EXHIBIT 23.2

                               CHANGE OF CONTROL
                              EMPLOYMENT AGREEMENT

        AGREEMENT between KBK Capital Corporation, a Delaware corporation (the
"Company"), AND J. DUGAN SMITH, residing at the address set forth under his
signature on the last page of this Agreement (the "Executive"), dated as of the
15th day of May, 1996.

                                   WITNESSETH:

        WHEREAS, the Executive is a principal officer of the Company and an
integral part of its management; and

        WHEREAS, the Company recognizes that even the possibility of a change of
control and the uncertainty and questions which it may raise may result in the
departure or distraction of management personnel to the detriment of the Company
and its shareholders during a critical time; and

        WHEREAS, the Company considers it in the best interest of the Company
and its shareholders that the Executive be encouraged to remain with the Company
in the event of any actual or threatened change of control of the Company; and

        WHEREAS, the Company's Board of Directors (the "Board") has determined
that appropriate steps should be taken now to reinforce and encourage members of
the Company's management;

        NOW, THEREFORE, in consideration of the above premises and mutual
agreements herein set forth and the services performed and to be performed by
the Executive for the Company, the parties agree as follows:

        1.     OPERATION OF AGREEMENT.

        This Agreement shall be effective without any action by any party upon
the first date on which a Change of Control ( as defined in Article 2) has
occurred; PROVIDED, HOWEVER, that at the option of the Company this Agreement
may be terminated on the first anniversary of written notice of termination
given to the Executive by the Board prior to the Agreement's Effective Date.

        2.     DEFINITIONS.

        CAUSE. For purposes of this Agreement "Cause" shall mean termination
resulting from (i) acts of dishonesty by the Executive constituting a felony and
resulting or intended to result directly or indirectly in gain or personal
enrichment to the Executive at the expense of the Company or (ii) willful and
continued failure by Executive to substantially perform his duties with the
Company (other than any such failure resulting from Disability (as defined
herein) after a demand in writing for substantial performance is delivered to
the Executive by the Board, which demand specifically identifies the manner in
which the Board believes that the Executive has not substantially performed his
duties, and such failure to perform the Executive's duties results in
demonstrably material injury to the Company.

        CHANGE OF CONTROL. For the purpose of this Agreement, a "Change of
Control" shall occur if (i) the Company shall not be 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 

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contemplated by Section 13(d)(3) of the 1934 Act, 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, sales 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.

        EFFECTIVE DATE. For purposes of this Agreement "Effective Date" shall
mean the first date on which a Change of Control has occurred.

        DISABILITY. For purposes of this Agreement, "Disability" shall mean that
the Executive is unable to perform the essential functions of the job for which
the Executive is being employed hereunder, with or without reasonable
accommodation, by reason of his illness, accident or other cause, including
mental disability, for a period of six consecutive calendar months, or an
aggregate of nine months during any continuous twelve-month period.

        GOOD REASON. For purposes of this Agreement, "Good Reason" shall mean:

        (i) A determination by the Executive made in good faith that his primary
management functions, duties or responsibilities have been diminished in any
material respect and the situation is not remedied within 30 days after receipt
by the Company of written notice from the Executive of such determination;

        (ii) Any requirement that the Executive relocate his principal office
outside of Tarrant County, Texas;

        (iii) Any modification to the rights to indemnification or director and
officer liability insurance under which the Executive is covered immediately
prior to the Effective Date which reduces the benefits available to the
Executive under such indemnification or insurance; or

        (iv) A breach by the Company of any provision of this Agreement not
embraced within the foregoing clause (i), (ii) or (iii) which is not remedied
within 30 days after receipt by the Company of written notice from the
Executive.

        3. EMPLOYMENT PERIOD. Unless terminated pursuant to Section 6, the
Company hereby agrees to continue the Executive in its employ for the period
commencing on the Effective Date and ending on the second anniversary of such
date (the "Employment Period"). Unless terminated pursuant to Section 6, the
Executive agrees to remain in the employ of the Company until such time as the
Executive gives the Company at least 30 days written notice of the Executive's
intent to voluntarily terminate employment.

