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TYLER TECHNOLOGIES, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held May ~~15, 2008~~14, 2009

To the Stockholders of

TYLER TECHNOLOGIES, INC.:

The annual meeting of stockholders will be held in Dallas, Texas at the Park City Club, 5956 Sherry Lane, Suite 1700, at 9:30 a.m., local time. At the meeting, you will be asked to:

	(1)		elect seven directors to serve until the next annual meeting or until their respective successors are duly elected and qualified;

	(2)		consider and vote upon a proposal to amend the Tyler Technologies, Inc. Stock Option Plan (the “Stock Option Plan”) to increase the number of our common stock subject to the Stock Option Plan by 2,500,000;

	~~(3)~~		ratify the selection of Ernst & Young LLP as our independent auditors for fiscal year ~~2008;~~2009; and

	~~(4)~~(3)		transact such other business as may properly come before the meeting.

Only stockholders of record on March 17, ~~2008~~2009 may vote at the annual meeting. A list of those stockholders will be available for examination at our corporate headquarters, 5949 Sherry Lane, Suite 1400, Dallas, Texas 75225, from May 5 through May ~~15, 2008.~~14, 2009.

Please date and sign the enclosed proxy card and return it promptly in the enclosed envelope or vote through the Internet as described in the enclosed proxy card.No postage is required if the proxy card is mailed in the United States. Your prompt response will reduce the time and expense of solicitation.

The enclosed ~~2007~~2008 Annual Report does not form any part of the proxy solicitation material.


By Order of the Board of Directors H. Lynn Moore, Jr. Executive Vice President, General Counsel, and Secretary

		~~By Order of the Board of Directors~~


	~~H. Lynn Moore, Jr.~~
	~~Executive Vice President,~~
	~~General Counsel, and Secretary~~

Dallas, Texas
~~April 2, 2008~~March 26, 2009

THE ANNUAL MEETING

Place, Date, and Time

The annual meeting will be held in Dallas, Texas at the Park City Club, 5956 Sherry Lane, Suite 1700, on Thursday, May ~~15, 2008,~~14, 2009, at 9:30 a.m., local time.

Matters to be Considered

At the annual meeting, you will be asked to consider and vote upon the following proposals:

	•		Proposal One — Election of seven directors to serve until the next annual meeting or until their respective successors are duly elected and qualified; and

	•		Proposal Two ~~— Amendment to the Stock Option Plan increasing the number of shares of common stock subject to issuance under the Option Plan from 8,500,000 to 11,000,000; and~~

	•		~~Proposal Three~~ — Ratification of the selection of Ernst & Young LLP as our independent auditors for fiscal year ~~2008.~~2009.

Record Date and Voting

Only stockholders of record on March 17, ~~2008~~2009 are entitled to vote at the annual meeting. On March 17, ~~2008,~~2009, we had ~~37,981,782~~35,252,630 shares of common stock issued and outstanding. Each stockholder will be entitled to one vote, in person or by proxy, for each share of common stock held in his or her name. A majority of our shares of common stock must be present, either in person or by proxy, to constitute a quorum for action at the meeting. Abstentions and broker nonvotes are counted for purposes of determining a quorum. Abstentions are counted in tabulating the votes cast on any proposal, but are not counted as votes either for or against a proposal. Broker nonvotes are not counted as votes cast for purposes of determining whether a proposal has been approved.

Vote Required

The following is the required vote necessary to approve each of the proposals:

	•		Proposal One — Election of Directors — the election of directors is determined by plurality vote; and

	•		Proposal Two — Amendment to Stock Option Plan — the affirmative vote of holders of a majority of the voting power of the shares actually voted at the annual meeting is required to approve the amendment to the Stock Option Plan; and

	•		~~Proposal Three~~ — Ratification of Ernst & Young LLP — the affirmative vote of holders of a majority of the voting power of the shares actually voted at the annual meeting is required to ratify Ernst & Young LLP as our independent auditors for fiscal year ~~2008.~~2009.

Proxy Solicitation, Revocation, and Expense

The accompanying proxy is being solicited on behalf of the board of directors. Your shares will be voted at the annual meeting as you direct in the enclosed proxy or through the Internet, provided that it is completed, signed, and returned to us prior to the annual meeting. No proxy can vote for more than seven nominees for director. If you return a proxy but fail to indicate how you wish your shares to be voted, then your shares will be voted in favor of each of the nominees for director.

After you sign and return your proxy, you may revoke it prior to the meeting either by (i) filing a written notice of revocation at our corporate headquarters, (ii) attending the annual meeting and voting your shares in person, or (iii) delivering to us another duly executed proxy that is dated after the initial proxy.

We will bear the expense of preparing, printing, and mailing the proxy solicitation material and the proxy. In addition to use of the mail, we may solicit proxies by personal interview or telephone by our directors, officers, and employees. We may also engage the services of a proxy solicitation firm to assist us in the solicitation of proxies. We estimate that the fee of any such firm will not exceed $10,000 plus reimbursement of reasonable out-of-pocket

PROPOSALS FOR CONSIDERATION

Proposal One — Election of Directors

At the annual meeting, you will be asked to elect a board of seven directors. The nominees for director are: Donald R. Brattain; J. Luther King, Jr.; John S. Marr, Jr.; G. Stuart Reeves; Michael D. Richards; Dustin R. Womble; and John M. Yeaman. Each of the nominees currently serves on our board of directors. For more information regarding these nominees, see “Tyler Management.”

Each nominee has indicated that he is able and willing to serve as a director. If any of the nominees becomes unable to serve prior to the meeting, the persons named in the enclosed proxy will vote the shares covered by your executed proxy for a substitute nominee as selected by the board of directors. You may withhold authority to vote for any nominee by entering his name in the space provided on the proxy card.

Our board of directors unanimously recommends that the stockholders voteFOR each of the nominees for director.

Proposal Two — ~~Amendment to the Stock Option Plan~~

At the annual meeting, you will also be asked to consider and vote upon a proposal to amend the Stock Option Plan to increase the number of shares of common stock subject to the plan from 8,500,000 to 11,000,000. The proposed amendment to the plan is intended to enable us to provide additional incentives to selected key employees whose substantial contributions are important to our continued growth and profitability. Currently, there are only 206,000 shares of our common stock available for option grants under the existing plan. Copies of the Stock Option Plan are available upon written request.

~~Purpose of the Stock Option Plan~~. Stock options are designed to strengthen the commitment of selected key employees, directors, and non-employee consultants, to motivate those individuals to perform their assigned responsibilities diligently and skillfully, and to attract and retain competent entrepreneurial-type management dedicated to our long-term growth and profitability. We believe this can best be accomplished by tying a portion of compensation to appreciation in the market value of our common stock so that the management and key employees, non-employee directors, and non-employee consultants are rewarded only if the value of your investment in our common stock has appreciated.

~~Description of the Stock Option Plan~~. The Stock Option Plan is designed to permit the appropriate administering committee to grant options to key employees, directors, and non-employee consultants to purchase shares of our common stock. The plan requires that the purchase price under each stock option will not be less than 100% of the fair market value of our common stock at the time of the grant of the option. The fair market value per share is the reported closing price of our common stock on the New York Stock Exchange on the date of the grant of the option, or if no sale has been reported on such date, on the next preceding day or the last day prior to the date of grant when the sale was reported. The option period may not be more than ten years from the date the option is granted. Except with respect to options granted to officers and directors, the Executive Committee grants options to eligible individuals, determines the purchase price and option period at the time the option is granted, and administers and interprets the plan. The Compensation Committee grants options and administers the plan with respect to officers, and our board of directors, as a whole, grants options and administers the plan with respect to directors. Options may be exercised in annual installments as specified by the administering committee or, if applicable, our board of directors. All installments that become exercisable are cumulative and may be exercised at any time after they become exercisable until expiration of the option. The Stock Option Plan contains provisions governing “Changes of Control,” as defined therein, including accelerated vesting of options under certain circumstances.

The exercise price of options is paid in cash or by check at the time of exercise or, if approved, by the tender of shares of our common stock, or through a combination thereof; provided that such shares either: (i) have been owned by the optionee for more than six months and have been “paid for” within the meaning of Rule 144 promulgated under the Securities Act of 1933; or (ii) were obtained by the optionee in the public market (“Qualifying Shares”). If the option is exercised by tendering Qualifying Shares, the number of shares tendered shall be determined by the fair market value per share on the date of the exercise, as determined by us. An option agreement may also provide that the exercise price may be paid through the cashless exercise method whereby the optionee authorizes a broker designated by us to sell a specified number of the shares of common stock to be acquired by the optionee on the exercise of the option, having a then fair market value equal to the sum of the exercise price of the option, plus any transaction costs. The remainder of the shares not sold will be delivered to the optionee. Shares of common stock deliverable upon exercise of the options may be transferred from treasury or issued from authorized but unissued shares.

The Stock Option Plan will terminate on May 11, 2010, and no options may thereafter be granted under the plan. Our board of directors may amend, alter, or discontinue the plan, or any part thereof, at any time and for any reason. However, we will obtain stockholder approval for any amendment to the plan to the extent necessary and desirable to comply with applicable law. The administering committee may also make appropriate adjustments in the number of shares covered by the plan, the number of shares subject to outstanding options, and the option prices to reflect any stock dividend, stock split, share combination, or other recapitalization and, with respect to outstanding options and option prices, to reflect any merger, consolidation, reorganization, liquidation, or similar transaction.

Incentive stock options and nonqualified stock options may be granted under the plan to our key employees. Key employees are defined in the plan to be those employees whose performance and responsibilities are determined to have a direct and significant effect on our success. Non-employee directors, as well as consultants, are eligible for the grant of nonqualified stock options. Additional options may be granted to persons to whom options have previously been granted. There is no restriction in the plan on the maximum or minimum number of shares covered by options that may be granted to any person.

Incentive stock options are options that meet the requirements of Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”), and nonqualified stock options are options that do not meet the requirements of Section 422 of the Code. No incentive stock option, however, may be granted under the Stock Option Plan to an employee who owns more than 10% of the voting power of all classes of securities unless the option price is at least 110% of the fair market value of our common stock at the date of grant, and the option is not exercisable more than five years after it is granted. There is no limit on the fair market value of incentive stock options that may be granted to an employee in any calendar year, but no employee may be granted incentive stock options that first become exercisable during a calendar year for the purchase of stock with an aggregate fair market value (determined as of the date of grant of each option) in excess of $100,000. An incentive stock option (or an installment thereof) counts against the annual limitation only in the year it first becomes exercisable.

The appropriate administering committee may provide for the termination of options in case of termination of employment, directorship, consultant relationship, dishonesty, or any other reason the appropriate committee determines. If an option expires or terminates before it has been exercised in full, the shares of common stock allocable to the unexercised portion of that option may become subject to future grants of options. Upon termination of the employment, directorship, or consultant relationship of an optionee, his or her option is exercisable for a period of 30 days after termination, and thereafter the option terminates. If the optionee dies or becomes disabled before the termination of his right to exercise his or her option, the legal representatives of the estate, or the optionee in the event of his disability, may exercise his or her option provided the option is exercised prior to the date of expiration of the option period or one year from the date of the optionee’s death or disability, whichever first occurs, and the option may be exercised only as to those shares the optionee could have purchased under the option on the date of death, disability or other termination. Options may not be transferred other than by will or the laws of descent and distribution and, during the lifetime of the optionee, may be exercised only by him.

~~Tax Status of Options~~. An optionee has no taxable income, and we are not entitled to a deduction, at the time of the grant of an option. All stock options that qualify under the rules of Section 422 of the Code will be entitled to “incentive stock option” treatment. To receive incentive stock option treatment, an optionee must not dispose of the

acquired stock within two years after the option is granted and within one year after the exercise. In addition, the individual must have been an employee for the entire time from the date of granting of the option until three months (one year if the employee is disabled) before the date of the exercise. The requirement that the individual be an employee and the two-year and one-year holding periods are waived in the case of death of the employee. If all such requirements are met, then any gain upon sale of the stock will be entitled to capital gain treatment. The employee’s gain on exercise (the excess of the fair market value at the time of exercise over the exercise price) of an incentive stock option is a tax preference item and, accordingly, is included in the computation of alternative minimum taxable income, even though it is not included in taxable income for purposes of determining regular tax liability of an employee. Consequently, an optionee may be obligated to pay alternative minimum tax in the year he or she exercises an incentive stock option.

If an employee does not meet the two-year and one-year holding requirement (a “disqualifying disposition”), tax will be imposed at the time of sale of the stock. In such event, the employee’s gain on exercise of the incentive stock option will be compensation to him taxed as ordinary income rather than capital gain to the extent the fair market value of the acquired common stock on the date of exercise of the incentive stock option exceeds the aggregate exercise price paid for that common stock, and we will be entitled to a corresponding deduction at the time of sale. If the amount realized on the disqualifying disposition is less than the fair market value of the common stock on the date of exercise of the incentive stock option, the total amount includable in optionee’s gross income, and the amount deductible by us, will equal the excess of the amount realized on the disqualifying disposition over the exercise price.

An optionee, upon exercise of a nonqualified stock option that does not qualify as an incentive stock option, recognizes ordinary income in an amount equal to the gain on exercise. The exercise of a nonqualified stock option entitles us to a tax deduction in the same amount as is includable in the income of the optionee for the year in which the exercise occurred. Any gain or loss realized by an optionee on subsequent disposition of shares generally is a capital gain or loss and does not result in any tax deduction to us.

