<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
<TABLE>
<S> <C>
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 Section240.14a-11(c) or
Section240.14a-12
</TABLE>
<TABLE>
<S> <C> <C>
DIVERSIFIED CORPORATE RESOURCES, INC.
- --------------------------------------------------------------------------
(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)(1)
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 (set forth the
amount on which the filing fee is calculated and state how
it was determined):
----------------------------------------------------------
(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:
----------------------------------------------------------
</TABLE>
<PAGE>
[LOGO]
May 12, 2000
Dear Shareholder:
You are cordially invited to attend the 2000 Annual Meeting of Shareholders
(the "Annual Meeting") of Diversified Corporate Resources, Inc. (the "Company"),
which will be held at the Westin Park Central Hotel, 12720 Merit Drive, Dallas,
Texas 75251 on June 21, 2000 at 10:00 a.m. Central Time.
At the Annual Meeting, you will be asked to consider and vote upon the
following: (1) the election of five directors to hold office until the next
annual election of directors by shareholders or until their respective
successors shall have been duly elected and shall have qualified, and (2) the
transaction of any and all other business that may properly come before the
meeting or any adjournment(s) thereof.
Whether or not you plan to attend the meeting, please date, sign, and return
the enclosed proxy for your shares of stock in the enclosed prepaid envelope.
Your cooperation in returning your executed proxy promptly is appreciated. If
you do attend the meeting, you may vote in person, which will effectively revoke
any proxy previously submitted.
Sincerely,
[/S/ J. MICHAEL MOORE]
J. MICHAEL MOORE
CHAIRMAN OF THE BOARD AND
CHIEF EXECUTIVE OFFICER
[LOGO]
<PAGE>
DIVERSIFIED CORPORATE RESOURCES, INC.
12801 N. CENTRAL EXPRESSWAY, SUITE 350
DALLAS, TEXAS 75243
------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JUNE 21, 2000
------------------------
To the Shareholders:
You are cordially invited to attend the Annual Meeting of Shareholders (the
"Annual Meeting") of Diversified Corporate Resources, Inc. (the "Company") to be
held in Dallas, Texas on Wednesday, June 21, 2000 for the following purposes:
1. To elect five directors of the Company to hold office until the next
annual meeting of shareholders or until their respective successors are
duly elected and shall have qualified.
2. The transaction of any and all other business that may properly come
before the meeting or any adjournment(s) thereof.
Holders of record of the Company's Common Stock at the close of business on
April 28, 2000, will be entitled to notice of, and to vote at, the Annual
Meeting or any adjournment(s) thereof. The stock transfer books will not be
closed. A list of shareholders entitled to vote at the Annual Meeting will be
available for examination at the offices of the Company for ten (10) days prior
to the Annual Meeting.
You are cordially invited to attend the Annual Meeting; WHETHER OR NOT YOU
EXPECT TO ATTEND THE ANNUAL MEETING IN PERSON, HOWEVER, YOU ARE URGED TO MARK,
SIGN, DATE AND MAIL THE ENCLOSED FORM OF PROXY PROMPTLY SO THAT YOUR SHARES OF
COMMON STOCK MAY BE REPRESENTED AND VOTED IN ACCORDANCE WITH YOUR WISHES AND IN
ORDER THAT THE PRESENCE OF A QUORUM MAY BE ASSURED AT THE ANNUAL MEETING. Your
proxy will be returned to you if you are present at the Annual Meeting and
request its return in the manner provided for revocation of proxies on the
initial page of the enclosed proxy statement.
By Order of the Board of Directors,
[/S/ M. TED DILLARD]
M. TED DILLARD
SECRETARY
Dallas, Texas
May 12, 2000
<PAGE>
DIVERSIFIED CORPORATE RESOURCES, INC.
12801 N. CENTRAL EXPRESSWAY, SUITE 350
DALLAS, TEXAS 75243
------------------------
PROXY STATEMENT
FOR 2000 ANNUAL MEETING OF SHAREHOLDERS
JUNE 21, 2000
------------------------
SOLICITATION AND REVOCABILITY OF PROXIES
The enclosed form of proxy is solicited by the Board of Directors of
Diversified Corporate Resources, Inc. (the "Company") to be used at the Annual
Meeting of Shareholders (the "Annual Meeting") to be held at the time and place
and for the purposes set forth in the accompanying Notice of Annual Meeting of
Shareholders (the "Notice") and at any adjournment(s) thereof. WHEN PROXIES IN
THE ACCOMPANYING FORM ARE PROPERLY EXECUTED AND RECEIVED, THE SHARES REPRESENTED
THEREBY WILL BE VOTED AT THE ANNUAL MEETING IN ACCORDANCE WITH THE DIRECTIONS
NOTED THEREON; IF NO DIRECTION IS INDICATED, SUCH SHARES WILL BE VOTED FOR THE
ELECTION OF DIRECTORS AND IN FAVOR OF THE OTHER PROPOSALS SET FORTH IN THE
NOTICE.
The executive offices of the Company are located at, and the mailing address
of the Company is, 12801 North Central Expressway, Suite 350, Dallas, Texas
75243.
Management does not intend to present any business at the Annual Meeting for
a vote other than the matters set forth in the Notice and has no information
that others will do so. If other matters requiring a vote of the shareholders
properly come before the Annual Meeting, it is the intention of the persons
named in the accompanying form of proxy to vote the shares represented by the
proxies held by them in accordance with their judgment on such matters.
This proxy statement (the "Proxy Statement") and accompanying form of proxy
are being mailed on or about May 12, 2000. The Company's Annual Report is
enclosed herewith, but does not form any part of the materials for solicitation
of proxies.
The enclosed proxy, even though executed and returned, may be revoked at any
time prior to the voting of the proxy by giving written notice of revocation to
the Secretary of the Company at the Company's principal executive offices or by
executing and delivering a later-dated proxy or by attending the Annual Meeting
and voting in person. However, no such revocation shall be effective until the
Company at or before the Annual Meeting has received such notice. Such
revocation will not affect a vote on any matters taken prior to receipt of such
revocation. Mere attendance at the Annual Meeting will not of itself revoke the
proxy.
In addition to the solicitation of proxies by use of the mail, directors,
officers, and regular employees of the Company may solicit the return of
proxies, either by mail, telephone, telegraph, or through personal contact. Such
directors, officers, and employees will not be additionally compensated but will
be reimbursed for out-of-pocket expenses. Brokerage houses and other custodians,
nominees, and fiduciaries will, in connection with shares of the Company's
common stock, par value $.10 per share (the "Common Stock"), registered in their
names, be requested to forward solicitation material to the beneficial owners of
such shares of Common Stock.
The cost of preparing, printing, assembling, and mailing the Annual Report,
the Notice, this Proxy Statement, and the enclosed form of proxy, as well as the
cost of forwarding solicitation materials to the beneficial owners of shares of
Common Stock, and other costs of solicitation, are to be borne by the Company.