        4.     POSITION AND DUTIES.

        (a) During the Employment Period, the Executive shall continue to serve
as a principal officer of the Company with office, title and primary management
functions, duties, and responsibilities, substantially similar to those held and
performed during the 90-day period immediately preceding the Effective Date
provided that any change in such functions, duties and responsibilities which
results solely from the Company no longer being a reporting company under the
Federal securities laws or the Company being a subsidiary of another company
shall not be considered a change in functions, duties or responsibilities for
any purpose under this Agreement.

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        (b) During the Employment Period, the Executive shall devote the
Executive's full time and efforts during normal business hours to the business
and affairs of the Company except for reasonable vacations and except for
illness or incapacity, but nothing in this Agreement shall preclude the
Executive from (i) devoting reasonable periods required for serving as a
director or member of a committee of any organization involving no conflict of
interest with the interests of the Company, and (ii) engaging in charitable and
community activities and professional organizations, provided that such
activities do not materially interfere with the regular performance of his
duties and responsibilities under this Agreement.

        (c) Executive shall have as his principal office and shall perform his
duties hereunder primarily at the Company's headquarters at 301 Commerce, Suite
2200, Fort Worth, Texas 76102-4140 or at such other location as the Board shall
direct within Tarrant County, Texas.

        5.     COMPENSATION.

        (a) BASE SALARY. During the Employment Period, the Executive shall
receive a base salary ("Base Salary") equal to the average of the Executive's
monthly salary during the three full months immediately preceding the Effective
Date multiplied by twelve. The Base Salary shall not be reduced after the
Effective Date. The Base Salary will be paid in equal bi-monthly installments.

        (b) OTHER NON-SALARY BENEFITS. During the Employment Period, the
Executive shall be entitled to participate in all bonus, incentive, savings and
retirement plans, policies and programs applicable generally to other peer
executives of the Company and its affiliated companies, but in no event shall
such plans, policies and programs provide the Executive with incentive
opportunities, savings opportunities and retirement benefit opportunities, in
each case, less favorable, in the aggregate, than those provided by the Company
and its affiliated companies for the Executive under such plans, policies and
programs as in effect at any time during the 90-day period immediately preceding
the Effective Date or if more favorable to the Executive, those provided
generally at any time after the Executive Date to other peer executives of the
Company and its affiliated companies. During the Employment Period, the
Executive and/or the Executive's family, as the case may be, shall be eligible
for participation in and shall receive all benefits under welfare benefit plans,
policies and programs provided by the Company and its affiliated companies
(including to the extent they exist and without limitation, medical,
prescription, dental, disability, salary continuance, employee life, group life,
accidental death and travel accident insurance plans and programs) to the extent
applicable generally to other peer executives of the Company and its affiliated
companies, but in no event shall such plans, policies and programs provide the
Executive with benefits which are less favorable, in the aggregate, than such
plans, practices, policies and programs in effect for the Executive at any time
during the 90-day period immediately preceding the Effective Date or, if more
favorable to the Executive, those provided generally at any time after the
Effective Date to other peer executives of the Company and its affiliated
companies. During the Employment Period, the Executive shall be entitled to
perquisites, including, without limitation, an office, secretarial and clerical
staff, and to fringe benefits, including, without limitation, the payment of
allowances for, and reimbursement of, automobile expenses, and cellular
telephone charges, in each case at least equal to those attached to his office
immediately prior to the Effective Date.

