SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
DIVERSIFIED CORPORATE RESOURCES, INC.
(NAME OF ISSUER)
COMMON STOCK, PAR VALUE $0.10
(TITLE OF CLASS OF SECURITIES)
255153 10 8
(CUSIP NUMBER)
MARK D. WIGDER, ESQ.
JENKENS & GILCHRIST, A PROFESSIONAL CORPORATION
1445 ROSS AVENUE, SUITE 3200
DALLAS, TEXAS 75202-2799
(214) 855-4500
(NAME, ADDRESS AND TELEPHONE NUMBER
OF PERSON AUTHORIZED TO RECEIVE
NOTICES AND COMMUNICATIONS)
JUNE 10, 1997
(DATE OF EVENT WHICH REQUIRES FILING OF THIS STATEMENT)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition that is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-l(b)(3) or (4), check the following box.
Check the following box if a fee is being paid with this statement. |X| A fee is
not required only if the reporting person (1) has a previous statement on file
reporting beneficial ownership of more than five percent (5%) of the class of
securities described in Item 1 and (2) has filed no amendment subsequent thereto
reporting beneficial ownership of five percent (5%) or less of such class.
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CUSIP No. 255153 10 8
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1 . Names of Reporting Persons S.S. or I.R.S. Identification Nos.
of Persons:
M. Ted Dillard
2. Check the Appropriate Box if a Member of a Group
(See Instructions)
(a) [ ] (b) [ ]
3. SEC Use Only
4. Source of Funds (See instructions) PF
5. Check box if Disclosure of Legal Proceedings is Required
Pursuant to Items 2(d) or 2(e)
6. Citizenship or Place of Organization Texas
7. Sole Voting Power 57,500
Number of Shares
Beneficially Owned by 8. Shared Voting Power -0-
Each Reporting Person
With 9. Sole Dispositive Power 147,056
10. Shared Dispositive Power -0-
11. Aggregate Amount Beneficially Owned by Each Reporting Person
147,056
12. Check if the Aggregate Amount in Row 11 Excludes Certain
Shares (See Instructions)
13. Percent of Class Represented by Amount in Row 11.
5.2*
14. Type of Reporting Person (See Instructions):
IN
*Based on 2,747,597 shares of Common Stock outstanding as of April 27, 1998, as
described in the Company's Proxy Statement (the "Proxy Statement") on Schedule
14A, filed with the Securities and Exchange Commission on April 30, 1998.
Because Dillard holds presently exercisable options, the percentage ownership is
calculated on the assumption that the shares purchasable within the next sixty
(60) days underlying such options are outstanding.
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SCHEDULE 13D
ITEM 1. SECURITY AND ISSUER
This Schedule 13D relates to the common stock, par value $.10 per share
(the "Common Stock"), of Diversified Corporate Resources, Inc. (the "Company"),
whose principal executive offices are located at 12801 North Central Expressway,
Suite 350, Dallas, Texas 75243.
ITEM 2. IDENTITY AND BACKGROUND
The person filing this Schedule 13D is M. Ted Dillard ("Dillard"),
whose business address 12801 North Central Expressway, Suite 350, Dallas, Texas
75243. Dillard's principal occupation is serving as President and Secretary of
the Company. Dillard is a citizen of the United States of America.
During the last five years, Dillard has not been convicted in a
criminal proceeding (excluding traffic violations or similar misdemeanors) or
has been a party to a civil proceeding of a judicial or administrative body of
competent jurisdiction and as a result of such proceeding has been or is subject
to a judgment, decree or final order enjoining future violations of, or
prohibiting or mandating activities subject to, federal or state securities laws
or finding any violation with respect to such laws.
ITEM 3. AND ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
This Schedule 13D is being filed to report that Dillard now beneficially
owns greater than 5% of the Company's Common Stock.
Dillard beneficially owns 147,056 shares of Common Stock. In October 1995,
the Company granted to Dillard options to purchase 50,000 shares of Common Stock
at an exercise price of $.50 per share, which options were exercised by Dillard
in April 1997. In July 1997, in consideration of financial services rendered to
DLRI L.P. No. 2 ("No. 2"), a company wholly- owned by J. Michael Moore, the
Chairman and Executive Officer of the Company, Dillard received 7,500 shares of
Common Stock from No. 2. Dillard has the right (the "No. 2 Right")to acquire a
ten percent (10%) ownership interest in No. 2, pursuant to a vesting schedule
over a four (4) year period. Although Dillard holds the No. 2 Right, he
disclaims beneficial ownership of any Common Stock held by No. 2.