1
<PAGE>
VOTING SECURITIES OUTSTANDING; QUORUM
The record date for the determination of shareholders entitled to notice of
and vote at the Annual Meeting was the close of business on April 28, 2000 (the
"Record Date"). At the close of business on the Record Date there were 2,786,352
shares of Common Stock issued and outstanding, each of which is entitled to one
vote on all matters properly brought before the Annual Meeting. Shareholders
have no cumulative voting rights.
The presence in person or by proxy of the holders of a majority of the
issued and outstanding shares of Common Stock entitled to vote as of the Record
Date is necessary to constitute a quorum at the Annual Meeting. Abstentions and
broker non-votes are treated as present at the Annual Meeting and are,
therefore, counted to determine a quorum. If a quorum is not present, the
shareholders entitled to vote who are present in person or represented by proxy
at the Annual Meeting have the power to adjourn the meeting from time to time,
without notice or other announcement, until a quorum is present or represented.
It is the intention of the persons named in the accompanying form of proxy to
vote the shares represented by the proxies held by them for such an adjournment.
At any adjourned meeting at which a quorum is present, any business may be
transacted that might have been transacted at the Annual Meeting as originally
notified.
Assuming the presence of a quorum, the affirmative vote of the holders of
(a) a plurality of the shares of Common Stock represented and voting at the
Annual Meeting is required for the election of directors, and (b) a majority of
the shares of Common Stock present in person or represented by proxy at the
Annual Meeting and entitled to vote therein is required to approve any and all
other business that may properly come before the meeting or any adjournment(s)
thereof.
Abstentions may be specified on all proposals except the election of
directors. Abstentions, with respect to any proposal other than the election of
directors, will have the same effect as a vote against such proposal. Broker
non-votes will have no effect on the outcome of the election of directors. With
regard to the election of directors, votes may be cast in favor of or withheld
from each nominee; votes that are withheld will be excluded entirely from the
vote and will have no effect.
[Remainder of page intentionally left blank]
2
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the beneficial
ownership of the Common Stock as of April 28, 2000 by (a) each person known by
the Company to own beneficially five percent or more of the outstanding Common
Stock; (b) each of the Company's directors; (c) each of the executive officers
named in the Summary Compensation Table below; and (d) all directors and
executive officers of the Company as a group. The address of each person listed
below is 12801 N. Central Expressway, Suite 350, Dallas, Texas 75243, unless
otherwise indicated.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY
OWNED(1)(2)
--------------------------
NAME AND ADDRESS OF BENEFICIAL OWNER NUMBER PERCENT
- ------------------------------------ --------- --------
<S> <C> <C>
DCRI L.P. No. 2, Inc........................................ 621,700(3) 22.3%
J. Michael Moore............................................ 838,367(3)(4) 28.9%
M. Ted Dillard.............................................. 206,445(5) 7.2%
Samuel E. Hunter............................................ 43,125(6) 1.5%
Deborah A. Farrington....................................... 35,625(7) 1.3%
A. Clinton Allen............................................ 35,625(8) 1.3%
Douglas G. Furra............................................ 37,167(9) 1.3%
Anthony G. Schmeck.......................................... 10,000(10) *
FMR Corp.................................................... 247,300(11) 8.9%
First Wilshire Securities Management, Inc................... 159,500(12) 5.7%
All directors and executive officers as a group (7 persons)
(4), (5), (6), (7), (8), (9), (10)........................ 1,206,354 38.6%
</TABLE>
- ------------------------
* Represents less than 1% of outstanding Common Stock.
(1) Beneficial ownership as reported in the above table has been determined in
accordance with Rule 13d-3 under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"). The persons and entities named in the table
have sole voting and investment power with respect to all shares shown as
beneficially owned by them, except as noted below and subject to applicable
community property laws.
(2) Except for the percentages of certain parties that are based on presently
exercisable options that are indicated in the following footnotes to the
table, the percentages indicated are based on 2,786,352 shares of Common
Stock issued and outstanding on the Record Date. In the case of parties
holding options, the percentage ownership is calculated on the assumption
that the shares underlying such options which are vested or will be vested
in the next 60 days are outstanding.
(3) These shares (the "Shares") were acquired by DCRI L.P. No. 2, Inc.
("No. 2") from Ditto Properties Co. ("DPC") as a result of a series of
transactions culminating in March 1993. DPC has since filed a lawsuit
against No. 2 (the "Litigation") in which it is claiming, among other
things, that its sale of the Shares to No. 2 in March 1993 should be
rescinded. The trial court, however, granted No. 2's motion for summary
judgment dismissing DPC's rescission claim. DPC has also filed a
Schedule 13D claiming that it is the beneficial owner of the Shares based on
a successful outcome of DPC's rescission claim. The Litigation is described
in the Company's Annual Report on Form 10-K, Item 3. No. 2 holds sole voting
and investment power with respect to the Shares, subject to the rights
retained by (a) Imperial Bank in connection with a loan (the "Imperial
Loan") to No. 2, the current balance of which is $550,000 and is due May 7,
2000, (b) Bank One Texas in connection with a loan (the "Bank One Loan") to
No. 2, the current balance of which is $825,000 and is due July 10, 2000,
and (c) Compass Bank in connection with two loans (collectively the "Compass
Loan") to No. 2, the current balance of which is $427,000 and is due
May 15, 2000. No. 2 has granted a security interest to (i) Imperial Bank to
secure the Imperial Loan with 275,000 shares of Common Stock, (ii) to Bank
3
<PAGE>
One Texas to secure the Bank One Loan with 175,000 shares of Common stock,
(iii) Compass Bank to secure the Compass Loan with 165,000 shares of Common
Stock, and (iv) to the Company, in connection with the Compass Bank
transaction, with 25,000 shares of Common Stock (see "Certain Relationships
and Related Transactions" for more information related to the Company's
agreement to purchase the Compass Loan in the event No. 2 and J. Michael
Moore default in their obligations to repay the Compass Loan). No. 2 is
currently renegotiating these loans. No. 2 has granted an option (the
"Hunter Option") to Samuel E. Hunter, a director of the Company, to purchase
an aggregate of 20,000 shares of Common Stock at $5.00 per share, which
option expires on July 31, 2002. The address of No. 2 is 12801 North Central
Expwy, Suite 260, Dallas, Texas 75243.
(4) Includes the Shares beneficially owned by No. 2 (as J. Michael Moore owns
substantially all of the capital stock of No. 2), and 119,167 shares of
Common Stock issuable upon the exercise of options.
(5) Includes 65,445 shares of Common Stock issuable upon the exercise of
options. Mr. Dillard owns 7.5% of the capital stock of No. 2 and in January,
2000, Mr. Dillard exercised the right to acquire an additional 2.5% of the
capital stock of No. 2; such shares have yet to be issued to Mr. Dillard.