        (c) VACATION. The Executive shall be entitled to receive such paid
vacation time each year during the term of this Agreement as is consistent with
the vacation policy of the Company for Executive's position. Such vacation shall
be taken at a time convenient to the Company. Any vacation time to which the
Executive is entitled in accordance with the foregoing that is not taken by the
Executive in any year during the Employment Period shall not be cumulative, and
the Executive shall not receive any cash or noncash benefit in lieu of vacation
time not taken by the Executive except that Executive shall be entitled to
receive cash in lieu of any unused vacation time applicable for the year in

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which any termination of employment occurs.

        (d) EXPENSES. Upon submission of proper vouchers, the Company will pay
or reimburse the Executive for reasonable transportation, hotel, travel and
related expenses incurred by the Executive on business trips away from the
Executive's principal office, and for other business and entertainment expenses
reasonably incurred by the Executive in connection with the business of the
Company and its subsidiaries during the Employment Period, all subject to such
limitations as may from time to time be prescribed by the Board.

        (e) INDEMNITY. The Executive shall be entitled to and shall be provided
the benefits of indemnification and director and officer liability insurance on
the same basis as in effect immediately preceding the Effective Date, or if more
favorable to the Executive, as in effect at anytime thereafter with respect to
other officers of similar position and responsibility.

        6. TERMINATION.

        (a) DEATH OR DISABILITY. Executive's employment shall terminate
automatically upon the Executive's death. The Company may terminate Executive's
employment upon Executive's Disability, by giving to the Executive written
notice of its intention to terminate the Executive's employment. The Company
shall have the right to terminate the Executive's employment effective as of the
applicable date of his Disability.

        (b) CAUSE. The Company may terminate the Executive's employment for
"Cause" upon written notice as required herein. Executive's employment shall in
no event be considered to have been terminated by the Company for Cause if such
termination took place as the result of (i) bad judgment or negligence, or (ii)
any act or omission without intent of gaining therefrom directly or indirectly a
profit to which the Executive was not legally entitled, or (iii) any act or
omission believed by the Executive in good faith to have been in or not opposed
to the interest of the Company, or (iv) any act or omission in respect of which
a determination is made that the Executive met the applicable standard of
conduct prescribed for indemnification or reimbursement or payment of expenses
under the by-laws of the Company or the laws of the State of Delaware or the
directors and officers liability insurance of the Company, in each case as in
effect at the time of such act or omission. The Executive shall not be deemed to
have been terminated for Cause unless and until there shall have been delivered
to him a copy of a resolution duly adopted by the affirmative vote of not less
than a majority of the entire membership of the Board at a meeting of the Board
called and held for the purpose (after reasonable notice to the Executive and an
opportunity for the Executive, together with his counsel, to be heard before the
Board), finding that in the good faith opinion of the Board, the Executive was
guilty of conduct contained in the definition of Cause and specifying the
particulars thereof in detail.

        (c) GOOD REASON. The Executive's employment may be terminated by the
Executive at any time for Good Reason. Executive's employment shall in no event
be considered to have been terminated by Executive for Good Reason if such
termination by the Executive took place as a result of changes in the
Executive's functions, duties and responsibilities resulting solely from the
Company no longer being a reporting company under the Federal securities laws or
the Company being a subsidiary of another company.

        (d) VOLUNTARY TERMINATION AFTER ONE YEAR. The Executive's employment may
be terminated by the Executive at any time after the first anniversary of the
Effective Date.

        (e) NOTICE OF TERMINATION. Any termination of the Executive's employment
by the Company for Cause or due to Disability or by the Executive for Good
Reason or otherwise shall be 

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communicated by Notice of Termination to the other party. For purposes of this
Agreement, a "Notice of Termination" means a written notice which (i) indicates
the specific termination provision in this Agreement relied upon, (ii) sets
forth in reasonable detail the facts and circumstances claimed to provide a
basis for termination of the Executive's employment under the provision so
indicated, if applicable, and (iii) if the termination date is other than the
date of receipt of such notice, specifies the termination date (which date shall
be not more than 15 days after the giving of such notice).