In 1996, the Company granted to Dillard options (the "1996 Options") to
purchase an aggregate of 105,000 shares of Common Stock pursuant to the
Company's Amended and Restated 1996 Nonqualified Stock Option Plan. With respect
to the 1996 Options, as of December 31, 1997, the total number of shares that
are immediately exercisable by Dillard are 84,000. In addition, Dillard will
become vested as to an additional 21,000 shares on December 31, 1998, contingent
upon Dillard's continued employment as an officer of the Company. The per share
exercise price for options becoming vested in 1996, 1997 and 1998 are,
respectively, $2.50, $4.00 and $8.00.
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In addition to the 1996 Options, on April 29, 1998, the Compensation
Committee of the Company granted to Dillard options (the "1998 Options")
pursuant to the Company's 1998 Nonqualified Stock Option Plan (the "1998 Plan")
to purchase an aggregate 66,667 shares of Common Stock. The 1998 Options were
granted contingent upon the following: (i) shareholder approval of the 1998 Plan
and (ii) the agreement (the "Exercise Agreement") of Dillard to exercise before
June 30, 1998, those 1996 Options that are presently exercisable. Both of these
contingencies have since been met. Dillard will therefore begin vesting, at a
rate of 5,556 shares per quarter, on June 30, 1998, and at the end of each
quarter thereafter for a total of twelve quarters, contingent upon Dillard's
continued employment as an officer of the Company. The exercise price for the
1998 Options is $12.75 per share.
Each of the option awards described above is subject to certain change of
control provisions contained in Dillard's employment agreement and the relevant
stock option plan and stock option grant, each as amended. Such change of
control provisions are described in the Company's Proxy Statement.
With respect to the Exercise Agreement, Dillard is currently exploring
certain methods of financing the exercise of the shares of Common Stock
underlying the 1996 Options that are presently exercisable. Such financing may
include the borrowing of money secured by the pledging of certain shares of
Common Stock currently held by Dillard or to be acquired by Dillard upon the
exercise of the 1996 Options and/or the transfer to the Company of such number
of shares of Common Stock, the market value of which would be sufficient to pay
the exercise price.
At the present time, but subject to Dillard's continuing evaluation of the
factors noted below, it is intended that Dillard will retain (other than as
described above) the shares of Common Stock beneficially owned by him and,
through such ownership, will exercise influence over almost all matters relating
to the Company requiring shareholder approval, including the election of the
directors of the Company and through such influence will exercise influence over
the operations and financial policies of the Company and its subsidiaries.
In connection with the public offering of the Company's Common Stock in
1997 (the "Offering"), Dillard executed a lock-up letter (the "Lock-Up Letter")
in favor of Cruttenden Roth Incorporated ("Cruttenden Roth"), as representative
of the Underwriters. The Lock-Up Letter provides that for a period of three
hundred sixty-five (365) days after September 30, 1997 (the "Closing"), Dillard
will not, directly or indirectly, pledge, offer, sell, contract to sell, grant
any option to sell, or otherwise dispose of shares of Common Stock without the
prior written of Cruttenden Roth. The Lock-Up Letter also provides for the sale
of a number of shares of Common Stock to be agreed upon by Dillard and
Cruttenden Roth upon the expiration of six (6) months after the Closing provided
that such sale is handled by Cruttenden Roth.
Whether Dillard purchases or otherwise acquires or disposes of additional
shares of Common Stock, and the amount, method and timing of any such purchases
or acquisitions, will depend upon Dillard's continuing assessment of pertinent
factors, including, among other things: the availability of such shares for
purchase or acquisition at particular price levels or upon particular terms; the
business and prospects of Dillard and the Company; other business and investment
opportunities available to Dillard; economic conditions; money market and stock
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market conditions; the attitude and actions of other shareholders of the
Company; the availability and nature of opportunities to dispose of Common
Stock; and other plans and requirements of Dillard. Depending upon his
assessment of these factors from time to time and the provisions of the Lock-Up
Letters, Dillard may elect to acquire additional shares of Common Stock (by
means of privately negotiated purchases of shares, market purchases, a tender
offer, a merger or otherwise) or to dispose of some or all of their shares of
Common Stock.
