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                                  UNITED STATES
                      SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C. 20549


                                  SCHEDULE 14A
                                 (RULE 14A-101)14a-101)

                    INFORMATION REQUIRED IN PROXY STATEMENT

                            SCHEDULE 14A INFORMATION

          PROXY STATEMENT PURSUANT TO SECTION 14(A)14(a) OF THE SECURITIES
                    EXCHANGE ACT OF 1934 (AMENDMENT NO.   )

Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]

Check the appropriate box:

[ ] Preliminary Proxy Statement       [ ] Confidential, for Use of the
                                               Commission Only (as permitted by
                                               Rule 14a-6(e)(2))
     [X] Definitive Proxy Statement
     [ ] Definitive Additional Materials
     [ ] Soliciting Material Pursuant to sec. 240.14a-11(c) or sec. 240.14a-12

                               TYLER CORPORATION
[ ]  Preliminary Proxy Statement          [ ]  Confidential, for Use of the
                                               Commission Only (as permitted by
                                               Rule 14a-6(e)(2))
[X]  Definitive Proxy Statement
[ ]  Definitive Additional Materials
[ ]  Soliciting Material Pursuant to Rule 14a-12
Tyler Technologies, Inc. - -------------------------------------------------------------------------------- (Name of Registrant as Specified in itsIn Its Charter) - -------------------------------------------------------------------------------- (Name of Person(s) Filing Proxy Statement, if other than the Registrant) Payment of Filing Fee (Check the appropriate box): [X] No fee required. [ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(l)(1) and 0-11. (1) Title of each class of securities to which transaction applies: - ------------------------------------------------------------------------------------------------------------------------------------------------------- (2) Aggregate number of securities to which transaction applies: - ------------------------------------------------------------------------------------------------------------------------------------------------------- (3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (Set(set forth the amount on which the filing fee is calculated and state how it was determined): - ------------------------------------------------------------------------------------------------------------------------------------------------------- (4) Proposed maximum aggregate value of transaction: - ------------------------------------------------------------------------------------------------------------------------------------------------------- (5) Total fee paid: - ------------------------------------------------------------------------------------------------------------------------------------------------------- [ ] Fee paid previously with preliminary materials. [ ] Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. (1) Amount Previously Paid: - ------------------------------------------------------------------------------------------------------------------------------------------------------- (2) Form, Schedule or Registration Statement No.: - ------------------------------------------------------------------------------------------------------------------------------------------------------- (3) Filing Party: - ------------------------------------------------------------------------------------------------------------------------------------------------------- (4) Date Filed: - ------------------------------------------------------------------------------------------------------------------------------------------------------- 2 [TYLER CORPORATIONTECHNOLOGIES, INC. LOGO] March 27, 1998May 7, 2001 Dear Stockholder: You are cordially invited to attend the annual meeting of stockholders of Tyler CorporationTechnologies, Inc. to be held on Tuesday, April 28, 1998,June 5, 2001, at San Jacinto Tower, 2121 San Jacinto Street, Suite 2820,the Park Cities Hilton Hotel, 5954 Luther Lane, Dallas, Texas, commencing at 10:00 a.m. At this meeting you will be asked to elect sixseven directors for the ensuing year and to consider and vote upon a proposal to amend the Tyler Corporation Stock Option Plan.year. It is important that your shares be represented at the meeting whether or not you are personally in attendance, and I urge you to sign, date, and return the enclosed proxy at your earliest convenience. Yours very truly, /s/ LOUIS A.A WATERS LOUIS A. WATERS Chairman of the Board 3 TYLER CORPORATIONTECHNOLOGIES, INC. NOTICE OF ANNUAL MEETING OF STOCKHOLDERS TO BE HELD APRIL 28, 1998JUNE 5, 2001 To the Stockholders of TYLER CORPORATION:TECHNOLOGIES, INC.: Tyler CorporationTechnologies, Inc. ("Tyler" or the "Company") will hold its annual meeting of stockholders (the "Annual Meeting") at San Jacinto Tower, 2121 San Jacinto Street, Suite 2820,the Park Cities Hilton Hotel, 5954 Luther Lane, Dallas, Texas, on Tuesday, April 28, 1998,June 5, 2001, at 10:00 a.m., Dallas time, for the following purposes: (a)(1) to elect sixseven directors to serve until the next annual meeting of stockholders or until their respective successors are duly elected and qualified; (b) to consider and vote upon a proposal to amend the Tyler Corporation Stock Option Plan; and (c)(2) to transact such other business as may properly come before the meetingAnnual Meeting or any adjournment thereof. Only stockholders of record at the close of business on March 10, 1998,April 6, 2001 are entitled to notice of, and to vote at, the meetingAnnual Meeting or any adjournment thereof. A list of stockholders entitled to vote at the meetingAnnual Meeting will be available for examination at the offices of Tyler Corporation, 2121 San Jacinto Street, Suite 3200,the Company, 2800 W. Mockingbird Lane, Dallas, Texas 75235, for the ten daysday period immediately before the meeting.Annual Meeting. PLEASE DATE AND SIGN THE ENCLOSED PROXY CARD AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE. No postage is required if the proxy card is mailed in the United States. Prompt response by our stockholders will reduce the time and expense of solicitation. By Order of the Board of Directors, /s/ JAMES E. RUSSELL JAMES E. RUSSELL Secretary Dallas, Texas March 27, 1998 4 TYLER CORPORATION 2121 SAN JACINTO STREET SUITE 3200 DALLAS, TEXAS 75201 PROXY STATEMENT FOR ANNUAL MEETING OF STOCKHOLDERS TO BE HELD APRIL 28, 1998 Tyler Corporation, a Delaware corporation (the "Company"), furnishes this Proxy Statement to its stockholders in connection with the solicitation on behalf of the Board of Directors of the Company (the "Board") of proxies to be used at the annual meeting of stockholders of the Company to be held April 28, 1998 (the "Meeting"). Proxies in the form enclosed will be voted at the Meeting if properly executed, returned to the Company before the Meeting, and not revoked. You may revoke the proxy at any time before it is exercised by delivering written notice of revocation to the Secretary of the Company, by delivering a subsequently dated proxy, or by attending the Meeting, withdrawing your proxy, and voting your shares personally. The approximate date on which this Proxy Statement and the enclosed proxy card will first be sent to stockholders is March 27, 1998. The enclosed 19972000 Annual Report of the Company does not form any part of the proxy solicitation material. OUTSTANDING CAPITAL STOCKBy Order of the Board of Directors /s/ H. LYNN MOORE, JR. H. Lynn Moore, Jr. Vice President, General Counsel, and Secretary Dallas, Texas May 7, 2001 1 4 THE ANNUAL MEETING PLACE, DATE, AND TIME The Annual Meeting will be held at the Park Cities Hilton Hotel, 5954 Luther Lane, Dallas, Texas on Tuesday, June 5, 2001, at 10:00 a.m., Dallas time. MATTERS TO BE CONSIDERED At the Annual Meeting, the stockholders of Tyler will be asked to consider and vote upon proposals to (i) elect a board of directors to serve until the next annual meeting of stockholders or until their successors are duly elected and qualified; and (ii) transact such other business as may properly come before the Annual Meeting or any adjournment thereof. Proposal One - Election of Directors At the Annual Meeting, the stockholders of the Company will be asked to elect a board of seven directors. The nominees for director are Ben T. Morris, Ulrich Otto, G. Stuart Reeves, Glenn A. Smith, Louis A. Waters, John D. Woolf and John M. Yeaman. Messrs. Waters and Yeaman currently serve on the Company's Board of Directors (the "Tyler Board"). For more information regarding the nominees for director to the Tyler Board, see "Tyler Management - Directors, Nominees for Director, and Executive Officers." Shares represented by proxies returned duly executed will be voted, unless otherwise specified, in favor of the seven nominees for the Tyler Board as described herein. The proxies cannot be voted for more than seven nominees. The nominees have indicated that they are able and willing to serve as directors. If any (or all) such persons should be unable to serve, the persons named in the enclosed proxy will vote the shares covered thereby for such substitute nominee (or nominees) as the Tyler Board may select. Stockholders may withhold authority to vote for any nominee by entering the name of such nominee in the space provided for such purpose on the proxy card. THE TYLER BOARD UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR EACH OF THE NOMINEES FOR DIRECTOR. RECORD DATE AND VOTING Only holders of record date for stockholdersof Common Stock on April 6, 2001 (the "Record Date") are entitled to notice of, and to vote at, the annual meeting of stockholders is the close of business on March 10, 1998. At the close of business on that date, the Company hadAnnual Meeting. There were issued and outstanding and entitled to vote at the Meeting 33,981,70947,179,371 shares of Common Stock $.01 par value ("Common Stock"). As of March 10, 1998,on the following entities were known by the Company to own beneficially more than 5% of the Common Stock of the Company:
NUMBER OF SHARES PERCENT BENEFICIALLY OF NAME AND ADDRESS OF BENEFICIAL OWNER OWNED NATURE OF BENEFICIAL OWNERSHIP CLASS - ------------------------------------ ---------------- ------------------------------ -------- William D. Oates 6,565,000 Sole voting and 25.8 2800 West Mockingbird Lane investment power Dallas, Texas 75235 2,200,000(1) Sole voting power Richmond Partners, Ltd. 4,000,000(2) Sole voting and 11.1 10375 Richmond Ave., Suite 1615 investment power Houston, Texas 77042 Gabelli Funds, Inc. 2,161,500(3) Sole voting and 6.4 One Corporate Center investment power Rye, New York 10580 6,500(3) Sole investment power William H. Oates 2,000,000(1) Sole investment power 5.9 2800 West Mockingbird Lane Dallas, Texas 75235
- --------------- (1) Voting power and record ownership of these shares is retained by Mr. Oates pursuant to collateral pledge arrangements securing payment for these shares sold to family members (including William H. Oates) and a former in-law. 5 (2) Includes a warrant to purchase 2,000,000 shares of the Company's Common Stock at $2.50 per share. Louis A. Waters is deemed to have beneficial ownership of these shares. (3) Share amounts are as of January 27, 1998. Shares are held by Gabelli Funds, Inc. and its affiliate, GAMCO Investors, Inc. Also, Mr. Mario J. Gabelli is deemed to have beneficial ownership of these shares. ACTION TO BE TAKEN AT THE MEETING The presence, in person or by proxy, of the holders of a majority of the outstanding shares of the Common Stock is necessary to constitute a quorum at the Meeting. Abstentions shall be treated as shares of the Common Stock that are present and entitled to vote for purposes of determining the presence of a quorum. In deciding all questions, aRecord Date. Each holder of Common Stock iswill be entitled to one vote, in person or by proxy, for each share heldof Common Stock standing in his or her name on the record date. The accompanying proxy, unlessbooks of Tyler on the stockholder otherwise specifies therein, will be voted (i) for the election as directors of the Company of the six persons designated under the caption "Directors and Executive Officers -- Nominees for Director", (ii) for the amendment to the Tyler Corporation Stock Option Plan (the "Stock Option Plan") and (iii) at the discretion of the proxy holdersRecord Date on any other matter that may properly come before the Meeting or any adjournment thereof. To be electedsubmitted to a director, each nominee must receive a plurality of all the votes cast at the meeting for the election of directors. Any abstentions or broker non-votes will have no effect on the election of directors. Should any nominee become unable or unwilling to accept nomination or election, the proxy holders may vote for the election in his stead of any other person the Board may recommend. Each