None of the shares of Common Stock owned by No. 2 are included in the shares
of Common Stock owned by Mr. Dillard.
(6) Includes 43,125 shares of Common Stock issuable upon the exercise of
options. This number excludes 20,000 shares of Common Stock issuable upon
exercise of the Hunter Option. The address of Mr. Hunter is 501 East
87th Street, 17E, New York, New York 10128.
(7) Consists of 35,625 shares of Common Stock issuable upon the exercise of
options. The address of Ms. Farrington is 929 Park Avenue, New York,
New York 10028.
(8) Consists of 35,625 shares of Common Stock issuable upon the exercise of
options. The address of Mr. Allen is 1280 Massachusetts Avenue, No. 200,
Cambridge, Mass. 02138.
(9) Includes 36,667 shares of Common Stock issuable upon the exercise
of options.
(10) Includes 5,000 shares of Common Stock issuable upon the exercise
of options.
(11) The address of FMR Corp. is 82 Devonshire St., Boston, MA 02109.
(12) The address of First Wilshire Securities Management, Inc. is 600 South Lake
Street, Suite 100, Pasadena, CA 91106.
4
<PAGE>
ELECTION OF DIRECTORS
(PROPOSAL 1)
The Company's Bylaws provide that the number of directors which shall
constitute the whole board shall be fixed from time to time by resolution of the
Board of Directors but shall not be less than one. On April 21, 1998, the number
of directors comprising the Board of Directors was set at five.
The Board of Directors has nominated for directors the five individuals
named below to be elected at the Annual Meeting to hold office until the next
annual meeting of shareholders, or until their successor has been duly elected
and has qualified. All of the nominees are currently directors of the Company.
Unless otherwise directed in the enclosed proxy, it is the intention of the
persons named in such proxy to vote the shares represented by such proxy for the
election of the following named nominees for the offices of directors of the
Company to hold office until the next annual meeting of shareholders or until
their respective successors shall have been duly elected and shall have
qualified. Information regarding each nominee is set forth in the table and
text below.
<TABLE>
<CAPTION>
PRESENT
OFFICE(S) HELD DIRECTOR
NOMINEE AGE IN THE COMPANY SINCE
- ------- -------- ----------------------- --------
<S> <C> <C> <C>
Chairman and Chief
J. Michael Moore........................................ 53 Executive Officer 1991
M. Ted Dillard.......................................... 47 President and Secretary 1991
A. Clinton Allen........................................ 56 None 1998
Deborah A. Farrington................................... 49 None 1997
Samuel E. Hunter........................................ 65 None 1997
</TABLE>
J. MICHAEL MOORE has served as the Chairman of the Board of Directors of the
Company since May 1991. Mr. Moore has served as Chief Executive Officer of the
Company since May 1993. He has been President and Chief Executive Officer of
United States Funding Group, Inc., a Texas corporation, since 1986. Mr. Moore is
the principal shareholder of DCRI L.P. No. 2, Inc., a Texas corporation.
Mr. Moore is also a minority shareholder in More-O, Inc. See "Security Ownership
of Certain Beneficial Owners and Management."
M. TED DILLARD has served on the Board of Directors of the Company since
August 1991. Mr. Dillard has served as President of the Company since
October 1996. Prior to that, he was the Chief Financial Officer of the Company
from January 1994 to October 1996. He has been Secretary of the Company since
January 1994, and was Controller of the Company from June 1990 to January 1994.
Mr. Dillard is a Certified Public Accountant, Certified Management Accountant
and Certified Financial Planner.
A. CLINTON ALLEN was elected to the Board of Directors on April 21, 1998, by
unanimous consent of the Board of Directors. Mr. Allen has been Chairman and
Chief Executive Officer of A.C. Allen and Company, an investment banking and
consulting firm, since 1987. He also serves on the board of directors of The
DeWolfe Companies, Swiss Army Brands Inc., Response U.S.A. Inc., Steinway
Musical and Legal Club of America, Inc. He served on the board of directors of
Blockbuster Entertainment Corporation from 1986 until the acquisition of the
Company by Viacom/Paramount in September of 1994. None of such companies is an
affiliate of the Company.
DEBORAH A. FARRINGTON was elected to the Board of Directors of the Company
on November 12, 1997, by unanimous vote of the Board of Directors. Since
May 1998, Ms. Farrington has been a consultant to the Company in addition to
functioning as a director (see "Board of Directors and Committee--Director
Compensation"). Since May, 1998, Ms. Farrington has been Managing Member of the
general partner of StarVest Partners, L.P., a private equity investment firm.
From 1993 to 1997, Ms. Farrington served as Co-Chairman of Victory Ventures LLC
and President and Chief Executive
5
<PAGE>
Officer of its predecessor Victory Capital, LLC, both venture capital companies
in New York City. From 1993 to 1996, Ms. Farrington also served as Chairman of
the Board of Staffing Resources Inc., a Dallas based staffing services company.
She also served as Co-Chairman of the Board of Tigera Group, Inc. from 1995
to 1996.
SAMUEL E. HUNTER was elected to the Board of Directors of the Company on
February 28, 1997, by unanimous vote of the Board of Directors. Since
October 1, 1997, Mr. Hunter has served as Senior Vice President of sales for
OptiMark Technologies, Inc., an electronic trading network. From 1993 to 1997,
he served as managing director for equities trading for Ormes Capital
Markets, Inc. in New York City. Mr. Hunter is also a minority shareholder and
director in More-O, Inc. Mr. Hunter is also engaged in various other business
activities. See "Security Ownership of Certain Beneficial Owners
and Management."
None of the nominees is related to any other nominee or to any executive
officer or director of the Company by blood, marriage or adoption (except
relationships, if any, more remote than first cousin).
BOARD OF DIRECTORS AND COMMITTEES
The Board of Directors held six (6) meetings during the year ended
December 31, 1999. All directors of the Company during that time attended 100%
of the meetings of the Board of Directors.
Working committees of the Board include the Audit Committee and the
Compensation Committee. The Board of Directors does not have a standing
Nominating Committee.
AUDIT COMMITTEE. The Audit Committee consists of Mr. Hunter (Chairman),
Ms. Farrington, and Mr. Allen. The function of the Audit Committee is to make
recommendations concerning the engagement of independent public accountants,
review with the independent public accountants the plans and results of the
audit engagement, approve professional services provided by the independent
public accountants, review the independence of the independent public
accountants, consider the range of audit and non-audit fees and review the
adequacy of the Company's internal accounting controls. During 1999, the Audit
Committee held one meeting.
COMPENSATION COMMITTEE. The Compensation Committee consists of Mr. Allen,
Ms. Farrington and Mr. Hunter. The Chairman of the Compensation Committee is
Mr. Allen. The Compensation Committee determines the compensation of the
Company's executive officers and administers the Company's stock option plans.
During 1999, the Compensation Committee held three meetings and took certain
actions by unanimous consent.
OTHER COMMITTEES. The Board of Directors may establish other committees as
deemed necessary or appropriate from time to time, including, but not limited
to, an Executive Committee of the Board of Directors.
DIRECTOR COMPENSATION
In 1999, members of the Board of Directors received $8,000 per quarter with
no meeting fees. In addition, members of committees received $500 for each
committee meeting attended. Mr. Hunter, Chairman of the Audit Committee,
receives $1,000 for each Audit Committee meeting attended, and Mr. Allen,
Chairman of the Compensation Committee receives $1,000 per month as Chairman of
the Compensation Committee.
Members of the Board of Directors who are employees of the Company received
no compensation for attending Directors' meetings.
In 1999, the Company paid $4,000 per month to Deborah A. Farrington, a
director of the Company, in accordance with the terms of the May, 1998
consulting agreement, pursuant to which Ms. Farrington
6
<PAGE>
agreed to provide consulting services to the Company in connection with an
acquisition program of the Company.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF EACH OF THE
INDIVIDUALS NOMINATED FOR ELECTION AS A DIRECTOR.
EXECUTIVE OFFICERS
The table and text below set forth the name, age, current position and term
of office of the Company's executive officers other than those executive
officers who are also directors of the Company and for whom such information is
set forth above under the caption "Election of Directors."
<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- -------- -------------------------------------
<S> <C> <C>
Anthony G. Schmeck................................. 47 Chief Financial Officer and Treasurer
</TABLE>
ANTHONY G. SCHMECK was appointed Chief Financial Officer of the Company on
April 14, 2000. Mr. Schmeck joined the Company in September 1999 as its
Principal Accounting Officer and Director of Accounting. Previously, from
March 1998 to September 1999, Mr. Schmeck was the Chief Administrative Officer
and Corporate Controller at Landmark Financial Services, Inc. (a financial
services business). Mr. Schmeck also held senior level financial positions at
Nu-Kote Holding, Inc. (a manufacturer of ribbons and cartridges for printers,
copiers and fax machines) from 1987 to 1997 (at the time of his resignation of
employment with Nu-Kote Holding, Inc. Mr. Schmeck was Senior Vice President,
Corporate Controller and Secretary). Mr. Schmeck also held senior level
financial positions at Rockwell International (a multi-industry concern) from
1978 to 1987. He was an auditor at Price Waterhouse (an international accounting
firm now named PricewaterhouseCoopers L.L.P.) from 1974 to 1978. On November 6,
1998, Nu-Kote Holding, Inc. filed a bankruptcy petition for protection from
creditors under Chapter 11 of the Federal Bankruptcy Act; such bankruptcy
proceedings are still pending.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's officers and
directors, and persons who own more than 10% of a registered class of the
Company's equity securities (the "10% Shareholders"), to file reports of
ownership and changes of ownership with the Securities and Exchange Commission
("SEC"). Officers, directors and 10% Shareholders of the Company are required by
SEC regulations to furnish the Company with copies of all Section 16(a) forms so
filed. Based solely on a review of copies of such forms received, the Company
believes that, except as below provided, all filing requirements under
Section 16(a) applicable to its officers, directors and 10% Shareholders have
been timely met since January 1, 1999 to date. The exceptions are as follows:
(a) in connection with a transaction in January 1999, Mr. Moore and No. 2 were
required to file Form 4 but such filing was not made until February 11, 1999,
(b) in February, 1999, Messrs. Moore, Dillard, Furra, Anthony J. Bruno (an
executive with a subsidiary of the Company) and James L. Woo (an executive with
a subsidiary of the Company) were all one day late in filing their Form 5's for
1999, (c) in November, 1999, Mr. Schmeck was two days late in filing a required
Form 3, and (d) in March 2000, Messrs. Schmeck and Dillard were two days and
five days, respectively, late in filing their required Form 4.
7
<PAGE>
EXECUTIVE COMPENSATION
The following table summarizes certain information regarding compensation
paid or accrued during each of the Company's last three fiscal years to the
Company's Chief Executive Officer and each of the Company's three other most
highly compensated executive officers (the "Named Executive Officers"):
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
------------
ANNUAL COMPENSATION SECURITIES
-------------------------------------- UNDERLYING
OTHER ANNUAL ALL OTHER
COMPENSATION OPTIONS/SARS
NAME AND PRINCIPAL POSITION YEARS SALARY($) BONUS($)(1) ($)(2) (#)(3) COMPENSATION($)
- --------------------------- -------- --------- ----------- ------------ ------------ ---------------
<S> <C> <C> <C> <C> <C> <C>
J. Michael Moore............ 1999 $220,996 $ -- $38,000 -- $ --
1998 188,320 55,805 23,500 100,000(4) --
Chairman and Chief 1997 172,196 54,078 3,000 -- --
Executive Officer
M. Ted Dillard.............. 1999 $170,040 $ -- $28,087 -- $ --
1998 157,707 46,504 18,700 66,667 --
President and Secretary 1997 135,664 45,065 3,000 -- --
Douglas G. Furra(5)......... 1999 $122,112 $ -- $ -- -- $ --
1998 115,408 27,902 -- 10,000 --
Former Chief Financial 1997 57,500 20,279 -- 30,000 --
Officer and Treasurer
Anthony G. Schmeck(6)....... 1999 $ 29,377 $ -- $ -- 20,000 $ --
1998 -- -- -- -- --
Chief Financial Officer 1997 -- -- -- -- --
and Treasurer
</TABLE>
- ------------------------
(1) Each executive's bonus is calculated as a percentage of after-tax net income
("Profits"). Bonuses for Messrs. Moore, Dillard and Furra are calculated as
a percentage of Profits of the Company's subsidiary companies on a
consolidated basis.
(2) Includes perquisites and other personal benefits if value is greater than
the lesser of $50,000 or 10% of reported salary and bonus. Includes
directors fees for each of Mr. Moore and Mr. Dillard of $1,500, and $3,000
in 1998 and 1997, respectively. Includes deferred compensation for
Mr. Moore of $38,000 and $22,000, respectively, and Mr. Dillard of $27,000
and $16,500, respectively, in 1999 and 1998.
(3) All options granted in 1997 were granted pursuant to the 1996 Nonqualified
Stock Option Plan (the "1996 Plan"). All options granted in 1998 were
granted pursuant to the 1998 Non-Qualified Stock Option Plan (the "1998
Plan").
(4) In April 1998, Mr. Moore was granted (the "1998 Grant") options to purchase
100,000 shares of Common Stock contingent upon the exercise by Mr. Moore of
previously granted options (the "Existing Options") to purchase 124,000
shares. In April 1999, the 1998 Grant was reduced to options to purchase
62,500 shares as a result of Mr. Moore's partial exercise of the Existing
Options. As reduced, the 1998 Grant vests at the rate of 5,208 shares per
quarter, beginning June 30, 1998.
(5) Effective as of March 31, 2000, Mr. Furra resigned as the Treasurer and
Chief Financial Officer of the Company.
(6) Mr. Schmeck became the Chief Financial Officer of the Company on April 14,
2000. Mr. Schmeck joined the Company in September 1999 as the Principal
Accounting Officer and Director of Accounting.
8
<PAGE>
STOCK OPTION GRANTS DURING 1999
The following table provides information with respect to the Named Executive
Officers concerning the grant of options to acquire Common Stock in 1999.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
INDIVIDUAL GRANTS VALUE OF ASSUMED
------------------------------------------------------- ANNUAL RATES
NUMBER OF % OF TOTAL OF STOCK PRICE
SECURITIES OPTIONS/SARS APPRECIATION FOR
UNDERLYING GRANTED TO EXERCISE OPTION TERM(2)
OPTIONS/SARS EMPLOYEES IN OR BASE EXPIRATION ---------------------
NAME GRANTED(#)(1) FISCAL YEAR PRICE($/SH) DATE 5%($) 10%($)
- ---- ------------- ------------ ----------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Anthony G. Schmeck......... 20,000 41.67% $3.625 10-09 $45,595 $115,546
</TABLE>
- ------------------------
(1) All of the options granted to Named Executive Officer in 1999 were granted
under the 1998 Plan.
(2) The dollar amounts under these columns represent the potential realizable
value of each grant of options assuming that the market price of the
Company's Common Stock appreciates in value from the date of grant at the 5%
and 10% annual rates prescribed by the SEC and, therefore, are not intended
to forecast possible future appreciation, if any, of the price of the
Company's Common Stock.
AGGREGATED STOCK OPTION/SAR EXERCISES DURING 1999 AND STOCK OPTION/SAR VALUES AS
OF DECEMBER 31, 1999
The following table sets forth information with respect to the Chief
Executive Officer and the Named Executive Officers concerning the exercise of
options during 1999 and unexercised options held as of December 31, 1999:
AGGREGATE OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF VALUE OF
SECURITIES UNEXERCISED
UNDERLYING IN-THE-MONEY
UNEXERCISED OPTIONS/SARS
OPTIONS/SARS AT FISCAL
AT FISCAL YEAR END
YEAR END(#)(1) ($)(1)(2)
SHARES --------------- -------------
ACQUIRED ON VALUE EXERCISABLE/ EXERCISABLE/
NAME EXERCISE(#) REALIZED($) UNEXERCISABLE UNEXERCISABLE
- ---- ----------- ----------- --------------- -------------
<S> <C> <C> <C> <C>
J. Michael Moore.......................... 72,500 $64,982 114,048/25,952 $ 0/$ 0
M. Ted Dillard............................ -- -- 59,889/27,778 $ 0/$ 0
Douglas G. Furra.......................... -- -- 30,833/ 9,167 $ 0/$ 0
Anthony G. Schmeck........................ -- -- 2,500/17,500 $ 0/$ 0
</TABLE>
- ------------------------
(1) The amounts under the headings entitled "Exercisable" reflect vested options
as of December 31, 1999 and the amounts under the headings entitled
"Unexercisable" reflect options that have not vested as of December 31,
1999.
(2) No options outstanding are in-the-money at December 31, 1999 based on the
$2.875 per share closing price of the Common Stock on December 31, 1999.
9
<PAGE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
No member of the Compensation Committee was an officer or employee of the
Company or any of its subsidiaries or had any relationship requiring disclosure
pursuant to Item 404 of SEC Regulation S-K. No executive officer of the Company
served as a member of a compensation committee of another corporation (or other
board committee of such company performing similar functions or, in the absence
of any such committee, the entire board of directors of such corporation), one
of whose executive officers served on the Compensation Committee. No executive
officer of the Company served as a director of another corporation, one of whose
executive officers served on the Compensation Committee.
REPORT FROM THE COMPENSATION COMMITTEE REGARDING EXECUTIVE COMPENSATION
MEMBERSHIP. The Compensation Committee currently consists of three
individuals: A. Clinton Allen (who is the Chairman of the Compensation
Committee), Deborah A. Farrington and Samuel E. Hunter. Mr. Allen became a
member of the Board and the Chairman of the Compensation Committee on April 21,
1998.
RESPONSIBILITIES. The Compensation Committee is responsible for
establishing the level of compensation of the executive officers of the Company
and administering the 1996 Plan and the 1998 Plan. The compensation review and
evaluation is conducted by reviewing the overall performance of each individual
and comparing the overall performance of the Company with others in its
industry, as well as considering general economic and competitive conditions.
The financial performance of the Company on a yearly basis and as compared with
the Company's Peer Group (see "Comparative Total Returns," below) and the
industry as a whole, the Company's stock price and market share, and the
individual performance of each of the executive officers, are among the factors
reviewed. No particular weight is assigned to one factor over another.
GENERAL COMPENSATION POLICY. Our fundamental policy is to offer the
Company's executive officers competitive compensation opportunities based upon
their personal performance, the financial performance of the Company and their
contribution to that performance. It is our objective to make a substantial
portion of each officer's compensation contingent upon the Company's performance
as well as upon his or her own level of performance. Accordingly, each executive
officer's compensation package is comprised of three elements: (a) base salary,
which reflects individual performance and is designed primarily to be
competitive with salary levels of similarly sized companies; (b) annual variable
performance awards payable in cash and tied to the Company's achievement of
performance goals; and (c) long-term stock based incentive awards which
strengthen the mutuality of interests between the executive officers and the
Company's shareholders. Generally, as an officer's level of responsibility
increases, a greater portion of his or her total compensation will be dependent
upon Company performance and stock price appreciation rather than base salary.
EMPLOYMENT AGREEMENTS AND COMPENSATION. The Company is a party to
employment agreements with Messrs. Moore and Dillard, and contemplates
finalizing such an agreement with Mr. Schmeck. Both of the existing agreements
provide for an annual base salary and certain other benefits. The Compensation
Committee has in the past, and may continue in the future, to approve salaries
above the agreed-upon base salaries based upon the factors listed above. See
"Employment Contracts and Change in Control Arrangements," below, for specific
information as to the terms of each of these employment agreements. Bonuses for
the Company's executive officers are determined by the Compensation Committee
pursuant to an incentive plan below discussed. See "--Executive Bonus Plan,"
below.
During 1999, the Chief Executive Officer and President received salaries
averaging 17.3%, and 7.8% over 1998 levels. In comparison to the salary levels
of the chief executive officers and presidents of companies within the Company's
Peer Group, the salaries of Messrs. Moore and Dillard are below
10
<PAGE>
average. Likewise, the salaries of other executives of the Company are lower
than the average of those named in the public documents of the Company's Peer
Group.
EXECUTIVE BONUS PLAN. As a result of the Company's performance, no
executive bonuses were paid for 1999. In December 1999, the Compensation
Committee established an Executive Bonus Plan pursuant to which a bonus pool
will be established based upon the Company's net income (after tax income
exclusive of non-operating and non-recurring gains and losses and exclusive of
write-off of capitalized expenses). The amount of such bonus pool will be
(a) zero if the Company's net income is $1,000,000 or less, (b) seven percent
(7%) of the Company's net income for Messrs. Moore (3%), Dillard (2.5%) and
Schmeck (1.5%) if the Company's net income increases (in relationship to the
Company's net income in the preceding year) at a rate of less than 20%, and
(c) nine and three quarters percent (9 3/4%) of the Company's net income for
Messrs. Moore (4.25%), Dillard (3.5%) and Schmeck (2.0%) if the Company's net
income increases (in relationship to the Company's net income in the preceding
year or over the $1,000,000 net income base) at a rate of 20% or more. Based on
the same type of formula, additional bonus amounts may be awarded to other
executives of the Company who are not executive officers of the Company.
EQUITY COMPENSATION. The executive officers are also granted stock options
from time to time under the 1996 Plan and the 1998 Plan. The timing of such
grants and the size of the overall option pools and their allocations are
determined by the Compensation Committee. Pursuant to guidelines established by
the Compensation Committee in December 1999, it is anticipated that (a) no stock
options will be granted to the Company's existing executive officers unless the
Company's net income (as above defined) increases (in relationship to the prior
year or over the $1,000,000 net income base) by at least 20%, and (b) the number
of stock options to be granted to the executive officers of the Company will be
based upon the following formula:
a. Moore--1 1/2 (such amount shall be increased by the same percentage
increase of net income for the year over the greater of $1,000,000 or the
prior year net income) times Mr. Moore's annual salary divided by the
price of the Common Stock on December 31 (or the last trading day of the
year if December 31 is not a business day) of the year involved.
b. Dillard--1 1/4 (subject to adjustment in the same manner as described
above for Mr. Moore) times Dillard's annual salary divided by the price
of the Common Stock on the same date as provided above for Mr. Moore.
c. Schmeck-- 3/4 (subject to adjustment in the same manner as above
described for Mr. Moore) times Mr. Schmeck's annual salary divided by the
price of the Common Stock on the same date as provided above for
Mr. Moore.
TAX CONSEQUENCES. The Omnibus Budget Reconciliation Act of 1993 added
Section 162(m) ("Section 162(m)") to the Internal Revenue Code. With certain
exceptions, Section 162(m) prevents publicly held corporations, including the
Company, from taking a tax deduction for compensation in excess of $1 million
paid to the Chief Executive Officer and the other persons named in the Summary
Compensation Table in this Proxy Statement ("Covered Persons"). For purposes of
Section 162(m), this limitation will apply to the tax year in which the Company
would otherwise take the deduction. For nonqualified stock options the deduction
is normally taken in the year the option is exercised. However, Section 162(m)
will not apply to limit the deductibility of performance-based compensation
exceeding $1 million if (i) paid solely upon attainment of one or more
performance goals, (ii) paid pursuant to a performance-based compensation plan
adopted by the Compensation Committee, and (iii) the terms of the plan are
approved by the shareholders before payment of the compensation.
The Compensation Committee has previously reviewed the Company's
compensation plans with regard to the deduction limitation contained in
Section 162(m). The Compensation Committee believes that option grants under the
1996 Plan (the "1996 Options") do not meet the requirements of
11
<PAGE>
Section 162(m) to be considered performance-based compensation. Therefore,
Section 162(m) could limit the Company's deduction in any tax year in which a
Covered Employee who received 1996 Options exercises some or all of such Covered
Employee's 1996 Options and such recipient's total compensation, including the
value of the exercised options, exceeds $1 million in that taxable year.
The Compensation Committee decided not to alter the Company's compensation
plans with respect to existing 1996 Options, but does believe that options
granted and repriced to Covered Employees under the 1998 Plan will meet the
deductibility requirements of Section 162(m).
COMPENSATION COMMITTEE
A. Clinton Allen
Deborah A. Farrington
Samuel E. Hunter
12
<PAGE>
EMPLOYMENT AGREEMENTS AND CHANGE IN CONTROL ARRANGEMENTS
The Company has entered into agreements with Messrs. Moore, Dillard, and it
is expected to complete such an agreement with Mr. Schmeck, that provide that:
(a) base compensation payable to Mr. Moore, Mr. Dillard and Mr. Schmeck be not
less than $150,000 per annum, $125,000 per annum, and $114,000 per annum,
respectively (the current annual salaries for such individuals are $190,000 for
Mr. Moore, $162,000 for Mr. Dillard and $127,500 for Mr. Schmeck; the increase
in the base compensation of Mr. Schmeck is subject to ratification by the
Compensation Committee); (b) Mr. Moore shall be the Chief Executive Officer of
the Company and shall report to the Board of Directors of the Company;
(c) Mr. Dillard shall be the President and Secretary of the Company and shall
report to Mr. Moore; and (d) Mr. Schmeck shall be the Chief Financial Officer
and Treasurer of the Company and shall report to Mr. Dillard (e) all three of
these individuals shall have the right to participate in all of the benefit,
bonus and incentive compensation plans of the Company and its subsidiaries. The
employment agreements for Mr. Moore and Mr. Dillard provide that during such
executive's agreement, the Company shall fund a deferred compensation program
(the "Deferred Compensation Program") for such executive in the amount of $2,000
and $1,500 per month, respectively. The employment agreements for Mr. Moore and
Mr. Dillard provide that the term of the employment agreement shall be for a
period of three (3) years beginning January 1, 1998 and ending December 31, 2000
(the "Termination Date") and the employment agreement for Mr. Schmeck shall be
for a period of two years beginning September 22, 1999 and ending September 21,
2001. With respect to Messrs. Moore and Dillard, the Termination Date in effect
shall be automatically extended for one (1) year unless (i) the employment
agreement has already been terminated prior to the Termination Date for a reason
permitted thereunder, or (ii) either the Company or the executive gives written
notice (the "Non-Renewal Notice") that the employment agreement should not be
renewed at least six (6) months in advance of the Termination Date then in
effect. The employment agreements for Mr. Moore and Mr. Dillard provide that if
the executive's employment with the Company is terminated without cause, the
Company agrees to pay such executive an amount equal to the base compensation
that would have been paid to such executive during the period of the time from
the date of termination of such executive's employment with the Company until
the Termination Date and for a period of twelve (12) months (the "Extension
Period") following the Termination Date. In addition, if the executive's
employment is terminated without cause, the executive shall be entitled to
receive a pro rata share of any bonus or incentive compensation that such
executive would otherwise have been entitled to receive had he remained employed
for the entirety of the calendar year involved and shall have 12 months
following such termination within which to exercise his options. It is
anticipated that the employment agreements of Messrs. Moore and Dillard will be
renegotiated in the near term and that, unless such negotiations are completed
by June 30, 2000, the Non-Renewal Notice will be given by the Company to both
Mr. Moore and Mr. Dillard prior to such date.