        (f) DATE OF TERMINATION. If the Executive's employment is terminated for
any reason, whether pursuant to the terms of this Agreement or otherwise, the
date set forth in the notice of termination as the termination date of the
Executive's employment shall be deemed the "Date of Termination."

        7.     COMPENSATION UPON TERMINATION OR DURING DISABILITY.

        (a) DURING DISABILITY. During any period that Executive is unable to
perform his duties hereunder during the Employment Period as a result of
incapacity due to physical or mental illness or injury, the Company shall
continue to pay to the Executive his full Base Salary and other benefits as in
effect immediately prior to such physical or mental illness or injury until
Executive's employment is terminated.

        (b) DEATH; DISABILITY. If during the Employment Period the Executive's
employment is terminated by reason of death or Disability, the Company shall (x)
pay to the Executive or his estate a lump sum payment (made within 10 days after
the Date of Termination) equal to the Executive's Base Salary divided by twelve
multiplied by the number of full or partial months remaining in the Employment
Period, (y) provide the medical insurance benefits contemplated by Section 5(b)
for one year from the Date of Termination or through the end of the Employment
Period whichever is longer and (z) make available medical benefits equivalent to
those required to be provided under "COBRA" for a period of eighteen months
after the expiration of the Company's obligations under clause (y) above.

        (c) CAUSE; VOLUNTARY TERMINATION PRIOR TO ONE YEAR. If the Executive's
employment shall be terminated either (i) for Cause by the Company or (ii) by
the Executive voluntarily prior to the first anniversary of the Effective Date
other than for Good Reason, the Company shall pay the Executive's full Base
Salary through the Date of Termination at the rate in effect at the time Notice
of Termination is given and shall have no further obligations to the Executive
under this Agreement.

        (d) GOOD REASON; VOLUNTARY TERMINATION AFTER ONE YEAR; OTHER THAN FOR
CAUSE. If, during the Employment Period, (i) the Company shall terminate the
Executive's employment other than for Cause, death or Disability, (ii) the
employment of the Executive shall be terminated by the Executive for Good Reason
or (iii) after the first anniversary date of the Effective Date for any reason
or no reason, the Company shall (x) pay to the Executive as severance pay
hereunder and in lieu of any other amounts due hereunder a lump sum payment
(made within 10 days after the Date of Termination) equal to two times the
Executive's then current Base Salary, (y) provide the medical insurance benefits
contemplated by Section 5(b) for one year from the Date of Termination or
through the end of the Employment Period whichever is longer and (z) make
available to the Executive medical benefits equivalent to those required to be
provided under "COBRA" for a period of eighteen months after the expiration of
the Company's obligations under clause (y) above.

        (e) PAYMENT LIMITATION. Notwithstanding anything to the contrary in this
Agreement, the payments and benefits otherwise provided by this Agreement shall
be reduced if and to the extent that such payments and benefits, when added to
any payments and benefits provided by the Company other than under this
Agreement, would result in any such payments being nondeductible to the Company
or 

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would subject Executive to an excise tax pursuant to the golden parachute
payment provisions of Section 280G or Section 4999 of the Internal Revenue Code
of 1986, as amended. Any reduction of payments and benefits under this Agreement
resulting from the foregoing limitations shall be applied to the payments and
benefits due to be otherwise provided to Executive latest in time.

        8. NON-EXCLUSIVITY OF RIGHTS. Nothing in this Agreement shall prevent or
limit the Executive's continuing or future participation in any benefit, bonus,
incentive or other plan or program provided by the Company or any of its
affiliated companies and for which the Executive may qualify, nor shall anything
herein limit or otherwise affect such rights as the Executive may have under any
other agreements with the Company or any of its affiliated companies. Amounts
which are vested benefits or which the Executive is otherwise entitled to
receive under any plan or program of the Company or any or program of the
Company or any of its affiliated companies at or subsequent to the Date of
Termination shall be payable in accordance with such plan or program.

        9.     EXECUTIVE OBLIGATIONS.

        (a) For the Employment Period the Executive will not do or say anything
that reasonably may be expected to have the effect of diminishing or impairing
the goodwill and good reputation of the Company and its officers, directors and
products nor will the Executive intentionally disparage or injure the reputation
of the Company by making any material negative statements about the Company's
methods of doing business, the effectiveness of its business policies and the
quality of its products or personnel.

        (b) The Executive agrees to keep the terms of this Agreement in strict
confidence, except that the Executive may disclose the terms of this Agreement
to family members and professional advisors who understand the confidentiality
of such terms.

        (c) The Executive hereby agrees that during the Executive's employment
by the Company and for a period of twenty-four months following termination of
the Executive's employment during the Employment Period either (i) by the
Company other than for Cause, death or Disability or (ii) by the Executive for
Good Reason or after the first anniversary date of the Effective Date for any
reason or no reason, the Executive shall not act in any manner or capacity,
directly or indirectly, in any individual or representative capacity, whether as
principal, agent, partner, officer, director, employee, joint venturer, member
of any business entity, consultant, advisor or investor (except that the
Executive shall have the right hereunder to own up to 2% of one or more public
companies having a class of equity securities registered with the Securities and
Exchange Commission under the Securities Exchange Act of 1934, as amended) or
otherwise, in or for any business entity or enterprise which competes with the
Company in any geographic area served by the Company at the time of the
Executive's termination and engages as its primary line of business in factoring
or other asset-based lending (the "Business");

        (d) The Executive hereby agrees that during the Executive's employment
by the Company and for a period of twenty-four months following the termination
of the Executive's employment, the Executive shall not:

               (i) without the prior written consent of the Company, divulge,
        disclose or make accessible to any other person, firm, partnership or
        company or other entity any Confidential Information which shall not
        include information known generally or available to the public or of
        information not considered confidential by persons engaged in the
        business conducted by the Company or from disclosure required by law or
        court order pertaining to the Business except (x) while employed by the
        Company in the Business and for the benefit of the Company or (y) when
        required to do so by a court of competent jurisdiction, by any
        governmental agency, or by any 

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        administrative body or legislative body (including a committee thereof)
        with purported or apparent jurisdiction to order the Executive to
        divulge, disclose or make accessible such information.

               (ii) without the prior written consent of the Company solicit or
        hire away any person who is then an employee of the Company and was an
        employee of the Company at any time after the Effective Date and prior
        to termination of the Executive's employment.

        (e) The Executive also agrees that upon leaving the Company's employ he
will not take with him, without the prior written consent of an officer
authorized to act in the matter by the Board, any drawing, blueprint, business
strategies, budgets, projections, nonpublic financial information, manuals,
policies or other document of the Company, its subsidiaries, affiliates and
divisions.

        (f) If the scope of any restriction contained in Section 9(c) or (d)
hereof is too broad to permit enforcement of such restriction to its full
extent, then such restriction shall be enforced to the maximum extent permitted
by law, and the Executive hereby consents and agrees that such scope may be
judicially modified accordingly in any proceedings brought to enforce such
restrictions.

        (g) The Executive acknowledges and agrees that the Company's remedy at
law for any breach of the Executive's obligations under this Section 9 (other
than Section 9(c)) may be inadequate, and agrees and consents that temporary
and/'or permanent injunctive relief may be granted in any proceeding which may
be brought to enforce any provision hereof (other than Section 9(c)), without
the necessity of proof of actual damage. In the event of any breach of the
provisions of Section 9(c) hereof, as liquidated damages and in lieu of any
other damages, payments to or actions by the Company, the Executive shall pay to
the Company an amount equal to the product of (i) any lump sum payment made to
Executive under this Agreement divided by twenty-four multiplied by (ii)
twenty-four minus the number of months (including as a whole month any portion
thereof) since the Executive's Date of Termination.