Other than as mentioned above, Dillard does not have any present plans
or proposals that relate to or would result in:
(a) The acquisition or disposition by Dillard of additional securities
of the Company;
(b) Any extraordinary corporate transactions, such as material
mergers, reorganizations or liquidations, involving the Company or any of
its subsidiaries;
(c) A sale or transfer of a material amount of assets of the Company
or any of its subsidiaries;
(d) A change in the current board of directors or management of the
Company, including any plans or proposals to change the number or term of
directors or to fill any existing vacancies on the board;
(e) Any material change in the current capitalization or dividend
policy of the Company;
(f) Any other material change in the Company's business or corporate
structure;
(g) Changes in the Company's articles or bylaws or other actions that
may impede the acquisition of control of the Company by any person;
(h) Causing a class of the Company's securities to be delisted from a
national securities exchange or to cease to be authorized to be quoted in
an inter-dealer quotation system of a registered national securities
association;
(i) A class of equity securities of the Company becoming eligible for
termination of registration pursuant to ss.12(g)(4) of the Securities and
Exchange Act of 1934; or
(j) Any action similar to those enumerated above.
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ITEM 5. INTEREST IN SECURITIES OF THE ISSUER
(a) Number and Percentage of Securities Owned:
The aggregate number of shares of Common Stock
beneficially owned by Dillard is 147,056 shares of Common
Stock, amounting to approximately 5.2% of the Common Stock
outstanding, based on 2,747,597 shares outstanding as of April
27, 1998. Because Dillard holds presently exercisable options,
the percentage ownership is calculated on the assumption that
the shares purchasable within the next sixty (60) days
underlying such options are outstanding. Such number of shares
beneficially owned is based on Dillard's record and beneficial
ownership of 57,500 shares of Common Stock and options to
purchase 89,556 shares of Common Stock that are exercisable
within sixty (60) days of the date hereof.
(b) Type of Ownership:
Dillard is deemed to have the sole power to vote or to direct
the voting of and the sole power to dispose or to direct the
disposition of all of the shares of Common Stock indicated in item
5(a). Except as stated herein, Dillard does not currently share the
power to vote or to direct the voting of or the power to dispose or
direct the disposition of any shares of Common Stock.
(c) Transactions in Securities:
Except as disclosed herein, there have been no transactions in
the securities of the Company by Dillard within the past sixty days.
(d) Not applicable.
(e) Not applicable.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO
SECURITIES OF THE ISSUER
Other than as described previously in this Schedule 13D, Dillard has no
contracts, arrangements or understandings with any person with respect to any
securities of the Company.
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ITEM 7. MATERIAL TO BE FILED AS EXHIBITS
Exhibit 1. Lock-Up Letter, dated August 6, 1997 between M. Ted
Dillard and Cruttenden Roth;
2. Diversified Corporate Resources, Inc. Amended and
Restated 1996 Nonqualified Stock Option Plan
(incorporated by reference from Exhibit 10(z)(xii)
to the Company's Form 10-K for the year ended
December 31, 1996);
3. First Amendment to the Company's Amended and Restated
1996 Nonqualified Stock Option Plan (incorporated by
reference from Exhibit 10.5 to the Company's Form
10-K for the year ended December 31, 1996);
4. Stock Option Agreement by and between the Company and
M. Ted Dillard, executed May 15, 1997 (incorporated
by reference from Exhibit 4.8 to the Company's Form
S-8 (Reg. No. 333-27867) filed on May 27, 1997; and
5. Diversified Corporate Resources, Inc. 1998
Nonqualified Stock Option Plan (incorporated by
reference from Exhibit 10.14 to the Company's Form
10-Q (No. 001-13431) filed on May 15, 1998).
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SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Date: June 22, 1998
/s/ M. Ted Dillard
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M. Ted Dillard
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DIVERSIFIED CORPORATE RESOURCES, INC.