nominee has expressed to the Board his intention to serve the entire term for which his election is sought. A favorable vote of the Company's stockholders. The presence, in person or by proxy, of holders of record of a majority of the shares entitled to vote constitutes a quorum for action at the Annual Meeting. Abstentions and broker nonvotes are counted for purposes of determining the presence or absence of a quorum for transaction of business. Abstentions are counted in tabulations of the votes cast on proposals presented to the stockholders to determine total number of votes cast. Abstentions are not counted as votes for or against any proposal. Broker nonvotes are not counted as votes cast for purposes of determining whether a proposal has been approved. VOTE REQUIRED The affirmative vote of the holders of shares of Common Stock, presenthaving a plurality of the voting power of the Company, in person or represented by proxy, and entitled to vote at the Meeting is required for approval and adoptionto elect directors. PROXY SOLICITATION, REVOCATION, AND EXPENSE The accompanying proxy is being solicited on behalf of the amendmentTyler Board. All proxies that are properly completed, signed, and returned prior to the Stock Option Plan. Abstentions will have the same effect as a vote against the adoption of the amendment to the Stock Option Plan, while broker non-votes will have no effect on the vote on the amendment to the Stock Option Plan. Where stockholders have appropriately specified how their proxies are to be voted, the proxiesAnnual Meeting will be voted accordingly.as indicated on the proxy. If the enclosed proxy is signed and returned, it may, nevertheless, be revoked at any other mattertime prior to the voting 2 5 thereof at the pleasure of the stockholder signing it, either by (i) filing a written notice of revocation received by the person or business is brought beforepersons named therein, (ii) the stockholder attending the Annual Meeting and voting the shares covered thereby in person, or (iii) delivering another duly executed proxy dated subsequent to the date thereof to the addressee named in the enclosed proxy. Shares represented by duly executed proxies in the accompanying form will be voted in accordance with the instructions indicated on such proxies, and, if no such instructions are indicated thereon, will be voted in favor of each of the proposals considered and of each of the nominees for director named therein. The Company will bear the expense of preparing, printing, and mailing the proxy holderssolicitation material and the proxy. In addition to use of the mail, proxies may votebe solicited by personal interview, telephone, and telegram by directors, officers, and employees of the proxies at their discretion.Company. The Board does not knowCompany may also engage the services of a proxy solicitation firm to assist in the solicitation of proxies. The Company estimates that the fee of any such firm will not exceed $5,000 plus reimbursement of reasonable out-of-pocket expenses. Arrangements may also be made with brokerage houses and other matter or business. 2 6 SECURITY OWNERSHIP OFcustodians, nominees, and fiduciaries for the forwarding of solicitation material to the beneficial owners of stock held of record by such persons, and the Company may reimburse them for reasonable out-of-pocket expenses incurred by them in connection therewith. TYLER MANAGEMENT DIRECTORS, NOMINEES FOR DIRECTOR, AND EXECUTIVE OFFICERS The following table sets forth the beneficial ownershipis a brief description of the Company's Common Stock as of March 10, 1998, by each director, and named executive officer and the directors and executive officers of the Company as a group:
SHARES OF COMPANY PERCENT NAME COMMON STOCK OF CLASS ---- ----------------- -------- Ernest H. Lorch............................................ 50,000 * Frederick R. Meyer......................................... 227,349 * Brian K. Miller............................................ -- -- William D. Oates(1)........................................ 8,765,000 25.8 Harold W. Parkison......................................... 12,500 * E. Peter Raisbeck(2)....................................... -- -- C.A. Rundell, Jr........................................... 368,657 1.1 James E. Russell........................................... 257,543 * Louis A. Waters(3)......................................... 4,000,000 11.1 Bruce W. Wilkinson(4)...................................... 133,333 * All directors and executive officers of the Company as a group (10 persons)....................................... 13,814,382 38.1
- --------------- * Less than 1% of the outstanding Common Stock (1) Includes 2,200,000 shares of Common Stock over which Mr. Oates has sole voting power, but no investment power, pursuant to collateral pledge arrangements securing paymentnominee for the sale of such shares to family members and a former in-law. (2) Until June 1997, Mr. Raisbeck served as Chief Executive Officer and President of Institutional Financing Services, Inc. ("IFS"), a former subsidiary of the Company which was sold in October 1997. (3) Includes 2,000,000 shares owned by Richmond Partners, Ltd. ("Richmond") and 2,000,000 shares subject to a warrant issued to Richmond at an exercise price of $2.50 per share. Mr. Waters is the sole general partner of Richmond and deemed beneficial owner of these shares. (4) Mr. Wilkinson served as President and Chief Executive Officer of the Company from March 1997 to October 1997. The number of shares of Common Stock beneficially owned by some officers and directors of the Company includes certain shares they have the right to acquire pursuant to options granted under the Company's Stock Option Plan and through a warrant to purchase Common Stock. Shares subject to options and a warrant exercisable within 60 days after March 10, 1998, are held by the following persons and group: Mr. Parkison -- 12,500; Mr. Rundell -- 167,288; Mr. Wilkinson -- 133,333; Mr. Waters -- 2,000,000; and all directors and executive officers of the Company as a group -- 2,313,121. Unless noted above, each director, and executive officer of the Company may be deemed to have sole voting and investment power over the shares of Common Stock reflected as beneficially owned. 3 7 DIRECTORS AND EXECUTIVE OFFICERS A brief description of each nominee for director and of each executive officer of the Company is provided below.Company. Directors hold office until the next annual meeting of stockholders or until their successors are elected and qualified. Executive officers are elected by the Tyler Board of Directors at its annual meeting and hold office until its next annual meeting. NOMINEES FOR DIRECTORmeeting or until their successors are elected and qualified. Directors, Nominees for Director, and Executive Officers of Tyler
Name / Age Present Position Served Since - ---------- ---------------- ------------ Louis A. Waters, 62 Co-Chief Executive Officer 2000 Chairman of the Board 1997 John M. Yeaman, 60 Co-Chief Executive Officer 2000 President 1998 Director 1999 Ernest H. Lorch, 68 Director 1993 William D. Oates, 60 Director 1998 Ben T. Morris, 55 Nominee for Director -- Ulrich Otto, 51 Nominee for Director -- G. Stuart Reeves, 61 Nominee for Director -- Glenn A. Smith, 47 Nominee for Director -- John D. Woolf, 56 Nominee for Director -- Theodore L. Bathurst, 51 Vice President and Chief Financial Officer 1998 Brian K. Miller, 42 Vice President - Finance 1999 Treasurer 1997 H. Lynn Moore, Jr., 33 Vice President and Secretary 2000 General Counsel 1998
Business Experience of Directors, Nominees for Director, and Executive Officers Louis A. Waters has been Chairman of the Board of the Company since October 1997, after being elected director of the Company in August 1997. In March 2000, Mr. Waters was also elected Co-Chief Executive Officer of the Company. Mr. Waters is currently a member of the Executive Committee and the Compensation Committee of the Tyler Board. Mr. Waters was the founding Chairman of the Board and Chief Executive Officer of Browning-Ferris Industries, Inc. ("BFI"). He recently directed BFI's international activities, serving as Chairman and Chief Executive Officer of BFI International, Inc. from 3 6 1991 to March 1997, at which time he retired from full-time employment with BFI. From 1988 to March 1997, Mr. Waters was Chairman of the BFI Finance Committee, and from 1980 through 1988, he was Chairman of the BFI Executive Committee. Mr. Waters also served as Chairman of the Board and Chief Executive Officer of BFI from 1969 through 1980. Mr. Waters is also a director of Team, Inc. John M. Yeaman is President and Co-Chief Executive Officer of the Company, a position he has held since March 2000. From December 1998 until March 2000, Mr. Yeaman was President and Chief Executive Officer of the Company. Mr. Yeaman was elected to the Tyler Board in February 1999. Mr. Yeaman was previously employed by Electronic Data Systems Corporation ("EDS"), where he served as the director of a worldwide Strategic Support Unit managing $2 billion in real estate assets. Prior to that position, Mr. Yeaman had been associated with EDS as a service provider since 1980. 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. Ernest H. Lorch.Lorch was elected to the Tyler Board in October 1993, and he currently serves as a member of the Compensation Committee and as Chairman of the Audit Committee of the Tyler Board. Mr. Lorch age 65, is counsel to the law firm of Whitman Breed Abbott & Morgan LLP, a position he has held since December 1992. HeMr. Lorch retired as Chairman of the Board and Chief Executive Officer of Dyson-Kissner-Moran Corporation ("DKM"), a private investment company, in December 1992, a position he held since January 1990. Mr. Lorch was President and Chief Operating Officer of DKM from June 1984 to January 1990. He iswas also Senior Chairman of the Board of Varlen Corporation anduntil 1999 when Varlen was acquired by a director of Dorsey Trailers, Inc. Mr. Lorch was elected to the Board of Directors of the Company in October 1993, and is a member of the Compensation Committee and the Audit Committee of the Board of Directors. Frederick R. Meyer. Mr. Meyer, age 70, has since July 1985 been Chairman of the Board of Aladdin Industries, Inc., a diversified company principally engaged in the manufacture of children's lunch kits, thermosware, insulated food delivery systems and related products. He has also been President and Chief Executive Officer of Aladdin Industries, Inc. from October 1995 to present and from May 1987 to September 1994. He was President of Tyler Corporation from August 1983 through December 1986. Mr. Meyerthird party. William D. Oates has been a director of the Company since 19671998 and is a member of the CompensationExecutive Committee of the Board of Directors. He is also a director of Arvin Industries, Inc., Palm Harbor Homes, Inc., and Southwest Securities Group, Inc. William D. Oates.Tyler Board. Since August 2000, Mr. Oates age 58, has beenserved as Chairman of the Board, President, and PresidentChief Executive Officer of eiStream, Inc., a holding company with subsidiaries that are engaged in the business of providing software systems and solutions in the areas of document management, imaging, and workflow. Mr. Oates was appointed director of the Company in February 1998 following the Company's acquisition of Business Resources Corporation, ("Resources") since its inception in 1993.a former affiliate of the Company. Mr. Oates served as President of Resources from 1993 until September 1998. From 1987 through 1994, Mr. Oates acquired or formed and served as President or a principal executive officer of American Title Company, of Dallas, Austin Title Company, Commercial Abstract and Title Company, and other title insurance agencies in Texas, as well as a title insurance underwriting company. Mr. Oates held these companies through American Title Company of Dallas, of which he wasBen T. Morris has been nominated by the principal owner and President until his sale of the company in November 1994. Mr. Oates was appointedTyler Board to serve as a director of the Company in February 1998 following the Company's acquisition of Resources2001. In 1987, Mr. Morris co-founded Sanders Morris Harris ("SMH"), a full service investment banking, money management, and is a member of the Executive Committee of the Board of Directors. C. A. Rundell, Jr. Mr. Rundell, age 66, was electedprincipal investor organization based in Houston, Texas, where he has served as its President and Chief Executive Officer of the Company in October 1997. From Octobersince 1996, and from 1987 to October 1997, Mr. Rundell1996, he served as Chairman of the Board and from October 1996 to March 1997 served as Interim Chiefits Executive Officer of the Company. Mr. Rundell has also served as President of Rundell Enterprises, a venture capital and investment company, since June 1988 and as Chairman of the Board of NCI Building Systems, Inc. since April 1989. Mr. Rundell served as Chief Executive Officer of Cronus Industries, Inc. from April 1977 to June 1988 as well as its President from April 1977 to April 1987 and its Chairman of the Board from April 1987 to April 1988. Mr. Rundell has been a director of the Company since 1966 and is a member of the Executive Committee of the Board of Directors. He is also a director of Dain Rauscher Corporation and Tandy Brands Accessories, Inc. James E. Russell. Mr. Russell, age 62, was elected Vice President Chief Financial Officer and Secretary& Director of the Company in October 1997.Investment Banking. From 1980 to 1986, Mr. Russell has been a director of the Company since May 1990 and has been affiliated with the Company for more than 25 years. HeMorris served as Vice President of the Company from January 1992 to August 1995 and was Chairman of the Board of Tyler Pipe Industries, Inc. ("Tyler Pipe"), a former subsidiary, until his retirement in August 1995. He was President and Chief Executive Officer of Tyler Pipe from December 1988 to December 1991 and was President and Chief Operating Officer of Tatham Corporation, a corporation principally engaged in the transportation and marketing of natural gas. From 1973 to 1980, Mr. Morris served in various executive capacities, including President and Chief Financial Officer, of Mid American Oil and Gas Inc., a company engaged in the business of oil and gas exploration and transportation. Prior to 1973, Mr. Morris was an accountant with Price Waterhouse & Co. Mr. Morris also serves as a director of Pinnacle Global Group, the parent corporation of SMH, Capital Title Group, and American Equity Investment Life Holding Company. Mr. Morris is a certified public accountant. Ulrich Otto has been nominated by the Tyler Pipe from February 1988Board to December 1988. 