~~Different tax consequences may result from stock-for-stock exercises of options.~~

THE FOREGOING SUMMARY OF THE EFFECT OF THE FEDERAL INCOME TAX UPON PARTICIPANTS IN THE STOCK OPTION PLAN DOES NOT PURPORT TO BE COMPLETE, AND IT IS RECOMMENDED THAT THE PARTICIPANTS CONSULT THEIR OWN TAX ADVISORS FOR COUNSELING. MOREOVER, THE FOREGOING SUMMARY IS BASED UPON PRESENT FEDERAL INCOME TAX LAWS AND IS SUBJECT TO CHANGE. THE TAX TREATMENT UNDER FOREIGN, STATE, OR LOCAL LAW IS NOT COVERED IN THIS SUMMARY.

~~Our board of directors unanimously recommends that the stockholders vote~~~~FOR~~ ~~the amendment to the Stock Option Plan.~~

~~Proposal Three —~~ Ratification of Ernst & Young LLP as Our Independent Auditors for Fiscal Year ~~2008~~2009

The Audit Committee has selected Ernst & Young LLP, independent registered public accounting firm, as our independent auditors for fiscal year ~~2008,~~2009, subject to ratification by the stockholders. Ernst & Young LLP served as our independent auditors for fiscal years ~~2007~~2008 and ~~2006.~~2007. A representative of Ernst & Young LLP is expected to be present at the annual meeting. That representative will have an opportunity to make a statement, if desired, and will be available to respond to appropriate questions.


		Ernst & Young’s fees for all professional services during each of the last two fiscal years were as follows:


					2008		2007
	2007		2006
Audit Fees	$	1,069,000	$	1,020,000	$	1,095,000	$	1,069,000
Audit Related Fees		51,000		110,000		63,000		51,000
Tax Fees		11,000		28,000		19,000		11,000

Total	$	1,131,000	$	1,158,000	$	1,177,000	$	1,131,000

TYLER MANAGEMENT

Directors, Nominees for Director, and Executive Officers

Below is a brief description of our directors, nominees for director, and executive officers. Each director holds office until our next annual meeting or until his successor is elected and qualified. Executive officers are elected annually by the board of directors and hold office until the next annual board meeting or until their successors are elected and qualified.


Name / Age	Present Position	Served Since

John M. Yeaman, 6768	Chairman of the Board		2004
	Director		1999
John S. Marr, Jr., 4849	President and Chief Executive Officer		2004
	Director		2002
Donald R. Brattain, 6768	Director		2004
J. Luther King, Jr., 6869	Director		2004
G. Stuart Reeves, 6869	Director		2001
Michael D. Richards, 5758	Director		2002
Dustin R. Womble, 4849	Executive Vice President		2003
	Director		2005
Brian K. Miller, 4950	Executive Vice President		2008
	Chief Financial Officer		2005
	Treasurer		1997
H. Lynn Moore, Jr., 4041	Executive Vice President		2008
	Secretary		2000
	General Counsel		1998

Business Experience of Directors, Nominees for Director, and Executive Officers

John M. Yeamanhas served as Chairman of the Board since July 2004. From April 2002 until July 2004, Mr. Yeaman served as President and Chief Executive Officer; from March 2000 until April 2002, he served as President and Co-Chief Executive Officer; and from December 1998 until March 2000, he was President and Chief Executive Officer. Mr. Yeaman was elected to our board of directors in February 1999. Mr. Yeaman also serves as Chairman of the Executive Committee. From 1980 until 1998, Mr. Yeaman was associated with Electronic Data Systems Corporation (“EDS”), where he most recently served as the director of a worldwide Strategic Support Unit managing $2 billion in real estate assets. Mr. Yeaman began his career with Eastman Kodak Company. Mr. Yeaman also serves on the Board of Directors of Park Cities Bank in Dallas, Texas.

John S. Marr, Jr.has served as President and Chief Executive Officer since July 2004. From July 2003 until July 2004, Mr. Marr served as Chief Operating Officer. Mr. Marr has served on our board of directors since May 2002 and is currently a member of the Executive Committee. Mr. Marr also served as President of MUNIS, Inc. (“MUNIS”) from 1994 until July 2004. Mr. Marr began his career in 1983 with MUNIS, a provider of a wide range of software products and related services for county and city governments, schools, and not-for-profit organizations, with a focus on integrated financial systems. We acquired MUNIS in 1999. Mr. Marr also serves on the board of directors of Mercy Hospital in Portland, Maine.

Donald R. Brattainhas served as a director since 2004. Mr. Brattain also serves as Chairman of the Audit Committee and is a member of the Nominating and Governance Committee. Since 1985, Mr. Brattain has served as President of Brattain & Associates, LLC, a private investment company founded by Mr. Brattain in 1985 and located in Minneapolis, Minnesota. From 1981 until 1988, Mr. Brattain purchased and operated Barefoot Grass Lawn Service Company, a company that grew from $3.2 million in sales to over $100 million in sales and was sold to ServiceMaster, Ltd. in 1998.

J. Luther King, Jr.has served as a director since 2004. Mr. King also serves on the Audit Committee and the Compensation Committee. Mr. King is the Chief Executive Officer and President of Luther King Capital

Management (“LKCM”), a registered investment advisory firm that he founded in 1979. Mr. King also serves as ~~the chairman~~a director and a member of the ~~board~~Audit Committee of ~~trustees of Texas Christian University.~~Encore Energy Partners GP, LLC. In addition, Mr. King serves as a director on various private and ~~a member~~non-profit entities and foundations, including Chairman of the ~~audit committee~~Board of ~~Encore Energy Partners GP, LLC.~~Trustees of Texas Christian University, Advisory Committee of the Employees Retirement System of Texas, Trustee of LKCM Funds and director of Hunt Forest Products, Inc. Mr. King has a Bachelor of Science degree and a Masters of Business Administration from Texas Christian University, and he is also a Chartered Financial Analyst.

G. Stuart Reeveshas served on our board of directors since June 2001. Mr. Reeves also serves as Chairman of the Nominating and Governance Committee and is a member of the Audit Committee and the Compensation Committee. From 1967 to 1999, Mr. Reeves worked for EDS, a professional services company that offers its clients a portfolio of related systems worldwide within the broad categories of systems and technology services, business process management, management consulting, and electronic business. During his thirty-two years of service with EDS, Mr. Reeves held a variety of positions, including Executive Vice President, North and South America, from 1996 to 1999; Senior Vice President, Europe, Middle East, and Africa, from 1990 to 1996; Senior Vice President, Government Services Group, from 1988 to 1990; Corporate Vice President, Human Resources, from 1984 to 1988; Corporate Vice President, Financial Services Division, from 1979 to 1984; Project Sales Team Manager, from 1974 to 1979; and Systems Engineer and Sales Executive, from 1967 to 1974. Mr. Reeves also served on the EDS Board of Directors from 1988 until 1996. Mr. Reeves retired from EDS in 1999. Mr. Reeves ~~also~~ serves on the Board of ~~Governors~~Directors of Park Cities Bank in Dallas, Texas. Mr. Reeves has Bachelor of Science and Master of Science degrees in Mathematics from Oklahoma State ~~University Foundation.~~University.

Michael D. Richardshas served on our board of directors since May 2002. Mr. Richards also serves as Chairman of the Compensation Committee and is a member of the Nominating and Governance Committee. Mr. Richards is Executive Vice President of Republic Title of Texas, Inc. From September 2000 until September 2005, Mr. Richards served as Chairman and Chief Executive Officer of Suburban Title, LLC d/b/a Reunion Title, an independent title insurance agency founded by Mr. Richards in September 2000 and which he sold to Republic Title in September 2005. From 1989 until September 2000, Mr. Richards served as President and Chief Executive Officer of American Title Company, Dallas, Texas, an affiliate of American Title Group, Inc., one of the largest title insurance underwriters in Texas during that time. From 1982 until 1989, Mr. Richards held various management positions with Hexter-Fair Title Company, Dallas, Texas, including President from 1988 until 1989. From 1974 until 1982, Mr. Richards worked for Stewart Title Guaranty Company, Dallas, Texas, during which time he held several key management positions including serving on its board of directors. Mr. Richards holds several positions with various associations, some of which include: Greater Dallas Chamber of Commerce, member of the Economic Development Advisory Council; Leukemia Society of America, Advisory Board Member; Greater Dallas Association of Realtors, Board Member; Home Builders Association, Board Member; and member of the executive committee of the Texas Stampede.

Dustin R. Womblehas been Executive Vice President in charge of corporate-wide product strategy, Chief Executive Officer of both our Courts and Justice division and our INCODE division since July 2006 and is currently a member of the Executive Committee. From July 2003 to June 2006, Mr. Womble was Executive Vice President

in charge of corporate-wide product strategy and President of our INCODE division. Mr. Womble previously served as President of our INCODE division from 1998, when we acquired INCODE, to July 2003.

Brian K. Millerhas been Executive Vice President — Chief Financial Officer and Treasurer since February 2008. From May 2005 until February 2008, Mr. Miller served as Senior Vice President ~~- -~~— Chief Financial Officer and Treasurer. He previously served as Vice President — Finance and Treasurer from May 1999 to April 2005 and was Vice President — Chief Accounting Officer and Treasurer from December 1997 to April 1999. From June 1986 through December 1997, Mr. Miller held various senior financial management positions at Metro Airlines, Inc. (“Metro”), a publicly-held regional airline holding company operating as American Eagle. Mr. Miller was Chief Financial Officer of Metro from May 1991 to December 1997 and also held the office of President of Metro from January 1993 to December 1997. Mr. Miller is a certified public accountant.

H. Lynn Moore, Jr.has been General Counsel since September 1998 and has been Secretary since October 2000 and Executive Vice President since February 2008. He previously served as Vice President from October 2000 until February 2008. From August 1992 to August 1998, Mr. Moore was associated with the law firm of Hughes & Luce, L.L.P. in Dallas, Texas where he represented numerous publicly-held and privately-owned entities

in various corporate and securities, finance, litigation, and other legal related matters. Mr. Moore is a member of the State Bar of Texas.

CORPORATE GOVERNANCE PRINCIPLES AND BOARD MATTERS

Corporate Governance Guidelines

Our board of directors has adopted a number of corporate governance guidelines, including the following:

	•		Independence Standards, which determine the independence of our non-employee directors. These standards are consistent with the independence standards set forth in Rule 303A.02(b) of the New York Stock Exchange Listed Company Manual. The Independence Standards are included as an exhibit to our Audit Committee Charter.

	•		Corporate Governance Guidelines, which include, among other things:

	•		annual submission of independent auditors to stockholders for approval;

	•		formation of a Nominating and Governance Committee to be comprised solely of independent directors;

	•		prohibition of stock option re-pricing;

	•		formalization of the ability of independent directors to retain outside advisors;

	•		performance of periodic formal board evaluation; and

	•		limitation on the number of additional public company boards on which a director may serve to a maximum of four.

			A copy of our Corporate Governance Guidelines may be found on our Website,~~www.tylertech.com~~www.tylertech.com..

	•		An Audit Committee Charter, which requires, among other things, that the committee be comprised solely of independent directors (as set forth in the Independence Standards), at least one of who will qualify as an “audit committee financial expert” as set forth in Item 401(h) of the SEC’s Regulation S-K. A copy of our Audit Committee Charter may be found on our Website,~~www.tylertech.com~~www.tylertech.com..

	•		A Compensation Committee Charter, which requires, among other things, that the committee be comprised solely of independent directors and sets forth the guidelines for determining executive compensation. A copy of our Compensation Committee Charter may be found on our Website,~~www.tylertech.com~~www.tylertech.com..

	•		A Nominating and Governance Committee Charter, which requires, among other things, that the committee be comprised of at least three independent directors who are responsible for recommending candidates for

accountability for adherence to the policy.

A copy of our Code of Business Conduct and Ethics may be found on our Website,www.tylertech.com, or will be furnished, without charge, upon written request at our principal executive offices. Any future amendments or waivers related to our Code of Business Conduct and Ethics will be promptly posted on our Website.

Board Independence

Our board of directors has determined, after considering all of the relevant facts and circumstances, that each of the non-employee directors standing for re-election as director (Messrs. Brattain, King, Reeves, and Richards) has no material relationship with us (either directly or as a partner, shareholder, or officer of an organization that has a relationship with us) and is “independent” within the meaning of the New York Stock Exchange director independence standards, as currently in effect and as may be changed from time to time. As a result, if each of the nominees for director is elected at the annual meeting, our board of directors will be comprised of a majority of “independent” directors as required by the New York Stock Exchange. Furthermore, our board of directors has determined that each of the members of the Audit Committee, Compensation Committee, and Nominating and Governance Committee has no material relationship with us (either directly or as a partner, shareholder, or officer of an organization that has a relationship with us) and is “independent” within the meaning of our director independence standards.

Committees and Meetings of the Board of Directors

The board met ~~four~~seven times during ~~2007.~~2008. Each board member participated in at least 75% of all board and committee meetings held during the portion of ~~2007~~2008 that he served as a director and/or committee member. In addition, our board of directors has established a policy under which our non-management members will meet at regularly scheduled (and in any event at least twice per fiscal year) executive sessions without management present and with Mr. G. Stuart Reeves presiding over such meetings. During ~~2007,~~2008, the standing committees of our board of directors were the Audit Committee, Compensation Committee, Executive Committee, and Nominating and Governance Committee.

