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SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A14a 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 Section 240.14a-11(c) or Section 240.14a-2.
Tyler Corporation
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in itsIn Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
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(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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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
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(4) Date Filed:
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[TYLER CORPORATION LOGO]
March 27, 1998April 19, 1999
Dear Stockholder:
You are cordially invited to attend the annual meeting of stockholders
of Tyler Corporation to be held on Tuesday, April 28, 1998,Wednesday, May 19, 1999, at San Jacinto Tower,
2121 San Jacinto Street, Suite 2820,the Renaissance
Dallas Hotel, in the Presidente Room, 2222 N. Stemmons Freeway, Dallas, Texas,
commencing at 10:00 a.m. At this meeting you will be asked to elect six
directors for the ensuing year, to consider and vote upon a proposal to change
the name of the Company, and to consider and vote upon a proposal to amend the
Tyler Corporation 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,
/s/ LOUIS A. WATERS
LOUIS A. WATERS
Chairman of the Board
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TYLER CORPORATION
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD APRIL 28, 1998MAY 19, 1999
To the Stockholders of
TYLER CORPORATION:
Tyler Corporation will hold its annual meeting of stockholders (the "Annual
Meeting") at San
Jacinto Tower, 2121 San Jacinto Street, Suite 2820,the Renaissance Dallas Hotel, in the Presidente Room, 2222 N.
Stemmons Freeway, Dallas, Texas, on Tuesday,
April 28, 1998,Wednesday, May 19, 1999, at 10:00 a.m.,
Dallas time, for the following purposes:
(a)(1) to elect six directors to serve until the next annual meeting of
stockholders or until their respective successors are duly elected and
qualified;
(b)(2) to consider and vote upon a proposal to amend Article First of the
Company's Restated Certificate of Incorporation to change the name of
the Company to "Tyler Technologies, Inc.";
(3) to consider and vote upon a proposal to amend the Tyler Corporation
Stock Option Plan;Plan (the "Tyler Option Plan") to increase the number of
shares of Tyler Corporation common stock subject to the Tyler Option
Plan from 3,300,000 to 4,300,000; and
(c)(4) 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, 1998,25, 1999 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
3200,2800 West
Mockingbird Lane, Dallas, Texas, 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
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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 19971998 Annual Report of the CompanyTyler Corporation does not form any
part of the proxy solicitation material.
OUTSTANDING CAPITAL STOCKBy Order of the Board of Directors
/s/ DEANIE MOREL
Deanie Morel
Secretary
Dallas, Texas
April 19, 1999
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THE ANNUAL MEETING
PLACE, DATE, AND TIME
The record date for stockholders entitled to notice of, and to voteAnnual Meeting will be held at the annual meeting of stockholders isRenaissance Dallas Hotel, in the
close of businessPresidente Room, 2222 N. Stemmons Freeway, Dallas, Texas on March 10, 1998.Wednesday, May 19,
1999, at 10:00 a.m., local time.
MATTERS TO BE CONSIDERED
At the closeAnnual Meeting, the stockholders of business on that date,Tyler Corporation ("Tyler" or
the Company had issued and outstanding and
entitled to vote at the Meeting 33,981,709 shares of Common Stock, $.01 par
value ("Common Stock""Company").
As of March 10, 1998, 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.
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(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, a holder of Common Stock is entitled to one
vote, in person or by proxy, for each share held in his name on the record date.
The accompanying proxy, unless the stockholder otherwise specifies therein, will be votedasked to consider and vote upon proposals to (i) for the election aselect a
board of 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 holders on any other matter that may properly come
before the Meeting or any adjournment thereof.
To be elected 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 holders of a majority of the shares of Common Stock
present in person or represented by proxy and entitled to vote at the Meeting is
required for approval and adoption of the amendment 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 proxies will be voted accordingly. If any other matter or business is
brought before the Meeting, the proxy holders may vote the proxies at their
discretion. The Board does not know of any such other matter or business.
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SECURITY OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth the beneficial ownership 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
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* 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 payment 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.
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DIRECTORS AND EXECUTIVE OFFICERS
A brief description of each nominee for director and of each executive
officer of the Company is provided below. Directors hold office until the next annual meeting of stockholders or
until their successors are duly elected and qualified. Executive officers are elected byqualified; (ii) approve an amendment
to the Company's Restated Certificate of Incorporation (the "Tyler Charter")
changing the name of the Company to "Tyler Technologies, Inc."; (iii) to amend
the Tyler Option Plan increasing the number of shares of Company common stock,
$.01 par value per share (the "Common Stock"), subject to issuance under the
Tyler Option Plan from 3,300,000 shares to 4,300,000; and (iv) 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 at its
annual meeting and hold office until its next annual meeting.