4 8 Louis A. Waters. Mr. Waters, age 59, was elected Chairman of the Board in October 1997 after being appointedserve as a director of the Company in August 1997.2001. Since 1997, Mr. Waters is a member of the Executive Committee, the Audit Committee, and the Compensation Committee of the Board of Directors. Mr. Waters was the foundingOtto has been Chairman of the Board and Chief Executive Officer of Browning-Ferris Industries, Inc.Otto Holding, B.V. ("BFI"Otto Holding"). He recently directed BFI's, an international activities, serving as Chairmandiversified holding company based in the Netherlands with subsidiaries devoted to the waste container systems business, which maintain an active presence in over 30 countries; venture capital transactions, including investments in software companies, with offices located in Paris, France, Tel Aviv, Israel, and Chief Executive Officer of BFI International, Inc. from 1991 to March 1997 at which time he retired from full-time employmentSingapore; and corporate finance, also with BFI. From 1988 to March of 1997 he was Chairman of the BFI Finance Committeeoffices in Paris, France and from 1980 through 1988 he was Chairman of the BFI Executive Committee.Singapore. Since 1990, Mr. WatersOtto has also served as Chairman of the Board and Chief Executive Officer of Otto Holding International B.V., also an international diversified holding company based in Germany with similar business lines as Otto Holding. Since 1980, Mr. Otto has served as Managing Partner of Gebr. Otto KG, Koln, Germany. During the past fifteen years, Mr. Otto has also held positions with various international councils, associations, supervisory boards, and management boards, some of which include Vice Chairman of the Supervisory Board of Interseroh AG, Koln, Germany, from 1993 to 2000; Vice Chairman of the Bundesverband der Deutschen Entsorgungswirtchaft e.V., Koln, Germany, from 1992 to 1996 and in which he was a member of the Managing Board of Directors from 1996 to 1999; member of the Board of Directors of BFI from 1969 through 1980. OTHER EXECUTIVE OFFICERS Harold W. Parkison.1994 to 1997; Vice Chairman of the Federation Europeenne des Activites du Dechet, Brussells, Belgium from 1996 to 1998; member of the General Assembly and Foreign Trade Committee of the Chamber of Industry and Commerce, Koln, Germany, from 1992 to 1999 and in which he was Chairman from 1996 to 1999; member of the Central and Management Committee of the Chamber of Industry and Commerce, Koln, Germany, from 1996 to 1999; member of the Council of INSEAD, Hamburg, Germany, since 1995; and member of the Land Advisory Board Northrhine-Westfalia of Commerzbank AG, Dusseldorf, Germany, since 1985. Mr. Parkison, age 49,Otto also holds a law degree. 4 7 G. Stuart Reeves has been nominated by the Tyler Board to serve as a director of the Company in 2001. From 1967 to 1999, Mr. Reeves worked for Electronic Data Systems Corporation ("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 32 years of service for 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 of Oklahoma State University Foundation and the Board of Directors of Park Cities Bank. Glenn A. Smith has been nominated by the Tyler Board to serve as a director of the Company in 2001. Mr. Smith currently serves as President of The Software Group, Inc. ("TSG"), a principal subsidiary of the Company that was co-founded by Mr. Smith in 1981 and acquired by the Company in 1998. TSG develops and markets a wide range of software products and related services for county governments, with a focus on integrated judicial management and law enforcement systems. Prior to founding TSG, Mr. Smith was employed at Distributed Data Systems of Raleigh, North Carolina, in a software development project management capacity and, prior to that, at Texas Instruments Incorporated in Dallas, Texas as a software developer. John D. Woolf has been nominated by the Tyler Board to serve as a director of the Company in 2001. Since August 2000, Mr. Woolf has served as a director and as Executive Vice President and Chief ExecutiveFinancial Officer of Forest City Auto Parts Company ("Forest City") since February 1997.eiStream, Inc., a holding company with subsidiaries that are engaged in the business of providing software systems and solutions in the areas of document management, imaging, and workflow. From December 1999 until August 2000, Mr. Parkison had previously beenWoolf served as Senior Vice President-International Store Development at Federal-MogulPresident -- Administration of the Company. From 1994 until December 2000, Mr. Woolf also served as Executive Vice President and Chief Financial Officer of Business Resources Corporation, since March 1995. Priora former affiliate of the Company. From 1987 to March 1995, he was1994, Mr. Woolf served as a director and as Executive Vice President-Merchandise Manager at Auto Express from 1993. From 1991 to 1993 he held the positionPresident and Chief Financial Officer of Vice President-Automotive for Kmart Corporation. Between 1971 and 1991 he held various management positions at Goodyear Tire and Rubber Company. Brian K. Miller.American Title. Mr. Miller, age 39,Woolf is a certified public accountant. Theodore L. Bathurst has been Vice President and Chief AccountingFinancial Officer of the Company since October 1998. Mr. Bathurst was previously an audit partner in the Dallas office of KPMG Peat Marwick LLP ("KPMG"), where he served as engagement partner on the accounts of a variety of information, communications, and high technology companies. Mr. Bathurst was also designated by KPMG as a Securities and Exchange Commission ("SEC") partner responsible for the review of filings made by public companies with the SEC. Mr. Bathurst, a certified public accountant, serves as a board member of the Texas Society of CPAs. Brian K. Miller has been Vice President - Finance and Treasurer of the Company since May 1999 and was Vice President - Chief Accounting Officer and Treasurer of the Company from December 1997.1997 to April 1999. From June 1986 through December 1997, Mr. Miller held various senior financial management positions at Metro Airlines, Inc. ("Metro"), a regional airline holding company. 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. From March 1994 to November 1995, Mr. Miller also held the position of Vice President and Chief Financial Officer of Lone Star Airlines, a regional airline. Mr. Miller is a certified public accountant. H. Lynn Moore, Jr. has been General Counsel of the Company since September 1998 and has been Vice President and Secretary of the Company since October 2000. 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. COMMITTEES AND MEETINGS OF THE TYLER BOARD The business of the Company is managed under the Tyler Board. The Tyler Board meets periodically during the fiscal year to review significant developments affecting the Company and to act on matters requiring Tyler Board approval. The Tyler Board met eleven times during 2000. Each member of the Tyler Board participated in at least 75% of all Tyler Board and committee meetings held during 2000 that he served as a director and/or committee member. The Tyler Board has established an Audit Committee, Compensation Committee, and Executive Committee to devote attention to specific subjects and to assist the Tyler Board in the discharge of its responsibilities. The functions of these committees are described below. The Company has no nominating 5 8 committee; instead, the entire Tyler Board is responsible for selecting nominees for election as directors and executive officers. Audit Committee. During 2000, the Audit Committee was comprised of Ernest H. Lorch and Frederick R. Meyer, each of whom is "independent" as defined by the New York Stock Exchange Listing Standards. The Audit Committee's duties include considering the independence of the independent auditors before the Company engages 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, appropriateness of accounting and disclosure decisions with respect to significant unusual transactions or material obligations and significant findings during the audit; reviewing the Company's financial statements and related regulatory filings with the independent auditors; and meeting periodically with the Company's management to discuss internal accounting and financial controls. The Audit Committee met six times during 2000. On May 11, 2000, the Tyler Board adopted the Tyler Audit Committee Charter, which is attached hereto as Appendix A. Immediately following the Annual Meeting, the Tyler Board intends to appoint a minimum of three of its "independent" directors to the Audit Committee for 2001. For more information on the Audit Committee's activities during 2000, see "Report of the Audit Committee." Compensation Committee. During 2000, the Compensation Committee was comprised of Ernest H. Lorch and Louis A. Waters. The Compensation Committee has final authority on all executive compensation and periodically reviews compensation, employee benefit plans, and other benefits paid to or provided for officers and directors of the Company. The Compensation Committee also approves annual salaries and bonuses for Company officers to ensure that the recommended salaries and bonuses are not unreasonable. The Compensation Committee met once during 2000. Executive Committee. During 2000, the Executive Committee was comprised of William D. Oates (Chairman), C.A. Rundell, Jr., and Louis A. Waters. The Executive Committee has authority, as delegated by the Tyler Board, to act for the Tyler Board, but may not commit the Company to an expenditure in excess of $10,000,000 without full Tyler Board approval. The Executive Committee meets periodically throughout the year. SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE Section 16(a) of the Securities Exchange Act of 1934, as amended, requires the Company's directors, executive officers, and holders of more than 10% of the Company's Common Stock to file with the SEC and New York Stock Exchange initial reports of ownership and reports of changes in ownership of the Company's Common Stock. Such persons are required by SEC regulations to furnish the Company with copies of all Section 16(a) reports they file with the SEC. Based solely on the Company's review of the copies of such forms it has received during the year, the Company believes that during the year ended December 31, 2000, all the Company's directors, officers, and holders of more than 10% of the Company's Common Stock complied with all Section 16(a) filing requirements. 6 9 SECURITY OWNERSHIP OF DIRECTORS, EXECUTIVE COMPENSATION SUMMARY COMPENSATION TABLEOFFICERS, AND PRINCIPAL STOCKHOLDERS The following table sets forth certain information concerning the beneficial ownership of the Company's Common Stock as of April 6, 2001 by (i) each of the "Named Executive Officers" (as defined in Regulation S-K of the Securities Act of 1933, as amended), (ii) each director or nominee for director of the Company, (iii) each beneficial owner of more than 5% of the outstanding shares of Common Stock, and (iv) all executive officers and directors of the Company as a group.
