockholder
proposing such business, (c) the class and number of shares of voting stock of
the Company which are beneficially owned by the stockholder, (d) a
representation that the stockholder intends to appear in person or by proxy at
the meeting to bring the proposed business before the annual meeting, and (e) a
description of any material interest of the stockholder in such business. A
stockholder must also comply with all applicable requirements of the Securities
Exchange Act of 1934, as amended, and the rules and regulations thereunder with
respect to any such proposal.

NOMINATIONS FOR THE 2000 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 2000 ANNUAL MEETING OF THE STOCKHOLDERS OF THE COMPANY, ON OR BEFORE
FEBRUARY 4, 2000, 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

15
<PAGE>
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) BENEFICIAL 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. 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 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.

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.

16
<PAGE>
EXHIBIT A
KBK CAPITAL CORPORATION
1996 LONG-TERM INCENTIVE PLAN
(AS AMENDED)

SECTION 1. PURPOSE

The purpose of the 1996 Long-Term Incentive Plan (the "Plan") is to
promote the interests of the Company and its stockholders by (i) attracting and
retaining key employees, consultants and advisors of outstanding ability, (ii)
motivating key employees, consultants and advisors, by means of
performance-related incentives, to achieve longer-range performance goals, and
(iii) enabling such key employees, consultants and advisors to participate in
the long-term growth and financial success of the Company.

SECTION 2. DEFINITIONS

"Act" shall mean the Securities Exchange Act of 1934, as amended.

"Affiliate" shall mean any corporation or other entity which is not a
Subsidiary but as to which the Company possesses a direct or indirect ownership
interest and has representation on the Board of Directors or any similar
governing body.

"Award" shall mean a grant or award under Section 6 through 10, inclusive,
of the Plan, as evidenced in a written document delivered to a Participant as
provided in Section 11(b).

"Board of Directors" shall mean the Board of Directors of the Company.

"Change of Control" shall be deemed to have occurred if (i) any person(s)
(as such term is used in Sections 13(d) and 14(d)2 of the Act) or party becomes
the beneficial owner (as defined in Rule 13d-3 under the Act), directly or
indirectly, of securities of the Company representing 25% or more of the
combined voting power of the Company's then outstanding securities, or (ii) the
stockholders of the Company approve a merger, consolidation, sale or disposition
of all or substantially all of the Company's assets or a plan of liquidation.

"Code" shall mean the Internal Revenue Code of 1986, as amended from time
to time.

"Committee" shall mean the Compensation Committee of the Board of
Directors. The Committee shall be made up of two or more outside Directors
(within the meaning of Section 162(m) of the Code), and only outside Directors
may serve on the Committee.

"Common Stock" or "Stock" shall mean the Common Stock, $.01 par value per
share, of the Company.

"Company" shall mean KBK Capital Corporation.

"Designated Beneficiary" shall mean the beneficiary designated by the
Participant, in a manner determined by the Committee, to receive the amounts, if
any, due to the Participant under the Plan in the event of the Participant's
death. In the absence of any effective designation by the Participant,
Designated Beneficiary shall mean the Participant's estate.

"Employee" shall mean any key employee of the Employer.

"Employer" shall mean the Company and each Subsidiary and Affiliate.

"Fair Market Value" shall mean as of any specified date, the mean of the
high and low sales prices of the Common Stock if the Common Stock is listed on a
national stock exchange, reported on the stock exchange

A-1
<PAGE>
composite tape on that date; or if no prices are reported on that date, on the
last preceding date on which such prices of the Common Stock are so reported. If
the Common Stock is traded over the counter at the time a determination of its
fair market value is required to be made hereunder, its fair market value shall
be deemed to be equal to the average between the reported high and low or
closing bid and asked prices of Common Stock on the most recent date on which
Common Stock was publicly traded. In the event Common Stock is not publicly
traded at the time a determination of its value is required to be made
hereunder, the determination of its fair market value shall be made by the
Committee in such manner as it deems appropriate.

"Fiscal Year" shall mean the fiscal year of the Company.

"Incentive Stock Option" shall mean a stock option granted under Section 6
which is intended to meet the requirements of Section 422 of the Code.

"Non-Stock Based Incentive Compensation" refers to incentive compensation
whose value is not based in whole or in part on the value of Common Stock.

"Nonqualified Stock Option" shall mean a stock option granted under
Section 6 which is not intended to be an Incentive Stock Option.