Effective April 30, 1998, the employment agreements of the Chief Executive
Officer and the President were amended. The amendments to these employment
agreements provide that upon a Special Change in Control (as defined below) of
the Company and if the executive's employment with the Company is terminated for
any reason other than Voluntary Termination (as defined in the respective
employment agreements) or terminated for cause during the twenty-four
(24) month period beginning on the Effective Date of such change in control,
(a) the payments to the executive under the employment agreement for the
Extension Period shall be at such times and in such amounts as would have been
paid to the executive during the Extension Period had the executive's employment
not been terminated and (b) the Company's obligation to fund the Deferred
Compensation Program shall extend until the expiration of the Extension Period.
With respect to change of control provisions related to stock options, each
of the 1996 Plan and the 1998 Plan contain certain change in control provisions.
In addition, if with respect to any of Messrs. Moore, Dillard or Schmeck a
Special Change in Control occurs and such executive's employment with the
Company terminates for any reason other than Voluntary Resignation or
Termination for Cause
13
<PAGE>
(as defined in the executive's respective Stock Option Agreement), such
executive's stock options will become fully vested, notwithstanding any other
vesting provisions.
For this purpose, the term "Special Change in Control" means (a) any person
or entity, including a "group" as defined in Section 13(d)(3) of the Exchange
Act, other than the Company, a majority-owned subsidiary thereof, or Mr. Moore
and any affiliate of Mr. 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 (b) if, 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 (c) if, 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.
COMPARATIVE TOTAL RETURNS
PERFORMANCE GRAPH
The following Performance Graph shows the changes over the five year period
from December 31, 1994 to December 31, 1999 in the value of $1,000 invested in:
(a) the Company's Common Stock; (b) the Russell 2000 Index; and (c) the common
stock of the Peer Group (as defined below) of companies, whose returns represent
the arithmetic average for such companies and includes such companies in such
average only during the years that any of such companies were publicly traded.
The values with each investment as of the beginning of each year are based on
share price appreciation and the reinvestment with dividends on the respective
ex-dividend dates. The change in the Company's performance for the year ended
December 31, 1999, results from the price of the Company's Common Stock
decreasing from $5.00 per share at December 31, 1998 to $2.875 per share at
December 31, 1999.
COMPARISON OF CUMULATIVE TOTAL RETURNS FROM YEAR-END 1994 THROUGH YEAR-END
1999
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
RUSSELL 2000 DCRI PEER GROUP
<S> <C> <C> <C>
12/31/94 $1,000 $1,000 $1,000
12/31/95 $1,200 $1,920 $1,080
12/31/96 $1,390 $25,000 $2,420
12/31/97 $1,700 $61,540 $2,260
12/31/98 $1,660 $38,460 $2,070
12/31/99 $2,010 $22,110 $1,270
</TABLE>
14
<PAGE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
RUSSELL 2000 DCRI PEER GROUP
------------ -------- ----------
<S> <C> <C> <C>
12/31/94.................................................... $1,000 $ 1,000 $1,000
12/31/95.................................................... $1,200 $ 1,920 $1,080
12/31/96.................................................... $1,390 $25,000 $2,420
12/31/97.................................................... $1,700 $61,540 $2,260
12/31/98.................................................... $1,660 $38,460 $2,070
12/31/99.................................................... $2,010 $22,110 $1,270
</TABLE>
The Company's Peer Group, as selected by the Company's Compensation
Committee, consists of the following companies whose businesses, taken as a
whole, resemble the Company's activities: Butler International, Inc., General
Employment Enterprises, Inc, RCM Technologies, Inc., Professional Staffing,
Comforce Corp., National Technical Systems, Inc., and National TechTeam, Inc. In
previous years, the Company's Peer Group included Lamalie Associates, which was
party to a merger in 1999 and no longer exists.
This graph above assumes $1,000 invested on December 31, 1994 in the Common
Stock of the Company, the Russell 2000 Index, and the Peer Group and was plotted
using the above data.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company and Mr. Moore have an agreement pursuant to which, in connection
with pending litigation involving the Company, Mr. Moore, DCRI L.P. No. 2, Inc
("No. 2"), Ditto Properties Company and others, the Company has agreed to
advance funds to pay certain legal fees which are the obligation of Mr. Moore
and/or No. 2. During 1999, the Company paid various expenses on behalf of
Mr. Moore or No. 2 in the amount of approximately $72,000. Such amount was
non-interest bearing and not collateralized and is included in receivables from
related parties in the Company's consolidated balance sheets. To date during
2000, the Company has advanced Mr. Moore or No. 2 an additional $127,000 related
to the same matters.
On January 12, 1999, the Company entered into (a) a note purchase agreement
(the "Agreement") with Compass Bank (the "Bank"), and No. 2, which is
principally owned by Mr. Moore, pursuant to which the Company agreed to purchase
from the Bank, in the event of a default by the Borrower and Mr. Moore (as
guarantor), the following: (i) two promissory notes (collectively the "Notes")
executed by the Borrower payable to the Bank in the principal amount of
$500,000, and (ii) all instruments collateralizing repaying of the Notes
including, without limitation, a pledge agreement related to 165,000 shares of
Common Stock which are owned by the Borrower and which have been pledged by the
Borrower as collateral for the Notes, and (b) a bank transaction agreement (the
"Related Agreement") with the Borrower and Mr. Moore which obligated the
Borrower and/or Mr. Moore to (i) pledge and convey to the Company 50,000 shares
(subsequently reduced to 25,000 shares) of Common Stock to collateralize the
Company under the terms of both the Agreement and the Related Agreement,
(ii) pay the Company 5,000 shares of Common Stock for entering into the
Agreement, and (iii) waive the right of Mr. Moore to exercise options to
purchase, at $2.50 per share, 5,000 shares of Common Stock pursuant to options
previously granted to Mr. Moore by the Company. The proceeds from the loans
evidenced by the Notes have been advanced to $427,000 by the Bank and have been
used in part to fund Mr. Moore's purchase, at $2.50 per share (for an aggregate
amount of $181,250), of 72,500 shares of Common Stock pursuant to exercising
stock options previously granted to him by the Company.
In 1999, More-O, Inc., a corporation in which Mr. Moore and Mr. Samuel E.
Hunter, directors of the Company are minority shareholders, paid the Company
$15,000 for the sub-lease of office space. Also in 1999, More-O, Inc. paid
approximately $2,000 to Train International, Inc. (a subsidiary of the Company)
for training services provided to certain clients of More-O, Inc. Mr. Hunter is
also a director of More-O, Inc.
15
<PAGE>
With respect to Ms. Farrington, see "Board of Directors and
Committees--Director Compensation," above.