Name and Address of Beneficial Owner(1) Amount and Nature of Ownership Percent of Class (2)(3) - --------------------------------------- ------------------------------ ----------------------- William D. Oates 6,220,374(4) 13.18% 2911 Turtle Creek Blvd., Suite 1100 Dallas, Texas 75219 Ulrich Otto 3,866,378(5) 8.20% Louis A. Waters 2,509,900(6) 5.10% Glenn A. Smith 927,571 1.97% John M. Yeaman 548,850(7) 1.16% Ben T. Morris 389,980(8) * John P. Harvell 220,000 * John D. Woolf 150,000 * Theodore L. Bathurst 125,000(9) * H. Lynn Moore, Jr 76,000(10) * G. Stuart Reeves 65,000 * Ernest H. Lorch 65,000(11) * Brian K. Miller 56,000(12) * Directors, nominees, and executive officers as a group (13 persons) 15,220,053(13) 30.53%
- ---------- * Less than one percent of the outstanding Common Stock (1) Unless otherwise noted herein, the address of each beneficial owner is the address of the Company's principal place of business located at 2800 W. Mockingbird Lane, Dallas, Texas 75235. (2) Reported in accordance with the beneficial ownership rules of the SEC. Unless otherwise noted, the stockholders listed in the table have both sole voting power and sole investment power with respect to such shares, subject to community property laws where applicable and the information contained in the other footnotes to the table. (3) Based on 47,179,371 shares of Common Stock issued and outstanding at April 6, 2001. Each owner's percentage is calculated by dividing (a) the number of shares beneficially held by such owner by (b) the sum of (i) 47,179,371 plus (ii) the number of shares such owner has the right to acquire within sixty days. (4) Includes beneficial ownership of 1,600,000 shares of Common Stock over which Mr. Oates has sole voting power, but no investment power, pursuant to collateral pledge agreements securing payment for the sale of such shares. (5) Includes beneficial ownership of 3,383,600 shares of Common Stock held in various investment entities in which Mr. Otto has sole voting and investment power. 7 10 (6) Includes beneficial ownership of 2,000,000 shares of Common Stock subject to a warrant issued to Richmond Partners, Ltd. at an exercise price of $2.50 per share. Mr. Waters is the sole general partner of Richmond and deemed the beneficial owner of these shares. (7) Includes beneficial ownership of 125,000 shares of Common Stock issuable upon the exercise of stock options granted pursuant to the Tyler Technologies, Inc. Stock Option Plan (the "Tyler Option Plan") that are exercisable within sixty days and 7,300 shares of Common Stock owned by a foundation in which Mr. Yeaman is deemed to have shared voting power. (8) Includes beneficial ownership of 333,380 shares of Common Stock subject to a warrant issued to SMH, of which Mr. Morris is President and Chief Executive Officer and is therefore deemed to have investment power over the shares. (9) Includes beneficial ownership of 115,000 shares of Common Stock issuable upon the exercise of stock options granted pursuant to the Tyler Option Plan that are exercisable within sixty days. (10) Includes beneficial ownership of 26,000 shares of Common Stock issuable upon the exercise of stock options granted pursuant to the Tyler Option Plan that are exercisable within sixty days. (11) Includes beneficial ownership of 15,000 shares of Common Stock issuable upon the exercise of stock options granted pursuant to the Tyler Option Plan that are exercisable within sixty days. (12) Includes beneficial ownership of 55,000 shares of Common Stock issuable upon the exercise of stock options granted pursuant to the Tyler Option Plan that are exercisable within sixty days. (13) Includes 2,333,380 shares of Common Stock subject to warrants, 336,000 shares of Common Stock that are issuable upon the exercise of stock options granted pursuant to the Tyler Option Plan that are exercisable within sixty days, and 4,990,900 shares of Common Stock held in investment entities, foundations, and other arrangements in which named persons have sole or shared voting and/or investment power. 8 11 EXECUTIVE COMPENSATION Summary Compensation Table The following table sets forth certain information regarding compensation paid or accrued for all services rendered to the Company and its subsidiaries for the last threein all capacities during fiscal years 2000, 1999, and 1998 by the ChiefCompany's "Named Executive Officer, former Chief Executive Officer, retired Chief Executive Officer of a former subsidiary and the three highest-paid executive officersOfficers" (as defined in Regulation S-K of the Company:Securities Act of 1933, as amended) whose total annual salary and bonus earned during fiscal year 2000 exceeded $100,000. SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION LONG-TERM COMPENSATION AWARDS ANNUAL COMPENSATION ----------------------- ----------------------------------------------------------------------------------- ----------------------------- OTHER SECURITIES OTHERANNUAL RESTRICTED UNDERLYING ANNUALNAME AND PRINCIPAL COMPEN- STOCK OPTIONS/ ALL OTHER NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION(1)SATION(1) AWARDS SARS COMPENSATION - ----------------------------- ----- -------- -------- --------------------------------- ---- ---------- ---------- ---------- ---------- ---------- ------------ C.Louis A. Rundell, Jr. 1997Waters 2000 $ 80,077 $461,250(3) 350,000233,077(2) $ -- $ -- $ -- $ -- $ -- Chairman and Co- 1999 -- -- -- -- -- -- Chief Executive 1998 -- -- -- -- -- -- Officer John M. Yeaman 2000 225,000 -- -- -- -- -- President and Chief 1996 01999 225,000 200,000 -- -- 25,000 -- Co-Chief Executive 1998 76,302(3) 100,000 Executive-- -- 250,000 -- Officer of the Company(2) Bruce W. Wilkinson 1997 143,077 $347,180 40,625(5) 666,666 Former President and Chief Executive Officer of the Company(4) James E. Russell 1997 81,409Theodore L. Bathurst 2000 252,400 -- -- -- -- -- Vice President and 1999 252,400 125,000 -- -- 15,000 -- Chief Financial 1998 57,841(4) 40,000 -- -- 250,000 -- Officer of the Company(6)John P. Harvell 2000 180,000 150,000(6) -- 168,750(7) -- -- Vice President - 1999 156,923 90,000 -- -- 15,000 -- Chief Technology 1998 120,000 50,000 -- -- -- -- Officer(5) H. Lynn Moore, Jr 2000 120,000 80,000 -- -- -- -- Vice President, 1999 120,000 90,000 -- -- 10,000 -- General Counsel, 1998 40,000(3) 30,000 -- -- 40,000 -- and Secretary Brian K. Miller 1997 10,795 50,0002000 162,400 8,500 -- -- -- -- Vice President and Chief Accounting Officer of the Company(7) Harold W. Parkison 1997 183,333 $170,000 75,000 50,000 President and Chief Executive Officer of Forest City(8) Peter Raisbeck 1997 208,719 Chief Executive 1996 320,000 $40,980 Officer and President of IFS, 1995 305,011 49,412 a former subsidiary(9)- 1999 149,908 81,200 -- -- 25,000 -- Finance 1998 140,000 35,000 -- -- -- --
- ------------------------- (1) Certain of the Company's executive officers receive personal benefits in addition to salary. The aggregate amount of the personal benefits, however, does not exceed the lesser of $50,000 or 10% of the total annual salary for the named executive officer and therefore has been omitted. (2) Mr. Rundell has served as President and ChiefWaters was elected Co-Chief Executive Officer in March 2000. (3) Employment commenced in September 1998. (4) Employment commenced in October 1998. (5) Resigned from the Company effective December 2000 upon consummation of the Company since October 1997 at an annual salary of $210,000. From October 1996 to October 1997, he served as Chairman of the Board, and from October 1996 to March 1997 served as Interim Chief Executive Officer of the Company. He elected not to accept remuneration for his services from October 1996 to March 1997. (3) On October 8, 1997, Mr. Rundell was granted 125,000 sharessale of the Company's operating unit Business Resources Corporation ("BRC") to Affiliated Computer Services, Inc. ("ACS"). (6) Bonus compensation relates to services provided to the Company during 2000 and for services provided in connection with the sale of BRC to ACS in December 2000 for $71,000,000. 9 12 (7) Restricted shares of Company Common Stock with a market value of $3.69 per share. Mr. Rundell will vestgranted in these shares in increments of 25,000 shares every six months beginning April 8, 1998 and ending April 8, 2000. (4) Mr. Wilkinson served as President and Chief Executive Officer ofDecember 2000 for services provided to the Company from March 1997during 2000 and for services provided in connection with the sale of BRC to October 1997. Mr. Wilkinson's other annual compensation includes $260,000 for stock appreciation rights and $87,180 for amounts reimbursed for payment of taxes. (5) In March 1997, Mr. Wilkinson was granted 125,000 shares with a market value of $1.625 per share. The shares were to vest over 30 months. Upon Mr. Wilkinson's resignation as President and Chief Executive Officer of the Company in October 1997, 100,000 shares, the unvested portion of the grant, were forfeited. The 25,000 vested shares were purchased by the Company for $86,250, valued at the market value of $3.45 per share at the time of repurchase. 6 10 (6) Mr. Russell has served as Vice President and Chief Financial Officer of the Company since October 1997. (7) Mr. Miller joined the CompanyACS in December 1997. (8) Mr. Parkison has served as President and Chief Executive Officer of Forest City since February 1997. In connection with his move to Cleveland, Ohio, Mr. Parkison was paid $75,000 in compensation2000 for expenses resulting from transportation of household items, disposition of current residence, acquisition of a new residence and other related expenses associated with his move. (9) Mr. Raisbeck retired in June 1997 from IFS, a subsidiary of the Company which was sold in October 1997. OPTION/SAR GRANTS IN LAST FISCAL YEAR The following table shows stock option grants during 1997 to any named executive officer:
PERCENT OF NUMBER OF TOTAL SECURITIES OPTIONS/SARS EXERCISE UNDERLYING GRANTED TO PRICE GRANT DATE OPTION/SARS EMPLOYEES IN PER EXPIRATION PRESENT NAME GRANTED FISCAL YEAR SHARE DATE VALUE $(1) ---- ----------- ---------------- --------- ---------- ---------- C. A. Rundell, Jr.(2)............... 350,000 23% $3.69 10/07/07 $1.95 Bruce W. Wilkinson(3)............... 666,666 44% $1.50 03/27/07 $ .79 James E. Russell.................... -- -- -- -- -- Brian K. Miller..................... 50,000 3% $5.25 12/11/07 $2.82 Harold W. Parkison.................. 50,000 3% $2.13 02/02/07 $1.11 E. Peter Raisbeck................... -- -- -- -- --
- --------------- (1) The present value was determined using the Black-Scholes option-pricing model and assuming an expected life of seven years and a dividend yield of $0. In addition, expected volatility and risk-free interest rates, respectively, were assumed to be as follows: Mr. Rundell -- .40 and 6.1%; Mr. Wilkinson -- .38 and 6.9%; Mr. Miller -- .42 and 5.8%; and Mr. Parkison -- .38 and 6.4%. (2) Includes 132,199 options granted as incentive stock options and 217,801 options granted as non-qualified stock options. (3) As a result of Mr. Wilkinson's resignation as President and Chief Executive Officer of the Company in October 1997, he cannot vest in 400,000 options included in his total options granted.$71,000,000. OPTION/SAR EXERCISES DURING 19972000 AND YEAR-END OPTION/SAR VALUES The following table shows stock option exercises during 19972000 by each of the named executive officers"Named Executive Officers" and the value of unexercised options at December 31, 1997:2000:
NUMBER OF VALUE OF UNEXERCISED NUMBER OF IN-THE-MONEY UNEXERCISED IN-THE-MONEY OPTIONS/SARS AT OPTIONS/SARS AT SHARESNUMBER OF DECEMBER 31, 1997(1)2000 DECEMBER 31, 1997(2) EXERCISED2000(1) SHARES VALUE ---------------------------------------------------- ------------------------- NAME AS SARSEXERCISED REALIZED EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE ---- --------- -------- ----------------------------------- ---------- -------------------------- ------------------------- C.A. Rundell..................... 137,677/312,323 $396,596/$575,280 Bruce W. Wilkinson............... 133,333 $260,000 0/133,333Louis A. Waters ............ -- -- -- -- John M. Yeaman ............. -- -- 116,667 / 158,333 -- Theodore L. Bathurst ....... 5,000 $ 0/$533,332 James E. Russell.................7,187 110,000 / 145,000 -- John P. Harvell(2) ......... -- -- --(3) -- H. Lynn Moore, Jr .......... -- -- 22,667 / 27,333 -- Brian K. Miller.................. 0/ 50,000 $ 0/$ 12,500 Harold W. Parkison............... 0/ 50,000 $ 0/$168,750 E. Peter Raisbeck................Miller ............ -- -- 46,667 / 28,333 --
