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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 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:
<TABLE>
<S> <C>
[ ] 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
</TABLE>
TYLER TECHNOLOGIES, INC.
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(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
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[ ] 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.
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[TYLER TECHNOLOGIES, INC. LOGO]
May 25, 2000
Dear Stockholder:
You are cordially invited to attend the annual meeting of stockholders
of Tyler Technologies, Inc. to be held on Wednesday, June 28, 2000, at the
Melrose Hotel, 3015 Oak Lawn Avenue, Dallas, Texas, commencing at 10:00 a.m. At
this meeting you will be asked to elect six directors for the ensuing year and
to consider and vote upon a proposal to amend the Tyler Technologies, Inc. Stock
Option Plan.
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,
LOUIS A. WATERS
Chairman of the Board
<PAGE> 3
TYLER TECHNOLOGIES, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 28, 2000
To the Stockholders of
TYLER TECHNOLOGIES, INC.:
Tyler Technologies, Inc. ("Tyler" or the "Company") will hold its annual
meeting of stockholders (the "Annual Meeting") at the Melrose Hotel, 3015 Oak
Lawn Avenue, Dallas, Texas, on Wednesday, June 28, 2000, at 10:00 a.m., Dallas
time, for the following purposes:
(1) to elect six directors to serve until the next annual meeting of
stockholders or until their respective successors are duly elected and
qualified;
(2) to consider and vote upon a proposal to amend and restate the Tyler
Technologies, Inc. Stock Option Plan (the "Tyler Option Plan") as
described in this proxy statement; and
(3) to transact such other business as may properly come before the Annual
Meeting or any adjournment thereof.
Only stockholders of record at the close of business on May 15, 2000 are
entitled to notice of, and to vote at, the Annual Meeting or any adjournment
thereof. A list of stockholders entitled to vote at the Annual Meeting will be
available for examination at the offices of the Company, 2800 West Mockingbird
Lane, Dallas, Texas, for the ten day period immediately before the 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.
The enclosed 1999 Annual Report does not form any part of the proxy
solicitation material.
By Order of the Board of Directors
Deanie Morel
Secretary
Dallas, Texas
May 25, 2000
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THE ANNUAL MEETING
PLACE, DATE, AND TIME
The Annual Meeting will be held at the Melrose Hotel, 3015 Oak Lawn Avenue,
Dallas, Texas on Wednesday, June 28, 2000, at 10:00 a.m., local 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; (ii) approve the amended and restated Tyler Option Plan (the
"Amended Plan"); and (iii) 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 six directors. Each of the six nominees for directors currently
serve on the Company's Board of Directors (the "Tyler Board"). The nominees for
director for the Tyler Board are Ernest H. Lorch, Frederick R. Meyer, William D.
Oates, C.A. Rundell, Jr., Louis A. Waters, and John M. Yeaman. For more
information regarding the nominees for directors to the Tyler Board, see "Tyler
Management - Directors and Executive Officers."
Shares represented by proxies returned duly executed will be voted, unless
otherwise specified, in favor of the six nominees for the Tyler Board as
described herein. The proxies cannot be voted for more than six 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.
Proposal Two - Amended and Restated Tyler Option Plan
At the Annual Meeting, the stockholders will also be asked to consider and
vote upon a proposal to approve the Amended Plan. The principal changes proposed
by the Amended Plan include (i) increasing the number of shares of Company
common stock, $.01 par value per share (the "Common Stock") subject to the Tyler
Option Plan from 4,300,000 to 5,500,000, (ii) providing that options may be
granted under the Tyler Option Plan to non-employee directors and consultants,
(iii) adding a change of control provision, and (iv) permitting cashless and
stock-for-stock exercises. The Amended Plan is intended to enable the Company to
provide additional incentives to selected key employees and non-employee
directors of and consultants to the Company and its subsidiaries whose
performance and responsibilities are determined to have a direct and significant
effect on the performance of the Company and its subsidiaries.
Purpose of the Plan. Stock options are designed to strengthen the
commitment of selected key employees, directors and consultants to the Company,
its subsidiaries and its stockholders, to motivate those individuals 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 Common Stock so that the management and key employees of
the Company and its subsidiaries and non-employee directors and consultants are
rewarded only if the value of the stockholders' investment in the Company has
appreciated. The increase in shares subject to the Amended Plan has become
increasingly important as the Company pursues its growth strategy of building a
nationally integrated information management services, systems, and outsourcing
company serving local governments and other enterprises. A copy of the Amended
Plan is attached as Appendix A.
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Amendment Submitted for Approval. The Tyler Stock Option Plan was
established on March 13, 1990 and has been amended since that time. On May 11,
2000 the Tyler Board approved the Amended Plan.
The approval of the Amended 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 Annual Meeting. It is being submitted in order
to comply with federal income tax and other requirements. Management recommends
voting in favor of the Amended Plan.
If the Amended Plan is not approved by the stockholders, the Company will
continue to maintain the Tyler Option Plan as amended and restated by the
Amended Plan; however, any options granted as incentive stock options prior to
the Annual Meeting at a time when the aggregate number of shares subject to
outstanding options exceeded the aggregate number of shares then available for
issuance under the Tyler Option Plan will be considered nonqualified stock
options.
Description of the Amended Plan. The Amended Plan is designed to permit the
appropriate administering committee to grant options to key employees,
directors, and consultants of the Company or its subsidiaries to purchase shares
of Common Stock. The Amended Plan requires that the purchase price under each
incentive stock 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 Tyler Board grants options to eligible individuals,
determines the purchase price and option period at the time the option is
granted, and administers and interprets the Amended Plan. The Compensation
Committee of the Tyler Board grants options and administers the Amended Plan
with respect to officers of the Company and the entire Tyler Board grants
options and administers the Amended Plan with respect to directors of the
Company. Options may be exercised in annual installments as specified by the
administering committee or, if applicable, the Tyler Board. All installments
that become exercisable are cumulative and may be exercised at any time after
they become exercisable until expiration of the option. The Amended Plan
contains provisions governing "Changes of Control", as defined therein,
including accelerated vesting of options under certain circumstances.
The exercise price of options is paid in cash or by check at the time of
exercise or, if the option agreement allows and if approved by the administering
committee or, if applicable, the Tyler Board, by the tender of Common Stock
owned by the optionee in lieu of cash payment of the option price, or through a
combination thereof; provided that such shares either (i) have been owned by the
optionee for more than six months and have been "paid for" within the meaning of
Rule 144 promulgated under the Securities Act of 1933 or (ii) were obtained by
the optionee in the public market (hereunder referred to as "Qualifying
Shares"). If the option is exercised by tendering Qualifying Shares, the number
of shares tendered shall be determined by the fair market value per share of the
Common Stock on the date of the exercise, as determined by the Company. An
option agreement may also provide that the exercise price of an option may be
paid through the cashless exercise method whereby the optionee authorizes a
broker designated by the Company to sell a specified number of the shares of
Common Stock to be acquired by the optionee on the exercise of the option,
having a then fair market value equal to the sum of the exercise price of the
option, plus any transaction costs. The remainder of the shares not sold will be
delivered to the optionee. Shares of Common Stock deliverable upon exercise of
the options may be transferred from treasury or issued from authorized but
unissued shares.
Unless sooner terminated by action of the Tyler Board, the Amended Plan
will terminate on May 11, 2010, and no options may thereafter be granted under
the Amended Plan. The Amended Plan may be amended, altered, or discontinued by
the Tyler Board without the approval of the stockholders, except that any
amendment to change the individuals or class of individuals who are eligible to
receive options or the aggregate number of shares that may be issued under
options shall be submitted to the stockholders for approval. The administering
committee or, if applicable, the Tyler Board, however, may make appropriate
adjustments in the number of shares covered by the Amended Plan, the number of
shares subject to outstanding options, and the option prices to reflect any
stock dividend, stock split, share combination, or
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other recapitalization and, with respect to outstanding options and option
prices, to reflect any merger, consolidation, reorganization, liquidation or
similar transaction of or by the Company.
Incentive stock options and nonqualified stock options may be granted under
the Amended Plan to key employees of the Company or its subsidiaries. Key
employees are defined in the Amended Plan to be those employees whose
performance and responsibilities are determined by the appropriate administering
committee to have a direct and significant effect on the success of the Company
and its subsidiaries. Directors who are not employees of the Company or one of
its subsidiaries, as well as consultants, are eligible for the grant of
nonqualified stock options. Currently approximately two persons who are either
directors or consultants are eligible to receive options under the Amended Plan.
Additional options may be granted to persons to whom options have previously
been granted. There is no restriction in the Amended 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 Amended Plan. Incentive stock options are options that meet the
requirements of Section 422 of the Internal Revenue Code of 1986, as amended
(the "Code"), and nonqualified stock options are options that do not meet the
requirements of Section 422 of the Code. No incentive stock option, however, may
be granted under the Amended Plan to an employee who owns more than 10% of the
voting power of all classes of securities of the Company or its parent or
subsidiaries 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 or, if applicable, the Tyler Board may provide
for termination of options granted under the Amended Plan in case of termination
of employment, directorship, consultant relationship, dishonesty, or any other
reason the appropriate committee or, if applicable, the Tyler Board determines.
If an option under the Amended 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 Amended Plan. Upon termination of the employment, directorship, or
consultant relationship of an optionee holding an option under the Amended Plan,
his option is exercisable for a period of 30 days after termination, and
thereafter his option terminates. If the optionee dies or becomes disabled
before the termination of his right to exercise his option, the legal
representatives of his estate, or the optionee in the event of his disability,
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 or disability, whichever first occurs, and the option may be exercised
only as to those shares the optionee could have purchased under the option on
the date of death, disability or other termination. Options may not be
transferred other than by will or the laws of descent and distribution and,
during the lifetime of the optionee, may be exercised only by him.
Tax Status of Options. An optionee has no taxable income, and the Company
is not entitled to a deduction, at the time of the grant of an option. All stock
options that qualify under the rules of Section 422 of the Code will be entitled
to "incentive stock option" treatment. To receive incentive stock option
treatment, an optionee must not dispose of the acquired stock within two years
after the option is granted or within one year after the exercise. In addition,
the individual must have been an employee of the Company or one of its
subsidiaries (or their predecessors) 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.
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If an employee does not meet the two-year and one-year holding requirement
(a "disqualifying disposition"), tax will be imposed at the time of sale of the
stock. In such event, the employee's gain on exercise of the incentive stock
option will be compensation to him taxed as ordinary income rather than capital
gain to the extent the fair market value of the acquired Common Stock on the
date of exercise of the incentive stock option exceeds the aggregate exercise
price paid for that Common Stock, and the Company will be entitled to a
corresponding deduction at the time of sale. Any remaining gain on sale of that
Common Stock (equal to the excess of the amount realized on the disqualifying
disposition of that Common Stock over its fair market value on the date of the
exercise of the incentive stock option) will be long-term capital gain if the
optionee held that Common Stock for more than one year. If the amount realized
on the disqualifying distribution is less than the fair market value of the
Common Stock on the date of exercise of the incentive stock option, the total
amount includable in optionee's gross income, and the amount deductible by the
Company, will equal the excess of the amount realized on the disqualifying
disposition over the exercise price.
An optionee, upon exercise of a nonqualified stock option that does not
qualify as an incentive stock option, recognizes ordinary income in an amount
equal to the gain on exercise. The exercise of a nonqualified stock option
entitles 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.
Different tax consequences may result from stock-for-stock and cashless
exercises of options.
THE FOREGOING SUMMARY OF THE EFFECT OF THE FEDERAL INCOME TAX UPON
PARTICIPANTS IN THE TYLER OPTION PLAN DOES NOT PURPORT TO BE COMPLETE, AND IT IS
RECOMMENDED THAT THE PARTICIPANTS CONSULT THEIR OWN TAX ADVISORS FOR COUNSELING.
MOREOVER, THE FOREGOING SUMMARY IS BASED UPON PRESENT FEDERAL INCOME TAX LAWS
AND ARE SUBJECT TO CHANGE. THE TAX TREATMENT UNDER FOREIGN, STATE, OR LOCAL LAW
IS NOT COVERED IN THIS SUMMARY.
THE TYLER BOARD UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE
AMENDED AND RESTATED TYLER OPTION PLAN.
RECORD DATE AND VOTING
Only holders of record of Common Stock on May 15, 2000 (the "Record Date")
are entitled to notice of, and to vote at, the Annual Meeting. There were issued
and outstanding 43,345,687 shares of Common Stock on the Record Date. Each
holder of Common Stock will be entitled to one vote, in person or by proxy, for
each share of Common Stock standing in his or her name on the books of Tyler on
the Record Date on any matter submitted to a 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, having a
plurality of the voting power of the Company, in person or by proxy, is required
to elect directors. The affirmative vote of the holders of shares of Common
Stock, having a majority of the voting power of the shares actually voted at the
Annual Meeting, is required to approve the Amended Plan.
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PROXY SOLICITATION, REVOCATION, AND EXPENSE
The accompanying proxy is being solicited on behalf of the Tyler Board. All
proxies that are properly completed, signed, and returned prior to the Annual
Meeting will be voted as indicated on the proxy. If the enclosed proxy is signed
and returned, it may, nevertheless, be revoked at any time prior to the voting
thereof at the pleasure of the stockholder signing it, either by (i) filing a
written notice of revocation received by the person or persons 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 solicitation material and the proxy. In addition to use of the mail,
proxies may be solicited by personal interview, telephone, and telegram by
directors, 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.
TYLER MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
The following is a brief description of the directors and executive
officers of the 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 at its annual meeting and hold office
until its next annual meeting or until their successors are elected and
qualified.