NOMINEES FOR DIRECTOR
Ernest H. Lorch. Mr. Lorch, age 65, is counsel to the law firm of Whitman,
Breed, Abbott & Morgan, a position he has held since December 1992. He retired
as Chairman of the Board and Chief Executive Officer of Dyson-Kissner-Moran
Corporation ("DKM"(the "Tyler Board"), 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 is also Senior Chairman of the Board
of Varlen Corporation and 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. Meyer has been a director of the Company
since 1967 and is a member of the Compensation 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. Mr. Oates, age 58, has been Chairman of the Board and
President of Business Resources Corporation ("Resources") since its inception in
1993. 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. Mr. Oates was appointed a director of the Company in February
1998 following the Company's acquisition of Resources and is a member of the
Executive Committee of the Board of Directors.
C. A. Rundell, Jr. Mr. Rundell, age 66, was elected President and Chief
Executive Officer of the Company in October 1997. From October 1996 to October
1997, Mr. Rundell served as Chairman of the Board and from October 1996 to March
1997 served as Interim Chief 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 of the Company in October 1997. Mr. Russell has
been a director of the Company since May 1990 and has been affiliated with the
Company. The nominees for
more than 25 years. He 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
Tyler Pipe from February 1988 to December 1988.
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Louis A. Waters. Mr. Waters, age 59, was elected Chairman of the Board in
October 1997 after being appointed a director of the Company in August 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 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 of 1997 he 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.
OTHER EXECUTIVE OFFICERS
Harold W. Parkison. Mr. Parkison, age 49, has been President and Chief
Executive Officer of Forest City Auto Parts Company ("Forest City") since
February 1997. Mr. Parkison had previously been Vice President-International
Store Development at Federal-Mogul Corporation since March 1995. Prior to March
1995, he was Vice President-Merchandise Manager at Auto Express from 1993. From
1991 to 1993 he held the position 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. Mr. Miller, age 39, has been Vice President and Chief
Accounting Officer of the Company since December 1997. 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.
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EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth all compensation paid or accrued for
services rendered to the Company and its subsidiaries for the last three fiscal
years by the Chief Executive Officer, former Chief Executive Officer, retired
Chief Executive Officer of a former subsidiary and the three highest-paid
executive officers of the Company:
LONG-TERM
COMPENSATION AWARDS
ANNUAL COMPENSATION -----------------------
------------------------------------- SECURITIES
OTHER RESTRICTED UNDERLYING
ANNUAL STOCK OPTIONS/ ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION(1) AWARDS SARS COMPENSATION
- ----------------------------- ----- -------- -------- --------------- ---------- ---------- ------------
C. A. Rundell, Jr. 1997 $ 80,077 $461,250(3) 350,000
President and Chief 1996 0 100,000
Executive 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 81,409
Vice President and Chief
Financial Officer of the
Company(6)
Brian K. Miller 1997 10,795 50,000
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)
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(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 Chief Executive Officer of the
Company since October 1997 at an annual salary of $210,000. From October
1996 to October 1997, he served as Chairman of theTyler 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 shares of the Company's
Common Stock with a market value of $3.69 per share. Mr. Rundell will vest
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 of the Company
from March 1997 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.
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(6) Mr. Russell has served as Vice President and Chief Financial Officer of the
Company since October 1997.
(7) Mr. Miller joined the Company 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 compensation 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.
OPTION/SAR EXERCISES DURING 1997 AND YEAR-END OPTION/SAR VALUES
The following table shows stock option exercises during 1997 by each of the
named executive officers and the value of unexercised options at December 31,
1997:
NUMBER OF VALUE OF UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS/SARS AT OPTIONS/SARS AT
SHARES DECEMBER 31, 1997(1) DECEMBER 31, 1997(2)
EXERCISED VALUE ------------------------- -------------------------
NAME AS SARS REALIZED EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
---- --------- -------- ------------------------- -------------------------
C.A. Rundell..................... 137,677/312,323 $396,596/$575,280
Bruce W. Wilkinson............... 133,333 $260,000 0/133,333 $ 0/$533,332
James E. Russell................. -- --
Brian K. Miller.................. 0/ 50,000 $ 0/$ 12,500
Harold W. Parkison............... 0/ 50,000 $ 0/$168,750
E. Peter Raisbeck................ -- --
- ---------------
(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 per share.
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COMPENSATION OF DIRECTORS
Each non-employee director receives an annual fee of $15,000, plus $1,000
for each Board meeting and $500 for each committee meeting attended.
EMPLOYMENT, NONCOMPETITION AGREEMENTS AND AGREEMENTS WITH NAMED EXECUTIVE
OFFICERS
On October 8, 1997, the Company entered into an employment agreement with
C. A. Rundell, Jr. which provides that the Company will pay Mr. Rundell an
annual salary of $210,000 for his services as President and Chief Executive
Officer of the Company and allows him to participate in performance bonus or
incentive compensation plans made available to comparable level employees of the
Company and its subsidiaries. Mr. Rundell will also receive certain other
employee benefits and perquisites normally offered to the executive employees of
the Company. In addition, 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 an employment agreement in February 1997, with
Harold W. Parkison which provides that the Company pay Mr. Parkison for his
services as President and Chief Executive Officer of Forest City, a salary of
$200,000, a guaranteed bonus of $60,000 for 1997 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 expenses 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) at a
monthly salary 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 and 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 portions of
the agreement expire February 19, 2001, and the nonsolicitation and
noncompetition portions of the agreement expire the later of February 19, 2003,
or the third anniversary of Mr. Oates' termination.
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12
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. 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 perquisites
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 are Ernest H. Lorch, Frederick R. Meyer, andWilliam D.
Oates, C.A. Rundell, Jr., Louis A. Waters. Mr. Meyer was previously an officerWaters, 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 Company.
REPORTsix 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 COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS ON EXECUTIVE
COMPENSATION
The Compensation Committee, a committee ofNOMINEES FOR DIRECTOR.
Proposal Two - Amendment to the Board of Directors, hasTyler Charter Changing the responsibility for final approval for all compensation to officers and directorsName of the Company
including, primarily,to "Tyler Technologies, Inc."
At the dutyAnnual Meeting, the stockholders will also be asked to ensure that compensation paidconsider and
vote upon a proposal to executive officers does not exceed reasonable amounts and is basedamend the Tyler Charter to change the name of the
Company to "Tyler Technologies, Inc." This amendment was adopted by the Tyler
Board on objective standards.February 18, 1999, subject to stockholder approval. The Compensation Committee approves or disapprovespurpose of the
recommendations of management regarding compensation according to the guidelines
set forth below.
The Company's personnel policyamendment 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
compensationestablish a brand name that is in the form of bonuses and options which are awarded only when
indicated by superior accomplishment. The Company feels very strongly that
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 and based on the purchase contract, Forest City
officers received bonuses for 1991, 1992 and 1993 and an additional bonus in
1996 for cumulative operating profits achieved since 1991. In addition, the
President and Chief Executive Officer of Forest City received a bonus for 1997
in accordanceconsistent with the termsCompany's
growth strategy of his employment and in recognition of 1997
performance.
For 1998, executive officers of operating subsidiaries will be measured on
the results of that subsidiary and, 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 thebuilding a nationally integrated information management
services, business. The new program, which must be approved bysystems, and outsourcing company serving local governments and other
enterprises.
To accomplish this change in 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
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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. was elected President and Chief Executive Officername of the Company, effective October 8, 1997, upon the resignation of Bruce W. Wilkinson.
Mr. Rundell had previously served as Interim Chief Executive Officer without
salary from October 1996 through March 1997.
Effective October 8, 1997, Mr. Rundell's compensation consists of a base
annual salary of $210,000. Mr. Rundell also receives certain health and
insurance benefits provided to executive officersArticle First of the
Company. In determining
Mr. Rundell's salary, the Compensation Committee considered several factors,
including Mr. Rundell's experienceTyler Charter must be amended to be and his ability to enhance the long-term
valueread as follows:
"FIRST. The name of the Company, particularly in lightCorporation is Tyler Technologies, Inc."
THE TYLER BOARD UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR
THE AMENDMENT TO THE TYLER CHARTER.
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5
Proposal Three - Amendment to the Tyler Option Plan
At the Annual Meeting, the stockholders will also be asked to consider and
vote upon a proposal to amend the Tyler Option Plan to increase the number of the Company's strategic plan to
grow through acquisitions in the information management services business. The
committee also considered Mr. Rundell's considerable experience with
acquisitions.
Mr. Rundell was granted options to purchase 350,000
shares of the Company's
Common Stock on October 8, 1997, which options vest over a period of 48 months.
In addition, Mr. Rundell was granted 125,000 shares of the Company's Common
stock on October 8, 1997, with a market value on that date of $3.69 per share.
Mr. Rundell will vest 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.
This report is submitted by the Compensation Committee
Ernest H. Lorch
Frederick R. Meyer
Louis A. Waters
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14
STOCK PERFORMANCE CHARTS
The following two charts compare the return on the Company's Common Stock
for the last five and ten years with the S&P 500 Index and the S&P Consumer
Cyclicals-500 Index. Although Tyler's principal subsidiary from October 15, 1997
to December 31, 1997, was a retailer of automotive parts and supplies, the S&P
Consumer Cyclicals-500 Index was selected because it represents Tyler's past
philosophy of diversification. The comparison assumes $100 was invested on
December 31, 1992 and December 31, 1987 in the Company's Common Stock and in
each of the foregoing indices and assumes reinvestment of dividends and
distributions.
Consumer
Measurement Period Cyclicals -
(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
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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, pursuantsubject to the terms of the
merger in which Resources was acquired, Mr. Oates may be entitledTyler Option Plan from 3,300,000 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 PLAN4,300,000. 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 stockCommon Stock so that the management and key
employees of the Company and its subsidiaries are rewarded under the StockTyler
Option Plan only if the value of the stockholders' investment in the Company has
appreciated. PURPOSE OF THE PLANThe increase in shares subject to the Tyler Option 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. Copies of the Tyler
Option Plan are available from the Company upon request.
Purpose of the Plan. On March 13, 1990, the Company established the StockTyler
Option Plan, pursuant to which the Company could award key employees with
options could be grantedthat would provide additional incentive to eligiblesuch employees whose
substantial contributions are important to the continued growth and
profitability of the Company's business. Initially, the Tyler Option Plan
provided for the grant of options to purchase of a
maximum ofup to 1,100,000 shares of Common
Stock of the Company.Stock. The StockTyler Option Plan washas since been amended effectiveon two separate occasions
(effective February 7, 1997 and October 8, 1997) to increase the number of
shares of Common Stock ofsubject to option under the Company that may be granted to eligible employeesTyler Option Plan 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 Stock3,300,000.
Description 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
16as Amended. 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 StockTyler 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.Stock. The StockTyler
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 Tyler 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 StockTyler Option Plan. The
Compensation Committee of the Tyler Board of Directors grants options and administers the
StockTyler 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
StockTyler 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 StockTyler 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.
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6
Unless sooner terminated by action of the Tyler Board, of Directors of the Company, the StockTyler Option
Plan will terminate on February 6, 2007, and no options may thereafter be
granted under the StockTyler Option Plan. The StockTyler Option Plan may be amended,
altered, or discontinued by the Tyler Board of Directors without the approval of the
stockholders, except that the Tyler 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 StockTyler Option Plan, and the number
of shares subject to 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,similar transaction of or by the
Company.
Options may be granted under the StockTyler Option Plan only to key employees of
the Company or its subsidiaries. Key employees are defined in the StockTyler 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 7080 employees are
eligible to receive stock options under the StockTyler 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 StockTyler 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 StockTyler Option Plan. Incentive stock options are options whichthat meet the
requirements of Section 422 of the Internal Revenue Code of 1986, as amended
(the "Code"), and nonqualified options are options whichthat do not meet the
requirements of Section 422 of the Code. No incentive stock option, however, may
be granted under the StockTyler 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 StockTyler Option Plan in case of termination of employment, dishonestyfraud, or any
other reason the appropriate committee determines. If an option under the StockTyler
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 StockTyler Option Plan.
Upon termination of the employment of an optionee holding an option under the
StockTyler 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 OPTIONSTax 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
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7
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 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 AMENDMENT TO THE TYLER STOCK OPTION PLAN.
RECORD DATE AND VOTING
Only holders of record of Common Stock on March 25, 1999 (the "Record
Date") are entitled to notice of, and to vote at, the Annual Meeting. There were
issued and outstanding 35,542,464 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 foregoing statementspresence, 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 based upon present federal income tax lawscounted 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 total issued and regulationsoutstanding
Common Stock (regardless of the number of shares actually voted at the Annual
Meeting), in person or by proxy, is required to approve the proposed amendment
to the Tyler Charter. 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 amendment to the Tyler Option Plan.
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8
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 are subjectreturned prior to change if the tax lawsAnnual
Meeting will be voted as indicated on the proxy. If the enclosed proxy is signed
and regulations, or
interpretations thereof, are changed.
OUTSTANDING OPTIONS
Optionsreturned, it may, nevertheless, be exercised in annual installments as specified by the
administering committee. All installments that become exercisable are cumulative
and may be exercisedrevoked at any time after they become exercisable until expirationprior to the voting
thereof at the pleasure of the option. The administering committee may grantstockholder signing it, either nonqualified stock
options or incentive stock options, as definedby (i) filing a
written notice of revocation received by the Code.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 table shows, as to certainis 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 directorsqualified. Executive
officers are elected by the Tyler Board at its annual meeting and hold office
until its next annual meeting.
Directors and Executive Officers of Tyler
Name / Age Present Position Served Since
- ---------- ---------------- ------------
John M. Yeaman, 58 President and Chief Executive Officer 1998
Director 1999
Theodore L. Bathurst, 49 Vice President and Chief Financial Officer 1998
Brian B. Berry, 43 Vice President - Corporate Development 1998
Brian K. Miller, 40 Vice President and Chief Accounting Officer 1997
Louis A. Waters, 60 Chairman of the Board 1997
William D. Oates, 59 Chairman of the Executive Committee and Director 1998
C.A. Rundell, Jr., 67 Director 1966
Ernest H. Lorch, 66 Director 1993
Frederick R. Meyer, 71 Director 1967
Business Experience of Directors and Executive Officers
John M. Yeaman is President and Chief Executive Officer of the Company, a
position he has held since December 1998. From September 1998 until December
1998, Mr. Yeaman served as President and its subsidiaries andChief Executive Officer of Business
Resources Corporation, a subsidiary of the Company. Mr. Yeaman was appointed to
the Tyler Board in February 1999. Mr. Yeaman had previously been 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 all executive officersthat position, Mr. Yeaman had been associated with EDS as a group,service
provider since 1980. Mr. Yeaman began his career with Eastman Kodak Company. Mr.
Yeaman also serves on the followingBoard of Directors of Eagle National Bank in Dallas.
6
9
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 wide variety of information with respect to stock optionstechnology,
communications, 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
- ---------------
* Includes 400,000 options to purchase Common Stock which terminatedhigh technology companies. Mr. Bathurst was also designated
by KPMG as a resultSecurities and Exchange Commission ("SEC") partner responsible for
the review of filings made by public companies with the SEC. Mr. Wilkinson's resignationBathurst, a
certified public accountant, serves as a board member of both the Dallas Chapter
and the Texas Society of CPA's.