- ------------------------- (1) As of December 31, 1997, options to purchase an aggregate of 695,933 shares of Common Stock were outstanding with a weighted average exercise price per share of $3.04 and expiring between January 28, 2003, and December 11, 2007. (2) Amount is based on a year-end market value of $5.50$1.69 per share. 7 11(2) Mr. Harvell resigned from the Company in December 2000 in connection with the sale of BRC to ACS. (3) Pursuant to the Tyler Option Plan, the unvested options of Mr. Harvell were forfeited upon his resignation in December 2000, and his vested and unexercised options (all of which were unexercised) were forfeited 60 days thereafter. COMPENSATION OF DIRECTORS Each non-employee director receives an annual fee of $15,000, plus $1,000 for each Tyler Board meeting and $500 for each committee meeting attended. The Tyler Board further approved discretionary grants of stock options to non-employee directors of the Tyler Board. On May 11, 2000, the Tyler Board granted options to purchase 20,000 shares of Company Common Stock to Ernest H. Lorch at an exercise price of $4.8125 per share, which options vest in equal installments on the date of grant and on the first and second anniversary of the date of grant. On June 28, 2000, the Tyler Board granted options to purchase 5,000 shares of Company Common Stock to Ernest H. Lorch at an exercise price of $3.1875 per share, which options vest in equal installments on the first, second, and third anniversary of the date of grant. EMPLOYMENT NONCOMPETITION AGREEMENTS AND AGREEMENTS WITH NAMED EXECUTIVE OFFICERSCONTRACTS On October 8, 1997,7, 1998, the Company entered into an employment agreement with C. A. Rundell, Jr.Theodore L. Bathurst, which provides that the Company will pay Mr. Rundell an annual salary of $210,000Bathurst for his services as Vice President and Chief ExecutiveFinancial Officer of the Company and allows him toa salary of $250,000. Mr. Bathurst will participate in performance bonus or incentive compensation plans made available to comparable level employees of the Company and its subsidiaries. Mr. Rundell will alsosubsidiaries and receive certain otherall employee benefits and perquisites normally offered to the executive employees of the Company. In addition,On December 9, 1998, the Company granted Mr. Rundell 125,000 shares of Common Stock. He will vest in these shares in increments of 25,000 shares every six months beginning April 8, 1998, and ending April 8, 2000. The agreement also granted him options to purchase 350,000 shares of Common Stock at $3.69 per share, the closing price on October 8, 1997, of which (i) 132,199 incentive stock options of which 23,727 will vest and be exercisable on January 1, 1998, and 27,118 will vest and be exercisable on each of January 1, 1999-2002 and (ii) 217,801 non-qualified stock options, of which 43,561 will vest and be exercisable on October 8, 1997, and 43,560 will vest and be exercisable on each of October 8, 1998-2001. Both the stock grant and the 350,000 stock options to purchase Common Stock fully vest in the event of a change of control of the Company. The Company entered into ana five-year employment agreement in February 1997, with Harold W. ParkisonH. Lynn Moore, Jr., which provides that the Company pay Mr. ParkisonMoore for his services as President and Chief Executive OfficerGeneral Counsel of Forest City,the Company a minimum salary of $200,000,$120,000 and a guaranteedminimum bonus of $60,000 for 1997$80,000 per year. Mr. Moore will participate in additional performance bonus or incentive compensation plans made available to comparable 10 13 level employees of the Company and eligibility for an additional bonus in 1997 if certain profit objectives were achieved. The agreement also provides for a cash payment of $200,000 if during the first three years of his employment there is a change in control of Forest City or the Company. In addition, Mr. Parkison received $75,000 in compensation for expenses that would be incurred in connection with his move to Cleveland, Ohio, such as moving expensesits subsidiaries and real estate fees associated with the disposition of his current residence and acquisition of a new residence. Mr. Parkison is also eligible to receive all employee benefits and perquisites normally offered to the executive employees of Forest City. In connection with Bruce W. Wilkinson's resignation as a director and President and Chief Executive Officer of the Company effective October 8, 1997, the Company purchased 447,609 shares of the Company's common stock owned by Mr. Wilkinson for $1,544,000. Mr. Wilkinson purchased these shares in the second quarter of 1997 as a condition of his employment. In addition, the Company also made payments to Mr. Wilkinson of approximately $346,000 relating to various stock compensation plans as provided for under the terms of his resignation as President and Chief Executive Officer of the Company. Mr. Wilkinson will continue as an employee until March 31, 1998 (or earlier, if he so elects) atThe agreement provides for a monthly salaryseverance payment equal to the amount of $8,333. The Company has a consulting agreement with James E. Russell that began in September 1995, part of which expired in August 1997 andcompensation due for the remainder of which may be terminated upon 30 days' notice. The agreement provides the Company will pay Mr. Russell $20,000 per year through August 1997 and an additional $4,167 monthly for his services to the Company. In October 1997, Mr. Russell assumed the duties of Vice President, Chief Financial Officer and Secretary of the Company and his monthly payment was increased from $4,167 to $8,333 to reflect these additional responsibilities. Effective February 19, 1998, the Company entered into an employment, confidentiality, nonsolicitation and noncompetition agreement with William D. Oates which provides that the Company will pay Mr. Oates a salary of at least $200,000 per year for his services to the Company as President and Chief Executive Officer of Resources. In addition, Mr. Oates is eligible to participate in performance bonus or incentive compensation plans made available to comparable level employees of the Company and its subsidiaries. Mr. Oates will also receive all employee benefits and perquisites normally offered to the executive employees of Resources. The employment and confidentiality portionsterm of the agreement expire February 19, 2001, and the nonsolicitation and noncompetition portionsif he is terminated for any reason other than cause or upon a change in control of the agreement expire the later of February 19, 2003, or the third anniversary of Mr. Oates' termination. 8 12Company. In December 1997, the Company entered into an employment agreement with Brian K. Miller, which provides that the Company pay Mr. Miller a salary of $140,000 for his services as Vice President and Chief Accounting Officer for the Company.- Finance. In addition, Mr. Miller will participate in performance bonus or incentive compensation plans made available to comparable level employees of the Company and its subsidiaries and receive all employee benefits and perquisitesprerequisites normally offered to the executive employees of the Company. The agreement also provides for a severance payment equal to one year of his current base salary if he is terminated for any reason other than cause, as specified in the agreement. COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION Members of the Compensation Committee of the Tyler Board are Ernest H. Lorch Frederick R. Meyer and Louis A. Waters. Mr. Meyer was previously an officerWaters is Co-Chief Executive Officer of the Company. REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS ON EXECUTIVE COMPENSATION The Compensation Committee, a committee of the Tyler Board, of Directors, has the responsibility for final approval for all compensation to officers and directors of the Company, including primarily, 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 Company's personnel policy is to employ outstanding management in order to obtain outstanding results. To attract and retain high-level individuals, the Company may pay above-median compensation or provide stock ownership and stock option incentives to its executive officers. From time to time, salaries, bonuses, and other compensation of executive officers are evaluated by reference to nationwide comparisons for the industries in which the Company operates. A substantial portion of each executive officer's potential total compensation is in the form of bonuses and options which are awarded only when indicated by superior accomplishment. The Company feels very strongly thatoptions. Annual bonuses must be earned, and when results are not superior, no bonuses are paid. In nine of the past thirteen years, including 1997, no bonuses have been paid to corporate officers as results have not warranted payment of such bonuses. As a result of excellent performance andvary significantly based on the purchase contract, Forest City officers received bonuses for 1991, 1992Company's results and 1993revenue growth, the achievement of strategic objectives of the Company, and an additional bonus in 1996 for cumulative operating profits achieved since 1991. In addition, the President andeach individual's contribution toward that performance. Chief Executive Officer Compensation Louis A. Waters was elected Co-Chief Executive Officer of Forest City receivedthe Company in March 2000. In 2000, Mr. Waters' cash compensation consisted of a bonus for 1997base salary of $300,000 with no bonus. In determining Mr. Waters' cash compensation in accordance with2000, the termsCompensation Committee considered several factors, including the Company's strategic goal to reduce its outstanding indebtedness, the Company's decision to exit the information and property records services segment of his employmentits business, the Company's decision to focus its core business on its software systems and in recognitionservices segment, Mr. Waters' contributions to the achievement of 1997 performance. For 1998,these strategic initiatives, and the levels of compensation of chief executive officers of operating subsidiaries will be measured on the resultscompanies of that subsidiary and,similar size in the case of Resources, The Software Group, Inc. and Interactive Computer Designs, Inc., will be measured on the combined results of those companies. The primary criteria for bonus payments for subsidiary companies in 1998 will be achievement of certain levels of operating income, which will be evaluated relative to the operating plan established in December 1997 and approved by Tyler's Board of Directors. In order to be eligible to receive the maximum bonus, the applicable operation(s) must earn 130% of par (plan operating income plus bonuses). The minimum threshold for bonuses is 90% of par. Below that level, no bonuses will be paid. The Company is in the process of redesigning the bonus program for corporate officers for 1998 in recognition of recent changes in the Company's business, particularly its entry into the information management services business. The new program, which must be approved by the Compensation Committee, is expected to be based on different criteria for measuring the Company's performance than those previously used, although return on net assets (the primary factor historically used in determination of bonuses) may still be one of the criteria considered. Occasionally, bonuses are paid when specific return targets are not met. These cases are based on particular contributions to shareholder value or Company performance. Such bonus payments are not the rule 9 13 and are generally associated with increases in shareholder value which the Compensation Committee deems should be recognized with an out-of-the-ordinary bonus. CHIEF EXECUTIVE OFFICER COMPENSATION C.A. Rundell, Jr.similar industries. John M. Yeaman was elected President and Chief Executive Officer of the Company effective October 8, 1997, upon the resignation of Bruce W. Wilkinson.in December 1998, and in March 2000, Mr. Rundell had previously served as Interim ChiefYeaman shared his Co-Chief Executive Officer without salary from October 1996 through March 1997. Effective October 8, 1997,duties with Mr. Rundell'sWaters. In 2000, Mr. Yeaman's cash compensation consistsconsisted of a base annual salary of $210,000. Mr. Rundell also receives certain health and insurance benefits provided to executive officers of the Company.$225,000 with no bonus. In determining Mr. Rundell's salary,Yeaman's cash compensation in 2000, the Compensation Committee considered several factors, including Mr. Rundell's experience and his ability to enhance the long-term value of the Company, particularly in light of the Company's strategic plangoal to grow through acquisitions inreduce its outstanding indebtedness, the Company's decision to exit the information managementand property records services business. The committee also considered Mr. Rundell's considerable experience with acquisitions. Mr. Rundell was granted options to purchase 350,000 sharessegment of its business, the Company's Common Stockdecision to focus its core business on October 8, 1997, which options vest over a periodits software systems and services segment, Mr. Yeaman's contributions to the achievement of 48 months. In addition, Mr. Rundell was granted 125,000 sharesthese strategic initiatives, and the levels of the Company's Common stock on October 8, 1997, with a market value on that datecompensation of $3.69 per share. Mr. Rundell will vestchief executive officers of companies of similar size in these shares in increments of 25,000 shares every six months beginning April 8, 1998 and ending on April 8, 2000. Including stock options granted in 1996, Mr. Rundell has a total of 450,000 stock options which combined with his stock grant of 125,000 shares and his direct ownership of 76,369 shares give him a total potential ownership of 651,369 shares once he completes all respective vesting requirements. The Compensation Committee believes that the options and grant align the interest of management with those of the shareholders. As noted above, the Company is in the process of redesigning the bonus program for corporate officers. The new program, which must be approved by the Compensation Committee, will be effective for 1998. Mr. Rundell will participate in that program. By making a substantial portion of the Chief Executive Officer's potential total compensation in the form of bonuses that are based on objective performance measures, the Compensation Committee believes that it will provide for rewards only when indicated by superior accomplishment. Mr. Rundell did not receive a bonus for 1997.similar industries. 