Directors and Executive Officers of Tyler
<TABLE>
<CAPTION>
Name / Age Present Position Served Since
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Louis A. Waters, 61 Co-Chief Executive Officer 2000
Chairman of the Board 1997
John M. Yeaman, 59 Co-Chief Executive Officer 2000
President 1998
Director 1999
Theodore L. Bathurst, 50 Vice President and Chief Financial Officer 1998
Brian B. Berry, 44 Vice President - Corporate Development 1998
Brian K. Miller, 41 Vice President - Finance 1999
Treasurer 1997
John D. Woolf, 55 Senior Vice President - Administration 1999
William D. Oates, 59 Chairman of the Executive Committee and Director 1998
C.A. Rundell, Jr., 68 Director 1966
Ernest H. Lorch, 67 Director 1993
Frederick R. Meyer, 72 Director 1967
</TABLE>
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Business Experience of Directors 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 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. Since
September 1998, Mr. Yeaman has also served as President and Chief Executive
Officer of Business Resources Corporation, a subsidiary of the Company
("Resources"). 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 Eagle National Bank in Dallas.
Theodore L. Bathurst has been Vice President and Chief Financial 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 B. Berry has been Vice President-Corporate Development of the Company
since August 1998. Mr. Berry is one of the founders of The Software Group, a
subsidiary of the Company ("TSG"), and has served as an officer and director of
TSG with various responsibilities since its inception in 1981, most recently as
Vice President.
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 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.
John D. Woolf has been Senior Vice President - Administration of the
Company since December 1999. Mr. Woolf has also served as Executive Vice
President and Chief Financial Officer of Resources since November 1994. Mr.
Woolf is a certified public accountant.
William D. Oates has been Chairman of the Board of Resources since its
inception in 1993 and was President of Resources from 1993 until September 1998.
Mr. Oates was appointed director of the Company in February 1998 following the
Company's acquisition of Resources and is Chairman of the Executive Committee of
the Tyler Board. 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 was the principal owner and President until his sale of the
company in November 1994.
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C. A. Rundell, Jr. has been a director of the Company since 1966 and is a
member of the Executive Committee of the Tyler Board. Mr. Rundell served as
President and Chief Executive Officer of the Company from October 1997 to
December 1998, as Chairman of the Board from October 1996 to October 1997, and
Interim Chief Executive Officer of the Company from October 1996 to March 1997.
Mr. Rundell has been Chairman of the Board of NCI Building Systems, Inc. since
April 1989 and Chairman of the Board of Integrated Security Systems, Inc. since
March 1999. He is also a director of Dain Rauscher Corporation, Tandy Brands
Accessories, Inc., Renaissance US Growth and Income Trust PLC, and Renaissance
Capital Growth and Income Fund III, Inc.
Ernest H. Lorch is counsel to the law firm of Whitman Breed Abbott & Morgan
LLP, a position he has held since December 1992. Mr. 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 was also Senior Chairman of the Board of
Varlen Corporation until 1999 when Varlen was acquired by a third party. Mr.
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.
Frederick R. Meyer has been Chairman of the Board of Aladdin Industries,
Inc., a diversified company principally engaged in the manufacture of
thermosware and related products since July 1985. Mr. Meyer has also been
President and Chief Executive Officer of Aladdin Industries, Inc. from October
1995 to present and from May 1987 to September 1994. Mr. Meyer served as
President of Tyler from August 1983 through December 1986. Mr. Meyer has been a
director of the Company since 1967 and is currently a member of the Audit
Committee and Chairman of the Compensation Committee of the Tyler Board. He is
also a director of Palm Harbor Homes, Inc., and Southwest Securities Group, Inc.
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 eight times during 1999. Each member of the Tyler
Board participated in at least 75% of all Tyler Board and committee meetings
held during 1999 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 is described below. The Company has no nominating committee; instead
the entire Tyler Board is responsible for selecting nominees for election as
directors.
Audit Committee. During 1999, the Audit Committee was comprised of Louis A.
Waters and Ernest H. Lorch. Effective March 2000 the Audit Committee is
comprised of Ernest H. Lorch and Frederick R. Meyer. 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 twice during 1999.
Compensation Committee. During 1999, the Compensation Committee was
comprised of Louis A. Waters, Ernest H. Lorch, and Frederick R. Meyer. 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 1999.
8
<PAGE> 11
Executive Committee. During 1999, the Executive Committee was comprised of
Louis A. Waters, William D. Oates, and C.A. Rundell, Jr. 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 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, 1999, 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.
SECURITY OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth certain information concerning the
beneficial ownership of the Company's Common Stock as of May 15, 2000 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 of Tyler, (iii) each
beneficial owner of more than 5% of the outstanding shares of Common Stock, and
(iv) all executive officers and directors of Tyler as a group.
<TABLE>
<CAPTION>
Name and Address of Beneficial Owner Amount and Nature of Ownership Percent of Class(1)(2)
- ------------------------------------ ------------------------------ -----------------------
<S> <C> <C>
William D. Oates 7,751,000(3) 17.9%
2800 W. Mockingbird Lane
Dallas, Texas 75235
Louis A. Waters 2,509,900(4) 5.5%
520 Post Oak Boulevard, Suite 850
Houston, Texas 77027
Brian B. Berry 660,644(5) 1.5%
C.A. Rundell, Jr. 536,943(6) 1.2%
John M. Yeaman 490,517(7) 1.1%
Frederick R. Meyer 201,249(8) *
John D. Woolf 166,667(9) *
Theodore L. Bathurst 60,000(10) *
Ernest H. Lorch 50,000 *
All directors and executive officers as a group (10 persons) 12,464,587(11) 27.1%
</TABLE>
- -----------------------------
* Less than one percent of the outstanding Common Stock
9
<PAGE> 12
(1) 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.
(2) Based on 43,345,687 shares of Common Stock outstanding at May 15, 2000.
Each owner's percentage is calculated by dividing (a) the number of
shares beneficially held by such owner by (b) the sum of (i) 43,345,687
plus (ii) the number of shares such owner has the right to acquire
within sixty days.
(3) 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.
(4) 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.
(5) Includes beneficial ownership of 68,700 shares of Common Stock held in
a foundation in which Mr. Berry is deemed to have sole voting power.
(6) Includes beneficial ownership of 395,764 shares of Common Stock
issuable upon the exercise of stock options granted pursuant to the
Tyler Option Plan that are exercisable within sixty days, beneficial
ownership of 20,000 shares of Common Stock held in a foundation in
which Mr. Rundell has sole voting power, and 4,969 shares of Common
Stock held in an individual retirement account in which Mr. Rundell has
sole voting power.
(7) Includes beneficial ownership of 66,667 shares of Common Stock issuable
upon the exercise of stock options granted pursuant to 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 60,000 shares of Common Stock held in
an individual retirement account in which Mr. Meyer has sole voting
power.
(9) Includes beneficial ownership of 16,667 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 50,000 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 2,000,000 shares of Common Stock subject to a warrant, 565,765
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 1,760,969 shares of Common Stock held in
foundation, individual retirement accounts, and other arrangements in
which named persons have sole or shared voting power.