        10. REVIEW BY COUNSEL. The Executive has had sufficient time and the
opportunity, whether or not exercised, to have this Agreement reviewed by
counsel of the Executive's choosing and to be advised as to the Executive's
rights and obligations hereunder.

        11.    SUCCESSORS.

        (a) This Agreement shall not be assignable by either party without the
consent of the other party.

        (b) This Agreement shall inure to the benefit of and be binding upon the
Company and its successors.

        (c) In the event of a Change of Control of the Company, any successor
shall, by an agreement in form and substance satisfactory to the Executive,
expressly assume and agree to perform this Agreement.

        12.    MISCELLANEOUS.

        (a) This Agreement shall be governed by and construed in accordance with
the laws of the State of Texas, without reference to principles of conflict of
laws. The captions of this Agreement are not part of the provisions hereof and
shall have no force or effect. This Agreement may not be amended or modified
otherwise than by a written agreement executed by the parties hereto or their
respective successors and legal representatives.

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        (b) Executive shall not be required to mitigate the amount of any
payment or benefit provided for herein by seeking other employment or otherwise,
nor shall the amount of any payment or benefit provided for herein be reduced by
any compensation earned by you as a result of employment by another employer
after the Date of Termination, or otherwise.

        (c) All notices and other communications hereunder shall be in writing
and shall be given by hand delivery to the other party or by overnight courier
or by registered or certified mail, return receipt requested, postage prepaid,
addressed as follows:

IF TO THE EXECUTIVE:    At the address set forth on the signature page hereto

IF TO THE COMPANY:             KBK Capital Corporation
                         301 Commerce Street, Suite 2200
                          Forth Worth, Texas 76102-4122
                               Attention: Robert J. McGee

or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notice and communications shall be effective
when actually received by the addressee.

        (d) The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement.

        (e) The Company may withhold from any amounts payable under this
Agreement such federal, state or local taxes as shall be required to be withheld
pursuant to any applicable law or regulation.

        (f) This Agreement contains the entire understanding of the Company and
the Executive with respect to the subject matter hereof.

        (g) Any dispute or controversy arising under or in connection with this
Agreement shall be settled exclusively by arbitration in Houston, Texas in
accordance with the rules of the American Arbitration Association then in
effect; provided that all arbitration expenses shall be borne by the Company.
Notwithstanding the pendency of any dispute or controversy concerning
termination or the effects thereof, the Company will continue to pay Executive
bi-monthly the full compensation in effect immediately before any Notice of
Termination giving rise to the dispute was given (including, but not limited to,
Base Salary and bonus or incentive pay) and continue Executive as a participant
in all compensation, benefit and insurance plans in which the Executive was then
participating, until the dispute is finally resolved. Amounts paid under this
paragraph are in addition to all other amounts due under this Agreement and
shall not be offset against or reduce any other amounts due under this Agreement
except as otherwise determined by the arbitrator based upon the facts and
circumstances giving rise to the arbitration. Judgment may be entered on the
arbitrators' award in any court having jurisdiction; PROVIDED, HOWEVER, that
Executive shall be entitled to seek specific performance of his right to be paid
until the Date of Termination during the pendency of any dispute or controversy
arising under or in connection with this Agreement.

        (h) The Executive and the Company acknowledge that this Agreement shall
have no force and effect, and is no intended to alter in any way the current
relationship of the Executive and the Company, prior to the Effective Date. This
Agreement shall terminate and there shall be no further rights or liabilities
hereunder upon a termination of the Executive's employment prior to the
Effective Date.


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        IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.

                                            KBK CAPITAL CORPORATION


                                            BY: /S/MICHAEL D. MAGILL
                                            Name:  Michael D. Magill
                                            Title: Executive Vice President and
                                                   Chief Financial Officer


                                                /S/ J. DUGAN SMITH
                                                    J. Dugan Smith


                                            ADDRESS: J. DUGAN SMITH
                                                     5116 Partridge
                                                     Fort Worth, Texas 76132