11 14 This report is submitted by the Compensation Committee. Ernest H. Lorch Louis A. Waters REPORT OF THE AUDIT COMMITTEE The Audit Committee oversees the Company's financial reporting process on behalf of the Tyler Board. Management has the primary responsibility for the financial statements and the reporting process, including the systems of internal controls. In fulfilling its oversight responsibilities, the Audit Committee reviewed the audited financial statements in the Annual Report with management, including a 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 reviewed with the independent auditors, who are responsible for expressing an opinion on the conformity of those audited financial statements with generally accepted accounting principles, their judgments as to the quality, not just the acceptability, of the Company's accounting principles and such other matters as are required to be discussed with the Audit Committee under generally accepted auditing standards. In addition, the Audit Committee has discussed with the independent auditors the auditors' independence from management and the Company, including the matters in the written disclosures required by the Independence Standards Board and considered the compatibility of non audit services with the auditors' independence. The Audit Committee discussed with the Company's independent auditors the overall scope and plans for their respective audits. The Audit Committee meets with the independent auditors, with and without management present, to discuss the results of their examinations, their evaluations of the Company's internal controls, and the overall quality of the Company's financial reporting. The Audit Committee met six times during 2000. In reliance on the reviews and discussions referred to above, the Audit Committee recommended to the Tyler Board (and the Tyler Board approved) that the audited financial statements be included in the Annual Report on Form 10-K for the fiscal year ended December 31, 2000 for filing with the Securities and Exchange Commission. This report is submitted by the Audit Committee Ernest H. Lorch, Chairman Frederick R. Meyer Louis A. Waters 1012 1415 STOCK PERFORMANCE CHARTSCHART The following two charts comparechart compares the return on the Company's Common Stock for the last five and ten years with the Standard and Poors ("S&P&P") 500 Index and a Peer Group Index which is comprised of companies with similar market capitalization of approximately $50 million. A list of the S&P Consumer Cyclicals-500 Index. Although Tyler's principal subsidiary from October 15, 1997Companies included in the Peer Group Index is located at Appendix B. Prior to December 31, 1997,1998, the Company was a retailerdiversely based enterprise selling products and services through a few distinctly different operating companies. In 2000, the Company adopted a formal plan to dispose of automotive partsits businesses and supplies,assets related to its information and property records services segment and to focus the S&P Consumer Cyclicals-500Company's resources on its software systems and services segment and to reduce debt. The Company believes the Peer Group Index was selected because it represents Tyler's past philosophyis more representative of diversification.its current strategy and prior history. The comparison assumes $100 was invested on December 31, 1992 and December 31, 19871995 in the Company's Common Stock and in each of the foregoing indices and assumes reinvestment of dividends and distributions. [STOCK PERFORMANCE CHART]
Consumer Measurement Period CyclicalsBASE YEARS ENDING PERIOD ---------------------------------------------------------------------- COMPANY NAME / INDEX 1995 1996 1997 1998 1999 2000 - (Fiscal Year Covered) Tyler S&P 500 500 1992 100 100 100 1993 113.51 110.08 114.43 1994 70.27 111.53 104.49 1995 59.46 153.45 129.3 1996 40.54 188.68 149.37 1997 118.92 251.63 204.45
Consumer Measurement Period Cyclicals - (Fiscal Year Covered) Tyler S&P 500 500 1987 100.00 100.00 100.00 1988 152.31 116.61 123.26 1989 394.69 153.56 142.60 1990 389.38 148.79 127.09 1991 387.05 194.12 189.73 1992 622.65 208.91 258.69 1993 706.8 229.97 296.02 1994 437.54 233.00 270.30 1995 370.23 320.56 334.50 1996 252.43 394.16 388.28 1997 740.45 525.67 531.47
11 15 BENEFICIAL OWNERSHIP REPORTING COMPLIANCE SECTION 16(A) Section 16(a) of the Securities Exchange Act of 1934, as amended, requires the Company's directors, executive officers and holders of more than 10% of the Company's Common Stock to file with the Securities and Exchange Commission ("SEC") and New York Stock Exchange initial reports of ownership and reports of changes in ownership of the Company's Common Stock. Such persons are required by SEC regulations to furnish the Company with copies of all Section 16(a) reports they file with the SEC. Based solely on the Company's review of the copies of such forms it has received during the year, the Company believes that during the year ended December 31, 1997, all the Company's directors, officers, and holders of more than 10% of the Company's Common Stock complied with all Section 16(a) filing requirements. CERTAIN TRANSACTIONS In September 1997, Richmond Partners, Ltd., a Houston-based investment partnership of which Louis A. Waters is the managing general partner, invested $3,500,000 in a package of Tyler securities consisting of 2,000,000 common shares and a warrant to acquire 2,000,000 common shares with an exercise price of $2.50 per common share. Mr. Waters is currently Chairman of the Board of the Company. In connection with the Company's purchase of Resources on February 19, 1998, William D. Oates received approximately $15,250,000 in cash and 8,765,000 shares of the Company's Common Stock. In addition, pursuant to the terms of the merger in which Resources was acquired, Mr. Oates may be entitled to receive additional merger consideration of up to an aggregate $4,500,000 in cash if certain contingencies are achieved on or before December 31, 1999 relating to acquisitions of specified businesses for purposes of geographic expansion. PROPOSAL FOR APPROVAL OF AMENDMENT TO STOCK OPTION PLAN The proposed amendment to the Tyler Corporation Stock Option Plan (the "Stock Option Plan") is intended to enable the Company to provide additional incentives to selected key employees of the Company and its subsidiaries whose substantial contributions are important to the continued growth and profitability of the Company's business. Stock options are designed to strengthen the commitment of those key employees to the Company, its subsidiaries and its stockholders, to motivate those key employees to perform their assigned responsibilities diligently and skillfully, and to attract and retain competent entrepreneurial-type management dedicated to the long-term growth and profitability of the Company. The Company believes this can best be accomplished by tying a portion of compensation to appreciation in the market value of the Company's stock so that the management and key employees of the Company and its subsidiaries are rewarded under the Stock Option Plan only if the value of the stockholders' investment in the Company has appreciated. PURPOSE OF THE PLAN On March 13, 1990, the Company established the Stock Option Plan, pursuant to which options could be granted to eligible employees for the purchase of a maximum of 1,100,000 shares of Common Stock of the Company. The Stock Option Plan was amended effective February 7, 1997, to increase the number of shares of Common Stock of the Company that may be granted to eligible employees to a maximum of 1,800,000. AMENDMENT SUBMITTED FOR APPROVAL The Board is submitting for stockholder approval an amendment to the Stock Option Plan, effective October 8, 1997, (i) to increase the maximum number of shares of Common Stock of the Company that may be purchased pursuant to options granted to eligible employees under the Stock Option Plan from 1,800,000 shares to 3,300,000 shares and (ii) to provide that any eligible employee may be granted options up to the maximum number of shares authorized under the Stock Option Plan. 12 16 The approval of the amendment to the Stock Option Plan requires the favorable vote of the holders of a majority of the shares of Common Stock present in person or represented by proxy and entitled to vote at the Meeting. Stockholder approval is required in order for the options to constitute performance-based compensation under Section 162(m) of the Code (as defined below). Management recommends voting in favor of the amendment to the Stock Option Plan. If the amendment to the Stock Option Plan is not approved by the stockholders, the Company will maintain the Stock Option Plan without giving effect to the amendment, and any options for shares not available for grant prior to the amendment will terminate. Copies of the Stock Option Plan may be obtained from the Company upon request. DESCRIPTION OF THE PLAN, AS AMENDED The Stock Option Plan is designed to permit the appropriate administering committee to grant options to key employees of the Company or its subsidiaries to purchase shares of Common Stock of the Company. The Stock Option Plan requires that the purchase price under each option will not be less than 100% of the fair market value of the Common Stock at the time of the grant of the option. The fair market value per share is the reported closing price of the Common Stock on the New York Stock Exchange on the date of the grant of the option, or if no sale of Common Stock shall have been reported on such date of grant, 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 of the Board of Directors of the Company grants options to eligible employees, determines the purchase price and option period at the time the option is granted, and administers and interprets the Stock Option Plan. The Compensation Committee of the Board of Directors grants options and administers the Stock Option Plan with respect to officers and directors of the Company. Options may be exercised in annual installments as specified by the administering committee. All installments that become exercisable are cumulative and may be exercised at any time after they become exercisable until expiration of the option. The administering committee may accelerate or terminate any or all outstanding options in the event the Company sells all or substantially all of its assets or all or substantially all of the outstanding Common Stock is sold or exchanged for or converted into securities of another corporation or in the event of some other material corporate restructuring. The exercise price of options is paid in cash or by check at the time of exercise. 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 provides that an option agreement may include a provision granting stock appreciation rights ("SARs") to the optionee. If this provision is in the option agreement, the administering committee may determine upon the exercise of an option whether to issue the number of shares of Common Stock called for by the option agreement after payment of the purchase price or to pay cash, Common Stock or a combination of cash and Common Stock to the optionee pursuant to the SARs provision. Payment in accordance with the SARs provision would be in an amount equal to the excess of the fair market value of the shares of Common Stock covered by the option or portion thereof being exercised over the aggregate option price of the shares. In addition, the Stock Option Plan provides that the administering committee may offer to the holder of an option that does not contain a SARs provision the right to receive cash, Common Stock or a combination of cash and Common Stock in the amount of such excess rather than the number of shares of Common Stock called for by the option agreement. Unless sooner terminated by action of the Board of Directors of the Company, the Stock Option Plan will terminate on February 6, 2007, and no options may thereafter be granted under the Stock Option Plan. The Stock Option Plan may be amended, altered or discontinued by the Board of Directors without the approval of the stockholders, except that the Board of Directors does not have the power or authority without stockholder approval to change the employees or class of employees who are eligible to receive options or the aggregate number of shares that may be issued under options. The administering committee, however, may make appropriate adjustments in the number of shares covered by the Stock Option Plan and the outstanding options, and in the option prices, to reflect any stock dividend, stock split, share combination or other 13 17 recapitalization and, with respect to outstanding options and option prices, to reflect any merger, consolidation, reorganization, liquidation or the like, of or by the Company. Options may be granted under the Stock Option Plan only to key employees of the Company or its subsidiaries. Key employees are defined in the Stock Option Plan to be those employees whose performance and responsibilities are determined by the appropriate administering committee to be influential to the success of the Company and its subsidiaries. Currently approximately 70 employees are eligible to receive stock options under the Stock Option Plan. Directors who are not employees of the Company or one of its subsidiaries are not eligible. Additional options may be granted to persons to whom options have previously been granted. There is no restriction in the Stock Option Plan on the maximum or minimum number of shares of Common Stock covered by options that may be granted to any person. Both incentive stock options and nonqualified stock options may be granted under the Stock Option Plan. Incentive stock options are options which meet the requirements of Section 422 of the Internal Revenue Code of 1986, as amended (the "Code") and nonqualified options are options which 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 outstanding Common Stock unless the option price is at least 110% of the fair market value of the 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 administering committee may provide for termination of options granted under the Stock Option Plan in case of termination of employment, dishonesty or any other reason the appropriate committee determines. If an option under the Stock Option Plan expires or terminates before it has been exercised in full, the shares of Common Stock allocable to the unexercised portion of that option may be made the subject of future grants of options under the Stock Option Plan. Upon termination of the employment of an optionee holding an option under the Stock Option Plan, his option is exercisable for a period of 30 days after termination, and thereafter his option terminates. 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. If the optionee dies before the termination of his right to exercise his option, the legal representatives of his estate may exercise his 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, 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 or other termination. TAX STATUS OF OPTIONS 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 or within one year after the exercise. In addition, the individual must have been an employee of the Company or one of its subsidiaries 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, no tax will be imposed upon exercise of the incentive stock option, and 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. If an employee does not meet the two-year and one-year holding requirement (a "disqualifying disposition"), but does meet all other requirements, tax will be imposed at the time of sale of the stock. In such event, the employee's gain on exercise will be treated as ordinary income rather than capital gain and the Company will be entitled to a corresponding deduction at the time of sale. Any remaining gain on sale will be 14 18 short-term, mid-term or long-term capital gain, depending on the holding period of the stock. If the amount realized on the disqualifying distribution is less than the value at the date of exercise, the amount includable in gross income, and the amount deductible by the Company, will equal the excess of the amount realized on the sale or exchange 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. If the optionee receives cash or stock upon the exercise of an SAR, instead of paying the exercise price for the shares of Common Stock called for by his option agreement, the amount of cash or value of stock he receives is ordinary income to him. The exercise of a nonqualified stock option or SAR entitles the Company 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 the Company. The optionee has no taxable income, and the Company is not entitled to a deduction, at the time of the grant of an option. The foregoing statements are based upon present federal income tax laws and regulations and are subject to change if the tax laws and regulations, or interpretations thereof, are changed. OUTSTANDING OPTIONS Options may be exercised in annual installments as specified by the administering committee. All installments that become exercisable are cumulative and may be exercised at any time after they become exercisable until expiration of the option. The administering committee may grant either nonqualified stock options or incentive stock options, as defined by the Code. The following table shows, as to certain executive officers and directors of the Company and its subsidiaries and as to all executive officers as a group, the following information with respect to stock options and SARs in tandem therewith:
ALL EXECUTIVE C.A. BRUCE W. BRIAN K. HAROLD W. OFFICERS AS A COMMON STOCK RUNDELL, JR. WILKINSON MILLER PARKISON GROUP ------------ ------------ --------- -------- --------- --------------------------------- ---------- ---------- ---------- ---------- ---------- ---------- Granted January 1, 1996 to December 31, 1997.............................. 450,000 666,666* 50,000 50,000 1,216,666 Number of options with SARs.......... 450,000 666,666* 50,000 50,000 1,216,666 Weighted average price per share..... $ 3.47 $ 1.50 $ 5.25 $ 2.13 $ 2.90 Exercised -- January 1, 1996 to December 31, 1997.............................. -- 133,333 -- -- 133,333 Market value of shares less exercise price or cash received............ -- $260,000 -- -- $ 260,000 TYLER TECHNOLOGIES INC 100 68.18 200.00 222.73 200.00 61.38 S&P 500 INDEX 100 122.96 163.98 210.85 255.21 231.98 PEER GROUP 100 105.98 88.04 72.29 74.91 19.31
- --------------- * Includes 400,000 optionsCERTAIN TRANSACTIONS On September 29, 2000, the Company sold for cash certain net assets of Kofile, Inc. ("Kofile") and another subsidiary, the Company's interest in a certain intangible work product, and a building and related building improvements to purchase Common Stock which terminated asinvestment entities beneficially owned by William D. Oates, a resultprincipal shareholder who was also a director and Chairman of Mr. Wilkinson's resignation as President and Chiefthe Executive OfficerCommittee of the Company in October 1997. Duringat the periodtime of the sale. The Kofile sale was consistent with the Company's decision to exit the information and property records services segment of its business, focus the Company's resources on its software systems and services segment of its business, and to reduce the Company's debt. The cash sale price was $14.4 million, which was determined after lengthy negotiations between Mr. Oates and the Tyler Board. The Company received an opinion from January 1, 1996,an investment banker that the cash sale price was fair to December 31, 1997, employeesthe Company from a financial point of view. Periodically during 2000, the Company leased a private airplane owned by William D. Oates, a former director of the Company, exercised options and SARs with a net value (market value of shares less exercise price or cash received) of $792,045. As of December 31, 1997, options to purchase an aggregate of 695,933 shares of Common Stock of the Company were outstanding, with a weighted average exercise price per share of $3.04 and expiring between January 28, 2003, and December 11, 2007. 15for business related trips, for which payments aggregated approximately $325,000. 13 19 COMMITTEES OF THE BOARD OF DIRECTORS The Board of Directors of the Company has an Executive Committee, an Audit Committee and a Compensation Committee to assist the Board in carrying out its duties. The Executive Committee has authority, as delegated by the Board, to act for the Board but may not commit the Company to an expenditure in excess of $10,000,000 without Board approval. The Audit Committee's duties include considering the independence of the independent auditors before the Company engages 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, appropriateness of accounting and disclosure decisions with respect to significant unusual transactions or material obligations and significant findings during the audit; reviewing the Company's financial statements and related regulatory filings with the independent auditors; and meeting periodically with the Company's management to discuss internal accounting and financial controls. The Compensation Committee has final authority on all executive compensation and periodically reviews compensation, employee benefit plans and other benefits paid to or provided for officers and directors of the Company. This committee approves annual salaries and bonuses for Company officers to ensure that the recommended salaries and bonuses are not unreasonable. The Company has no nominating committee; the entire Board of Directors is responsible for selecting nominees for election as directors. During 1997, the Board of Directors of the Company met a total of eight times. The Executive Committee met once, the Audit Committee met twice and the Compensation Committee met three times.16 STOCKHOLDER PROPOSALS Any proposals that stockholders of the Company desire to have presented at the 19992002 annual meeting of stockholders must be received by the Company at its principal executive offices not later than November 17, 1998. 16 20 MISCELLANEOUSFebruary 1, 2002. INDEPENDENT AUDITORS Ernst & Young LLP acted as the Company's independent auditors for 1997.2000. Fees for the fiscal year 2000 annual audit were $412,000 and all other fees were $215,000, including audit related services of $153,000 and non audit services of $62,000. Audit related services generally include fees for business acquisitions and/or dispositions, accounting consultations, SEC filings, and audit of the Company's employee benefit plan. One or more representatives of Ernst & Young LLP will attend the annual meeting,Annual Meeting, will have an opportunity to make a statement, and will respond to appropriate questions from stockholders. The Audit Committee has not yet appointed the independent auditors for 1998. The accompanying proxy is being solicited on behalf of the Board of Directors of the Company. The Company will bear the expense of preparing, printing and mailing the proxy solicitation material and the of proxy. In addition to use of the mail, proxies may be solicited by personal interview, telephone and telegram by directors and regular officers and employees of the Company. The Company may also engage the services of a proxy solicitation firm to assist in the solicitation of proxies. The Company estimates that the fee of any such firm will not exceed $5,000 plus reimbursement of reasonable out-of-pocket expenses. Arrangements may also be made with brokerage houses and other custodians, nominees and fiduciaries for the forwarding of solicitation material to the beneficial owners of stock held of record by such persons, and the Company may reimburse them for reasonable out-of-pocket expenses incurred by them in connection therewith.2001. By Order of the Board of Directors, /s/ JAMES E. RUSSELL JAMES E. RUSSELLH. LYNN MOORE, JR. H. Lynn Moore, Jr. Vice President, General Counsel, and Secretary Dallas, Texas March 27, 1998May 7, 2001 14 17 APPENDIX A TYLER TECHNOLOGIES, INC. AUDIT COMMITTEE OF THE BOARD OF DIRECTORS CHARTER STATEMENT OF POLICY The Audit Committee shall provide assistance to the Board of Directors in fulfilling their oversight responsibility to the shareholders, potential shareholders, the investment community, and others relating to the Company's financial statements and the financial reporting process, the systems of internal accounting and financial controls, the internal audit function (if any), the annual independent audit of the Company's financial statements, and the legal compliance and ethics programs as established by management and the Board. In so doing, it is the responsibility of the committee to maintain free and open communication between the committee, independent auditors, and management of the Company. In discharging its oversight role, the committee is empowered to investigate any matter brought to its attention with full access to all books, records, facilities, and personnel of the Company and the power to retain outside counsel, or other experts for this purpose. The Audit Committee fulfills its oversight responsibilities by reviewing: the financial reports and other financial information provided by the Corporation to any governmental body or the public; the Corporation's systems of internal controls regarding finance, accounting, legal compliance and ethics that management and the Board have established; and the Corporation's auditing, accounting and financial reporting processes generally. Consistent with this function, the Audit Committee should encourage continuous improvement of, and should foster adherence to, the corporation's policies, procedures and practices at all levels. The audit committee's primary duties and responsibilities are to: [ ] Serve as an independent and objective party to monitor the Corporation's financial reporting process and internal control system. [ ] Review and appraise the audit efforts of the Corporation's independent accountants. [ ] Provide an open avenue of communication among the independent accountants, financial and senior management, and the Board of Directors. The Audit Committee will primarily fulfill these responsibilities by carrying out the activities enumerated below. COMPOSITION By June 14, 2001, the Audit Committee shall be comprised of three or more directors as determined by the Board, each of whom shall be independent directors, and free from any relationship with management of the Company that, in the opinion of the Board, would interfere with the exercise of his or her independent judgment as a member of the Committee. Members of the committee shall be considered independent if they have no relationship that may interfere with the exercise of their independence from management and the Company. All members of the Committee shall have a working familiarity with basic finance and accounting practices, and at least one member of the Committee shall have accounting or related financial management expertise. Committee members may enhance their familiarity with finance and accounting by participating in educational programs conducted by the Corporation or an outside consultant. The members of the Committee shall be elected by the Board at the annual organizational meeting of the Board or until their successors shall be duly elected and qualified. Unless a Chair is elected by the full Board, the members of the committee may designate a Chair by majority vote of the full Committee membership. 