LOCK-UP LETTER
August 6, 1997
CRUTTENDEN ROTH INCORPORATED
18301 Von Kannan, Suite 100
Irvine, California 92715
Ladies and Gentlemen:
The undersigned understands that you and certain other firms propose to
enter into an Underwriting Agreement (the "Underwriting Agreement") providing
for the purchase by you and such other firms (the "Underwriters") of shares (the
"Shares") of Common Stock, par value $0.10 per share (the "Common Stock"), of
Diversified Corporate Resources, Inc., a Texas corporation (the "Company") and
that the Underwriters propose to reoffer the Shares to the public (the "Public
Offering").
In consideration of the execution of the Underwriting Agreement by the
Underwriters, and for other good and valuable consideration, the undersigned
hereby irrevocably agrees that without the prior written consent of Cruttenden
Roth Incorporated (which consent may be withheld in its sole discretion) the
undersigned will not sell, offer to sell, solicit an offer to buy, contract to
sell, loan, pledge, grant any option to purchase, or otherwise transfer or
dispose of (collectively, a "Disposition"), any shares of Common Stock, or any
securities convertible into or exercisable or exchangeable for Common Stock
(collectively, "Securities"), now owned or hereafter acquired by the undersigned
or with respect to which the undersigned has or hereafter acquires the power of
disposition, for a period of 365 days after the date of the final Prospectus
relating to the offering of the Shares to the public by the Underwriters (the
"Lock-Up Period"). The foregoing restriction is expressly agreed to preclude the
holder of the Securities from engaging in any hedging, pledge or other
transaction which is designed to, or which may reasonably be expected to lead to
or result in a Disposition of Securities during the Lock-Up Period even if such
Securities would be disposed of by someone other than the undersigned. Such
prohibited hedging, pledge or other transactions would include without
limitation any short sale (whether or not against the box), any pledge of shares
covering an obligation that matures, or could reasonably mature during the
Lock-Up Period, or any purchase, sale or grant of any right (including without
limitation any put or call option ) with respect to any Securities or with
respect to any security (other than a broad-based market basket or index) that
includes, relates to or derives any significant part of its value from
Securities.
Notwithstanding the foregoing, the undersigned may (i) exercise (on a
cash or cashless basis, whether in a traditional cashless exercise or in a
"brokers" cashless exercise), Common Stock options or warrants outstanding on
the date hereof, it being understood, however, that the shares of Common Stock
received (net of shares sold by or on behalf of the undersigned in a "brokers"
cashless exercise or shares delivered to the Company in a traditional cashless
exercise thereof) by the undersigned upon exercise thereof shall be subject to
the terms of this agreement, and (ii) transfer shares of Common Stock or
Securities during the undersigned's lifetime by bona
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fide gift, to the undersigned's equity owners or members of the undersigned's
immediate family, or to a trust for such members' benefit, or upon death by will
or intestacy, provided that any transferee agrees to be bound by the terms of
this agreement.
Notwithstanding the foregoing, at any time during the Lock-Up Period
after the six (6) month anniversary of the closing of the Public Offering, the
undersigned shall be permitted to sell a number of shares of Common Stock to be
mutually agreed upon with Cruttenden Roth Incorporated, provided that the sale
of such shares is handled by Cruttenden Roth Incorporated.
The undersigned understands that the Underwriters will rely upon the
representations set forth in this Lock-Up Agreement in proceeding with the
Public Offering. The undersigned agrees that the provisions of this agreement
shall be binding upon the successors, assigns, heirs, personal and legal
representatives of the undersigned. Furthermore, the undersigned hereby agrees
and consents to the entry of stop transfer instructions with the Company's
transfer agent against the transfer of the Securities held by the undersigned
except in compliance with this Lock-Up Agreement.
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It is understood that, if the Underwriting Agreement does not become
effective prior to December 1, 1997, or if the Underwriting Agreement (other
than the provisions thereof which survive termination) shall terminate or be
terminated prior to payment for and delivery of the Shares, the obligations
under this letter agreement shall automatically terminate and be of no further
force and effect.
Very truly yours,
By:
Name:
Title:
Additional signature(s) if stock jointly held
By:
Name:
Title:
