AGREEMENT AND PLAN OF MERGER

         AGREEMENT  AND  PLAN OF  MERGER,  dated  as of  March  30,  1999  (this
"Agreement"), by and among Tyler Corporation, a Delaware corporation ("Parent"),
CPS Systems, Inc., a Delaware corporation,  a wholly-owned  subsidiary of Parent
("Merger Sub"), CPS Systems, Inc., a Texas corporation (the "Company"),  and the
stockholders  of the Company named on the signature pages of this Agreement (the
"Stockholders").  Parent  and  Merger  Sub  are  sometimes  referred  to in this
Agreement as the "Tyler  Companies," and the Tyler Companies and the Company are
sometimes referred to in this Agreement as the "Constituent Entities."

                                   BACKGROUND

         The Board of Directors  of each of Parent,  Merger Sub, and the Company
have determined that it is in the best interests of each respective  company and
their  respective  stockholders  that the Company merge with and into Merger Sub
(the "Merger"), on the terms and subject to the conditions of this Agreement and
in accordance with the Delaware General Corporation Law ("Delaware Law") and the
Texas Business Corporation Act ("Texas Law").

         The  Board  of  Directors  of each  of the  Constituent  Entities  have
approved the Merger in accordance with Delaware Law and Texas Law.

         The Merger is  intended  to be treated  as a  pooling-of-interests  for
financial accounting purposes.

         Articles I and II will  constitute  a "plan of merger" for the purposes
of Delaware Law and Texas Law.

         THEREFORE,  in  consideration  of  the  foregoing  and  the  respective
representations,  warranties,  covenants,  and  agreements  set  forth  in  this
Agreement and other good and valuable consideration, the receipt and sufficiency
of which all parties mutually acknowledge,  the parties, intending to be legally
bound, agree as follows:


                                    ARTICLE I
                                   THE MERGER

         SECTION 1.01.  The Merger.  On the terms and subject to the  conditions
set forth in this Agreement,  and in accordance with Delaware Law and Texas Law,
at the Effective Time (as defined in Section  1.02),  the Company will be merged
with and into  Merger Sub. As a result of the  Merger,  the  separate  corporate
existence  of the  Company  will  cease  and  Merger  Sub will  continue  as the
surviving corporation of the Merger (the "Surviving Corporation").

         SECTION  1.02.  Closing;  Closing  Date;  Effective  Time.  Unless this
Agreement  has been  terminated  pursuant  to Section  7.01,  and subject to the
satisfaction  or  waiver  of  the  conditions  set  forth  in  Article  VI,  the
consummation of the Merger and the closing of the  transactions  contemplated by
this Agreement (the "Closing") will take place at the offices of Parent, 2800 W.
Mockingbird Lane,  Dallas,  Texas 75235 as soon as practicable (but in any event
within two business days) after the  satisfaction or waiver of the conditions as
set forth in Article  VI, or at such other date,  time,  and place as Parent and
the Company  agree.  The date on which the Closing takes place is referred to as
the "Closing  Date." As promptly as practicable on the Closing Date, the parties
will cause the Merger to be consummated  by filing  articles or a certificate of
merger  (together,  the  "Certificate of Merger") with the Secretary of State of
the State of Delaware and the Secretary of State of the State of Texas,  in such
form as required by, and executed in accordance with the relevant provisions of,
Delaware  Law and Texas  Law,  respectively  (the date and time of the last such
filing, or such later date or time agreed upon by the Parent and the Company and
set forth in the Certificate of Merger, being the "Effective Time").

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         SECTION 1.03.  Effect of the Merger.  At the Effective Time, the effect
of the Merger will be as provided in the  applicable  provisions of Delaware Law
and Texas Law.

