SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 1 TO
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
Jenkens & Gilchrist, P.C.
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)
July 17, 1998
(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-1(b)(3) or (4), check the following box. o
Check the following box if a fee is being paid with this statement. o 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.
<PAGE>
CUSIP No. 255153 10 8
--------------------------
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
Number of Shares Beneficially
Owned by Each Reporting Person
With:
- ------------------------------
7. Sole Voting Power 134,000
8. Shared Voting Power 0
9. Sole Dispositive Power 134,000
10. Shared Dispositive Power 0
11. Aggregate Amount Beneficially Owned by Each Reporting Person 134,000
12. Check if the Aggregate Amount in Row 11 Excludes Certain Shares (See
Instructions) [ ]
13. Percent of Class Represented by Amount in Row 11. 5.0%
14. Type of Reporting Person (See Instructions): IN
*Based on 2,703,397 shares of Common Stock outstanding as of November 15, 1998.
<PAGE>
AMENDMENT NO. 1 TO SCHEDULE 13D
1. Security and Issuer
-------------------
No changes.
2. Identity and Background
-----------------------
No changes.
3. and Item 4. Source and Amount of Funds or Other Consideration
-------------------------------------------------
This Amendment No. 1 to Schedule 13D is being filed to report changes in
the beneficial ownership of M. Ted Dillard ("Dillard") in shares of the Common
Stock (the "Common Stock") of Diversified Corporate Resources, Inc. a Texas
corporation (the "Company"). Dillard beneficially owns 134,000 shares of Common
Stock at this time.
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 Nonqualified Stock Option Plan. On July 17, 1998,
Dillard exercised options to purchase 84,000 shares of Common Stock underlying
the 1996 Options for an aggregate purchase price of $257,250. The purchase price
was paid with 7,500 shares of Common Stock, valued at $89,500, and the remainder
was paid in cash obtained through a margin loan (the "Margin Loan") secured by
shares of Common Stock. The Margin Loan involved a third party lender not
affiliated with the Company. In connection with this transaction the following
has occurred:
a. On July 17, 1998, the Company loaned Dillard $148,600 (the
"Tax Loan") to cover his income tax liability associated with the
transaction. The Tax Loan (i) bears interest at the applicable federal
rate, which interest is payable quarterly, (ii) is collateralized
(pursuant to a Security Agreement executed by Mr. Dillard) by 20,000
shares of the Common Stock, and (iii) is due July 17, 2003.
b. On October 1, 1998, the Company advanced Dillard $38,562
against his 1998 bonus to cover a margin call in connection with the
Margin Loan.
c. On October 12, 1998, the Company loaned $125,300 to Dillard
(the "Company Loan") to cover a second margin call in connection with
the Margin Loan and to repay the Margin Loan. The Company Loan (i)
bears interest at 8%, which interest is payable quarterly, (ii) is
collateralized (pursuant to a Security Agreement executed by Mr.
Dillard) by 35,400 shares of the Company's Common Stock, and (iii) is
due October 12, 2001. The collateral securing the Company Loan will be
increased if the market value of the Common Stock declines to the point
where the market value of all shares pledged to the Company pursuant to
this Security Agreement is less than the principal amount of the
Company Loan. Subject to Regulation G promulgated by the Federal
Reserve Board, the collateral securing the Company Loan will be
decreased if the market value of the shares of Common Stock increases
to the point where the market value of all shares pledged to the
Company pursuant to this Security Agreement is in excess of the
principal amount of the Company Loan.
<PAGE>
d. On October 23, 1998, the Compensation Committee approved,
and the Board of Directors ratified, the repricing of certain options
to purchase shares of Common Stock that are held by certain employees
of the Company, including the remaining options held by Dillard. Such
action reduced to $5.125 per share the exercise price with respect to
Dillard's options to purchase 87,667 shares of Common Stock. The
Compensation Committee and the Board of Directors also imposed the
condition that no repriced options, including Dillard's repriced
options, may be exercised prior to October 23, 1998.
At the present time, but subject to Dillard's continuing evaluation of
the factors noted below, and the terms of the Security Agreements referred to
above, it is intended that Dillard will retain the shares of Common Stock
beneficially owned by him and as a shareholder of the Company will exercise
influence over matters relating to the Company requiring shareholder approval,
including the election of the directors of the Company, and as President and a
director of the Company will exercise influence over the operations and
financial policies of the Company and its subsidiaries.
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 market conditions; the attitude and actions of other shareholders of
the Company; the availability and nature of opportunities to dispose of Common
Stock; the provisions of the Security Agreements referred to above, and other
plans and requirements of Dillard. Depending upon his assessment of these
factors from time to time, 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 his 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.
<PAGE>
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 Exchange Act of 1934; or
j. Any action similar to those above enumerated.
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 134,000 shares of Common Stock,
amounting to approximately 5.0% of the Common Stock outstanding, based
on 2,703,397 shares outstanding as of November 15, 1998. While Dillard
holds options to purchase 87,667 shares of Common Stock, none of these
options are exercisable within sixty (60) days of the date hereof.
Thus, the aforesaid percentage ownership is calculated on the
assumption that none of the shares purchasable under Mr. Dillard's
options are outstanding.
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.
6. Contracts, Arrangements, Understandings or Relationships With Respect
---------------------------------------------------------------------
to Securities of the Issuer
---------------------------
Except as disclosed in the Schedule 13D or in this Amendment No. 1 to
Schedule 13D, Dillard has no contracts, arrangements or undertakings with any
person with respect to any securities of the Company.
7. Material to be Filed as Exhibits
--------------------------------
1. 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).
2. 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).
<PAGE>
3. 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).
4. 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).
5.* Amendment No. 1 to May 15, 1997 Stock Option Agreement between
the Company and M. Ted Dillard.
6. Promissory Note, effective July 17, 1998, between the Company
and the Company (incorporated by reference from Exhibit 10.3
to the Company's Form 10-Q (No. 0-13984) filed on November 16,
1998).
7. Promissory Note, effective October 12, 1998, by and between
the Company and M. Ted Dillard (incorporated by reference from
Exhibit 10.4 to the Company's Form 10-Q (No.
0-13984) filed on November 16, 1998).
8. Security Agreement effective July 17, 1998, between the
Company and M. Ted Dillard (incorporated by reference from
Exhibit 10.5 to the Company's Form 10-Q (No. 0-13984) filed on
November 16, 1998).
9. Security Agreement effective October 12, 1998, between the
Company and M. Ted Dillard (incorporated by reference from
Exhibit 10.6 to the Company's Form 10-Q (No. 0-13984) filed on
November 16, 1998).
- -------------------
* filed herewith
[This space left blank intentionally]
<PAGE>
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: December 30, 1998
/s/ M. Ted Dillard
-------------------------------
<PAGE>
FIRST AMENDMENT
TO
AMENDED AND RESTATED STOCK OPTION AGREEMENT
This First Amendment (the "Amendment") to the Amended and Restated
Stock Option Agreement between Diversified Corporate Resources, Inc. (the
"Company") and M. Ted Dillard ("Optionee") is adopted pursuant to the terms of
Article VIII of the Diversified Corporate Resources, Inc. Amended and Restated
1996 Stock Option Plan ("Plan").
WHEREAS, the Company has granted Optionee an option (the "Option") the
terms of which are set forth in an Amended and Restated Stock Option Agreement
to purchase a certain number of shares (individually and collectively, "Shares")
of the Company's common stock; and
WHEREAS, the Board has proposed that the vesting provisions of the
Option should provide for acceleration of its vesting in the event of a change
in control of the Company and a subsequent termination of the Optionee's
employment with the Company under certain circumstances and has further proposed
that the same provisions should apply to the Option; and
WHEREAS, the Board therefor has proposed to amend the Option to provide
that, upon a "Special Change in Control" (as described below) Optionee will
become fully vested in his Shares upon a subsequent termination of employment
under the circumstances described below occurring prior to the final vesting
date under the terms of the Option; and
WHEREAS, the Board has approved this First Amendment; and
WHEREAS, the Optionee desires to enter into this First Amendment.
NOW, THEREFORE, in consideration of the premises, the Option is amended
as follows:
1. Paragraph 2 is amended by adding to the end thereof a new
paragraph as follows:
"If (i) a "Special Change in Control" occurs, and (ii)
Optionee's employment with the Company terminates for any
reason other than Voluntary Resignation or Termination for
Cause during the twenty-four (24) month period beginning on
the Effective Date (as reasonably determined by the Committee)
of such Change in Control, then, notwithstanding any provision
of this Agreement to the contrary, and without limitation,
this Option will become exercisable with respect to all of the
Shares subject to this Option, at the exercise prices at which
the Option would have become exercisable if Optionee had
continued in employment through the dates set forth in the
preceding paragraph on which the Option would have been
exercisable with respect to all of the Shares subject to this
Option and will terminate as provided herein.
1
<PAGE>
"For all purposes hereof, "Voluntary Termination" shall mean
the Optionee's resignation from the Company unless such
resignation is as a direct proximate result of (i) without
Optionee's express written consent, the assignment to Optionee
of any duties materially inconsistent with his positions,
duties, responsibilities and status (including his removal
form the Board of Directors) with the Company on the Effective
Date of the Special Change in Control; (ii) a reduction of
Optionee's base compensation and bonus compensation (other
than a reduction in payments under the Company's incentive
bonus program based on a reduction in net profits of the
Company) to an amount that is greater than ten percent (10%)
lower than such compensation on the Effective Date of the
Special Change In Control; (iii) relocation of Optionee's
principal location of work to any location that is both (x) in
excess of fifty (50) miles from the location of Optionee's
principal location of work on the Effective Date or the
Special Change in Control, and (y) in excess of the sum of the
distance from Optionee's principal residence on such Effective
Date to the location of the Optionee's principal location of
work on such Effective Date, plus 50 miles; (iv) failure by
the Company to require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to
all or substantially all of the business and/or assets of the
Company, by agreement in form and substance reasonably
satisfactory to the Optionee, expressly to assume and agree to
perform his Employment Agreement and this Agreement in the
same manner and to the same extent that the Company would be
required to perform it if no such succession had taken place;
or (v) any material breach of his Employment Agreement as in
effect on the Effective Date of the Special Change in Control,
or this Agreement, by the Company.