Brian B. Berry was appointed Vice President-Corporate Development of the
Company in August 1998. Mr. Berry is one of the founders of The Software Group
("TSG") and has served as an officer and director of TSG with various
responsibilities since its inception in 1981. He is currently Vice President and
Treasurer of TSG.
Brian K. Miller has been Vice President, Chief Accounting Officer and
Treasurer of the Company since December 1997. 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.
Louis A. Waters was elected Chairman of the Board of the Company in October
1997 after being appointed director of the Company in August 1997. Mr. Waters is
a member of the Executive Committee, the Audit 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.
William D. Oates has been Chairman of the Board of Business Resources
Corporation ("Resources") since its inception in 1993 and President of Resources
from 1993 until September 1998 and from December 1998 until the present. 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. 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.
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 infrom October 1997.
During1997 to
December 1998, Chairman of the periodBoard from January 1,October 1996 to December 31,October 1997, employeesand as
Interim Chief Executive Officer of the Company exercised optionsfrom October 1996 to March 1997.
Mr. Rundell has also owned and SARs withoperated Rundell Enterprises, a net value (market valuesole
proprietorship engaged in providing acquisition and financial consulting
services to various business enterprises, since June 1988 and as Chairman of shares
less exercise price or cash received)the
Board of $792,045. AsNCI Building Systems, Inc. since April 1989. He is also a director of
Dain Rauscher Corporation, NCI Building Systems, Inc., Tandy Brands Accessories,
Inc., and Integrated Security Systems, Inc.
Ernest H. Lorch is counsel to the law firm of Whitman, Breed, Abbott &
Morgan, a position he has held since December 31, 1997,
options1992. 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 purchase an aggregateJanuary 1990. He is also Senior Chairman of 695,933 sharesthe Board
of Common StockVarlen Corporation. Mr. Lorch was elected to the Tyler Board in October 1993,
and he serves as a member of the Compensation Committee and the Audit Committee
of the Tyler Board.
7
10
Frederick R. Meyer has 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
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 Corporation from August
1983 through December 1986. Mr. Meyer has been a director of the Company were outstanding, withsince
1967 and is a weighted average exercise price per sharemember of $3.04the Compensation Committee of the Tyler Board. He is
also a director of Arvin Industries, Inc., Palm Harbor Homes, Inc., and
expiring between January 28, 2003, and December 11, 2007.
15
19Southwest Securities Group, Inc.
COMMITTEES AND MEETINGS OF THE TYLER BOARD
OF DIRECTORS
The Board of Directorsbusiness 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 held four formal meetings during 1998. Each member of
the Tyler Board participated in at least 75% of all Tyler Board and committee
meetings held during 1998 that he served as a director and/or committee member.
The Tyler Board has an Executive Committee,established an Audit Committee, and a Compensation Committee,
and Executive Committee to devote attention to specific subjects and to assist
the Tyler Board in carrying outthe discharge of its duties.responsibilities. The Executivefunctions 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 1998, the Audit Committee has authority, as delegated by the Board, to act
for the Board but may not commit the Company to an expenditure in excesswas comprised of $10,000,000 without Board approval.Louis A.
Waters and Ernest H. Lorch. 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 once
during 1998.
Compensation Committee. During 1998, 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. This committeeThe 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 1998.
Executive Committee. During 1998, 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, 1998, 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.
8
11
SECURITY OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth certain information with respect to shares
of the Company's Common Stock as of March 25, 1999 beneficially owned 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.
Name and Address of Beneficial Owner Amount and Nature of Ownership Percent of Class (1)(2)
- ------------------------------------ ------------------------------ -----------------------
William D. Oates 8,065,000(3) 22.7%
2800 W. Mockingbird Lane
Dallas, Texas 75235
Louis A. Waters 2,509,900(4) 6.7%
520 Post Oak Boulevard, Suite 850
Houston, Texas 77027
Richmond Partners, Ltd. 2,000,000(5) 5.3%
10375 Richmond Ave., Suite 1615
Houston, Texas 77042
Brian B. Berry 795,774(6) 2.2%
2800 W. Mockingbird Lane
Dallas, Texas 75235
John M. Yeaman 416,550(7) 1.2%
2800 W. Mockingbird Lane
Dallas, Texas 75235
C.A. Rundell, Jr. 389,045(8) 1.1%
2121 San Jacinto, Suite 2900
Dallas, Texas 75201
Frederick R. Meyer 201,249(9) *
2121 San Jacinto, Suite 895
Dallas, Texas 75201
Ernest H. Lorch 50,000 *
c/o Whitman, Breed, Abbott & Morgan
200 Park Avenue
New York, New York 10066
Brian K. Miller 10,000(10) *
2800 W. Mockingbird Lane
Dallas, Texas 75235
Theodore L. Bathurst --- ---
2800 W. Mockingbird Lane
Dallas, Texas 75235
All directors and executive officers as a group (9 persons) 12,437,518(11) 33.0%
- -----------------------------
* Less than one percent of the outstanding Common Stock
9
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 35,542,464 shares of Common Stock outstanding at March 25,
1999. Each owner's percentage is calculated by dividing the number of
shares beneficially held by the sum of 35,542,464 and the number of
shares such owner has the right to acquire within sixty days.