On July 17, 1998, Mr. Dillard exercised options to purchase 84,000 shares of
Common Stock for an aggregated purchase price of $257,250. The purchase price
was paid with 7,500 shares (acquired in 1997) of Common Stock valued at $89,500
(based upon the closing price of the Common Stock on July 16, 1998, on the
American Stock Exchange) and the remainder was paid in cash. In connection with
this transaction the Company loaned Mr. Dillard approximately $149,000, which
amount was subsequently reduced to approximately $90,000 (the "Tax Loan"), to
cover his income tax liability associated with the transaction. The Tax Loan
bears interest at the applicable federal rate which is payable quarterly, is
collateralized by 20,000 shares of Common Stock, and is due July 17, 2003. As of
April 1, 2000, the applicable federal rate was 6.51% per annum. On October 12,
1998, the Company loaned Mr. Dillard approximately $125,000 (the "Company
Loan"). The Company Loan bears interest at 8% per annum, provides that interest
is payable quarterly, is collateralized by 43,400 shares of Common Stock, and is
due October 12, 2001. The collateral for the Company Loan will be increased if
the market value of the Common Stock declines to the point where the market
value of all stock pledged to secure the Company Loan is less than the principal
amount of the Company Loan. During 1999, the largest aggregate amount of
indebtedness outstanding relating to the Tax Loan and the Company Loan was
$214,500. As of April 28, 2000, the amount of such indebtedness outstanding
was $214,500.
16
<PAGE>
SHAREHOLDER PROPOSALS
PROPOSALS FOR 2001 ANNUAL MEETING
Shareholders may submit proposals for consideration at future shareholder
meetings, including director nominations. In order for a shareholder proposal to
be considered for inclusion in the Company's proxy statement for next year's
annual meeting, presently scheduled to be held in June 2001, the written
proposal must be received by the Company no later than January 11, 2001. Any
such proposal also will need to comply with SEC regulations regarding the
inclusion of shareholder proposals in company-sponsored proxy materials.
Similarly, in order for a shareholder proposal, including a nomination for
director, to be properly brought before next year's annual meeting, written
notice must be received by the Company pursuant to the Company's Bylaws no
earlier than March 23, 2001, and no later than April 22, 2001, and shall contain
such information as required under the Company's Bylaws. If such proposal is
timely received by the Company and is in accordance with the Company's Bylaws,
management's discretion to vote proxies with respect to such proposal will be
limited by the provisions of Rule 14a-4, which is one of the proxy rules
promulgated by the SEC.
You may contact the Company's corporate Secretary at Company headquarters
for a copy of the relevant Bylaw provisions regarding the requirements for
making shareholder proposals, including nominating director candidates.
INDEPENDENT PUBLIC ACCOUNTANTS
The firm of PricewaterhouseCoopers, LLP has served as auditors for the
Company during 1999 and will serve in the capacity for 2000, unless the Audit
Committee and the Board subsequently determine that a change is desirable. A
representative of the auditors is expected to be at the Company's 2000 Annual
Meeting of Shareholders to respond to appropriate questions and to make a
statement if desired.
GENERAL
The information contained in this Proxy Statement in the sections entitled
"Executive Compensation--Report From the Board of Directors Regarding Executive
Compensation" and "Comparative Total Returns" shall not be deemed incorporated
by reference by any general statement incorporating by reference any information
contained in this Proxy Statement into any filing under the Act, or the Exchange
Act, except to the extent that the Company specifically incorporates by
reference the information contained in such sections, and shall not otherwise be
deemed filed under the Act or the Exchange Act.
By Order of the Board of Directors,
[/S/ M. TED DILLARD]
M. TED DILLARD
SECRETARY
May 12, 2000
Dallas, Texas
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. SHAREHOLDERS WHO DO NOT
EXPECT TO ATTEND THE ANNUAL MEETING AND WISH THEIR SHARES TO BE VOTED ARE URGED
TO DATE, SIGN AND RETURN THE ACCOMPANYING PROXY IN THE ENCLOSED SELF-ADDRESSED
ENVELOPE. NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES.
17
<PAGE>
DIVERSIFIED CORPORATE RESOURCES, INC.
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS, JUNE 21, 2000
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints J. Michael Moore and M. Ted Dillard,
or either of them, with full power of substitution, as Proxies to vote all
stock of Diversified Corporate Resources, Inc. (the "Company") owned by the
undersigned at the Annual Meeting of Shareholders to be held in Dallas, Texas
on June 21, 2000, upon such business as may properly come before the meeting
or any adjournments thereof, including the following items as set forth in
the Notice of Meeting and Proxy Statement, receipt of which is hereby
acknowledged.
- FOLD AND DETACH HERE -
<PAGE>
DIVERSIFIED CORPORATE RESOURCES, INC.
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY /X/
<TABLE>
<CAPTION>
For All
For Withheld Except
<S> <C> <C> <C> <C>
1. Proposal to elect as Directors of the Company the following persons to / / / / / /
hold office until the next annual election of Directors by shareholders -----------------
or until their successors have been duly elected and qualified. Nominee Exception
</TABLE>
(01) J. Michael Moore (02) A. Clinton Allen (03) Samuel E. Hunter
(04) M. Ted Dillard (05) Deborah A. Farrington
(INSTRUCTION: To withhold authority to vote for any individual
nominee, mark the oval "For All Except" and write that nominee's name
in the space provided.)
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF EACH OF THE
INDIVIDUALS NOMINATED FOR ELECTION AS A DIRECTOR.
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C> <C>
2. In their discretion, the Proxies are authorized to vote upon such other / / / / / /
matters and business as may properly come before the meeting.
</TABLE>
Your signature(s) on this proxy form should be
exactly as your name or names appear on this
proxy. If the stock is held jointly, each
holder should sign. If signing as attorney,
executor, administrator, trustee, guardian or
other fiduciary or representative capacity,
please set forth your full title. If a
corporation, please sign in full corporate name
as president or other authorized officer. If a
partnership or other entity, please sign in the
partnership's or other entity's name by
authorized person.
Dated ____________________________________, 2000
________________________________________________
(Signature)
________________________________________________
Signature if held jointly
THE SHARES REPRESENTED BY THIS PROXY WILL BE
VOTED AS DIRECTED BY THE SHAREHOLDER. IF NO
DIRECTION IS GIVEN WHEN THE DULY EXECUTED PROXY
IS RETURNED, SUCH SHARES WILL BE VOTED IN
ACCORDANCE WITH THE RECOMMENDATIONS OF THE
BOARD OF DIRECTORS FOR PROPOSAL 1 AND THE
PROXIES WILL USE THEIR DISCRETION WITH RESPECT
TO ANY MATTER REFERRED TO IN PROPOSAL 2.
- FOLD AND DETACH HERE -
CONTROL NUMBER
PLEASE MARK, SIGN, DATE AND RETURN
THIS PROXY PROMPTLY USING
THE ENCLOSED ENVELOPE.