15 18 MEETINGS The Committee shall meet at least four times annually, or more frequently as circumstances dictate. As part of its job to foster open communication, the Committee should meet at least annually with management and the independent accountants in separate executive sessions to discuss any matters that the Committee or each of these groups believe should be discussed privately. In addition, the Committee, or at least its Chair, shall review telephonically or in person, the interim financial statements with management and the independent auditors prior to the filing of the Company's Quarterly Report on Form 10-Q. Also, the Committee shall discuss the results of the quarterly review and any other matters required to be communicated to the committee by the independent auditors under generally accepted auditing standards. The Committee shall review with management and the independent auditors the financial statements to be included in the Company's Annual Report on Form 10-K, including their judgment about the quality, not just acceptability, of accounting principles, the reasonableness of significant judgments, and the clarity of the disclosures in the financial statements. Also, the Committee shall discuss the results of the annual audit and any other matters required to be communicated to the committee by the independent auditors under generally accepted auditing standards. RESPONSIBILITIES, PROCESSES, AND DUTIES The primary responsibility of the Audit Committee is to oversee the Company's financial reporting process on behalf of the Board and report the results of their activities to the Board. Management is responsible for preparing the Company's financial statements, and the independent auditors are responsible for auditing those financial statements. The Committee in carrying out its responsibilities believes its policies and procedures should remain flexible, in order to best react to changing conditions and circumstances. The Committee should take the appropriate actions to set the overall corporate "tone" for quality financial reporting, sound business risk practices, and ethical behavior. To fulfill its responsibilities and duties the Audit Committee shall: DOCUMENTS/REPORTS REVIEW 1. Review and update this Charter periodically, at least annually, as conditions dictate. 2. Review the Company's annual financial statements and any other significant reports submitted to the Securities and Exchange Commission and the New York Stock Exchange. 3. Review with financial management and the independent accountants the Form 10-Q and Form 10-K prior to their filing or prior to the release of earnings. The Chair of the Committee may represent the entire Committee for purposes of the review of the Form 10-Q. INDEPENDENT ACCOUNTANTS 4. Recommend to the Board of Directors on an annual basis the selection of the independent accountants. 5. Provide a clear understanding to management and the independent auditors that the independent auditors are ultimately accountable to the Board and the Audit Committee, as representatives of the Company's shareholders. The Committee shall have the ultimate authority and responsibility to evaluate and, where appropriate, replace the independent auditors. 6. Discuss with the independent auditors on an annual basis their independence from management and the Company and the matters included in the written disclosures required by the Independence Standards Board. 7. Discuss with the independent auditors the overall scope and plans for their respective audits including the adequacy of staffing and compensation. Also, the Committee shall discuss with management and the independent auditors the adequacy and effectiveness of the accounting and financial controls, including the Company's system to monitor and manage business risk, and legal and ethical compliance programs. Further, the Committee shall meet separately with the independent auditors, with and without management present, to discuss the results of their examinations. 16 19 8. Review the performance of the independent accountants and approve any proposed discharge of the independent accountants when circumstances warrant. FINANCIAL REPORTING PROCESSES 9. In consultation with the independent accountants, review the integrity of the Company's financial reporting processes, both internal and external. 10. Consider the independent accountants' judgments about the quality and appropriateness of the Corporation's accounting principles as applied in its financial reporting. 11. Consider and approve, if appropriate, major changes to the Corporation's auditing and accounting principles and practices as suggested by the independent accountants or management. PROCESS IMPROVEMENT 12. Establish regular and separate systems of reporting to the Audit Committee by management and by the independent accountants regarding any significant judgments made in management preparation of the financial statements and the view of each as to appropriateness of such judgments. 13. Following completion of the annual audit, review separately with management and with the independent accountants any significant difficulties encountered during the course of the audit, including any restrictions on the scope of work or access to required information. 14. Review any significant disagreement among management and the independent accountants in connection with the preparation of the financial statements. 15. Review with the independent accountants and management the extent to which changes or improvements in financial or accounting practices, as approved by the Audit Committee, have been implemented. ETHICAL AND LEGAL COMPLIANCE 16. Establish, review and update periodically a Code of Ethical Conduct and ensure that management has established a system to enforce this Code. 17. Ensure that management has the proper review system in place to ensure that Corporation's financial statements, reports and other financial information disseminated to governmental organizations, and the public satisfy legal requirements. 18. Review, with the organization's counsel, legal compliance matters including corporate securities trading policies. 19. Review, with the organization's counsel, any legal matter that could have a significant impact on the Company's financial statements. 20. Perform any other activities consistent with this Charter, the Corporation's By-laws and governing law, as the Committee or the Board deems necessary or appropriate. 17 20 APPENDIX B PEER GROUP INDEX ADVANCED POLYMER SYSTEMS AFTERMARKET TECHNOLOGY CORP AMERICA FIRST APT INVESTORS APPLIED SIGNAL TECHNOLOGY APPLIEDTHEORY CORP AT PLASTICS INC ATTUNITY LTD AVITAR INC BANK OF THE OZARKS INC BAR HARBOR BANKSHARES BIOJECT MEDICAL TECHNOL BITWISE DESIGNS INC BRIGHT STATION PLC-ADR CAGLE'S INC-CLA CANTEL MEDICAL CORP-CLB CAPITAL CROSSING BANK CAPITAL SENIOR LIVING CORP CASCADE FINL CORP CASTLE ENERGY CORP CFM TECHNOLOGIES INC CHAPARRAL RESOURCES INC CHART HOUSE ENTERPRISES INC CHATTEM INC CLICKSOFTWARE TECHNOLOGIES LTD CNB FLORIDA BANCSHARES INC COLONIAL INSD MUN FD COMPUTER MOTION INC CORNELL COMPANIES INC COVEST BANCSHARES INC CRIIMI MAE INC CYRK INC DAN RIVER INC-CLA DAXOR CORP DECKERS OUTDOOR CORP DELTA NATURAL GAS CO INC E MEDSOFT.COM EASTERN CO EATON VANCE FL MUNI INC TR ECONNECT EDUTREK INTERNATIONAL INC-CLA EMERGING MARKETS INCOME FD INC ENCHIRA BIOTECHNOLOGY CORP EPRISE CORP 18 21 FINANCIAL INDS CORP FLORIDA PUBLIC UTILITIES CO FNB FINANCIAL SERVICES CORP FRANKLIN MULTI-INCOME TR FUSION MED TECHNOLOGIES INC GASTON FED BANCORP INC GLOBAL VACATION GROUP INC GLOBAL-TECH APPLIANCES INC HAWK CORP HEI INC HISPANIC TV NETWORK INC HOLLYWOOD ENTMT CORP HOME STAKE OIL & GAS CO HUNT CORP INTERPHASE CORP JOHNSON OUTDOORS INC-CLA JPS INDUSTRIES INC KVH INDUSTRIES INC LANDEC CORP LARSCOM INC-CLA LASER MORTGAGE MGT INC LAWRENCE SAVINGS BANK MA LEAP TECHNOLOGY INC MACATAWA BANK CORP MAGIC SOFTWARE ENTERPRISES MARINE PETROLEUM TRUST MARKETWATCH.COM INC MARTEN TRANSPORT LTD MARVEL ENTERPRISES-CLA MATRIX BANCORP INC MATRIX SERVICE CO MAXX PETROLEUM LTD MEDIX RESOURCES INC MFN FINANCIAL CORP MICRO THERAPEUTICS INC MICROCIDE PHARMACEUTICALS MOMENTUM BUSINESS APPS INC MPHASE TECHNOLOGIES INC MUNIHOLDINGS FLA INSD FD V MUNIHOLDINGS MICH INSD FD II MYPOINTS.COM INC NASTECH PHARMACEUTICAL NATIONAL STEEL CORP-CLB NATIONS BALANCD TARGT MAT FD NEOGEN CORP NEOTHERAPEUTICS INC NESS ENERGY INTL INC NETERGY NETWORKS INC NETWORK COMMERCE INC NEWMIL BANCORP INC 19 22 NORTHPOINT COMMUNICATIONS GP NORTHWEST PIPE CO OBIE MEDIA CORP OEC COMPRESSION CORP OREGON TRAIL FINANCIAL CORP OWENS CORNING PENNSYLVANIA COMM BANCORP PETRIE STORES LIQUIDATION TR PROFESSIONAL STAFF PLC -ADR PROGRESSIVE RETURN FUND INC PUTNAM INV GRADE MUNI TR III QUALITY SYSTEMS INC QUIPP INC RAINMAKER SYSTEMS REPEATER TECHNOLOGIES INC ROYCE GLOBAL TRUST INC RWD TECHNOLOGIES INC SAUCONY INC-CLB SCC COMMUNICATIONS CORP SCIENTIFIC LEARNING CORP SCOPE INDUSTRIES INC SCUDDER GLOBAL HIGH INCM FD SECURITY CAPITAL/DE-CLA SHILOH INDUSTRIES INC SHOP AT HOME INC SIERRACITIES.COM INC SOFTNET SYSTEMS INC SOUTHERN MINERAL CORP SPORTS CLUB COMPANY INC SWISS ARMY BRANDS INC SYNSORB BIOTECH INC TEAMSTAFF INC TEFRON LTD TELEHUBLINK CORP TEXOIL INC THERMOGENESIS CORP TRACK DATA CORP TRADESTATION GROUP INC TRANSMEDIA NETWORK TURKISH INVT FD INC TWINLAB CORP UGLY DUCKLING CORP USLIFE INCOME FUND VAN KAMPEN HIGH INCOME TR II VENTRO CORP VISIONICS CORP WINTON FINANCIAL CORP WISER OIL CO WOLOHAN LUMBER CO ZEMEX CDA CORP 20 23 PROXY TYLER CORPORATIONTECHNOLOGIES, 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 March 27, 1998May 7, 2001 of the annual meeting of stockholders of Tyler CorporationTechnologies, Inc. (the "Company") to be held at Suite 2820, San Jacinto Tower, 2121 San Jacinto Street,the Park Cities Hilton, 5954 Luther Lane, Dallas, Texas, on Tuesday, April 28, 1998,June 5, 2001, at 10:0010.00 a.m., Dallas time, and the proxy statement in connection therewith, and (2) appoints Louis A. Waters and C.A. Rundell, Jr.,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 at 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 substitutes or any of them may lawfully do by virtue hereof. - ----------- ----------- SEE REVERSE SIDE SEE REVERSE SIDE CONTINUED AND TO BE SIGNED ON REVERSE SIDE [X]PLEASE MARK VOTE AS IN THIS EXAMPLE. THIS PROXY WILL BE VOTED AS SPECIFIED BELOW. IF NO SPECIFICATION IS MADE, THIS PROXY WILL BE VOTED FOR THE MATTERS SPECIFICALLY REFERRED TO BELOW. 1. Election of Directors: NOMINEES: Lorch, Meyer, Oates, Rundell, Russell, Waters [ ]FOR ALL NOMINEES [ ]WITHHOLD AUTHORITY FOR ALL NOMINEES [ ] -------------------------------------------------- TO WITHHOLD AUTHORITY TO VOTE FOR ANY NOMINEE(S), MARK ABOVE AND WRITE NOMINEE'S NAME(S) IN SPACE PROVIDED. 2. Approval of Tyler Corporation Stock Option Plan, as amended and restated as of February 19, 1998. [ ]For [ ] AGAINST [ ]ABSTAIN 3. In their discretion, the proxies are authorize to vote upon such other business as may properly come before the meeting or any adjournments thereof. MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT [ ] Please date this proxy and sign your name exactly as it appears hereon. Where there is more than one owner, each should sign. When signing as an attorney, administrator, executor, guardian or trustee, please add your title as such. If executed by a corporation, the proxy should be signed by a duly authorized officer. Please sign this proxy and return it promptly whether or not you expect to attend the meeting. You may nevertheless vote in person if you do attend. Signature: Date: --------------------- --------- Signature: Date: --------------------- ---------SIDE - ----------- ----------- 24 [TYLER LETTERHEAD] VOTE BY INTERNET-www.proxyvote.com Use the internet to transmit your voting instructions and for electronic delivery of information up until 11:59 P.M. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in hand when you access the web site. You will be prompted to enter your 12-digit Control Number, which is located below, to obtain your records and to create an electronic voting instruction form. VOTE BY MAIL Mark, sign, and date your proxy card and return it in the postage-paid envelope we have provided or return it to Tyler Technologies, Inc., c/o ADP, 51 Mercedes Way, Edgewood, NY 11717. YOUR VOTE IS IMPORTANT! Do not return your Proxy Card if you are voting by Telephone or Internet. Please sign this proxy and return it promptly whether or not you expect to attend the meeting. You may nevertheless vote in person if you do attend. TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: TYLER1 KEEP THIS PORTION FOR YOUR RECORDS - ------------------------------------------------------------------------------------------------------------------------------------ THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. DETACH AND RETURN THIS PORTION ONLY TYLER TECHNOLOGIES, INC. THIS PROXY WILL BE VOTED AS SPECIFIED BELOW, IF NO SPECIFICATION IS MADE, THIS PROXY WILL BE VOTED FOR THE MATTERS SPECIFICALLY REFERRED TO BELOW. For Withhold For All To withhold authority to vote, mark "For All All Except All Except" and write the nominees's 1. Election of Directors [ ] [ ] [ ] number on the line below. NOMINEES: 01) Ben T. Morris, 02) Ulrich Otto, 03) G. Stuart Reeves, 04) Glenn A. Smith, 05) Louis A. Waters, ---------------------------------------- 06) John D. Woolf, 07) John M. Yeaman 2. In their discretion, the proxies are authorized to vote upon such other business as may properly come before the meeting or any adjournments thereof. Please date this proxy and sign your name exactly as it appears hereon. Where there is more than one owner, each should sign. When signing as an attorney, administrator, executor, guardian or trustee, please add your title as such. If executed by a corporation, the proxy should be signed by a duly authorized officer. MARK HERE FOR ADDRESS CHANGE AND NOTE ON REVERSE [ ] - ---------------------------------------------------- ------------------------------------------------ Signature [PLEASE SIGN WITHIN BOX] Date Signature [Joint Owners] Date