(3) Includes beneficial ownership of 1,900,000 shares of Common Stock over
which Mr. Oates has sole voting power, but no nominating
committee;investment power,
pursuant to collateral pledge agreements securing payment for the entire Boardsale
of Directorssuch 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 responsiblethe sole general partner of
Richmond and deemed the beneficial owner of these shares.
(5) 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.
(6) Includes beneficial ownership of 80,000 shares of Common Stock held in
a foundation in which Mr. Berry is deemed to have sole voting power.
(7) Includes beneficial ownership of 200,000 shares of Common Stock held by
a third party of which Mr. Yeaman has an option to purchase that is
exercisable within sixty days.
(8) Includes beneficial ownership of 237,966 shares of Common Stock
issuable upon the exercise of stock options granted pursuant to the
Tyler Option Plan that are exercisable within 60 days and beneficial
ownership of 20,000 shares of Common Stock held in a foundation in
which Mr. Rundell has sole voting power.
(9) Includes beneficial ownership of 60,000 shares of Common Stock held in
an individual retirement account in which Mr. Meyer has sole voting
power.
(10) Includes beneficial ownership of 10,000 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, 247,966
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 200,000 shares of Common Stock that may be
acquired within sixty days from a third party beneficial owner.
10
13
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth certain information regarding compensation
paid for selecting nomineesall services rendered to the Company and its subsidiaries in all
capacities during fiscal years 1998, 1997, and 1996 by the Tyler Chief Executive
Officer and the four other most highly compensated executive officers of Tyler
whose total annual salary and bonus earned during fiscal years 1998, 1997, and
1996 exceeded $100,000.
SUMMARY COMPENSATION TABLE
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)
- -------------------- ------- ---------- ---------- ---------- ----------- ------------ ---------------
John M. Yeaman 1998 $ 76,302(3) $ 100,000 250,000
President and
Chief Executive
Officer of the
Company
Theodore L. Bathurst 1998 57,841(4) 40,000 250,000
Vice President
and
Chief Financial
Officer of the
Company
Brian B. Berry 1998 172,945(5) 100,000 $1,631
Vice President
of
TSG and Vice
President of
Corporate
Development of
the Company
William D. Oates 1998 157,083(6)
President
and Chief
Executive Officer
of
Resources
Brian K. Miller 1998 140,000 35,000
Vice President 1997 10,795 50,000
and
Chief Accounting
Officer of the
Company
C. A. Rundell, Jr. 1998 210,489
Former President 1997 80,077 $ 461,250(8) 350,000
and Chief 1996 0 100,000
Executive Officer
of the Company(7)
- --------------
(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
electionthe named executive officer and therefore has been omitted.
(2) Employer contributions to a Profit-Sharing Plan.
(3) Salary since beginning employment in September 1998. Mr. Yeaman has served
as directors.
During 1997,President and Chief Executive Officer since December 1998.
(4) Salary since beginning employment in October 1998.
(5) Salary since the Boardacquisition of DirectorsTSG on February 19, 1998.
11
14
(6) Salary since the acquisition of Resources on February 19, 1998.
(7) Mr. Rundell served as President and Chief Executive Officer of the Company
metfrom October 1997 to December 1998 at an annual salary of $210,000. From
October 1996 to October 1997, Mr. Rundell served as Chairman of the Board,
and from October 1996 to March 1997, he served as Interim Chief Executive
Officer of the Company. Mr. Rundell elected not to accept remuneration for
his services from October 1996 to March 1997.
(8) On October 8, 1997, Mr. Rundell was granted 125,000 shares of the Company's
Common Stock with a market value of $3.69 per share, all of which vested on
March 26, 1999 upon the consummation of the sale of Forest City Auto Parts
Company. See "Employment Agreements, Non-Competition Agreements, and
Agreements with Named Executive Officers."
OPTION/SAR GRANTS IN 1998
The following table shows stock option grants during 1998 to any named executive
officer:
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)
- ---------------------------- -------------- ----------------- ----------- ---------- ------------
John M. Yeaman(2) .......... 250,000 18% 5.44 10/07/08 $ 3.76
C. A. Rundell, Jr .......... -- -- -- -- --
Theodore L. Bathurst(3) .... 250,000 18% 6.44 10/06/08 $ 4.43
Brian B. Berry ............. -- -- -- -- --
William D. Oates ........... -- -- -- -- --
Brian K. Miller ............ -- -- -- -- --
- ----------------------
(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 rates, were assumed
to be, respectively, as follows: Mr. Yeaman - .68 and 4.7%; and Mr.
Bathurst - .68 and 4.5%.
(2) Includes 91,950 options granted as incentive stock options and 158,050
options granted as non-qualified stock options.
(3) Includes 77,665 options granted as incentive stock options and 172,335
options granted as non-qualified stock options.