"For all purposes hereof, "Termination For Cause" shall mean
Optionee's termination for cause under his Employment
Agreement as in effect on the Effective Date of the Special
Change in Control or if Optionee does not have an Employment
Agreement in effect on the Effective Date of the Special
Change in Control, "termination for cause" shall mean any of
the following events: (i) the Optionee's conviction or plea of
guilty to a crime involving moral turpitude, (ii) any acts of
dishonesty or theft on the part of the Optionee that, in the
opinion of the Board of Directors of the Company, is
detrimental to the best interests of the Company, and (iii)
intentional and material violation by the Optionee of any
written policy of the Board of Directors of the Company that
is not corrected within ninety (90) days after receipt by the
Optionee of a detailed written explanation from the Board of
Directors of the Company, all as reasonably determined by the
Committee in its sole discretion."
2
<PAGE>
2. Paragraph 5 is amended by renaming it "RECLASSIFICATION,
CONSOLIDATION, MERGER AND SPECIAL CHANGE IN CONTROL", and
deleting the second sentence and adding in lieu thereof the
following:
"(b) For all purposes hereof "Special Change in Control" means
(i) any person or entity, including a "group" as defined in
Section 13(d)(3) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), other than the Company, a
majority-owned subsidiary thereof, or J. Michael Moore
("Moore") and any affiliate of Moore, becomes the beneficial
owner (as defined pursuant to Schedule 13(d) under the
Exchange Act) of the Company's securities having 25% or more
of the combined voting power of the then outstanding
securities of the Company that may be cast for the election of
directors of the Company; or (ii) as the result of, or in
connection with, any cash tender or exchange offer, merger or
other business combination, sales of assets or contested
election, or any combination of the foregoing transactions,
less than a majority of the combined voting power of the then
outstanding securities of the Company or any successor
corporation or entity entitled to vote generally in the
election of the directors of the Company or such other
corporation or entity after such transaction are beneficially
owned (as defined pursuant to Section 13(d) of the Exchange
Act) in the aggregate by the holders of the Company's
securities entitled to vote generally in the election of
directors of the Company immediately prior to such
transaction; or (iii) during any period of two consecutive
years, individuals who at the beginning of any such period
constitute the Board of Directors of the Company cease for any
reason to constitute at least a majority thereof, unless the
election, or the nomination for election by the Company's
shareholders, of each director of the Company first elected
during such period was approved by a vote of at least
two-thirds of the directors of the Company then still in
office who were directors of the Company at the beginning of
any such period. The "Effective Date" of such Special Change
in Control shall be the earlier of the date on which an event
described in (i), (ii), or (iii) occurs, or if earlier, the
date of the occurrence of (iv) the approval by shareholders of
an agreement by the Company, the consummation of which would
result in an event described in (i), (ii), or (iii), or (v)
the acquisition of beneficial ownership (as defined pursuant
to Section 13(d) of the Exchange Act), directly or indirectly,
by any entity, person or group (other than the Company, a
majority-owned subsidiary of the Company, or Moore and any
affiliate of Moore) of securities of the Company representing
5% or more of the combined voting power of the Company's
outstanding securities, provided, however, that the events
described in (iv) and (v) will be considered the Effective
3
<PAGE>
Date of a Special Change in Control if they are followed
within six (6) months by an event described in (i), (ii) or
(iii)."
3. Paragraph 7 is renamed Plan Provisions and Binding Effect and
is amended and restated to read as follows:
The Agreement is in all respects subject to the
terms, definitions and provisions of the Plan, all of
which are incorporated herein by reference. This
Agreement shall be binding upon and inure to the
benefit of the Company, the Optionee, and their
respective heirs, representatives, successors, and
assigns.
4. A new paragraph 10 will be added as follows:
Committee Authority. Any questions concerning the
interpretation of this Agreement shall be determined
by the Committee in its reasonable discretion.
5. The effective date of the First Amendment shall be April 30, 1998.
6. Except as amended by the First Amendment, the terms of the Option
shall remain in full force and effect.
4
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this First Amendment
to be executed as of this _____ day of September, 1998.
DIVERSIFIED CORPORATE RESOURCES, INC.
By:
------------------------------
Name:
------------------------------
Title:
------------------------------
OPTIONEE
-------------------------------------
M. Ted Dillard
5