"Option" shall mean an Incentive Stock Option or a Nonqualified Stock
Option.

"Participant" shall mean an individual who is selected by the Committee to
receive an Award under the Plan.

"Payment Value" shall mean the dollar amount assigned to a Performance
Share which shall be equal to the Fair Market Value of the Common Stock on the
day of the Committee's determination under Section 8 (c)(1) with respect to the
applicable Performance Cycle.

"Performance Cycle" or "Cycle" shall mean the period selected by the
Committee during which the performance is measured for the purpose of
determining the extent to which an Award of Performance Shares has been earned.

"Performance Goals" shall mean the objectives established by the Committee
for a Performance Cycle, for the purpose of determining the extent to which
Performance Shares which have been contingently awarded for such Cycle are
earned.

"Performance Share" shall mean an award granted pursuant to Section 8 of
the Plan expressed as a share of Common Stock.

"Restricted Period" shall mean the period selected by the Committee during
which a grant of Restricted Stock or Restricted Stock Units may be forfeited to
the Company.

"Restricted Stock" shall mean shares of Common Stock contingently granted
to a Participant under Section 9 of the Plan.

"Restricted Stock Unit" shall mean a fixed or variable dollar denominated
unit contingently awarded under Section 9 of the Plan.

"Stock Appreciation Right" shall mean a right granted under Section 7 of
the Plan.

"Stock Exchange" shall mean the national securities exchange on which the
Common Stock is traded as of the particular time in question.

"Stock Unit Award" shall mean an award of Common Stock or units granted
under Section 10 of the Plan.

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<PAGE>
"Subsidiary" shall mean any entity in which the Company possesses directly
or indirectly fifty percent (50%) or more of the total combined voting power.

SECTION 3. ADMINISTRATION

The Plan shall be administered by the Committee. The Committee shall have
sole and complete authority to adopt, alter and repeal such administrative
rules, guidelines and practices governing the operation of the Plan as it shall
from time to time deem advisable, and to interpret the terms and provisions of
the Plan. The Committee's decisions shall be binding upon all persons, including
the Company, stockholders, an Employer, Employees, Participants and Designated
Beneficiaries.

SECTION 4. ELIGIBILITY

All Employees and non-employee consultants and advisors of the Employer
(other than members of the Committee) who, in the opinion of the Committee, have
the capacity for contributing in a substantial measure to the successful
performance of the Company are eligible to be Participants in the Plan.

SECTION 5. MAXIMUM AMOUNT AVAILABLE FOR AWARDS

(a) The maximum number of shares of Stock in respect of which Awards may
be made under the Plan shall be a total of 675,000 shares of Common Stock. In
addition, no individual may be granted Options or Stock Appreciation Rights for
more than 200,000 shares of Common Stock in the aggregate during the ten-year
period beginning on the effective date of the Plan. The limitations set forth in
the preceding sentence shall be applied in a manner that will permit
compensation generated under the Plan in connection with Options and Stock
Appreciation Rights to constitute "performance-based" compensation for purposes
of section 162(m) of the Code, including, without limitation, counting against
such maximum number of shares, to the extent required under section 162(m) of
the Code and applicable interpretive authority thereunder, any shares subject to
Options or Stock Appreciation Rights that are canceled or repriced. Shares of
Common Stock may be made available from the authorized but unissued shares of
the Company or from shares reacquired by the Company, including shares purchased
in the open market. In the event that (i) an Option or Stock Appreciation Right
expires or is terminated unexercised as to any shares of Common Stock covered
thereby, or (ii) any Award in respect of any shares is canceled or forfeited for
any reason under the Plan without the delivery of shares of Common Stock, such
shares shall thereafter be again available for award pursuant to the Plan to the
extent permissible under Rule 16b-3, as promulgated under the Act and as
interpreted from time to time by the Securities and Exchange Commission or its
staff.

(b) In the event that the Committee shall determine that any stock
dividend, extraordinary cash dividend, recapitalization, reorganization, merger,
consolidation, split-up, spin-off, combination, exchange of shares, warrants or
rights offering to purchase Common Stock at a price substantially below fair
market value or other similar corporate event affects the Common Stock such that
an adjustment is required in order to preserve the benefits or potential
benefits intended to be made available under this Plan, then the Committee shall
adjust appropriately any or all of (1) the number and kind of shares which
thereafter may be awarded or optioned and sold or made the subject of Stock
Appreciation Rights under the Plan, (2) the number and kind of shares subject to
Stock Options and other Awards, (3) the limitations set forth in the first two
sentences of Section 5(a) hereof, and (4) the grant, exercise or conversion
price with respect to any of the foregoing and/or, if deemed appropriate, make
provision for cash payment to a Participant or a person who has an outstanding
Option or other Award; provided, however, that the number of shares subject to
the Plan and any Option or other Award shall always be a whole number.

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SECTION 6. STOCK OPTIONS

(a) Grant.

Subject to the provisions of the Plan, the Committee shall have sole and
complete authority to determine the individuals from among those eligible
hereunder to whom Options shall be granted, the number of shares to be covered
by each Option, the option price therefor and the conditions and limitations
applicable to the exercise of the Option. The Committee shall have the authority
to grant Incentive Stock Options, or to grant Nonqualified Stock Options or to
grant both types of Options. In the case of Incentive Stock Options, the term
and conditions of such grants shall be subject to and comply with such rules as
may be prescribed by Section 422 of the Code, as from time to time amended and
any implementing regulations.

(b) Option Price.

The committee shall, in its discretion, establish the option price at the
time each Option is granted, which for Incentive Stock Options shall not be less
than 100% of the Fair Market Value of the Common Stock on the date of grant.

(1) Each Option shall be exercisable at such times and subject to such
terms and conditions as the Committee may, in its sole discretion, specify in
the applicable Award or thereafter; provided, however, that in no event may any
Option granted hereunder be exercisable after the expiration of ten years from
the date of such grant. The Committee may impose such conditions with respect to
the exercise of Options, including without limitation, any relating to the
application of federal or state securities laws, as it may deem necessary or
advisable.

(2) No shares shall be delivered pursuant to any exercise of an Option
until payment in full of the option price therefor is received by the Company.
Such payment may be made in cash, or its equivalent, or, if and to the extent
permitted by the Committee, by exchanging shares of Common Stock owned by the
optionee (which are not the subject of any pledge or other security interest),
or by a combination of the foregoing, provided that the combined value of all
cash and cash equivalents and the Fair Market Value of any such Common Stock so
tendered to the Company, valued as of the date of such tender, is at least equal
to such option price.

(3) The Company, in its sole discretion, may lend money to an Employee,
guarantee a loan to an Employee or otherwise assist an Employee to obtain the
cash necessary to exercise all or any portion of an Option granted under the
Plan.

SECTION 7. STOCK APPRECIATION RIGHTS

(a) The Committee may, with sole and complete authority, grant Stock
Appreciation Rights in tandem with an Option, in addition to an Option, or
freestanding and unrelated to an Option. Stock Appreciation Rights granted in
tandem with or in addition to an Option may be granted either at the same time
as the Option or at a later time. Stock Appreciation Rights shall not be
exercisable earlier than six months after grant, shall not be exercisable after
the expiration of ten years from the date of grant and shall have an exercise
price of not less than 100% of the Fair Market Value of the Common Stock on the
date of grant.

(b) A Stock Appreciation Right shall entitle the Participant to receive
from the Company an amount equal to the excess of the Fair Market Value of a
share of Common Stock on the exercise of the Stock Appreciation Right over the
exercise price thereof, provided that the Committee may for administrative
convenience determine that, for any Stock Appreciation Right which is not
related to an Incentive Stock Option which Stock Appreciation Right can only be
exercised during limited periods of time in order to satisfy the conditions of
certain rules of the Securities and Exchange Commission, the exercise of any
Stock Appreciation Right for cash during such limited period shall be deemed to
occur for all purposes hereunder on the day during

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<PAGE>
such limited period on which the Fair Market Value of the Stock is the highest.
Any such determination by the Committee may be changed by the Committee from
time to time and may govern the exercise of Stock Appreciation Rights granted
prior to such determination as well as Stock Appreciation Rights thereafter
granted. The Committee shall determine upon the exercise of a Stock Appreciation
Right whether such Stock Appreciation Right shall be settled in cash, shares of
Common Stock, or a combination thereof.

(c) A Limited SAR related to an Option, which can only be exercised during
limited periods following a Change of Control of the Company, may entitle the
Participant to receive an amount based upon the highest price paid or offered
for Common Stock in any transaction relating to the Change of Control or paid
during the thirty-day period immediately preceding the occurrence of the Change
of Control in any transaction reported on the Stock Exchange.

SECTION 8. PERFORMANCE SHARES

(a) The Committee shall have sole and complete authority to determine the
individuals from among these eligible hereunder who shall receive Performance
Shares, the number of such shares for each Performance Cycle, the Performance
Goals on which each Award shall be contingent, and the duration of each
Performance Cycle. There may be more than one Performance Cycle in existence at
any one time, and the duration of Performance Cycles may differ from each other.

(b) The Committee shall establish Performance Goals for each Cycle on the
basis of such criteria and to accomplish such objectives as the Committee may
from time to time select. During any Cycle, the Committee may adjust the
Performance Goals for such Cycle as it deems equitable in recognition of unusual
or non-recurring events affecting the Company, changes in applicable tax laws or
accounting principles, or such other factors as the Committee may determine.

(c) (1) As soon as practicable after the end of a Performance Cycle, the
Committee shall determine the number of Performance Shares which have been
earned on the basis of performance in relation to the established Performance
Goals.

(2) Payment Values of earned Performance Shares shall be distributed to
the Participant or, if the Participant has died, to the Participant's Designated
Beneficiary, as soon as practicable after the expiration of the Performance
Cycle and the Committee's determination under paragraph (1) above. The Committee
shall determine whether Payment Values are to be distributed in the form of cash
and/or shares of Common Stock.

SECTION 9. RESTRICTED STOCK AND RESTRICTED STOCK UNITS

(a) Subject to the provisions of the Plan, the Committee shall have sole
and complete authority to determine the individuals from among those eligible
hereunder to whom shares of Restricted Stock and Restricted Stock Units shall be
granted, the number of shares of Restricted Stock and the number of Restricted
Stock Units to be granted to each Participant, the duration of the Restricted
Period (during which, and the conditions under which, the Restricted Stock and
Restricted Stock Units may be forfeited to the Company, and the other terms and
conditions of such awards. The Restricted Period may be shortened, lengthened or
waived by the Committee at any time in its discretion with respect to one or
more Participants or Awards outstanding.

(b) Shares of Restricted Stock and Restricted Stock Units may not be sold,
assigned, transferred, pledged or otherwise encumbered, except as herein
provided, during the Restricted Period. Certificates issued in respect of shares
of Restricted Stock shall be registered in the name of the Participant and
deposited by such Participant, together with a stock power endorsed in blank,
with the Company. At the expiration of the Restricted Period, the Company shall
deliver such certificates to the Participant or the Participant's legal
representative, except to the extent such Restricted Stock or Restricted Stock
Units have been forfeited to the Company under the terms and conditions of the
Award. Payment for Restricted Stock Units shall be made by the Company in cash
and/or shares of Common Stock, as determined at the sole discretion of the
Committee.

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<PAGE>
SECTION 10. OTHER STOCK BASED AWARDS

(a) In addition to granting Options, Stock Appreciation Rights,
Performance Shares, Restricted Stock and Restricted Stock Units, the Committee
shall have authority to grant to individuals eligible hereunder Stock Unit
Awards which can be in the form of Common Stock or units, the value of which is
based, in whole or in part, on the value of Common Stock. Subject to the
provisions of the Plan, including Section 11 (b) below, Stock Unit Awards shall
be subject to such terms, restrictions, conditions, vesting requirements and
payment rules (all of which are sometimes hereinafter collectively referred to
as "rules") as the Committee may determine in its sole and complete discretion
at the time of grant. The rules need not be identical for each Stock Unit Award.

(b) In the sole and complete discretion of the Committee, a Stock Unit
Award may be granted subject to the following rules:

(1)Any shares of Common Stock which are part of a Stock Unit Award may
not be assigned, sold, transferred, pledged or otherwise encumbered
prior to the date on which the shares are issued or, if later, the
date provided by the Committee at the time of grant of the Stock
Unit Award.

(2)Stock Unit Awards may provide for the payment of cash consideration
by the person to whom such Award is granted or provide that the
Award, and any Common Stock to be issued in connection therewith, if
applicable, shall be delivered without the payment of cash
consideration, provided that for any Common Stock to be purchased in
connection with a Stock Unit Award the purchase price shall be at
least 50% of the Fair Market Value of such Common Stock on the date
such Award is granted.

(3)Stock Unit Awards may relate in whole or in part to certain
performance criteria established by the Committee at the time of
grant.

(4)Stock Unit Awards may provide for deferred payment schedules and/or
vesting over a specified period of employment.

(5)In such circumstances as the Committee may deem advisable, the
Committee may waive or otherwise remove, in whole or in part, any
restriction or limitation to which a Stock Unit Award was made
subject at the time of grant.

(c) In the sole and complete discretion of the Committee, an Award,
whether made as a Stock Unit Award under this Section 10 or as an Award granted
pursuant to Sections 6 through 9, may provide the Participant with (i) dividends
or dividend equivalents (payable on a current or deferred basis) and (ii) cash
payments in lieu of or in addition to an Award.

SECTION 11. GENERAL PROVISIONS

(a) WITHHOLDING.

The Employer shall have the right to deduct from all amounts paid to a
Participant in cash (whether under this Plan or otherwise) any taxes required by
law to be withheld in respect of Awards under this Plan. In the case of payments
of incentive awards in the form of Common Stock, the Employer may require the
Participant to pay to the Employer the amount of any taxes required to be
withheld with respect to such Common Stock. However, the Participant may pay all
or any portion of the taxes required to be withheld by the Employer or paid by
the Participant with respect to such Common Stock by electing to have the
Employer withhold shares of Common Stock, or by delivering previously owned
shares of Common Stock, having a Fair Market Value equal to the amount required
to be withheld or paid. The Participant must make the foregoing election on or
before the date that the amount of tax to be withheld is determined ("Tax
Date"). Any such election is irrevocable and subject to disapproval by the
Committee. If the Participant is subject to the short-swing profits recapture
provisions of Section 16(b) of the Act, any such election shall be subject to
the following additional restrictions:

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<PAGE>
(i) Such election may not be made within six months of the grant of the
Award, provided that this limitation shall not apply in the event of death
or disability, and

(ii) Such election must be made either six months or more prior to the
Tax Date or in a Window Period (as hereinafter defined). Where the Tax
Date in respect of the exercise of all or any portion of an Option is
deferred until after such exercise and the Participant elects Common Stock
withholding, the full amount of shares of Common Stock will be issued or
transferred to the Participant upon exercise of the Option, but the
Participant shall be unconditionally obligated to tender back to the
Employer on the Tax Date the number of shares of Common Stock necessary to
discharge with respect to such Option exercise the greater of (i) the
Employer's withholding obligation and (ii) all or any portion of the
holder's federal and state tax obligation attributable to the Option
exercise. A "Window Period" is any period commencing on the third business
day following the Company's release of a quarterly or annual summary
statement of sales and earnings and ending on the twelfth business day
following such release.

(b) AWARDS.

Each Award hereunder shall be evidenced in writing, delivered to the
Participant and shall specify the terms and conditions thereof and any rules
applicable thereto, including but not limited to the effect on such Award of the
death, retirement or other termination of employment (or consulting
relationship) of the Participant and the effect thereon, if any, of a Change of
Control of the Company.

No Award shall be assignable or transferable except by will or the laws of
descent and distribution, and no right or interest of any Participant shall be
subject to any lien, obligation or liability of the Participant. Notwithstanding
the above, in the discretion of the Committee, awards may be transferable
pursuant to a Qualified Domestic Relations Order ("QDRO"), as determined by the
Committee or its designee.

(d) NO RIGHT TO EMPLOYMENT.

No person shall have any claim or right to be granted an Award, and the
grant of an Award shall not be construed as giving a Participant the right to be
retained in the employ of the Employer. Further, the Employer expressly reserves
the right at any time to dismiss a Participant free from any liability, or any
claim under the Plan, except as provided herein or in any agreement entered into
with respect to an Award.

(e) NO RIGHTS AS STOCKHOLDER.

Subject to the provisions of the applicable Award, no Participant or
Designated Beneficiary shall have any rights as a stockholder with respect to
any shares of Common Stock to be distributed under the Plan until he or she has
become the holder thereof. Notwithstanding the foregoing, in connection with
each grant of Restricted Stock or Stock Unit Award hereunder, the applicable
Award shall specify if and to what extent the Participant shall not be entitled
to the rights or a stockholder in respect of such Restricted Stock or Stock Unit
Award.

(f) CONSTRUCTION OF THE PLAN.

The validity, construction, interpretation, administration and effect of
the Plan and of its rules and regulations, and rights relating to the Plan,
shall be determined solely in accordance with the laws of the State of Texas. It
is intended that the Plan and any grant of an Award made to a person subject to
Section 16 of the Act meet all of the requirements of Rule 16b-3. If any
provision of the Plan or any such Award would disqualify the Plan or such Option
under, or would otherwise not comply with, Rule 16b-3, such provision or Award
shall be construed or deemed amended to conform to Rule 16b-3.

A-7
<PAGE>
(g) DATE.

Subject to the approval of the stockholders of the Company within twelve
months of such date, the Plan shall be effective on February 22, 1996. No
Options or Awards may be granted under the Plan after February 22, 2006;
however, all previous awards made that have not expired under their original
terms at the time the Plan expires will remain outstanding.

(h) AMENDMENT OF THE PLAN.

The Board of Directors may amend, suspend or terminate the Plan or any
portion thereof at any time, provided that no amendment shall be made without
stockholder approval if such approval is necessary to comply with any tax or
regulatory requirement, including for these purposes any approval requirement
which is a prerequisite for exemptive relief under Section 16(b) of the Act.
Notwithstanding anything to the contrary contained herein, the Committee may
amend the Plan in such manner as may be necessary so as to have the Plan conform
with local rules and regulations.

(i) AMENDMENT OF AWARD.

The Committee may amend, modify or terminate any outstanding Award without
the Participant's consent at any time prior to payment or exercise in any manner
not consistent with the terms of the Plan, including without limitation, (i) to
change the date or dates as of which (A) an Option or Stock Appreciation Right
becomes excercisable; (B) a Performance Share is deemed earned; (C) Restricted
Stock becomes nonforfeitable; or (ii) to cancel and reissue an Award under such
different terms and conditions as it determines appropriate.

(j) CHANGE OF CONTROL.

In order to preserve a Participant's rights under an Award in the event of
a Change of Control of the Company, the Committee in its discretion may, at the
time an Award is made or any time thereafter, take one or more of the following
actions: (i) provide for the acceleration of any time period relating to the
exercise of the Award, (ii) provide for the purchase of the Award upon the
Participant's request for an amount of cash or other property that could have
been received upon the exercise or realization of the Award had the Award been
currently exercisable or payable, (iii) adjust the terms of the Award in a
manner determined by the Committee to reflect the Change of Control, (iv) cause
the Award to be assumed, or new rights substituted therefor, by another entity,
or (v) make such other provision as the Committee may consider equitable and in
the best interests of the Company.

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KBK CAPITAL CORPORATION
301 COMMERCE, 2200 CITY CENTER II
FORT WORTH, TEXAS 76102

PROXY FOR 1999 ANNUAL MEETING

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR THE
ANNUAL MEETING OF STOCKHOLDERS ON JULY 21, 1999. 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 Deborah B. Wilkinson, 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 1999 Annual Meeting of Stockholders
of the Company to be held in Fort Worth, Texas on July 21, 1999, 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
1999 Annual Meeting and Proxy Statement is hereby acknowledged.

CONTINUED AND TO BE SIGNED AND DATED ON REVERSE SIDE
<PAGE>
DRAFT COPY - PROXY CARD

KBK CAPITAL CORPORATION
ANNUAL SHAREHOLDERS MEETING - JULY 21, 1999

BACK:
<TABLE>
<CAPTION>
<S> <C>
1. Election of Directors FOR all nominees |_| WITHHOLD AUTHORITY to vote |_| *EXCEPTIONS |_|
listed below. for all nominees listed below.
</TABLE>
Nominees: Class III - Term to expire 2002: Robert J. McGee, Daniel R. Feehan and
Thomas L. Healey (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. Amendment to the Company's 1996 Long-Term Incentive Plan, increasing the
number of shares of Common Stock subject to the 1996 Plan from 325,000 to
675,000

FOR |_| AGAINST |_| ABSTAIN |_|

3. Ratification of the selection of KPMG LLP 4. In their discretion, upon
as independent auditors for the fiscal year any other business which
ending December 31, 1999 may properly come before
said meeting.

CHANGE OF ADDRESS OR
FOR |_| AGAINST |_| ABSTAIN |_| 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:________________________________,1999

___________________________________________
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. |_|