Audit Committee.During ~~2007,~~2008, the Audit Committee was comprised of Donald R. Brattain (Chairman), J. Luther King, Jr., and G. Stuart Reeves, each of whom is “independent” as defined above. The Audit Committee’s duties include:

	•		considering the independence of our independent auditors before we engage them;

	•		reviewing with the independent auditors the fee, scope, and timing of the audit;

	•		reviewing the completed audit with the independent auditors regarding any significant accounting adjustments, recommendations for improving internal controls, appropriateness of accounting policies,

directors, but may not commit to an expenditure in excess of $5,000,000 without full board approval. The Executive Committee meets periodically throughout the year.

Nominating and Governance Committee.During ~~2007,~~2008, the Nominating and Governance Committee was comprised of G. Stuart Reeves (Chairman), Donald R. Brattain, and Michael D. Richards. The Nominating and Governance Committee’s duties include:

	•		identifying and recommending candidates for election to our board of directors;

	•		periodically reviewing the appropriate skills and characteristics required of board members in the context of the current make-up of our board; and

	•		monitoring adherence to our “Corporate Governance Guidelines”.

The Nominating and Governance Committee met once during ~~2007.~~2008.

Audit Committee Financial Expert

Our board of directors determined that each of Donald R. Brattain and J. Luther King, Jr., current chairman and member of the Audit Committee, respectively, possesses the attributes necessary to qualify as an “audit committee financial expert” as set forth in Item 401(h) of the SEC’s Regulation S-K.

Pre-Approval Policies and Procedures for Audit and Non-Audit Services

The Audit Committee Charter requires that the Audit Committee pre-approve all of the audit and non-audit services performed by our independent auditors. The purpose of these pre-approval procedures is to ensure that the provision of services by our independent auditors does not impair their independence. Each year, the Audit Committee receives fee estimates from our independent auditors for each category of services to be performed by the independent auditors during the upcoming fiscal reporting year. These categories of services include Audit Services, Audit-Related Services, Tax Services, and All Other Services. Upon review of the types of services to be performed and the estimated fees related thereto, the Audit Committee will determine which services and fees should be pre-approved, which pre-approval will be in effect for a period of twelve months. The Audit Committee may periodically review the list of pre-approved services based on subsequent determinations. Unless a type of service to be provided by the independent auditor has received general pre-approval, it will require specific pre-approval by the Audit Committee (or delegated member of the Audit Committee) prior to the performance of such service. Any proposed services exceeding the pre-approved cost levels will also require specific pre-approval by the Audit Committee (or delegated member of the Audit Committee).

	•		willingness to represent the best interests of all stockholders and objectively appraise management performance; and

	•		involvement only in activities or interests that do not conflict with the director’s responsibilities to Tyler or our stockholders.

The Nominating and Governance Committee may, in the exercise of its discretion, actively solicit nominee candidates; however, nominee recommendations submitted by other directors or stockholders will also be considered as described below.

The Nominating and Governance Committee will consider qualified nominees recommended by stockholders who may submit recommendations to the committee in care of our Corporate Secretary at our corporate headquarters, 5949 Sherry Lane, Suite 1400, Dallas, Texas 75225. To be considered by the Nominating and Governance Committee, stockholder nominations must be submitted in accordance with our bylaws and must be accompanied by a description of the qualifications of the proposed candidate and a written statement from the proposed candidate that he or she is willing to be nominated and desires to serve, if elected. Nominees for director who are recommended by our stockholders will be evaluated in the same manner as any other nominee for director.

Nominations by stockholders may also be made at an annual meeting of stockholders in the manner provided in our bylaws. Our bylaws require that a stockholder entitled to vote for the election of directors may make nominations of persons for election to our board at a meeting of stockholders by complying with required notice procedures. Nominations must be received at our corporate headquarters not less than 75 days or more than 85 days before any annual meeting of stockholders. If, however, notice or prior public disclosure of an annual meeting is given or made less than 75 days before the date of the annual meeting, the notice must be received no later than the 10^th day following the date of mailing of the notice of annual meeting or the date of public disclosure of the date of the annual meeting, whichever is earlier. The notice must specify the following:

as to each person the stockholder proposes to nominate for election or re-election as a director:

	•		the name, age, business address, and residence address of the person;

	•		the principal occupation or employment of the person;

	•		the class and number of shares of our capital stock that are beneficially owned by the person; and

	•		any other information relating to the person that is required to be disclosed in solicitations for proxies for election of directors under Regulation 14A of the Exchange Act; and

as to the stockholder giving notice:

Depending on the subject matter, management will:

	•		forward the communication to the director or directors to whom it is addressed (for example, if the communication received deals with our “whistleblower policy” found on our Website,www.tylertech.com, including questions, concerns, or complaints regarding accounting, internal accounting controls, and auditing matters, it will be forwarded by management to the Chairman of the Audit Committee for review);

	•		attempt to handle the inquiry directly (for example, if the communication is a request for information about us or our operations or it is a stock-related matter that does not appear to require direct attention by our board of directors); or

	•		not forward the communication if it is primarily commercial in nature or if it relates to an improper or irrelevant topic.

At each meeting of our board of directors, our Chairman will present a summary of all communications received since the last meeting of the board of directors that were not forwarded and will make those communications available to any director on request.

Director Attendance at Annual Meetings

Directors are not required to attend our annual meetings of stockholders. However, our board of directors typically holds a meeting immediately following the annual meeting of stockholders. Therefore, in most cases, all of our directors will be present at the annual meeting. All of our directors were present at the ~~2007~~2008 annual meeting of stockholders.

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SECURITIES OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth certain information concerning the beneficial ownership of our common stock as of March 17, ~~2008~~2009 by (i) each beneficial owner of more than 5% of our common stock, (ii) each director and nominee, (iii) each “Named Executive Officer” (as defined in the SEC’s Regulation S-K), and (iv) all of our executive officers and directors as a group.

Security Ownership of Directors and Management


				Options													Options
				Exercisable													Exercisable
				Within 60							Percent						Within 60							Percent
Name and Address of Beneficial Owner (1)	Direct (2)			Days (3)		Other (4)			Total		of Class (5)			Direct (2)			Days (3)		Other (4)			Total		of Class (5)

MSD Capital, L.P. 645 Fifth Avenue, 21st Floor New York, NY 10022		4,049,923	(6)		—		—			4,049,923		10.7	%

Noonday Asset Management LP 227 West Trade Street, Suite 2140 Charlotte, NC 28202		3,801,400	(7)		—		—			3,801,400		10.0	%
MSD Capital, L.P.															4,049,923	(6)		—		—			4,049,923		11.5	%
645 Fifth Avenue, 21st Floor
New York, NY 10022

Brown Brothers Harriman and Company		2,980,100	(8)		—		—			2,980,100		7.9	%		3,485,013	(7)		—		—			3,485,013		9.9	%
140 Broadway New York City, NY 10005
140 Broadway
New York City, NY 10005

Barclays PLC															—			—		2,359,357	(8)		2,359,357		6.7	%
400 Howard Street
San Francisco, CA 94105

Vaughn Nelson Investment Management, L.P.															—			—		2,292,609	(9)		2,292,609		6.5	%
600 Travis Street, Suite 6300
Houston, TX 77002

Artisan Partners Limited Partnership															—			—		1,800,800	(10)		1,800,800		5.1	%
875 East Wisconsin Avenue, Suite 800
Milwaukee, WI 53202

Directors and Nominees

Donald R. Brattain		28,500			25,000		—			53,500		*			28,500			33,333		—			61,833		*
J. Luther King, Jr.		32,000			25,000		187,300	(9)		244,300		*			32,000			33,333		187,300	(11)		252,633		*
G. Stuart Reeves		65,000			115,000		—			180,000		*			65,000			123,333		—			188,333		*
Michael D. Richards		40,000			35,000		—			75,000		*			40,000			43,333		—			83,333		*
John M. Yeaman		184,350			566,950		7,300	(10)		758,600		2.0	%		276,300			469,000		7,300	(12)		752,600		2.1	%

Named Executive Officers

John S. Marr, Jr.		1,206,699			446,000		192,277	(11)		1,844,976		4.8	%		1,027,092			664,000		192,277	(13)		1,883,369		5.2	%
Dustin R. Womble		171,995			248,628		—			420,623		1.1	%		174,301			343,628		—			517,929		1.5	%
Brian K. Miller		23,072			75,000		7,300	(12)		105,372		*			27,504			105,000		7,300	(14)		139,804		*
H. Lynn Moore, Jr.		66,667			68,333		—			135,000		*			80,000			110,000		—			190,000		*

All directors, nominees and executive officers as a group (9 persons)		1,818,283			1,604,911		394,177			3,817,371		9.6	%		1,750,697			1,924,960		394,177			4,069,834		10.9	%


(5)		Based on ~~37,981,782~~35,252,630 shares of our common stock issued and outstanding at March 17, ~~2008.~~2009. Each stockholder’s percentage is calculated by dividing (a) the number of shares beneficially owned by (b) the sum of (i) ~~37,981,782~~35,252,630 plus (ii) the number of shares such owner has the right to acquire within sixty days.

(6)		Based on information reported by MSD Capital, L.P. on a Schedule 13G that was filed with the SEC on or about February 3, 2006.

(7)		Based on information reported by ~~Noonday Asset Management, L.P. on a Schedule 13G that was filed with the SEC on or about January 29, 2008.~~

~~(8)~~		~~Based on information reported by~~ Brown Brothers Harriman and Company on a Schedule 13G that was filed with the SEC on or about February ~~7, 2008.~~17, 2009.

(8)		Barclays PLC is deemed to have beneficial ownership of these shares. The shares are held by Barclays’ affiliates, Barclays Global Investors, NA., Barclays Global Fund Advisors and Barclays Global Investors, LTD and are based on information reported on a Schedule 13G that was filed with the SEC on or about February 5, 2009. Barclays PLC beneficial ownership includes 1,959,389 shares for which they have sole voting and sole investment power and 399,968 shares for which they have sole investment power.

(9)		Based on information reported by Vaughn Nelson Investment Management, L.P., on a Schedule 13G that was filed with the SEC on or about February 17, 2009. Vaughn Nelson Investment Management, L.P. beneficial ownership includes 1,603,425 shares for which they have sole voting and sole investment power, 473,609 shares for which they have shared investment power and 215,575 shares for which they have sole investment power.

(10)		Based on information reported by Artisan Partners Limited Partnership on a Schedule 13F that was filed with the SEC on or about February 13, 2009. Artisan Partners Limited Partnership’s beneficial ownership includes 1,652,400 shares for which they have shared voting and sole investment power and 148,400 shares for which they have sole investment power.

(11)		Includes the beneficial ownership of ~~(a)~~ 180,000 shares of common stock held in an ~~investment partnership in which~~entity controlled by Mr. King ~~is the general partner~~ and he is deemed to have voting and investment power, and ~~(b)~~ 7,300 shares of common stock owned by a foundation in which Mr. King is deemed to have shared voting power.

~~(10)~~(12)		Common stock owned by a foundation in which Mr. Yeaman is deemed to have shared voting power.

~~(11)~~(13)		Common stock held by a partnership in which Mr. Marr is the general partner and has sole voting and investment power.

~~(12)~~(14)		Common stock owned by a foundation in which Mr. Miller is deemed to have shared voting power.

COMPENSATION DISCUSSION AND ANALYSIS

Overview

2008 was a year of exceptional performance for Tyler Technologies (the “Company”), particularly in light of the global economic environment and the crisis in the financial markets. The Company’s revenues grew 21% to $265 million, with software-related revenues up 25%. Software license revenue growth of 18% was very solid, even as our software-as-a-service model continued to gain traction, resulting in a 38% increase in subscription revenues. For the year, our gross margin improved by 300 basis points and the Company posted non-GAAP operating income of $37.1 million, up 39% over 2007. Non-GAAP earnings per share rose 45% to $0.61. Free cash flow (excluding office facility investments) increased 40% over 2007 to $42.3 million (cash provided by operating activities of $47.8 million minus capital expenditures, excluding capital expenditures for office facilities, of $5.5 million). The Company’s common stock price at December 31, 2008, was $11.98, down 7% from $12.89 at December 31, 2007. By comparison, the Standard and Poor’s 500 declined 37% in 2008.

GAAP operating profit was $28.1 million and GAAP earnings per share was $0.38. Non-GAAP earnings per share of $0.61 and non-GAAP operating profit of $37.1 million excludes a non-cash legal settlement related to warrants charge of $9.0 million, which was not tax deductible. On June 27, 2008, we settled outstanding litigation related to two Stock Purchase Warrants (the “Warrants”) owned by Bank of America, N. A. (“BANA”). The Warrants entitled BANA to acquire 1.6 million shares of Tyler common stock at an exercise price of $2.50 per share. Following court-ordered mediation, in July 2008, BANA paid us $2.0 million and we issued to BANA 801,883 restricted shares of Tyler common stock. We excluded this non-cash charge from non-GAAP measures because it was a non-cash settlement unrelated to the Company’s core operations, and we believe this settlement actually increased shareholder value by diminishing the impact of the warrants on future diluted earnings per share.

Executive Summary

The Compensation Committee is responsible for reviewing, and approving the design and overseeing the administration of our executive compensation program.

The primary objectives of our executive compensation program are ~~to attract and employ outstanding management in order to obtain outstanding results,~~ to:

	•		attract and employ outstanding management in order to obtain outstanding results;

	•		provide a strong link between annual and long-term cash and stock incentives to the achievement of measurable corporate performance objectives; and

	•		align executive incentives with stockholder value.

To achieve these objectives, the executive compensation program relies on the following elements of total compensation:


	Form of
Element	Compensation	Purpose	Metric

Base salary	Cash	Provide competitive, fixed compensation to attract and retain exceptional executive talent	Salaries are set each year based on the executive’s position and responsibilities

Incentive cash compensation under the bonus plan	Cash	Create a strong financial incentive for achieving or exceeding annual financial goals	Achieving earnings per share goals

Equity-based compensation	Stock options	Create a strong financial incentive for creating shareholder value and encourage a significant equity stake in the Company	Discretionary but set each year based on the person’s position and responsibilities

Our executive compensation program is designed primarily to incentivize and reward the achievement of ~~measurable corporate performance~~both short-term and long-term objectives and ~~to align executive incentives with stockholder~~the creation of shareholder value. To ~~attract and retain high-level individuals,~~achieve these objectives we may pay above-median compensation or provide stock ownership and stock option incentives to our executive officers. Our Compensation Committee has the responsibility for final approval for all compensation to our executive officers and directors, including the duty to ensure that compensation paid to executive officers does not exceed reasonable amounts and is based on objective standards. The Compensation Committee approves or disapproves the recommendations of management regarding compensation according to the guidelines set forth below. The specific duties and responsibilities of the Compensation Committee are set forth in the Compensation Committee Charter.

We use a mix of short-term compensation (base salaries and annual cash bonuses) and long-term ~~compensation~~incentives (stock options) to provide a total compensation structure that is designed to reward outstanding performance and provide cash ~~incentives~~compensation at or slightly above the median for our industry. ~~From time~~In setting the mix between the different elements of compensation, we do not target specific allocations, but generally weight total target compensation more heavily toward incentive compensation, which comprises both cash and equity. Base salary and cash incentives are intended to ~~time, salaries,~~reward short-term objectives, while equity incentives, comprised of stock options, are intended to reward achievement of long-term objectives through time-based vesting periods. Our bonus plan is based on annual earnings per share performance metrics, with similar benefits for overachievement and consequences for underachievement, with bonuses paid soon after the fiscal year ends. Stock options to our executive officers vest over a period of five years, thereby providing a long-term incentive. Our allocations reflect our philosophy that a significant portion of our executive officers’ compensation should be performance-based and ~~other~~therefore at risk depending on the Company’s performance. Through the use of stock options, a significant portion of potential compensation is tied directly to stock price appreciation, further aligning the interest of our executive officers ~~are evaluated by reference to nationwide comparisons. A substantial portion of each~~with those of our stockholders.

Our Compensation Committee is responsible for determining and approving executive ~~officer’s potential total~~officer compensation iseach year. The Compensation Committee, using its judgment, may exercise discretion in ~~the form of bonuses~~granting additional bonus amounts and ~~options. Annual bonuses vary significantly~~stock option awards as it deems appropriate. These adjustments may be based on ~~our financial results,~~subjective factors such as the ~~achievement~~Compensation Committee’s assessment of ~~strategic objectives, extraordinary individual achievement,~~external factors, including general economic and ~~each individual’s contribution toward our performance.~~market conditions, the executive’s assumption of additional responsibilities, the degree of difficulty of a particular assignment, and the executive’s experience, tenure and future prospects with the Company.

Role of the Chief Executive ~~Compensation Components~~Officer

~~Our compensation program consists of:~~

	•		~~base salary;~~

	•		~~annual cash bonus program; and~~

	•		~~long-term incentive awards in the form of stock options.~~

~~Base Salary~~

Base salary is established based on each executive officer’s experience, skill, knowledge, and responsibilities, referring also to market data. The Compensation Committee approved base salaries for 2007 after considering a number of factors, including:

	•		~~individual performance of the executive;~~

	•		~~internal review of the executive’s compensation, both individually and relative to other officers;~~

	•		~~the base salary of each executive officer in prior years; and~~

	•		~~market data of base salary information.~~

The Compensation Committee ~~does not assign relative weight or rankings to these factors, but instead makes a subjective determination based upon~~determines the ~~consideration of all of these factors. Salary levels are typically considered annually as part~~compensation of our named executive officers, including the chief executive officer. In February 2008, our Chief Executive Officer, John S. Marr, Jr., provided the Compensation Committee with recommendations for 2008 base salary increases, annual bonus performance targets and related minimum and maximum bonus payout potentials and long-term incentives (stock option awards) for each executive, including Mr. Marr. His recommendations were based on his review ~~process as well as upon~~of internal pay relationships and consistency, the executive’s performance and experience, level of responsibility, changes in responsibilities, retention risk and market compensation survey data provided by the Company’s Human Resources department. Bonus payout potentials were based on the level of earnings per share achieved compared to earnings per share goals developed in connection with our annual operating plan at the beginning of the 2008 fiscal year. The Chairman of the Board attended the Compensation Committee meeting in February 2008 and presented Mr. Marr’s recommendations for 2008 compensation packages to the Compensation Committee and participated in the Committee’s discussion of executive compensation. Mr. Marr did not attend any Compensation Committee meetings in 2008.

In February 2009, Mr. Marr attended the meeting of the Compensation Committee and participated in a ~~promotion or other change in job responsibility.~~discussion of senior management’s philosophy regarding executive compensation and short and long-term objectives. Mr. Marr also discussed the compensation mix of base salary, short-term incentive compensation

1615

(annual bonus) and long-term incentive compensation (stock options), as well as metrics that the Company believes are important in evaluating Company performance, including growth in revenue, free cash flow and earnings per share. He reviewed the Company’s five year history as well as projected 2009 growth rate for each performance metric. In addition, Mr. Marr reviewed the Company’s 2008 financial performance. Mr. Marr made recommendations for 2009 salary adjustments for the executive officers, including Mr. Marr, based on the Company’s 2008 performance and his recommendations were consistent with company-wide guidelines for all employee salary adjustments. In addition, Mr. Marr also reviewed internal pay relationships and consistency, the executive’s performance and experience, level of responsibility, changes in responsibilities, retention risk and market compensation survey data provided by the Company’s Human Resources department in determining his salary adjustment recommendations. Mr. Marr was excused from the meeting after his presentation and did not participate in the Compensation Committee’s discussion of executive compensation for 2009. The Compensation Committee has the authority to accept, reject or modify the chief executive officer’s recommendations. The Compensation Committee accepted the chief executive officer’s recommendations for 2009.

Analysis of Compensation Elements

The principal elements of our executive compensation program in 2008 are described below:

Base Salary. Base salary represents the single, fixed component of the three principal elements of our executive compensation program and is intended to provide a baseline minimum amount of annual compensation for our executives. In February 2008, the Compensation Committee approved the following increases to the executive officers’ 2008 annual base salary, based largely on the chief executive officer’s recommendation and consistent with company-wide guidelines for all employees:


Name	Increase			2007 Salary		2008 Salary
John S. Marr, Jr.		4	%	$	380,000	$	395,000
Dustin R. Womble		4	%	$	320,000	$	333,000
Brian K. Miller		6	%	$	235,000	$	250,000
H. Lynn Moore, Jr.		6	%	$	235,000	$	250,000

The chief executive officer’s recommendations were based on reference to nationwide market surveys and his evaluation of each named executive officer’s performance.

For fiscal year 2009, the Compensation Committee approved a 3% salary increase for all four named executive officers, which was consistent with company-wide guidelines for all employees. The Compensation Committee also reviewed nationwide market survey information in a summary report and considered current economic conditions in determining salary adjustments. The market survey included comparisons to similar sized companies that were public companies in the technology and biomedical industries with annual revenues between $250 million and $500 million. These surveys indicated base salary for the executive officers was slightly under the median and total targeted cash compensation (base salary and bonus) was slightly above the median. We do not adhere to strict formulas or rely to any significant extent on market survey data to determine total compensation or the mix of compensation elements. Market survey data is not used as a benchmark per se, but rather is referred to by the Compensation Committee as a reasonableness check. This flexibility is important in designing compensation arrangements to attract new executives in the highly-competitive, rapidly changing market in which we compete.

Annual Cash ~~Bonus Program~~

Bonus. A significant portion of ~~the~~each executive’s annual compensation is in the form of a cash bonus. We believe that some meaningful portion of the executive’s compensation should be contingent upon successful achievement of our corporate objectives. ~~Therefore, 2007~~Our 2008 annual cash bonuses for executives ~~are~~were based on the level of attainment of ~~certain corporate~~earnings per share objectives and did not include any individual performance goals. In February 2008, the Compensation Committee approved the 2008 Bonus Plan recommended by management, which was based on achievement of earnings per share goals established in connection with our annual operating plan. The 2008 Bonus Plan was amended in July 2008 to exclude the earnings per share impact of $0.23 for a non-cash legal settlement charge pertaining to Stock Purchase Warrants recorded in June 2008. The Compensation Committee elected to exclude this charge from the earnings per share calculation because it was a non-cash settlement unrelated to the Company’s core operations and ~~approved~~the members of the Committee believed this settlement actually increased shareholder value by diminishing the impact of the warrants on future diluted earnings per share. In addition,

earnings per share goals were initially established with the expectation that any potential legal settlement in connection with this matter would be recorded as an equity transaction. The 2008 Bonus Plan for the executive officers was similar to other corporate employees’ incentive compensation ~~committee.~~plans and tied to similar goals. The main difference was the size of the target incentive award in relation to base salary. Target incentives are determined based on experience, level of responsibility and retention risk. The 2008 Bonus Plan provided incentive compensation potential for the executive officers as well as our corporate employees at the following levels:

	•		170% of target based on achieving 146% of earnings per share goal

	•		150% of target based on achieving 135% of earnings per share goal

	•		130% of target based on achieving 123% of earnings per share goal

	•		115% of target based on achieving 112% of earnings per share goal

	•		100% of target based on achieving 100% of earnings per share goal

	•		85% of target based on achieving 88% of earnings per share goal

	•		70% of target based on achieving 77% of earnings per share goal

	•		50% of target based on achieving 65% of earnings per share goal

	•		35% of target based on achieving 54% of earnings per share goal

	•		25% of target based on achieving 42% of earnings per share goal

	•		0% of target based on achieving less than 42% of earnings per share goal

~~Awards~~In order to earn 100% of ~~annual bonuses are~~the target bonus for 2008, the Company had to achieve the earnings per share goal of $0.26 to $0.29, which was based ~~upon targets~~on the Company’s operating plan and ~~maximum~~was generally in a range consistent with the Company’s initial earnings guidance publically issued early in the year, adjusted for a $0.23 per share non-cash legal settlement charge incurred in 2008. In order to achieve the threshold bonus ~~payouts set by~~of 25% of target, the ~~compensation committee~~Company had to achieve 42% of the earnings per share goal, a range of $0.11 to $0.14, adjusted for a $0.23 per share non-cash legal settlement charge incurred in 2008. The operating plan is developed from the “bottom-up” and ~~approved by~~considers a wide range of factors that impact the ~~board~~Company’s results including the general economic environment, the Company’s market, competitive landscape, Company initiatives and investments and various other risks and opportunities. As of ~~directors at~~ the beginning of ~~each fiscal year. The performance period for cash bonuses is the calendar year, and payouts are made in February and March following~~ the plan ~~year. Target bonus, as a percentage~~year we believe achievement of ~~base salary,~~the plan is set based on each executive’s position within the organization as well as the executive’s overall compensation package. In addition, the compensation committee may exercise discretion and take into account individual performance in determining awards.generally considered to be challenging but reasonably possible when all such factors are considered.

The named executive officers participate in a bonus plan that is based on actual fully diluted earnings per share (“EPS”) compared to budgeted fully diluted EPS (“EPS Bonus Plan”). The EPS Bonus Plan is calculated as a percentage of the executive’s base salary, with higher ranked executive officers being compensated at a higher percentage of base salary. Based on the recommendations of management, the compensation committee setCompensation Committee approved target bonus awards for ~~2007~~2008 at 100% of base salary for Mr. Marr and Mr. Womble, and ~~50%~~75% of base salary for Mr. Miller and Mr. Moore. The ~~minimum payout level under the 2007 EPS Bonus Plan was 0% of the~~ target bonus while the maximum payout level was 170% of the target bonus. In addition, 100% of the target bonus was earned if we achieved the approximate EPS issued as earnings guidance to the public at the beginning of the fiscal year. The payout level achieved in 2007 for the EPS Bonus Plan was 100% of the target bonus. In addition, Mr. Marr received a discretionary bonus of $50,000.

~~For 2008,~~difference is based on the ~~recommendations~~executives’ experience, level of ~~management,~~responsibility and retention risk.

For 2009, the ~~compensation committee set~~Compensation Committee elected to leave target bonus awards unchanged at 100% of base salary for Mr. Marr and Mr. Womble; and 75% of base salary for Mr. Miller and Mr. Moore. ~~The minimum payout level under~~In February 2009, the ~~2008 EPS~~Compensation Committee approved a 2009 Bonus Plan ~~is 0% of~~recommended by management, which included incentive compensation potential for the ~~target bonus while~~executive officers as well as corporate employees at the ~~maximum payout level is 170% of the target bonus.~~following levels:

	•		180% of target based on achieving 134% of earnings per share goal

	•		170% of target based on achieving 130% of earnings per share goal

	•		160% of target based on achieving 126% of earnings per share goal

	•		150% of target based on achieving 121% of earnings per share goal

	•		140% of target based on achieving 117% of earnings per share goal

	•		130% of target based on achieving 113% of earnings per share goal

	•		120% of target based on achieving 109% of earnings per share goal

	•		110% of target based on achieving 104% of earnings per share goal

	•		100% of target based on achieving 100% of earnings per share goal

	•		90% of target based on achieving 96% of earnings per share goal

	•		80% of target based on achieving 91% of earnings per share goal

	•		70% of target based on achieving 87% of earnings per share goal

	•		60% of target based on achieving 83% of earnings per share goal

	•		50% of target based on achieving 79% of earnings per share goal

	•		40% of target based on achieving 74% of earnings per share goal

	•		0% of target based on achieving less than 74% of earnings per share goal

In ~~addition,~~order to earn 100% of the target bonus ~~is earned if we~~for 2009, the Company must achieve the ~~approximate EPS issued as~~earnings per share goal, of $0.70 to $0.73, which is based upon the Company’s operating plan for 2009 and is generally in a range consistent with the Company’s initial earnings guidance publically issued in February 2009. In order to achieve the ~~public at~~threshold bonus of 40% of target, the ~~beginning~~Company has to achieve 74% of the ~~fiscal year.~~

~~Stock Options~~earnings per share goal, a range of $0.52 to $0.55. Although the threshold bonus amount of 40% was an increase over the prior year, the required earnings per share goal also increased. The level of earnings required to receive bonuses above and below the target range were determined based on the perceived difficulty of achieving various earnings levels, particularly in light of the challenging economic and market conditions expected in 2009.

Stock Options. To promote long-term performance and as a means of attraction, motivation and retention, we use stock options ~~are awarded~~to compensate executive officers. Equity-based compensation provides a vital link between the long-term results achieved for our stockholders and the rewards provided to executive officers and other associates. Stock options give the executive the right to promote long-term success by aligning executive financial interests with the interests of the stockholder, provide an opportunity for increased equity ownership by executives, and maintain competitive levels of compensation. All awardspurchase at a specified price a specified number of shares of our common stock for a specified period of time (ten years), and the executive can exercise this right as the options vest for the remainder of the term. The executive officers realize value on these options only if our stock price increases and only if they remain employed with us beyond the date their options vest. The options granted to our executives vest 20% each year over a period of five years and have an exercise price equal to fair market value of our common stock on the grant date. The ten year option term and five year vesting period for stock option grants is consistent with stock option grants made to all Company employees.

We believe stock options, as opposed to other forms of equity awards like restricted stock, are consistent with our philosophy of linking compensation and stockholder return by giving the executive a significant, long-term interest in our success. When our stock price does not grow, our executives realize little value from this component of their compensation. We believe this is appropriate because our stockholders also would not have benefited significantly from owning our stock.

All stock option awards are granted at regularly scheduled meetings of our board of directors or the Compensation Committee. Stock option awards are made at ~~or above~~ the market price at the time of the ~~award. Stock option grants~~award and are subject to time-based vesting as determined by the Compensation Committee. We have a policy of granting stock option awards in two semi-annual tranches, generally on June 15 and December 15.

Our philosophy with regard to granting stock options is to:

	•		monitor the overall number and value of stock option awards;

	•		focus stock option awards on a relatively small number of key employees determined to have a direct impact on our ability to achieve our long-term goals, with the largest stock option grants awarded to our top performers and individuals with the greatest responsibilities and the potential to drive long-term share price appreciation; and

	•		manage the overall net stock dilution (i.e., manage the total number of shares outstanding by balancing the dilutive effect of granting stock options with repurchases of our common stock which reduce our shares outstanding).

Other factors the Compensation Committee considers in determining the size of option grants to our executive officers includes our potential future financial performance, the executive officer’s experience and level of responsibility and our retention risk for the executive officer. The Compensation Committee does not have a set formula by which it determines which of these factors is more or less important, and the specific factors used and their weighting may vary among individual executives. The Compensation Committee also periodically reviews RiskMetrics Group guidelines as to the appropriate level of stock option awards granted for companies of similar characteristics. In addition, stock option awards are granted for promotions, new hires, an increase in responsibility and in connection with employment agreements.

In 2008, the size of the options granted to Mr. Marr and Mr. Womble (in number of shares), excluding stock options granted in connection with employment agreement renewals in 2008, remained the same as the option grants made to these executives in 2007. The Compensation Committee increased the size of annual recurring stock options awarded to Mr. Miller and Mr. Moore in recognition of their promotion to executive vice president in February 2008.


Name	2007		2008
John S. Marr, Jr.		60,000		60,000
Dustin R. Womble		50,000		50,000
Brian K. Miller		30,000		40,000
H. Lynn Moore, Jr.		30,000		40,000

Stock options grants in 2007 exclude the stock options granted on March 2, 2007 because these options were related to 2006 financial performance. In 2008, we adjusted the timing of awarding stock options to semi-annual tranches, generally on June 15 and December 15.

Stock option ~~award levels~~awards are ~~determined~~made annually to approximately 2 – 4% of all employees. Excluding stock options granted in connection with employment agreement renewals, the executive officers were awarded approximately 30% of the total stock options granted to employees in 2008. Stock option awards were allocated to the executive officers based on the Compensation Committee’s consideration of their experience and level of responsibility. In 2008, the percentage of total stock option awards for our annually recurring grants to executives, excluding stock options granted in connection with employment agreement renewals, was as follows:


	Percentage of total
	annually recurring
Name	stock option awards
John S. Marr, Jr.		9.8	%
Dustin R. Womble		8.1	%
Brian K. Miller		6.5	%
H. Lynn Moore, Jr.		6.5	%

The Compensation Committee believed the size of each of our named executive ~~responsibilities~~officer’s option grants in 2008 was sufficient to retain and motivate these executives. See also “Compensation Mix” below for further discussion on stock option grants. The Compensation Committee has not yet determined 2009 stock option awards.

In 2008, the percentage of total stock option awards to executives, including stock options granted in connection with employment agreement renewals, was as follows:


	Percentage of total
Name	stock option awards
John S. Marr, Jr.		26.3	%
Dustin R. Womble		17.1	%
Brian K. Miller		10.9	%
H. Lynn Moore, Jr.		10.9	%

In February 2008, we entered into new five-year employment agreements with John S. Marr, Jr., Dustin R. Womble, Brian K. Miller and H. Lynn Moore, Jr. Under the terms of the agreements, Messrs. Marr, Womble, Miller and Moore were granted options to purchase respectively 400,000, 250,000, 150,000 and 150,000 shares of Tyler’s common stock. These grants were in addition to our annual grants and will not be recurring. See also “Employment Contracts” below for further discussion on these stock option awards.

Compensation Mix

The key elements of executive compensation, base salary, cash incentives and stock option awards, are designed with the objective of putting a substantial portion of executive pay at risk. While salaries are intended to be assured, the other two elements only have value if earnings per share goals are met and if the value of the Company increases through common stock price appreciation. We believe that having a larger measure of key pay elements at risk motivates and challenges our executives to achieve positive returns for our stockholders. The proportion of pay at risk in 2008 was as follows:


				Compensation at risk
Name	Base Salary			Bonus			Stock Options
John S. Marr, Jr.		22	%		37	%		41	%
Dustin R. Womble		22	%		37	%		41	%
Brian K. Miller		29	%		37	%		34	%
H. Lynn Moore, Jr.		29	%		37	%		34	%

The table above depicts the relative mix of pay elements for 2008, made up of base salary earned, annual bonus cash incentive earned in 2008 (paid in 2009) and the amounts expensed by us during 2008 for stock option grants made to the executive officers. See “Summary Compensation Table” for more detail.

In determining total compensation packages for the executive officers, the Compensation Committee discussed in detail the following provided by management regarding the Company’s compensation philosophy:

	•		the Company’s 2008 financial performance;

	•		terms of employment agreements; and

	•		the executive officer’s annual incentive compensation plans that had been previously approved.

In addition to the factors listed above the Compensation Committee also considered the following in determining the chief executive officer’s compensation package for 2008:

	•		management’s goal of year-over-year improved earnings per share growth;

	•		management’s focus on strengthening the Company’s balance sheet;

	•		management’s strategic mission to increase profitability through sustained internal growth, including software-related revenues;

	•		management’s directive to develop and deploy premier technology through continued investment;

	•		Mr. Marr’s contribution to the achievement of each of these strategic initiatives; and

	•		reference to levels of compensation of other chief executive officers of similar sized, public held companies and in similar industries.

The Compensation Committee considers the overall compensation paid to our executive officers for 2008 appropriate for several reasons, including the non-GAAP earnings per share growth of 45%, free cash flow from operations excluding office facility investments increase of 40% and software-related revenue growth of 25%.

Employment Contracts

In February 2008, we entered into new five-year employment agreements with John S. Marr, Jr., Dustin R. Womble, Brian K. Miller and H. Lynn Moore, Jr. Under the terms of the agreements, Messrs. Marr, Womble, Miller and Moore will receive minimum base salaries of $395,000, $333,000, $250,000 and $250,000, respectively. They also participate in performance bonus or incentive compensation plans made available to comparable level employees of the Company and receive all employee benefits and perquisites normally offered to the Company’s executive employees. Each agreement provides for a severance payment equal to each executive’s base salary and target bonus and a non-compete payment equal to his base salary and target bonus upon the executive’s termination of employment without cause, or upon the executives’ termination of employment upon a change-in-control. A change-in-control is defined as a merger or consolidation of the Company into an unaffiliated entity, the dissolution or liquidation of the Company, the sale of all or substantially all of the assets of the Company, the acquisition by any person, entity or group of more than 50% of the voting stock of the Company, or a change in the majority of the Company’s Board of Directors that was not approved by the ~~Compensation Committee. Newly hired or promoted executives who are eligible~~then existing directors. In addition to ~~receive options are awarded such options on~~the severance payment and the non-compete payment, each agreement also provides that we will continue to provide medical benefits for twelve months after the date of ~~hire~~termination. In the event of a change-in-control, all unvested options previously granted to Messrs. Marr, Womble, Miller and Moore would immediately become vested and exercisable.

In addition, the employment agreements provide that Messrs. Marr, Womble, Miller and Moore be granted options to purchase respectively 400,000, 250,000, 150,000 and 150,000 shares of Tyler’s common stock. The options shall vest in equal installments on the first, second, third, fourth and fifth anniversary of the date of grant and shall be subject to terms and conditions of the Tyler Technologies, Inc. Stock Option Plan and the Company’s standard option agreement. The options were granted at an exercise price equal to the closing market price of Tyler’s common stock as reported by the New York Stock Exchange as of the effective date of the grant (May 15, 2008).

We developed a standard severance package for our executives, which we believe is necessary to attract and retain qualified executive officers and to minimize the distraction caused by a potential transaction and reduce the risk that an executive officer departs the Company before an acquisition is consummated. We believe that a pre-existing plan will allow our executive officers to focus on continuing normal business operations and on the success of a potential business combination, rather than on seeking alternative employment. We further believe that our employment agreements ensure stability and will enable our executive officers to maintain a balanced perspective in making overall business decisions during a potentially uncertain period. The Compensation Committee applied their best judgment after considering each executive’s overall compensation package, the rapidly changing environment for technology-based companies as well as the average time required to obtain employment for equivalent job duties in determining the stock option awards granted and the amount of payment made to executives in the event of termination without cause or ~~promotion.~~a change-in-control.

Other Compensation

Our executive officers previously entered into employment agreements which provide certain benefits and perquisites including severance pay that may be triggered as a result of the termination without cause of the executive officer’s employment or by a change in control. All of our executive officers are also eligible for benefits offered to employees generally, including life, health, disability and dental insurance, our 401(K) plan, and our Employee Stock Purchase Plan.

Incentive Options

No taxable income is generally realized by the optionee upon the grant or exercise of an incentive option. If shares issued to an optionee pursuant to the exercise of an incentive option are sold or transferred after two years from the date of grant and after one year from the date of exercise, then upon sale of such shares, any amount realized in excess of the incentive option price will be taxed to the optionee as a long-term capital gain, any loss sustained will be a long-term capital loss, and we will not be entitled to any deduction for federal income tax purposes. The exercise of an incentive option will give rise to an item of tax preference that may result in alternative minimum tax liability for the optionee.

If shares acquired upon the exercise of an incentive option are disposed of prior to the expiration of the two-year and one-year holding periods described above, generally the optionee will realize ordinary income in the year of disposition in an amount equal to the excess, if any, of the fair market value of the shares at exercise over the option price and we will be entitled to deduct such amount. Special rules will apply where all or a portion of the exercise price of the stock option is paid by tendering shares.

Non-Qualified Options

We also grant to executives non-qualified stock options that do not qualify for the tax treatment described above. No income is realized by the optionee at the time the option is granted. Generally, at exercise, ordinary income is realized by the optionee in an amount equal to the difference between the option price and the fair market value of the shares on the date of exercise, and we receive a tax deduction for the same amount. At disposition, appreciation or depreciation after the date of exercise is treated as either short-term or long-term capital gain or loss depending on how long the shares have been held. Special rules apply where all or a portion of the exercise price of the non-qualified option is paid by tendering shares. Upon exercise, the optionee will also be subject to Social Security taxes on the excess of the fair market value over the exercise price of the option.

Report of the Compensation Committee

The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K with management and, based on such review and discussions, the Compensation Committee recommended to the board of directors, and the board of directors has approved, that the Compensation Discussion and Analysis be included in this proxy statement.

This report is submitted by the Compensation Committee.

Michael D. Richards, Chairman
J. Luther King, Jr.
G. Stuart Reeves

1822

EXECUTIVE COMPENSATION

Summary Compensation Table

The following table sets forth certain information regarding the compensation paid to our named executive officers for all of the services they rendered to us during ~~2007.~~2008, 2007 and 2006.


													Change in
													Pension Value																	Change in
													and																	Pension Value
													Nonqualified																	and
											Non-Equity		Deferred															Non-Equity		Nonqualified
							Stock		Option		Incentive Plan		Compensation		All Other										Stock	Option		Incentive Plan		Deferred	All Other
			Salary		Bonus		Awards		Awards		Compensation		Earnings		Compensation			Total				Salary		Bonus	Awards	Awards		Compensation		Compensation	Compensation			Total
Name and Principal Position	Year		($)		($)		($)		($) (1)		($)		($)		($)			($)		Year		($)		($)	($)	($) (1)		($) (2)		Earnings ($)	($) (3)			($)
John S. Marr, Jr.		2007	$	380,000	$	430,000	$	—	$	465,574	$	—	$	—	$	8,176		$	1,283,750		2008	$	395,000			$	743,558	$	671,500		$	8,301		$	1,818,359
Chief Executive Officer		2006		363,000		450,000		—		400,371		—		—		8,060			1,221,431		2007	$	380,000			$	465,574	$	430,000		$	8,176		$	1,283,750
and President																					2006	$	363,000			$	400,371	$	450,000		$	8,060		$	1,221,431

Dustin R. Womble		2007	$	320,000	$	320,000	$	—	$	388,891	$	—	$	—	$	19,170	(2)	$	1,048,061		2008	$	333,000			$	613,242	$	566,100		$	14,131	(3)	$	1,526,473
Executive Vice		2006		300,000		345,000		—		266,299		—		—		21,791	(2)		933,090		2007	$	320,000			$	388,891	$	320,000		$	19,170	(3)	$	1,048,061
President; Chief Executive Officer of both the Courts and Justice division and INCODE division

President; Chief																					2006	$	300,000			$	266,299	$	345,000		$	21,791	(3)	$	933,090
Executive Officer of both the Courts and Justice division and INCODE division
Brian K. Miller		2007	$	235,000	$	117,500	$	—	$	91,093	$	—	$	—	$	4,668		$	448,261		2008	$	250,000			$	286,332	$	318,750		$	5,940		$	861,022
Executive Vice President,		2006		220,000		126,500		—		56,269		—		—		1,023			403,792		2007	$	235,000			$	91,093	$	117,500		$	4,668		$	448,261
Chief Financial Officer and Treasurer

Chief Financial																					2006	$	220,000			$	56,269	$	126,500		$	1,023		$	403,792
Officer and Treasurer
H. Lynn Moore, Jr.		2007	$	235,000	$	117,500	$	—	$	91,093	$	—	$	—	$	2,224		$	445,817		2008	$	250,000			$	286,332	$	318,750		$	2,376		$	857,458
Executive Vice President,		2006		220,000		126,500		—		56,269		—		—		60			402,829		2007	$	235,000			$	91,093	$	117,500		$	2,224		$	445,817
General Counsel and Secretary
General Counsel and																					2006	$	220,000			$	56,269	$	126,500		$	60		$	402,829
Secretary

Grants of Plan-Based Awards in ~~2007~~2008

The following table sets forth certain information relating to stock option grants to the ~~“Named Executive Officers”~~named executive officers during ~~2007.~~2008.


															All Other		All Other				Grant											All Other	All Other
															Stock		Option				Date Fair											Stock	Option				Grant
															Awards:		Awards:				Value of											Awards:	Awards:				Date Fair
															Number of		Number of		Exercise or		Stock and											Number of	Number of		Exercise or		Value of
			Estimated Future Payouts Under Non-						Estimated Future Payouts Under Equity						Shares of		Securities		Base Price		Option			Estimated Future Payouts Under Non-Equity					Estimated Future Payouts Under Equity			Shares of	Securities		Base Price		Stock and
	Grant		Equity Incentive Plan Awards						Incentive Plan Awards						Stock or		Underlying		of Option		Awards			Incentive Plan Awards (1)					Incentive Plan Awards			Stock or	Underlying		of Option		Option
	Date		Threshold		Target		Maximum		Threshold		Target		Maximum		Units		Options		Awards		(2)		Grant	Threshold	Target		Maximum		Threshold	Target	Maximum	Units	Options		Awards		Awards (3)
Name	(1)		($)		($)		($)		(#)		(#)		(#)		(#)		(#)		($/Sh)		($/Sh)		Date	($)	($)		($)		(#)	(#)	(#)	(#)	(#) (2)		($/Sh)		($/Sh)
John S. Marr, Jr.		3/2/2007	$	—	$	—	$	—		—		—		—		—		30,000	$	13.29	$	6.67	2/24/2008	$ —	$	395,000	$	671,500
		6/15/2007	$	—	$	—	$	—		—		—		—		—		30,000	$	12.26	$	6.25	5/15/2008											400,000	$	15.00	$	7.08
		12/14/2007	$	—	$	—	$	—		—		—		—		—		30,000	$	14.93	$	7.26	6/13/2008											30,000	$	14.98	$	7.10
																							12/15/2008											30,000	$	12.14	$	5.45

Dustin R. Womble		3/2/2007	$	—	$	—	$	—		—		—		—		—		25,000	$	13.29	$	6.67	2/24/2008	$ —	$	333,000	$	566,100
																							5/15/2008											250,000	$	15.00	$	7.08
		6/15/2007	$	—	$	—	$	—		—		—		—		—		25,000	$	12.26	$	6.25	6/13/2008											25,000	$	14.98	$	7.10
		12/14/2007	$	—	$	—	$	—		—		—		—		—		25,000	$	14.93	$	7.26	12/15/2008											25,000	$	12.14	$	5.45

Brian K. Miller		3/2/2007	$	—	$	—	$	—		—		—		—		—		15,000	$	13.29	$	6.67	2/24/2008	$ —	$	187,500	$	318,750
		6/15/2007	$	—	$	—	$	—		—		—		—		—		15,000	$	12.26	$	6.25	5/15/2008											150,000	$	15.00	$	7.08
		12/14/2007	$	—	$	—	$	—		—		—		—		—		15,000	$	14.93	$	7.26	6/13/2008											20,000	$	14.98	$	7.10
																							12/15/2008											20,000	$	12.14	$	5.45

H. Lynn Moore, Jr.		3/2/2007	$	—	$	—	$	—		—		—		—		—		15,000	$	13.29	$	6.67	2/24/2008	$ —	$	187,500	$	318,750
		6/15/2007	$	—	$	—	$	—		—		—		—		—		15,000	$	12.26	$	6.25	5/15/2008											150,000	$	15.00	$	7.08
		12/14/2007	$	—	$	—	$	—		—		—		—		—		15,000	$	14.93	$	7.26	6/13/2008											20,000	$	14.98	$	7.10
																							12/15/2008											20,000	$	12.14	$	5.45

Outstanding Equity Awards at Year-End

The following table shows outstanding equity awards for each of the ~~“Named Executive Officers”~~named executive officers at December 31, ~~2007:~~2008:


											Stock Awards				Option Awards										Stock Awards
	Option Awards											Market	Equity Incentive													Market
					Equity Incentive						Number	Value of	Plan Awards:	Equity Incentive					Equity Incentive							Value of	Equity Incentive	Equity Incentive
	Number of		Number of		Plan Awards:						of Shares	Shares or	Number of	Plan Awards:	Number of		Number of		Plan Awards:						Number of	Shares or	Plan Awards:	Plan Awards:
	Securities		Securities		Number of						or Units of	Units of	Unearned Shares,	Market or Payout	Securities		Securities		Number of						Shares or	Units of	Number of	Market or Payout
	Underlying		Underlying		Securities						Stock	Stock	Units	Value of Unearned	Underlying		Underlying		Securities						Units of	Stock	Unearned Shares,	Value of Unearned
	Unexercised		Unexercised		Underlying						That Have	That Have	or Other	Shares, Units or	Unexercised		Unexercised		Underlying		Option				Stock That	That Have	Units or Other	Shares, Units or
	Options		Options		Unexercised		Option Exercise		Option		Not	Not	Rights That Have	Other Rights That	Options		Options		Unexercised		Exercise		Option		Have Not	Not	Rights That Have	Other Rights That
	(#)		(#)		Unearned Options		Price		Expiration		Vested	Vested	Not Vested	Have Not Vested	(#)		(#)		Unearned Options		Price		Expiration		Vested	Vested	Not Vested	Have Not Vested
Name	Exercisable		Unexercisable		(#)		($)		Date		(#)	($)	(#)	($)	Exercisable		Unexercisable		(#)		($)		Date		(#)	($)	(#)	($)
John S. Marr, Jr.		400,000		100,000		—	$	4.58		7/1/2013						500,000		—		—	$	4.58		7/1/2013
		40,000		60,000		—	$	7.52		7/26/2015						60,000		40,000		—	$	7.52		7/26/2015
		—		30,000		—	$	13.29		3/2/2017						6,000		24,000		—	$	13.29		3/2/2017
		—		30,000		—	$	12.26		6/15/2017						6,000		24,000		—	$	12.26		6/15/2017
		—		30,000		—	$	14.93		12/14/2017						6,000		24,000		—	$	14.93		12/14/2017
																—		400,000		—	$	15.00		5/15/2018
																—		30,000		—	$	14.98		6/13/2018
																—		30,000		—	$	12.14		12/15/2018

Dustin R. Womble		50,000		—		—	$	3.88		4/14/2009						22,014		—		—	$	3.60		3/4/2013
																151,614		—		—	$	4.58		7/1/2013
																60,000		40,000		—	$	7.52		7/26/2015
		22,014		—		—	$	3.60		3/4/2013						40,000		60,000		—	$	11.02		7/26/2016
		111,614		40,000		—	$	4.58		7/1/2013						5,000		20,000		—	$	13.29		3/2/2017
		40,000		60,000		—	$	7.52		7/26/2015						5,000		20,000		—	$	12.26		6/15/2017
		20,000		80,000		—	$	11.02		7/26/2016						5,000		20,000		—	$	14.93		12/14/2017
		—		25,000		—	$	13.29		3/2/2017						—		250,000		—	$	15.00		5/15/2018
		—		25,000		—	$	12.26		6/15/2017						—		25,000		—	$	14.98		6/13/2018
		—		25,000		—	$	14.93		12/14/2017						—		25,000		—	$	12.14		12/15/2018

Brian K. Miller		25,000		—		—	$	3.88		4/14/2009						15,000		—		—	$	1.62		5/8/2011
		15,000		—		—	$	1.62		5/8/2011						48,000		32,000		—	$	7.52		7/26/2015
		32,000		48,000		—	$	7.52		7/26/2015						3,000		12,000		—	$	13.29		3/2/2017
		—		15,000		—	$	13.29		3/2/2017						3,000		12,000		—	$	12.26		6/15/2017
		—		15,000		—	$	12.26		6/15/2017						3,000		12,000		—	$	14.93		12/14/2017
		—		15,000		—	$	14.93		12/14/2017						—		150,000		—	$	15.00		5/15/2018
																—		20,000		—	$	14.98		6/13/2018
																—		20,000		—	$	12.14		12/15/2018

H. Lynn Moore, Jr.		10,000		—		—	$	3.88		4/14/2009						20,000		—		—	$	1.62		5/8/2011
		33,333		—		—	$	1.62		5/8/2011						48,000		32,000		—	$	7.52		7/26/2015
		32,000		48,000		—	$	7.52		7/26/2015						3,000		12,000		—	$	13.29		3/2/2017
		—		15,000		—	$	13.29		3/2/2017						3,000		12,000		—	$	12.26		6/15/2017
		—		15,000		—	$	12.26		6/15/2017						3,000		12,000		—	$	14.93		12/14/2017
		—		15,000		—	$	14.93		12/14/2017						—		150,000		—	$	15.00		5/15/2018
																—		20,000		—	$	14.98		6/13/2018
																—		20,000		—	$	12.14		12/15/2018

~~Employment Contracts~~

Effective February 26, 2008, we entered into five-year employment agreements with John S. Marr, Jr., Dustin R. Womble, Brian K. Miller and H. Lynn Moore, Jr. Under the terms of the agreements, Messrs. Marr, Womble, Miller and Moore will receive minimum base salaries of $395,000, $333,333, $250,000 and $250,000, respectively. They will also participate in performance bonus or incentive compensation plans made available to comparable level employees of Tyler and receive all employee benefits and perquisites normally offered to Tyler’s executive employees. Each agreement provides for a severance payment equal to each named executive’s base salary and target bonus and a non-compete payment equal to his base salary and target bonus upon the executive’s termination of employment for Good Reason (as defined therein), or upon executives’ termination of employment upon a Change in Control (as defined therein). In addition to the severance payment and the non-compete payment each agreement also provides that we will continue to provide medical benefits for twelve months after the date of termination. In the event of a Change in Control, all unvested options previously granted to Messrs. Marr, Womble, Miller and Moore would immediately become vested and exercisable.

In addition, Messrs. Marr, Womble, Miller and Moore were contingently granted options to purchase respectively 400,000, 250,000, 150,000 and 150,000 shares of Tyler’s common stock subject to Tyler’s stockholders approving an amendment to increase the number of shares available for grant under the Option Plan and shall be effective as of the date the Option Plan is so amended. The options shall vest in equal installments on the first, second, third, fourth and fifth anniversary of the date of grant and shall be subject to terms and conditions of the Option Plan and Tyler’s standard option agreement. The options granted shall be issued at an exercise price equal to the closing market price of Tyler’s common stock as reported by the New York Stock Exchange as of the effective date of the grant.


	Option Awards				Stock Awards
	Number of Shares				Number of Shares
	Acquired on		Value Realized on		Acquired on	Value Realized on
	Exercise		Exercise		Vesting	Vesting
Name	(#)		($)		(#)	($)
John S. Marr, Jr.		—	$	—

Dustin R. Womble		50,000	$	534,252

Brian K. Miller		25,000	$	251,125

H. Lynn Moore, Jr.		23,333	$	254,279

Potential Payments under Employment Contracts

The named executive officers would have been eligible to receive the payments set forth in the table below had their employment been terminated on December 31, ~~2007,~~2008, including if a change in control had occurred during fiscal ~~2007. In order to provide the most meaningful disclosure, the table below assumes that the employment contracts entered into as of February 26, 2008 had been in effect as of December 31, 2007.~~year 2008.


											Termination Without Cause				Upon a Change in Control
	Termination Without Cause				Upon a Change in Control						Lump Sum				Lump Sum
	Lump Sum		Continuation of		Lump Sum				Accelerated		Severance and		Continuation of		Severance and		Continuation of		Accelerated
	Severance		Health Care		Severance		Continuation of		Vesting of Stock		Non-Compete		Health Care		Non-Compete		Insurance		Vesting of Stock
Name	Payment		Benefit		Payment		Insurance Benefit		Options		Payment		Benefit		Payment		Benefit		Options

John S. Marr, Jr.	$	1,580,000	$	10,956	$	1,580,000	$	10,956	$	851,652	$	1,580,000	$	12,420	$	1,580,000	$	12,420	$	3,318,372

Dustin R. Womble	$	1,333,000	$	11,041	$	1,333,000	$	11,041	$	1,064,106	$	1,333,000	$	12,193	$	1,333,000	$	12,193	$	2,535,729

Brian K. Miller	$	875,000	$	9,204	$	875,000	$	9,204	$	412,765	$	875,000	$	12,516	$	875,000	$	12,516	$	1,440,105

H. Lynn Moore, Jr.	$	875,000	$	9,120	$	875,000	$	9,120	$	412,765	$	875,000	$	12,420	$	875,000	$	12,420	$	1,440,105

REPORT OF THE AUDIT COMMITTEE

The Audit Committee assists the board of directors in fulfilling its responsibilities for general oversight of the integrity of our financial statements, our compliance with legal and regulatory requirements, the independent auditors’ qualifications and independence, the performance of our independent auditors, the effectiveness of our disclosure controls and of our internal controls over financial reporting, and risk assessment and risk management. The Audit Committee manages the relationship with our independent auditors (who report directly to the Audit Committee). The Audit Committee has the authority to obtain advice and assistance from outside legal, accounting, or other advisors as the Audit Committee deems necessary to carry out its duties and to receive appropriate funding, as determined by the Audit Committee, from the ~~company~~Company for such advice and assistance.

Management has the primary responsibility for our reporting process, including our systems of internal controls, and for preparing our financial statements. In fulfilling its oversight responsibilities, the Audit Committee reviewed with management the audited financial statements contained in the Annual Report, including a detailed discussion of the quality, not just the acceptability, of the accounting principles, the reasonableness of the significant judgments, and the clarity of disclosures in the financial statements.

The Audit Committee meets with the independent auditors, with and without management present, to discuss the overall scope and plans for the audits and the results of their examinations. The Audit Committee reviewed with the independent auditors, who are responsible for expressing an opinion on the conformity of those audited financial statements with accounting principles generally accepted in the United States, their judgments as to the quality, not just the acceptability, of the accounting principles and such other matters as are required to be discussed with the Audit Committee under generally accepted auditing standards. The Audit Committee also reviewed ~~managements~~management’s report on internal controls over financial reporting and the independent accounting firm’s related opinions. In addition, the Audit Committee discussed with the independent auditors the auditors’ independence from management and the ~~company,~~Company, including the matters in the written disclosures required by the ~~Independence Standards~~Public Company Accounting Oversight Board, and considered the compatibility of non-audit services with the auditors’ independence. The Audit Committee met five times during ~~2007.~~2008.

In reliance on the reviews and discussions referred to above, the Audit Committee recommended to the board of directors (and the board approved) that the audited financial statements be included in the Annual Report on Form 10-K for the fiscal year ended December 31, ~~2007~~2008 for filing with the SEC.

This report is submitted by the Audit Committee.

Donald R. Brattain, Chairman
J. Luther King, Jr.
G. Stuart Reeves

2528

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Our directors and executive officers seek approval from the board of directors prior to entering into a business arrangement that ~~would~~may be deemed a ~~related party transaction.~~conflict of interest as described in our Code of Business Conduct and Ethics. Examples of transactions that may be considered a conflict of interest include:

	•		to receive or give more than a token value to anyone that has a business relationship with us;

	•		to lend to or borrow from individuals or concerns that do business with or compete with us, except banks and other financial institutions;

	•		to serve as an officer, director, employee, or consultant or receive income from any enterprise doing business with or competing with us;

	•		to own an interest in or engage in the management of an organization providing services or products to us, or to which we sell or compete, except when such interest (a) comprises publicly traded securities listed on a national securities exchange, NASDAQ or the OTC margin list and (b) is not in excess of five percent of the securities of such company; and

	•		to knowingly cause, either directly or indirectly, us to enter into a business transaction with a close relative of the director or executive officer or a business enterprise of such relative.

In addition, we review, on an annual basis, our financial records to ensure all related party transactions are identified, quantified, and adequately disclosed. Also, each director and executive officer must disclose in writing any known related party transactions associated with completion of the annual director and officer questionnaire.

~~We employ Dane L. Womble, a brother of Dustin R. Womble. Dane L. Womble received $197,000 in salary and bonus compensation in fiscal year 2007 in exchange for services rendered.~~ In fiscal year ~~2007,~~2008, we made lease payments of $1.8 million ~~in lease payments~~ for certain office space in Falmouth, Maine, ~~that is owned by~~to an entity in which ~~the~~Mr. Marr’s father and brother ~~of John S. Marr, Jr.~~ have ana 100% ownership interest. The lease is at current prevailing fair market rates for the area. John S. Marr, Jr. does not have an interest in the entity that leases property to ~~us.~~us and the lease arrangement existed at the time the Company acquired the division that occupies this property. We employ Dane L. Womble, a brother of Dustin R. Womble. Dane L. Womble received $239,000 in salary and bonus compensation in fiscal year 2008 in exchange for services rendered.

STOCKHOLDER PROPOSALS

Any proposal that a stockholder desires to present at the ~~2009~~2010 annual meeting must be received by us at our corporate headquarters no later than January 18, ~~2009.~~2010.


		~~By Order of the Board of Directors,~~


		~~H. Lynn Moore, Jr.~~ ~~Executive Vice President,~~ ~~General Counsel, and Secretary~~

~~Dallas, Texas~~
~~April 2, 2008~~

~~ANNUAL MEETING OF STOCKHOLDERS OF~~

~~TYLER TECHNOLOGIES, INC.~~

~~May 15, 2008~~

~~Please date, sign and mail~~
~~your proxy card in the~~
~~envelope provided as soon~~
~~as possible.~~

ê ~~Please detach along perforated line and mail in the envelope provided.~~ ê


n	~~20733000000000000000 2~~	~~051508~~


	By Order of the Board of Directors,			~~THIS~~
	H. Lynn Moore, Jr.
	Executive Vice President, General Counsel, and Secretary

Dallas, Texas
March 26, 2009

ANNUAL MEETING OF STOCKHOLDERS OFTYLER TECHNOLOGIES, INC.May 14, 2009NOTICE OF INTERNET AVAILABILITY OF PROXY MATERIAL: The Notice of Meeting, proxy statement and proxy card are available at — {Insert web address where material will be hosted}Please sign, date and mail your proxy card in the envelope provided as soon as possible.Please detach along perforated line and mail in the envelope provided.20730000000000000000 5051409THIS PROXY WILL BE VOTED AS SPECIFIED BELOW. IF NO SPECIFICATION IS MADE,
THIS PROXY WILL BE VOTED FOR THE MATTERS SPECIFICALLY REFERRED TO ~~BELOW.~~
~~PLEASE~~BELOW.PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE

FOR AGAINST ABSTAIN
   1. Election of Directors: 2. Amendment to the Tyler Stock Option Plan. o o o
   o NOMINEES:
FOR ALL NOMINEES ¡ Donald R. Brattain
¡ J. Luther King, Jr. 3. Ratification of Ernst & Young LLP as independent auditors. o o o
   o WITHHOLD AUTHORITY ¡ John S. Marr, Jr.
FOR ALL NOMINEES ¡ G. Stuart Reeves 4. In their discretion, the proxies are authorized to vote upon such other business as may properly come before the meeting or adjournments thereof.
¡ Michael D. Richards
   o

FOR ALL EXCEPT
(See instructions below) ¡
¡ Dustin R. Womble
John M. Yeaman

INSTRUCTION:To withhold authority to vote for any individual nominee(s), mark“FOR ALL EXCEPT”and fill in the circle next to each nominee you wish to withhold, as shown here:=

To change the address on your account, please check the box at right and indicate your new address in the address space above. Please note that changes to the registered name(s) on the account may not be submitted via this method.

o

~~-->~~

xFOR AGAINST ABSTAIN1.Election of Directors:2. Ratification of Ernst & Young LLP as independent auditors.NOMINEES:FOR ALL NOMINEESO Donald R. Brattain3. In their discretion, the proxies are authorized to vote upon such other business O J. Luther King, Jr.as may properly come before the meeting or adjournments thereof.WITHHOLD AUTHORITY O John S. Marr, Jr.FOR ALL NOMINEESO G. Stuart Reeves O Michael D. Richards FOR ALL EXCEPTO Dustin R. Womble(See instructions below)O John M. YeamanINSTRUCTIONS: To withhold authority to vote for any individual nominee(s), mark “FOR ALL EXCEPT” and fill in the circle next to each nominee you wish to withhold, as shown here:To change the address on your account, please check the box at right and indicate your new address in the address space above. Please note that changes to the registered name(s) on the account may not be submitted via this method.Signature of StockholderDate:Signature of ~~Stockholder~~

~~Date:~~

~~Signature of Stockholder~~

~~Date:~~

~~Signature of Stockholder~~

~~Date:~~

~~Signature of Stockholder~~

~~Date:~~


n		StockholderDate:Note:		Please sign exactly as your name or names appear on this Proxy. When shares are held jointly, each holder should sign. When signing as executor, administrator, attorney, trustee or guardian, please give full title as such. If the signer is a corporation, please sign full corporate name by duly authorized officer, giving full title as such. If signer is a partnership, please sign in partnership name by authorized person.		n


						n

~~PROXY~~

~~TYLER TECHNOLOGIES, INC.~~

~~THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY~~

The undersigned hereby (1) acknowledges receipt of the Notice dated April 2, 2008 of the annual meeting of stockholders of Tyler Technologies, Inc. (the “Company”) to be held at the Park City Club, 5956 Sherry Lane, Suite 1700, Dallas, Texas, on Thursday, May 15, 2008 at 9:30 a.m. local time, and the proxy statement in connection therewith, and (2) appoints John S. Marr, Jr. and John M. Yeaman, and each of them, his proxies with full power of substitution and revocation, for and in the name, place and stead of the undersigned to vote upon and act with respect to, all of the shares of Common Stock of the Company standing in the name of the undersigned, or with respect to which the undersigned is entitled to vote and act at said meeting and at any adjournment thereof, and the undersigned directs that his proxy be voted as indicated on the reverse side hereof. If only one of the above proxies shall be present in person, or by substitute, at such meeting or any adjournment thereof, that proxy, so present and voting, either in person or by substitute, shall exercise all of the powers hereby given.

The undersigned hereby revokes any proxy or proxies heretofore given to vote upon or act with respect to such stock and hereby ratifies and confirms all that said proxies, their substitute or any of them may lawfully do by virtue hereof.

~~(Continued and to be signed on the reverse side)~~


n					~~14475~~	n

~~FOR~~

xFOR AGAINST

~~ABSTAIN~~

~~1. Election~~ ABSTAIN1.Election of Directors:

~~Amendment to the Tyler Stock Option Plan.~~

~~NOMINEES:~~

~~FOR ALL NOMINEES~~

~~Donald R. Brattain~~

~~J. Luther King, Jr.~~

Ratification of Ernst & Young LLP as independent ~~auditors.~~

~~WITHHOLD AUTHORITY~~

~~John S. Marr, Jr.~~

auditors.NOMINEES:FOR ALL ~~NOMINEES~~

~~G. Stuart Reeves~~

NOMINEESO Donald R. Brattain3. In their discretion, the proxies are authorized to vote upon such other business asO J. Luther King, Jr.as may properly come before the meeting or adjournments ~~thereof.~~

thereof.WITHHOLD AUTHORITY O John S. Marr, Jr. FOR ALL NOMINEESO G. Stuart ReevesO Michael D. Richards

FOR ALL ~~EXCEPT~~
(EXCEPTO Dustin R. Womble(See instructions below)

¡
¡

~~Dustin R. Womble~~
O John M. ~~Yeaman~~

~~INSTRUCTION:~~YeamanINSTRUCTIONS: To withhold authority to vote for any individual nominee(s), mark~~“FOR~~ “FOR ALL EXCEPT”and fill in the circle next to each nominee you wish to withhold, as shown here:=

ToJOHN SMITH 1234 MAIN STREET APT. 203 NEW YORK, NY 10038To change the address on your account, please check the box at right and indicate your new address in the address space above. Please note that changes to the registered name(s) on the account may not be submitted via this ~~method.~~

~~-->~~

method.Signature of StockholderDate:Signature of ~~Stockholder~~

~~Date:~~

~~Signature of Stockholder~~

~~Date:~~

~~Signature of Stockholder~~

~~Date:~~

~~Signature of Stockholder~~

~~Date:~~


n		StockholderDate:Note:		Please sign exactly as your name or names appear on this Proxy. When shares are held jointly, each holder should sign. When signing as executor, administrator, attorney, trustee or guardian, please give full title as such. If the signer is a corporation, please sign full corporate name by duly authorized officer, giving full title as such. If signer is a partnership, please sign in partnership name by authorized person.		n

PROXYTYLER TECHNOLOGIES, INC.THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANYAs an alternative to completing this form, you may enter your vote instruction via the Internet at WWW.VOTEPROXY.COM and follow the simple instructions. Use the Company Number and Account Number shown on your proxy card.The undersigned hereby (1) acknowledges receipt of the Notice dated March 26, 2009 of the annual meeting of stockholders of Tyler Technologies, Inc. (the “Company”) to be held at the Park City Club, 5956 Sherry Lane, Suite 1700, Dallas, Texas, on Thursday, May 14, 2009 at 9:30 a.m. local time, and the proxy statement in connection therewith, and (2) appoints John S. Marr, Jr. and John M. Yeaman, and each of them, his proxies with full power of substitution and revocation, for and in the name, place and stead of the undersigned to vote upon and act with respect to, all of the shares of Common Stock of the Company standing in the name of the undersigned, or with respect to which the undersigned is entitled to vote and act at said meeting and at any adjournment thereof, and the undersigned directs that his proxy be voted as indicated on the reverse side hereof. If only one of the above proxies shall be present in person, or by substitute, at such meeting or any adjournment thereof, that proxy, so present and voting, either in person or by substitute, shall exercise all of the powers hereby given.The undersigned hereby revokes any proxy or proxies heretofore given to vote upon or act with respect to such stock and hereby ratifies and confirms all that said proxies, their substitute or any of them may lawfully do by virtue hereof.(Continued and to be signed on the reverse side)14475


Yours very truly, JOHN M. YEAMAN Chairman of the Board

		~~Yours very truly,~~


	~~JOHN M. YEAMAN~~
	~~Chairman of the Board~~

			appropriateness of accounting and disclosure decisions with respect to significant unusual transactions or material obligations, and significant findings during the audit;

	•		performance of periodic formal committee evaluations;

	•		reviewing our financial statements and related regulatory filings with the independent auditors; and

	•		meeting periodically with management to discuss internal accounting and financial controls.


(1)		~~These~~The target and maximum plan award amounts reported in these columns are derived from our 2008 Bonus Plan. The actual payout amounts for 2008 are set forth in the Non-Equity Incentive Plan Compensation column of our Summary Compensation Table above.

(2)		The options awarded on June 13, 2008 and December 15, 2008, were granted as part of Tyler’s broad-based annual stock option grant. The options awarded on May 15, 2008, were granted under the terms of employment agreements entered into in February 2008 and were contingent on the Company’s shareholders approving an amendment to increase the number of shares available for grant under the Tyler Technologies, Inc. Stock Option Plan on May 15, 2008. The options vest and become exercisable in five equal annual installments from the date of grant and have a contractual term of ten years. The option terms are the same for all the options granted to employees on ~~March 2, 2007,~~ June ~~15, 2007~~13, 2008 and December ~~14, 2007.~~15, 2008.

~~(2)~~(3)		The grant date fair value is determined in accordance with SFAS No. 123R and does not represent cash received by the ~~Named Executive Officers~~named executive officers in ~~2007.~~2008. The grant date fair value represents potential earnings contingent on ~~the~~ Tyler’s future performance. Stock option grants are designed to provide long-term (up to ten years) incentives and rewards linked directly to the price of our common stock. Stock options add value to the recipient only when stockholders benefit from stock price appreciation and, as such, further align management’s interest with those of our stockholders.


(6)		Total aggregate shares underlying outstanding stock options as of December 31, ~~2007~~2008 were ~~45,000.~~

~~(7)~~		~~Other compensation includes costs associated with spousal travel to a Tyler function.~~50,000.


	1) Title of each class of securities to which transaction applies:


	2) Aggregate number of securities to which transaction applies:


	Page
THE ANNUAL MEETING		3
Place, Date and Time		3
Matters to be Considered		3
Record Date and Voting		3
Vote Required		3
Proxy Solicitation, Revocation, and Expense		3
PROPOSALS FOR CONSIDERATION		4
Proposal One — Election of Directors		4
Proposal Two — ~~Amendment to the Stock Option Plan~~		4
~~Proposal Three —~~ Ratification of Ernst & Young LLP as Our Independent Auditors for Fiscal Year ~~2008~~2009		64
TYLER MANAGEMENT		75
Directors, Nominees for Director, and Executive Officers		75
Business Experience of Directors, Nominees for Director, and Executive Officers		75
CORPORATE GOVERNANCE PRINCIPLES AND BOARD MATTERS		97
Corporate Governance Guidelines		97
Code of Business Conduct and Ethics		107
Board Independence		108
Committees and Meetings of the Board of Directors		108
Audit Committee Financial Expert		119
Pre-Approval Policies and Procedures for Audit and Non-Audit Services		119
Director Nominating Process		129
Communications with ~~Our~~our Board of Directors		1310
Director Attendance at Annual Meetings		1311
SECURITIES OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT		1412
Security Ownership of Directors and Management		1412
Section 16(a) Beneficial Ownership Reporting Compliance		1514
COMPENSATION DISCUSSION AND ANALYSIS		1614
Overview		1614
Executive Summary		14
Role of the Chief Executive Officer		15
Analysis of Compensation ~~Components~~Elements		16
~~Base Salary~~Compensation Mix		1620
~~Annual Cash Bonus Program~~Employment Contracts		17
~~Stock Options~~		1721
Other Compensation		1721
Tax Consequences of Certain Forms of Compensation		1821
Report of the Compensation Committee		1822
EXECUTIVE COMPENSATION		1923
Summary Compensation Table		1923
Grants of Plan-Based Awards in ~~2007~~2008		2024
Outstanding Equity Awards at Year-End		2125
Option Exercises and Stock Vested		21
~~Employment Contracts~~		2226
Potential Payments under Employment Contracts		2226
Director Compensation		2327
Compensation Committee Interlocks and Insider Participation		2428
REPORT OF THE AUDIT COMMITTEE		2528
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS		2629
STOCKHOLDER PROPOSALS		2629

	•		honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships;

	•		full, fair, accurate, timely, and understandable disclosure in our public communications and reports filed with the SEC;

	•		compliance with applicable governmental laws, rules, and regulations;

	•		prompt internal reporting of violations of the policy to the appropriate persons designated therein, including anonymous “whistleblower” provisions; and

	•		~~accountability for adherence to the policy.~~

	•		sound personal and professional integrity;

	•		an inquiring and independent mind;

	•		practical wisdom and mature judgment;

	•		broad training and experience at the policy-making level of business, finance and accounting, government, education, or technology;

	•		expertise that is useful to Tyler and complementary to the background and experience of other board members, so that an optimal balance of board members can be achieved and maintained;

	•		willingness to devote the required time to carrying out the duties and responsibilities of board membership;

	•		commitment to serve on the board for several years to develop knowledge about our business;

	•		the name and record address of the stockholder and any other stockholder known to be supporting the nominee; and

	•		the class and number of shares of our capital stock that are beneficially owned by the stockholder making the nomination and by any other supporting stockholders.


*		Less than one percent of our outstanding common stock

(1)		Unless otherwise noted, the address of each beneficial owner is our corporate headquarters: 5949 Sherry Lane, Suite 1400, Dallas, Texas 75225.


(2)		“Direct” represents shares as to which each named individual has sole voting or dispositive power.

(3)		“Options Exercisable Within 60 Days” reflects the number of shares that could be purchased by exercise of options at March 17, ~~2008~~2009 or within 60 days thereafter.

(4)		“Other” represents the number of shares of common stock as to which the named individuals share voting and dispositive power with another person or trust fund.


(1)		Represents amounts expensed by us during 2008, 2007 and 2006 for grants made to executive officers. Such grants provide our executive officers the opportunity to purchase shares of Tyler common stock at some future date at the fair market value of the stock on the date of grant. The dollar value of the stock option grants is based on the grant date fair value as required by Statement of Financial Accounting Standards (“SFAS”) No. 123R. For additional information on the valuation assumptions ~~with respect to the 2007 expense,~~ refer to note 810 of the Tyler Technologies’ financial statements in the Form 10-K for the year ended December 31, ~~2007,~~2008, as filed with the SEC. The SFAS No. 123R value does not represent cash received by the executive in ~~2007,~~2008, but potential earnings contingent on ~~the~~ Tyler’s future performance. Stock option grants are designed to provide long-term (up to ten years) incentives and rewards linked directly to the price of our common stock. Stock options add value to the recipient only when stockholders benefit from stock price appreciation and, as such, further align management’s interest with those of our stockholders.

(2)		These amounts consist of amounts earned under the Company’s bonus plan for each respective year and paid in the following year.

(3)		All other compensation includes amounts contributed or accrued by Tyler under the 401(K) Savings Plan, ~~personal use of a company owned car, value of the tax gross up for personal use of a company owned car,~~ tickets to sporting events, a charitable donation made on behalf of Mr. Womble and disability insurance premiums paid on behalf of Mr. Womble.


(1)		Non-employee directors receive the following compensation:


	1) Amount Previously Paid:


	2) Form, Schedule or Registration Statement No.:


	3) Filing Party:


	4) Date Filed:

	•		An annual retainer of $25,000 for the chairman of the audit committee and $15,000 for the other non-employee directors.

	•		A fee of $2,500 for each Board meeting attended in person and $1,250 for each Board meeting ~~attending~~attended via telephone.

	•		A fee of $2,500 for each audit committee meeting attended in person and $1,250 for each audit committee meeting attended via telephone.

	•		A fee of $1,000 for each compensation committee meeting attended in person and $500 for each compensation committee meeting attended via telephone.

	•		A fee of $1,000 for each nominating and governance committee meeting attended in person and $500 for each nominating and governance committee meeting attended via telephone.

	•		~~Each director is entitled to reimbursement~~Reimbursement for ~~his~~ reasonable out-of-pocket expenses incurred in connection with travel to and from, and attendance at, meetings of the Board of Directors or its committees and related activities.


		~~PROXY~~ANNUAL MEETING OF STOCKHOLDERS OFTYLER TECHNOLOGIES, INC.May 14, 2009PROXY VOTING ~~INSTRUCTIONS~~


	~~COMPANY~~INSTRUCTIONSTELEPHONE — Call toll-free 1-800-PROXIES (1-800-776-9437) in the United States or 1-718-921-8500 from foreign countries from any touch-tone telephone and follow the instructions. Have your proxyCOMPANY NUMBER
	card available when you call and use the Company Number and Account Number shown on your proxy card.Vote online until 11:59 PM EST the day before the meeting. ACCOUNT NUMBER


		~~THIS~~ MAIL — Sign, date and mail your proxy card in the envelope provided as soon as possible.IN PERSON — You may vote your shares in person by attending the Annual Meeting.NOTICE OF INTERNET AVAILABILITY OF PROXY MATERIAL: The Notice of Meeting, proxy statement and proxy card are available at — {Insert web address where material will be hosted}Please detach along perforated line and mail in the envelope provided IF you are not voting via the Internet. 20730000000000000000 5051409THIS PROXY WILL BE VOTED AS SPECIFIED BELOW. IF NO SPECIFICATION IS MADE, THIS PROXY WILL BE VOTED FOR THE MATTERS SPECIFICALLY REFERRED TO ~~BELOW.~~ ~~PLEASE~~BELOW.PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE	x