12
15
OPTION/SAR EXERCISES DURING 1998 AND YEAR-END OPTION/SAR VALUES
The following table shows stock option exercises during 1998 by each of the
named executive officers and the value of unexercised options at December 31,
1998:
NUMBER OF VALUE OF UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS/SARS AT OPTIONS/SARS AT
SHARES DECEMBER 31, 1998(1) DECEMBER 31, 1998(2)
EXERCISED VALUE --------------------------- -------------------------
NAME AS SARS REALIZED EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- -------------------------------- --------- --------- --------------------------- -------------------------
John M. Yeaman.................. 0 / 250,000 0/$173,125
C.A. Rundell, Jr................ 210,848 / 239,152 $671,246 / $584,129
Theodore L. Bathurst............ 0 / 250,000 (2)
Brian B. Berry.................. -- --
William D. Oates................ -- --
Brian K. Miller................. 10,000 / 40,000 $8,800 / $35,200
- ---------------------------
(1) As of December 31, 1998, options to purchase an aggregate of 1,917,700
shares of Common Stock were outstanding with a weighted average exercise
price per share of $6.03 and expiring between January 28, 2003, and
November 22, 2008.
(2) Amount is based on a year-end market value of $6.13 per share. Theodore L.
Bathurst's exercise price exceeded the year-end market value.
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 AGREEMENTS, NON-COMPETITION AGREEMENTS, AND AGREEMENTS WITH NAMED
EXECUTIVE OFFICERS
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 as Vice President and
Secretary of TSG. 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 prerequisites normally offered to the executive
employees of TSG. 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.
13
16
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. 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 prerequisites
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.
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 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 prerequisites normally offered to
the executive employees of Resources. 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.
On December 9, 1998, the Company entered into an employment agreement with
C.A. Rundell, Jr., which superseded the agreement dated October 8, 1997.
Pursuant to this agreement, Mr. Rundell resigned as President and Chief
Executive Officer of the Company, but remained as an employee director and
member of the Executive Committee of the Company and was appointed Chairman of
Forest City Auto Parts Company ("FCAP"). As Chairman of FCAP, Mr. Rundell's
duties would consist of the development and implementation of a strategy to
maximize the shareholder value of FCAP through the sale or liquidation of all or
substantially all of FCAP, upon terms to be approved by the Tyler Board. For
these services, Mr. Rundell will receive a total cash compensation of eight
times. The Executive Committee met once,$315,000.
Mr. Rundell will also receive certain other employee benefits and prerequisites
normally offered to the Audit Committee met twiceexecutive employees of the Company. In addition, the
unvested 75,000 shares of restricted Tyler common stock originally granted to
him under the October 8, 1997 agreement will vest in increments of 25,000 shares
every six months beginning April 8, 1999 and ending April 8, 2000, except that
all of such shares will vest immediately upon the closing of a sale of all or
substantially all of FCAP, which was consummated on March 26, 1999. Since the
sale of FCAP, Mr. Rundell will remain an employee of the Company and receive a
salary equal to $1,250 per month until January 1, 2002. For this additional
service, Mr. Rundell's current outstanding and unvested stock options will vest
according to the original schedule modified as follows: (i) of the original
132,199 Incentive Stock Options previously granted, 23,727 are vested and
exercisable; of the remaining 108,472 Incentive Stock Options, 27,118 will vest
and be exercisable on each of January 1, 1999-2002 and (ii) of the original
217,801 Non-Qualified Stock Options previously granted, 87,121 are vested and
exercisable; of the remaining 130,680 Non-Qualified Stock Options, 43,560 will
vest and be exercisable on October 8, 1999 and 87,120 will vest and be
exercisable on June 30, 2000.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Members of the Compensation Committee met three times.are Ernest H. Lorch, Frederick R.
Meyer, and Louis A. Waters. 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 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.
14
17
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 that
bonuses must be earned, and when results are not superior, no bonuses are paid.
In nine of the past fourteen years, no bonuses have been paid to corporate
officers as results have not warranted payment of such bonuses.
CHIEF EXECUTIVE OFFICER COMPENSATION
John M. Yeaman was elected President and Chief Executive Officer of the
Company on December 9, 1998. Mr. Yeaman's compensation consists of a base annual
salary of $250,000. Mr. Yeaman will also receive certain health and insurance
benefits provided to executive officers of the Company. In determining Mr.
Yeaman's salary, the Compensation Committee considered several factors,
including Mr. Yeaman's experience and his ability to enhance the long-term value
of the Company, particularly in light of the Company's strategic plan to grow
through acquisitions in the information management services business. In
addition, Mr. Yeaman was granted options to acquire 250,000 shares of Common
Stock, which will vest ratably over a five-year period. 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.
C.A. Rundell, Jr. was elected President and Chief Executive Officer of the
Company effective October 8, 1997, upon the resignation of Bruce W. Wilkinson.
Mr. Rundell had previously served as Interim Chief Executive Officer without
salary from October 1996 through March 1997. Mr. Rundell resigned as President
and Chief Executive Officer of the Company effective December 9, 1998. Effective
October 8, 1997 (and through December 9, 1998), Mr. Rundell's compensation
consisted of a base annual salary of $210,000. Mr. Rundell also received certain
health and insurance benefits provided to executive officers of the Company. In
determining Mr. Rundell's salary, the Compensation Committee considered several
factors, including Mr. Rundell's considerable experience with acquisitions and
the Company's overall growth strategy. Mr. Rundell was also granted options to
purchase 350,000 shares of the Company's Common Stock on October 8, 1997, which
options vest over a period of 48 months. In addition, Mr. Rundell was granted
125,000 shares of the Company's Common stock on October 8, 1997, with a market
value on that date of $3.69 per share, all unvested shares of which became
vested on March 26, 1999 with the consummation of the sale of FCAP (See
"Employment Agreements, Non-Competition Agreements, and Agreements with Named
Executive Officers"). The Compensation Committee believes that the options and
grant aligned the interest of management with those of the stockholders.
This report is submitted by the Compensation Committee
Ernest H. Lorch
Frederick R. Meyer
Louis A. Waters
15
18
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, a new Peer Group
Index and the S&P Consumer Cyclical - 500 Index. Prior to 1998, the Company was
a diversely based enterprise selling products and services 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. As a result, the Company has replaced the S&P Consumer Cyclical -
500 Index with a new Peer Group Index which is comprised of companies with
similar market capitalization of approximately $200 million. The Companies
included in the new Peer Group Index are Advanced Radio Telecom Corporation,
Cascade Natural Gas Corporation, CFSB Bancorp, Inc., Copley Pharmaceutical,
Inc., General Communication - CLA, Getty Realty Corporation, Hecla Mining
Company, Learning Tree International, Inc., Massmutual Corporate Investors,
Medallion Financial Corporation, Municipal High Income Fund, Inc., Nelson
(Thomas), Inc. North Pittsburgh Systems, Nuveen Michigan Quality Income
Municipal Fund, Nuveen Select Tax-Free Income Portfolio 3, Nymagic, Inc.,
Players International, Inc., Resource America, Singer Company - N.V. and St.
Mary Land and Exploration Company. 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, 1993 in the Company's Common Stock and
in each of the foregoing indices and assumes reinvestment of dividends and
distributions.
Tyler S&P 500 Peer Group S&P Consumer Cyclicals
----- ------- ---------- ----------------------
1993 100 100 100 100
1994 61.91 101.32 78.31 91.1
1995 52.38 139.4 74.42 112.39
1996 35.72 171.4 76.80 130.56
1997 104.77 228.59 72.31 178.71
1998 116.67 293.91 55.84 243.59
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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 shares of
Common Stock and a warrant to acquire 2,000,000 shares of Common Stock with an
exercise price of $2.50 per common share. On June 2, 1998, Richmond Partners
distributed the 2,000,000 shares of Common Stock to its shareholders of which
Mr. Waters received 509,900 shares. Mr. Waters is currently Chairman of the
Tyler Board.
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 such
merger agreement, 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 the acquisition of
specified businesses for purposes of geographic expansion.
STOCKHOLDER PROPOSALS
Any proposals that stockholders of the Company desire to have presented at
the 19992000 annual meeting of stockholders must be received by the Company at its
principal executive offices not later than November 17, 1998.
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20
MISCELLANEOUS10, 1999.
INDEPENDENT AUDITORS
Ernst & Young LLP acted as the Company's independent auditors for 1997.1998. 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.1999.
By Order of the Board of Directors,
/s/ JAMES E. RUSSELL
JAMES E. RUSSELLDEANIE MOREL
Deanie Morel
Secretary
Dallas, Texas
March 27, 1998April 19, 1999
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2120
[DETACH HERE]
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PROXY
TYLER CORPORATION
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, 1998April
19, 1999 of the annual meeting of stockholders of Tyler Corporation (the
"Company") to be held at Suite 2820, San Jacinto Tower, 2121 San Jacinto Street,the Renaissance Dallas Hotel in the Presidente Room,
2222 N. Stemmons Freeway, Dallas, Texas, on Tuesday, April 28, 1998,Wednesday, May 19, 1999, at 10:00
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.
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SEE REVERSE SIDE SEE REVERSE SIDE CONTINUED AND TO BE SIGNED ON REVERSE SIDE SEE REVERSE
SIDE SIDE
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21
DETACH HERE
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[X]PLEASE MARK
VOTEVOTES 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, Yeaman
FOR WITHHELD
ALL [ ]FOR] [ ] FROM ALL
NOMINEES
[ ]WITHHOLD AUTHORITY FOR ALL NOMINEES
[ ]
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TO WITHHOLD AUTHORITY TO VOTE FOR ANY NOMINEE(S), MARK ABOVE AND WRITE
NOMINEE'S NAME(S) IN SPACE PROVIDED.
2. Approval of amendment to the Company's Restated Certificate of
Incorporation to change the name of the Company.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
3. Approval of amendment to the Tyler Corporation Stock Option Plan, as amended and restated
as of February 19, 1998.
[ ]ForPlan.
FOR [ ] AGAINST [ ]ABSTAIN
3.] ABSTAIN [ ]
4. In their discretion, the proxies are authorizeauthorized 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:
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Signature: Date:
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