10
<PAGE> 13
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth certain information regarding compensation
paid for all services rendered to the Company and its subsidiaries in all
capacities during fiscal years 1999, 1998, and 1997 by the Company's Chief
Executive Officer and the four other most highly compensated executive officers
of the Company whose total annual salary and bonus earned during fiscal year
1999 exceeded $100,000.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION AWARDS
--------------------------------------- ----------------------------
OTHER SECURITIES
ANNUAL RESTRICTED UNDERLYING
NAME AND PRINCIPAL COMPEN- STOCK OPTIONS/ ALL OTHER
POSITION YEAR SALARY BONUS SATION(1) AWARDS SARS COMPENSATION(2)
- ------------------ ------- ----------- ---------- --------- ------------ ------------ --------------
<S> <C> <C> <C> <C> <C> <C> <C>
John M. Yeaman 1999 $225,000 $200,000 -- -- 25,000 --
President and 1998 76,302(3) 100,000 -- -- 250,000 --
Co-Chief Executive
Officer of the
Company
Theodore L. Bathurst 1999 252,400 125,000 -- -- 15,000 --
Vice President and 1998 57,841(4) 40,000 -- -- 250,000 --
Chief Financial
Officer of the
Company
Brian B. Berry 1999 202,000 253,200(5) -- -- -- $3,200
Vice 1998 100,000 -- -- -- 1,631
President - 172,945(6)
Corporate
Development of
the Company and
Vice President of
TSG
William D. Oates 1999 180,000 188,000 -- -- -- --
Chairman of the 1998 157,083(7) -- -- -- -- --
Executive
Committee of the
Company and of
Resources
John D. Woolf 1999 129,000 145,000(5) -- -- 25,000 --
Senior Vice 1998 103,890(7) 50,000 -- -- -- --
President -
Administration of
the Company and
Executive Vice
President and
Chief Financial
Officer of
Resources
</TABLE>
- --------------
(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) Employer contributions to a Profit Sharing Plan.
(3) Employment commenced in September 1998.
(4) Employment commenced in October 1998.
11
<PAGE> 14
(5) Bonus compensation relates to services provided to the Company as well as
certain operating subsidiaries.
(6) Salary since the acquisition of TSG on February 19, 1998.
(7) Salary since the acquisition of Resources on February 19, 1998.
OPTION/SAR GRANTS IN 1999
The following table shows stock option grants during 1999 to the Named Executive
Officers:
<TABLE>
<CAPTION>
NUMBER OF PERCENT OF TOTAL
SECURITIES OPTIONS/SARS
UNDERLYING GRANTED TO EXERCISE GRANT DATE
OPTION/SARS EMPLOYEES IN PRICE PER EXPIRATION PRESENT
NAME GRANTED FISCAL YEAR SHARE DATE VALUE $(1)
- ----------------------- -------------- ----------------- ----------- ---------- ------------
<S> <C> <C> <C> <C> <C>
John M. Yeaman(2)......... 25,000 2% 3.875 4/14/09 $68,750
Theodore L. Bathurst(3)... 15,000 1% 3.875 4/14/09 $41,250
Brian B. Berry............ -- -- -- -- --
William D. Oates.......... -- -- -- -- --
John D. Woolf............. 25,000 2% 3.875 4/14/09 $68,750
</TABLE>
- ----------------------
(1) The present value was determined using the Black-Scholes option-pricing
model, assuming an expected life of seven years and a dividend yield of $0.
In addition, expected volatility and risk-free interest rate, were assumed
to be .70 and 5.3%, respectively.
(2) Includes 3 options granted as incentive stock options and 24,997 options
granted as non-qualified stock options.
(3) Includes 3 options granted as incentive stock options and 14,997 options
granted as non-qualified stock options.
OPTION/SAR EXERCISES DURING 1999 AND YEAR-END OPTION/SAR VALUES
The following table shows stock option exercises during 1999 by each of the
named executive officers and the value of unexercised options at December 31,
1999:
<TABLE>
<CAPTION>
VALUE OF
NUMBER OF UNEXERCISED
UNEXERCISED OPTIONS/SARS IN-THE-MONEY
AT OPTIONS/SARS AT
NUMBER OF DECEMBER 31, 1999(1) DECEMBER 31, 1999(2)
SHARES VALUE ------------------------- -------------------------
NAME EXERCISED REALIZED EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- ------------------------------- --------- --------- ------------------------- -------------------------
<S> <C> <C> <C> <C>
John M. Yeaman.............. 58,333 / 216,667 $16,666 / $39,584
Theodore L. Bathurst........ 5,000 $9,687 50,000 / 210,000 $ -- / $16,250
Brian B. Berry.............. -- --
William D. Oates............ -- --
John D. Woolf............... 8,333 / 16,667 $13,541 / $27,084
</TABLE>
- ---------------------------
(1) As of December 31, 1999, options to purchase an aggregate of 3,417,583
shares of Common Stock were outstanding with a weighted average exercise
price per share of $5.55 and expiring between January 27, 2005 and November
4, 2009.
(2) Amount is based on a year-end market value of $5.50 per share. Theodore L.
Bathurst's exercise price exceeded the year-end market value for 50,000
exercisable shares and 200,000 unexercisable shares.
12
<PAGE> 15
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.
EMPLOYMENT CONTRACTS
On October 7, 1998, the Company entered into an employment agreement with
Theodore L. Bathurst, which provides that the Company pay Mr. Bathurst for his
services as Vice President and Chief Financial Officer of the Company a salary
of $250,000 and a minimum guaranteed bonus of $37,500 for 1998. Mr. Bathurst
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 perquisites normally offered to the executive
employees of the Company. In addition, the Company granted Mr. Bathurst options
to purchase 250,000 shares of Common Stock (77,665 of which are incentive stock
options and 172,335 of which are non-qualified stock options) at $6.44 per
share, the closing price on October 7, 1998. The incentive and non-qualified
stock options will vest ratably on each October 7, 1999-2003. The agreement also
provides for a severance payment equal to one year of his then current base
salary if he is terminated for any reason other than cause, as specified in the
agreement.
Effective February 19, 1998, the Company entered into an employment,
confidentiality, non-solicitation, and non-competition agreement with Brian B.
Berry, which provides that the Company will pay Mr. Berry a salary of at least
$200,000 per year for his services to the Company. In addition, Mr. Berry is
eligible to participate in performance bonus or incentive compensation plans
made available to comparable level employees of the Company and its
subsidiaries. Mr. Berry will also receive all employee benefits and perquisites
normally offered to executive employees. The employment and confidentiality
portions of the agreement expire February 19, 2003, and the non-solicitation and
non-competition portions of the agreement expire the later of February 19, 2003
or the second anniversary of Mr. Berry's termination.
Effective February 19, 1998, the Company entered into an employment,
confidentiality, non-solicitation, and non-competition 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. 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 executive employees. The employment and confidentiality
portions of the agreement expire February 19, 2001, and the non-solicitation and
non-competition portions of the agreement expire the later of February 19, 2003
or the third anniversary of Mr. Oates' termination.
Effective January 1, 1998, the Company entered into an employment agreement
with John D. Woolf which expires December 31, 2004. The agreement provides that
the Company pay Mr. Woolf an annual base salary of at least $120,000. In
addition, Mr. Woolf is eligible to participate in performance bonus or incentive
compensation plans made available to comparable level employees of the Company
and its subsidiaries. Mr. Woolf also receives all employee benefits and
perquisites normally offered to the executive employees. The agreement also
provides that, in the event Mr. Woolf is terminated for any reason other than
cause, as specified in the agreement, he will continue to be paid his base
salary for the remaining term of 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. Waters is Co-Chief Executive
Officer of the Company and Mr. Meyer was previously an 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, has the
responsibility for final approval for all compensation to officers and directors
of the Company, including the duty to ensure that compensation paid to
13
<PAGE> 16
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. Annual bonuses vary
significantly based on the Company's results and revenue growth, the achievement
of strategic objectives of the Company, and each individual's contribution
toward that performance.
The Compensation Committee made stock option grant determinations for
executive officers in April 1999. Stock options granted to executive officers in
1999 were granted at 100% of fair market value on the date of grant, have a
10-year term, and become exercisable in three equal annual installments,
beginning on the date of grant. Any value actually realized by an executive
officer from an option grant depends completely upon increases in the price of
Tyler common stock.
The Compensation Committee considered each officer's continuing
contribution to achieving the strategic objectives of the Company and granted
each officer options at a price per share of $3.875 (the market value of Tyler's
common stock on the date of grant, April 14, 1999). The Compensation Committee
intended for the stock option grants to recognize progress toward accomplishment
of the Company's strategic objectives and, since these stock options will result
in increased compensation to an executive officer only if Tyler's stock price
increases, focus the executive officers on building value for stockholders.
CHIEF EXECUTIVE OFFICER COMPENSATION
John M. Yeaman was elected President and Chief Executive Officer of the
Company in December 1998. In 1999, Mr. Yeaman's cash compensation consisted of a
base salary of $225,000 plus a bonus of $200,000. In determining Mr. Yeaman's
cash compensation in 1999, the Compensation Committee considered several
factors, including the Company's substantial growth and overall financial
performance during 1999 relative to its announced strategy and target goals, Mr.
Yeaman's contributions to such growth and performance, and the levels of
compensation of chief executive officers of companies of similar size in similar
industries. In addition, Mr. Yeaman was granted options to acquire 25,000 shares
of Common Stock, which vested one-third upon the date of grant and one-third on
each of the first and second anniversary of the date of grant. The Compensation
Committee believes that these options will align Mr. Yeaman's interest with the
long-term growth interests of the Company and the stockholders.
This report is submitted by the Compensation Committee.
Ernest H. Lorch
Frederick R. Meyer
Louis A. Waters
STOCK PERFORMANCE CHART
The following chart compares the return on the Company's Common Stock for
the last five years with the Standard and Poors ("S&P") 500 Index and a Peer
Group Index which is comprised of companies with similar market capitalization
of approximately $220 million. A list of the Companies included in the Peer
Group Index is located at Appendix B. Prior to 1998, the Company was a diversely
based enterprise selling products and services
14
<PAGE> 17
through a few distinctly different operating companies. In 1998, the Company
implemented a new strategy to build a nationally integrated information
management services, systems and outsourcing company initially serving local
governments and other enterprises. The Company believes the Peer Group Index is
more representative of its current strategy and prior history. The comparison
assumes $100 was invested on December 31, 1994 in the Company's Common Stock and
in each of the foregoing indices and assumes reinvestment of dividends and
distributions.
<TABLE>
<CAPTION>
Tyler S&P 500 Peer Group
----- ------- ----------
<S> <C> <C> <C>
1994 100.00 100.00 100.00
1995 84.60 137.58 137.58
1996 57.69 169.17 155.73
1997 169.22 225.6 185.61
1998 188.45 290.08 146.6
1999 169.22 351.12 133.65
</TABLE>
CERTAIN TRANSACTIONS
Periodically during 1999, the Company leased a private airplane owned by
William D. Oates for business related trips, for which payments aggregated
approximately $133,000. Mr. Oates is Chairman of the Executive Committee of the
Tyler Board and a director of the Company.
STOCKHOLDER PROPOSALS
Any proposals that stockholders of the Company desire to have presented at
the 2001 annual meeting of stockholders must be received by the Company at its
principal executive offices not later than January 22, 2001.
INDEPENDENT AUDITORS
Ernst & Young LLP acted as the Company's independent auditors for 1999. One
or more representatives of Ernst & Young LLP will attend the 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 2000.
By Order of the Board of Directors,
Deanie Morel
Secretary
Dallas, Texas
May 25, 2000
15
<PAGE> 18
APPENDIX A
THE
TYLER TECHNOLOGIES, INC.
STOCK OPTION PLAN
[AMENDED AND RESTATED AS OF MAY 12, 2000]
INTRODUCTION
On May 12, 2000, the Board of Directors of Tyler Technologies, Inc. adopted
the following 2000 Stock Option Plan:
1. PURPOSE. The purpose of the Plan is to provide certain Key Employees,
non-employee directors and consultants with a proprietary interest in the
Company through the granting of Options which will:
(a) increase the interest of those Key Employees, non-employee directors
and consultants in the Company's welfare;
(b) furnish an incentive to those Key Employees, non-employee directors
and consultants to continue their services for the Company; and
(c) provide a means through which the Company may attract able persons to
enter its employ, serve on its Board and render other services to it.
2. ADMINISTRATION. The Plan will be administered by the Committee.
3. PARTICIPANTS. The Committee shall, from time to time, select the
particular Key Employees, directors and consultants of the Company and its
Subsidiaries to whom Options are to be granted, and who will, upon such grant,
become Participants in the Plan. The Committee has the authority, in its
complete discretion, to grant Options to Participants. A Participant may be
granted more than one Option under the Plan, and Options may be granted at any
time or times during the term of the Plan.
4. STOCK OWNERSHIP LIMITATION. No Incentive Option may be granted to an
Employee who owns more than 10% of the voting power of all classes of stock of
the Company or its Parent or Subsidiaries. This limitation will not apply if the
Option price is at least 110% of the fair market value of the Common Stock at
the time the Incentive Option is granted and the Incentive Option is not
exercisable more than five years from the date it is granted.
5. SHARES SUBJECT TO PLAN. The Committee may not grant Options under the
Plan for more than 5,500,000 shares of Common Stock and may not grant Options to
any Participant for more than 5,500,000 shares of Common Stock, but these
numbers may be adjusted to reflect, if deemed appropriate by the Committee,
16
<PAGE> 19
any stock dividend, stock split, share combination, recapitalization or the
like, of or by the Company. Shares to be optioned and sold may be made available
from either authorized but unissued Common Stock or Common Stock held by the
Company in its treasury. Shares that by reason of the expiration of an Option or
otherwise are no longer subject to purchase pursuant to an Option granted under
the Plan may be re-offered under the Plan.
6. LIMITATION ON AMOUNT. The aggregate fair market value (determined at the
time of grant) of the shares of Common Stock which any Employee is first
eligible to purchase in any calendar year by exercise of Incentive Options
granted under the Plan and all incentive stock option plans (within the meaning
of Section 422 of the Code) of the Company or its Parent or Subsidiaries shall
not exceed $100,000. For this purpose, the fair market value (determined at the
respective date of grant of each option) of the stock purchasable by exercise of
an Incentive Option (or an installment thereof) shall be counted against the
$100,000 annual limitation for an Employee only for the calendar year such stock
is first purchasable under the terms of the Incentive Option.
7. ALLOTMENT OF SHARES. The Committee shall determine the number of shares
of Common Stock to be offered from time to time by grant of Options to Key
Employees, non-employee directors and consultants of the Company or its
Subsidiaries. The grant of an Option to an individual shall not be deemed either
to entitle the individual to, or to disqualify the individual from,
participation in any other grant of Options under the Plan.
8. GRANT OF OPTIONS. All the Options under the Plan shall be granted by the
Committee. The Committee is authorized to grant Incentive Options, Nonqualified
Options, or a combination of both, under the Plan; provided, however, Incentive
Options may be granted only to Employees. The grant of Options shall be
evidenced by Option Agreements containing such terms and provisions as are
approved by the Committee, but not inconsistent with the Plan, including
provisions that may be necessary to assure that any Option that is intended to
be an Incentive Option will comply with Section 422 of the Code. The Company
shall execute Option Agreements upon instructions from the Committee. Except as
provided otherwise in Sections 5 and 14, the terms of any Option Agreement
executed by the Company shall not be amended, modified or changed without the
written consent of the Company and the Participant.
An Option Agreement may provide that the Participant may request approval
from the Committee to exercise an Option or a portion thereof by tendering
Qualifying Shares at the fair market value per share on the date of exercise in
lieu of cash payment of the Option price.
17
<PAGE> 20
The Plan shall be submitted to the Company's stockholders for approval. The
Committee may continue to grant Options under the Plan after the amendment and
restatement of the Plan on May 12, 2000 and prior to the time of stockholder
approval, which Options will be effective when granted, but if for any reason
the stockholders of the Company do not approve the amended and restated Plan at
their 2000 annual meeting (or any adjournment thereof), all Incentive Options
granted under the Plan prior to that stockholder meeting at a time when the
aggregate number of shares subject to then outstanding options exceeded the
aggregate number of shares then available for issuance under the Plan, will be
deemed to have been granted as Nonqualified Options, and no such Options may be
exercised in whole or in part prior to such stockholder meeting.
9. OPTION PRICE. The Option price for shares subject to Options granted
under the Plan shall be determined by the Committee and, with respect to
Incentive Options, shall not be less than 100% of the fair market value per
share of the Common Stock (or 110% of such amount as required by Section 4) on
the date the Option is granted. For purposes of the Plan, the fair market value
of a share of the Common Stock on the date of grant of the Incentive Option
shall be the reported closing price of the Common Stock on the New York Stock
Exchange on the date of grant of that Incentive Option, or if no sale of the
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 a sale was
reported.
10. OPTION PERIOD; VESTING. The Option Period will begin on the date the
Option is granted, which will be the date the Committee authorizes the Option
unless the Committee specifies a later date. No Option may terminate later than
ten years (or five years as required by Section 4) from the date the Option is
granted. The Committee may provide for the exercise of Options in installments
and subject to the provisions hereof, upon such terms, conditions and
restrictions as it may determine. The Committee may provide for termination of
the Option in the case of termination of employment, directorship or consultant
relationship, dishonesty, or for any other reason.
11. RIGHTS IN EVENT OF DEATH OR DISABILITY. If a Participant dies or
becomes disabled (within the meaning of Section 22(e)(3) of the Code) prior to
termination of his right to exercise an Option in accordance with the provisions
of his Option Agreement, the Option Agreement may provide that it may be
exercised, to the extent of the shares with respect to which the Option could
have been exercised by the Participant on the date of his death or disability,
(i) in the case of death, by the Participant's estate or by the person who
acquired the right to exercise the Option by bequest or inheritance or by reason
of the death of the Participant, or (ii) in the case of disability, by the
Participant or his personal representative, provided the Option is exercised
prior to the date
18
<PAGE> 21
of its expiration or not more than one year from the date of the Participant's
death or disability, whichever first occurs. The date of disability of a
Participant shall be determined by the Committee.
12. PAYMENT. Full payment for shares purchased upon exercising an Option
shall be made in cash or by check or, if the Option Agreement so permits, by
tendering Qualifying Shares at the fair market value per share at the time of
exercise, or on such other terms as are set forth in the applicable Option
Agreement. The Committee may permit a Participant exercising an Option to
simultaneously exercise the Option and sell a portion of the shares acquired,
pursuant to a brokerage or similar arrangement approved in advance by the
Committee, and use the proceeds from the sale as payment of the Option price of
the Common Stock being acquired by exercise of the Option. In addition, the
Participant shall tender payment of the amount as may be requested by the
Company, if any, for the purpose of satisfying its statutory liability to
withhold federal, state or local income or other taxes incurred by reason of the
exercise of an Option. No shares may be issued until full payment of the
purchase price therefor has been made, and a Participant will have none of the
rights of a stockholder until shares are issued to him.
13. EXERCISE OF OPTION. Unless otherwise provided in the Plan, all Options
granted under the Plan may be exercised during the Option Period, at such times,
in such amounts, in accordance with such terms and subject to such restrictions
as are set forth in the applicable Option Agreements. In no event may an Option
be exercised or shares be issued pursuant to an Option if any requisite action,
approval or consent of any governmental authority of any kind having
jurisdiction over the exercise of Options shall not have been taken or secured.
14. CAPITAL ADJUSTMENTS AND REORGANIZATIONS; ANTIDILUTION. The number of
shares of Common Stock covered by each outstanding Option, and the Option prices
thereof, may be adjusted to reflect, as deemed appropriate by the Committee, any
stock dividend, stock split, share combination, or the like of or by the
Company.
If (i) the Company shall sell all or substantially all of its assets, (ii)
the Company shall be a party to any merger, consolidation or other corporate
reorganization as the result of which either the Company is not a surviving or
continuing corporation or the Company is a surviving or continuing corporation
but the shares of Common Stock outstanding immediately before the merger,
consolidation or other corporate reorganization are converted by virtue of that
transaction into other property (whether cash, other securities, or otherwise),
except as described below, or (iii) when the Common Stock is traded in the
over-the-counter market or on any securities exchange, pursuant to a tender
offer or exchange offer for securities of the Company, or in any other manner,
any person or group within the
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meaning of the Securities Exchange Act of 1934, as amended (excluding any
employee benefit plan, or related trust, sponsored or maintained by the Company
or any of its affiliates), acquires beneficial ownership (within the meaning of
Rule 13d-3 promulgated under the Securities Exchange Act of 1934, as amended) of
Common Stock or other securities of the Company (or its successor) constituting
more than 50% of the combined voting power entitled to elect directors of the
Company (or its successor) (any such event described above in this paragraph, a
"Change of Control"), then the Options outstanding immediately before the Change
of Control will be assumed by the surviving corporation or the acquiring
corporation or will be converted into options or rights of at least equal value;
except that if the surviving corporation or the acquiring corporation refuses to
so assume or to so convert the outstanding Options, then the Options shall
become fully vested and exercisable, and the Company shall notify each
Participant, not later than 20 days prior to the effective date of such Change
of Control (except that in the case of a Change of Control described in clause
(iii) above in this paragraph, notice shall be given as soon as practicable
after that Change of Control), that all his Options have become fully vested and
exercisable, whether or not such Options would otherwise then be exercisable
under the terms of his Option Agreement. Any such arrangement relating to
Incentive Options shall comply with the requirements of Section 422 of the Code
and the regulations thereunder. To the extent that the Participants exercise the
Options before or on the effective date of the Change of Control, the Company
shall issue all Common Stock purchased by exercise of those Options, and those
shares of Common Stock shall be treated as issued and outstanding for purposes
of the Change of Control. Upon a Change of Control, where the outstanding
Options are not assumed by the surviving corporation or the acquiring
corporation, the Plan shall terminate, and any unexercised Options outstanding
under the Plan at that date shall terminate. Notwithstanding the foregoing, an
event described in clause (ii) above in this paragraph shall not constitute a
Change of Control if the stockholders of the Company immediately before the
merger, consolidation, or other corporate reorganization hold more than 50% of
the outstanding securities of the surviving corporation or the acquiring
corporation immediately following the merger, consolidation, or other corporate
reorganization.
15. TAX WITHHOLDING. The Committee may establish such rules and procedures
as it considers desirable in order to satisfy any obligation of the Company to
withhold the statutory prescribed minimum amount of federal income taxes or
other taxes with respect to the exercise of any Option granted under the Plan.
Such rules and procedures may provide that the withholding obligation shall be
satisfied by the Company withholding shares of Common Stock otherwise issuable
upon exercise of a Nonqualified Option in an amount equal to the statutory
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<PAGE> 23
prescribed minimum withholding applicable to the ordinary income resulting from
the exercise of that Nonqualified Option.
16. NON-ASSIGNABILITY. Options may not be transferred other than by will or
by the laws of descent and distribution. Except in the case of the death or
disability of a Participant, Options granted to a Participant may be exercised
only by the Participant.
17. INTERPRETATION. The Committee shall interpret the Plan and shall
prescribe such rules and regulations in connection with the operation of the
Plan as it determines to be advisable for the administration of the Plan. The
Committee may rescind and amend its rules and regulations.
18. AMENDMENT OR DISCONTINUANCE. The Plan may be amended or discontinued by
the Board or the Committee without the approval of the stockholders of the
Company, except that any amendment that would (a) materially increase the number
of securities that may be issued under the Plan or (b) materially modify the
requirements of eligibility for participation in the Plan shall be submitted to
the stockholders of the Company for approval.
19. EFFECT OF PLAN. Neither the adoption of the Plan nor any action of the
Board or the Committee shall be deemed to give any Employee, non-employee
director or consultant any right to be granted an Option to purchase Common
Stock or any other rights except as may be evidenced by the Option Agreement, or
any amendment thereto, duly authorized by the Committee and executed on behalf
of the Company and then only to the extent and on the terms and conditions
expressly set forth therein. The existence of the Plan and the Options granted
hereunder shall not affect in any way the right of the Board, the Committee or
the stockholders of the Company to make or authorize any adjustment,
recapitalization, reorganization or other change in the Company's capital
structure or its business, any merger or consolidation of the Company, any issue
of bonds, debentures, or shares of preferred stock ahead of or affecting Common
Stock or the rights thereof, the dissolution or liquidation of the Company or
any sale or transfer of all or any part of its assets or business, or any other
corporate act or proceeding. Nothing contained in the Plan or in any Option
Agreement shall confer upon any Employee, non-employee director or consultant
any right to (i) continue in the employ of the Company or any of its
Subsidiaries, or continue as a director or consultant of the Company or any of
its Subsidiaries or (ii) interfere in any way with the right of the Company or
any of its Subsidiaries to terminate his employment, directorship or consultant
relationship at any time.
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<PAGE> 24
20. TERM. Unless sooner terminated by action of the Board, this Plan will
terminate on May 11, 2010. The Committee may not grant Options under the Plan
after that date, but Options granted before that date will continue to be
effective in accordance with their terms.
21. DEFINITIONS. For the purpose of the Plan, unless the context requires
otherwise, the following terms shall have the meanings indicated:
(a) "Board" means the Board of Directors of the Company.
(b) "Code" means the Internal Revenue Code of 1986, as amended.
(c) "Committee" means the Executive Committee of the Board, except that (i)
the Compensation Committee of the Board shall administer the Plan with respect
to the grant of Options to employees who are officers of the Company and (ii)
the entire Board shall administer the Plan with respect to the grant of Options
to directors of the Company.
(d) "Common Stock" means the Common Stock which the Company is currently
authorized to issue or may in the future be authorized to issue (as long as the
common stock varies from that currently authorized, if at all, only in amount of
par value).
(e) "Company" means Tyler Technologies, Inc., a Delaware corporation.
(f) "Employee" means an individual who is employed, within the meaning of
Section 3401 of the Code, by the Company or by a Subsidiary. The Committee shall
determine when an Employee's period of employment terminates and when such
period of employment is deemed to be continued during an approved leave of
absence.
(g) "Incentive Option" means an Option granted under the Plan which meets
the requirements of Section 422 of the Code.
(h) "Key Employee" means any Employee of the Company and its Subsidiaries
whose performance and responsibilities are determined by the Committee to have a
direct and significant effect on the performance of the Company and its
Subsidiaries.
(i) "Nonqualified Option" means an Option granted under the Plan which is
not intended to be an Incentive Option.
(j) "Option" means an option granted pursuant to the Plan to purchase
shares of Common Stock, whether granted as an Incentive Option or as a
Nonqualified Option.
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<PAGE> 25
(k) "Option Agreement" means, with respect to each Option granted to a
Participant, the signed written agreement between the Participant and the
Company setting forth the terms and conditions of the Option.
(l) "Option Period" means the period during which an Option may be
exercised.
(m) "Parent" means any corporation in an unbroken chain of corporations
ending with the Company if, at the time of granting of the Option, each of the
corporations other than the Company owns stock possessing 50% or more of the
total combined voting power of all classes of stock in one of the other
corporations in the chain.
(n) "Participant" means an individual to whom an Option has been granted
under the Plan.
(o) "Plan" means this Tyler Technologies, Inc. Stock Option Plan, as set
forth herein and as it may be amended from time to time.
(p) "Qualifying Shares" means shares of Common Stock which either (i) have
been owned by the Participant for more than six months and have been "paid for"
within the meaning of Rule 144 promulgated under the Securities Act of 1933, or
(ii) were obtained by the Participant in the public market.
(q) "Subsidiary" means any corporation in an unbroken chain of corporations
beginning with the Company if, at the time of the granting of the Option, each
of the corporations other than the last corporation in the unbroken chain owns
stock possessing 80% or more of the total combined voting power of all classes
of stock in one of the other corporations in the chain and "Subsidiaries" means
more than one of any of such corporations.
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<PAGE> 26
APPENDIX B
PEER GROUP INDEX
ADAC LABORATORIES
ADE CORP./MA
ALLIANCE IMAGING, INC.
ALLOY ONLINE, INC.
AMERICAN SOFTWARE - CLA
ANCHOR FINANCIAL CORP./SC
ANESTA CORP.
APCO ARGENTINA, INC.
BRIGHT HORIZONS FAMILY SOLUTIONS
CALGON CARBON CORP.
CAPITAL SOUTHWEST CORP.
CELL PATHWAYS, INC.
CHURCHILL DOWNS, INC.
COMMUNITY TRUST BANCORP, INC.
CORPORATE HIGH YIELD FUND, INC.
CORT BUSINESS SERVICES CORP.
CVS AUTOMATIC COMMON EXCHANGE SECURITY TRUST
DELTEK SYSTEMS, INC.
EMERGING MARKETS INCOME FUND II, INC.
EUROPEAN WARRANT FUND, INC.
EXTENDICARE, INC. - SVTG
FAIRCHILD CORP. - CLA
FARMERS CAPITAL BANK CORP.
FREEDOM SECURITIES CORP.
GBC BANCORP./CA
GENELABS TECHNOLOGIES, INC.
GENERAL CIGAR HOLDINGS - CLA
GENERAL COMMUNICATION - CLA
GLEASON CORP.
GUITAR CENTER, INC.
HALL KINION & ASSOCIATES, INC.
HYSEQ, INC.
I-STAT CORP.
INTERGRAPH CORP.
INTERNATIONAL FIBERCOM, INC.
JFAX.COM, INC.
KEMPER HIGH INCOME
LANDRYS SEAFOOD RESTAURANTS
LINDSAY MANUFACTURING COMPANY
LIQUI-BOX CORP.
LSI INDUSTRIES, INC.
MAPICS, INC.
MCGRATH RENTCORP.
MEADE INSTRUMENTS CORP.
MEDIA 100, INC.
MORGAN STANLEY DEAN WITTER MUNICIPAL INCOME TRADERS
24
<PAGE> 27
MUNIVEST FUND II, INC.
NORTH PITTSBURGH SYSTEMS
NUVEEN NY INVESTMENT QUALITY MUNICIPAL FUND
NUVEEN SELECT TAX FREE INCOME PORTFOLIO
OCEANFIRST FINANCIAL CORP.
OPPENHEIMER MULTI-SECTOR
PHILLIPS - VAN HEUSEN
PITTSTON CO-BAX GROUP
PLAINS RESOURCES, INC.
POLYMEDICA CORP.
PRIME GROUP REALTY TRUST
PROVIDENCE ENERGY CORP.
RESOURCEPHOENIX.COM, INC.
SCANSOURCE, INC.
SEGUE SOFTWARE, INC.
SPSS, INC.
STAFFMARK, INC.
STEPAN COMPANY
THEGLOBE.COM, INC.
THERMEDICS, INC.
UNITED FIRE & CASUALTY COMPANY
UNIVERSAL DISPLAY CORP.
VALUE AMERICA, INC.
VENTIV HEALTH, INC.
WACKENHUT CORP.
WEST COAST BANCORP./ OR
ZANY BRAINY, INC.
ZYGO CORP.
25
<PAGE> 28
- -----------------
VOTE BY TELEPHONE
- -----------------
It's fast, convenient, and immediate!
Call Toll-Free on a Touch-Tone Phone
1-877-PRX-VOTE (1-877-779-8683).
- ----------------------------------------------------------------
FOLLOW THESE FOUR EASY STEPS:
1. READ THE ACCOMPANYING PROXY
STATEMENT/PROSPECTUS AND PROXY CARD.
2. CALL THE TOLL-FREE NUMBER
1-877-PRX-VOTE (1-877-779-8683).
3. ENTER YOUR 14-DIGIT VOTER CONTROL NUMBER
LOCATED ON YOUR PROXY CARD ABOVE YOUR NAME.
4. FOLLOW THE RECORDED INSTRUCTIONS.
- ----------------------------------------------------------------
YOUR VOTE IS IMPORTANT!
Call 1-877-PRX-VOTE anytime!
- ----------------
VOTE BY INTERNET
- ----------------
It's fast, convenient, and your vote is immediately
confirmed and posted.
- ----------------------------------------------------------------
FOLLOW THESE FOUR EASY STEPS:
1. READ THE ACCOMPANYING PROXY
STATEMENT/PROSPECTUS AND PROXY CARD.
2. GO TO THE WEBSITE
http://www.eproxyvote.com/tyl
3. ENTER YOUR 14-DIGIT VOTER CONTROL NUMBER
LOCATED ON YOUR PROXY CARD ABOVE YOUR NAME.
4. FOLLOW THE INSTRUCTIONS PROVIDED.
- ----------------------------------------------------------------
YOUR VOTE IS IMPORTANT!
Go to http://www.eproxyvote.com/tyl anytime!
DO NOT RETURN YOUR PROXY CARD IF YOU ARE VOTING BY TELEPHONE OR INTERNET
DETACH HERE
[X] PLEASE MARK
VOTES 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: (01) Lorch, (02) Meyer, (03) Oates, (04) Rundell, (05)
Waters, (06) Yeaman
FOR WITHHELD
ALL [ ] [ ] FROM ALL
NOMINEES NOMINEES
[ ]
-------------------------------------------------------------------
TO WITHHOLD AUTHORITY TO VOTE FOR ANY NOMINEE(S), MARK ABOVE AND WRITE
NOMINEE'S NAME(S) IN SPACE PROVIDED.
2. Approval of the Tyler Technologies, Inc. Stock Option Plan (Amended and
Restated as of May 11, 2000).
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
3. In their discretion, the proxies are authorized 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:
------------------------- ----------------------------
<PAGE> 29
DETACH HERE
PROXY
TYLER TECHNOLOGIES, INC.
THIS PROXY IS SOLICITED ON BEHALF OF
THE BOARD OF DIRECTORS OF THE COMPANY
The undersigned hereby (1) acknowledges receipt of the Notice dated May
25, 2000 of the annual meeting of stockholders of Tyler Technologies, Inc. (the
"Company") to be held at the Melrose Hotel, 3015 Oak Lawn Avenue, Dallas,
Texas, on Wednesday, June 28, 2000, at 10:00 a.m., Dallas time, and the proxy
statement in connection therewith, and (2) appoints Louis A. Waters and John M.
Yeaman, and each of them, his proxies with full power of substitution and
revocation, for and in the name, place and stead of the undersigned, to vote
upon and act with respect to all of the shares of Common Stock of the Company
standing in the name of the undersigned or with respect to which the
undersigned is entitled to vote and act at said meeting and at any adjournment
thereof, and the undersigned directs that his proxy be voted as indicated on
the reverse side hereof. If only one of the above proxies shall be present in
person or by substitute at such meeting or 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 SEE REVERSE
SIDE CONTINUED AND TO BE SIGNED ON REVERSE SIDE SIDE
- ----------- -----------