         SECTION 1.04.  Certificate of  Incorporation;  Bylaws. At the Effective
Time, the certificate of incorporation  of Merger Sub, as in effect  immediately
prior to the Effective  Time, will be the  certificate of  incorporation  of the
Surviving  Corporation  and  thereafter  will continue to be its  certificate of
incorporation until amended as provided in such certificate of incorporation and
pursuant to Delaware Law. At the Effective Time, the bylaws of Merger Sub, as in
effect  immediately  prior to the  Effective  Time,  will be the  bylaws  of the
Surviving  Corporation  and  thereafter  will  continue  to be its bylaws  until
amended as provided in such bylaws and pursuant to Delaware Law.

         SECTION  1.05.  Directors  and  Officers.  The  directors of Merger Sub
immediately  prior to the Effective  Time will be the directors of the Surviving
Corporation,  each  to  hold  office  in  accordance  with  the  certificate  of
incorporation  and bylaws of the  Surviving  Corporation,  and the  officers  of
Merger Sub  immediately  prior to the Effective Time will be the officers of the
Surviving Corporation,  each to hold office in accordance with the bylaws of the
Surviving  Corporation,  in each case until their respective successors are duly
elected or appointed and qualified.


                                   ARTICLE II
               CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES

     SECTION 2.01. Merger Consideration;  Conversion and Cancellation of Company
Stock.  At the Effective Time, by virtue of the Merger and without any action on
the part of the Tyler Companies, the Company, or their respective stockholders:

                  (a) Subject to the other  provisions  of this Article II, each
         share of Company  common stock,  $.01 par value per share (the "Company
         Stock"), issued and outstanding immediately prior to the Effective Time
         (excluding  any Company  Stock  described  in Section 2.01 (b)) will be
         converted  into the  right to  receive  one-third  of a share of Parent
         common stock,  $.01 par value per share ("Parent  Common  Stock").  The
         shares of Parent  Common  Stock to be issued in the Merger are referred
         to herein as the "Tyler Shares" or the "Merger Consideration".

                  Notwithstanding  the  foregoing,  if, between the date of this
         Agreement  and the Effective  Time,  the  outstanding  shares of Parent
         Common Stock or Company Stock have been changed into a different number
         of  shares  or a  different  class by  reason  of any  stock  dividend,
         subdivision, reclassification,  re-capitalization,  split, combination,
         exchange of shares,  or similar  occurrence,  the Merger  Consideration
         will be  correspondingly  adjusted  to  reflect  such  stock  dividend,
         subdivision, reclassification,  re-capitalization,  split, combination,
         exchange of shares, or similar occurrence.

                  (b)  Notwithstanding  any  provision of this  Agreement to the
         contrary,  each share of  Company  Stock  held in the  treasury  of the
         Company  immediately  prior to the Effective  Time will be canceled and
         extinguished without any conversion thereof and no payment will be made
         with respect thereto.

                  (c) All shares of Company  Stock will cease to be  outstanding
         and will  automatically  be canceled and retired,  and each certificate
         previously  evidencing  Company Stock outstanding  immediately prior to
         the  Effective  Time (other than  Company  Stock  described  in Section
         2.01(b)) (the "Converted  Shares") will thereafter  represent the right
         to receive  the  applicable  portion of the Merger  Consideration.  The
         holders of certificates  previously  evidencing  Converted  Shares will
         cease to have any rights with respect to such Converted Shares,  except
         as otherwise  provided in this  Agreement or by  applicable  law.  Such
         certificates  previously  evidencing Converted Shares 

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          will be exchanged for  certificates  evidencing whole shares of Parent
          Common Stock upon the  surrender of such  certificates  in  accordance
          with the provisions of Section 2.02,  without interest.  No fractional
          shares of Parent  Common Stock will be issued in  connection  with the
          Merger;  and in lieu thereof, a cash payment shall be made pursuant to
          Section 2.02.

                  (d) Under  Texas Law,  the  holders  of Company  Stock are not
         entitled  to  dissenters'  rights  of  appraisal.  Notwithstanding  the
         foregoing,  upon  consummation  of  the  Merger,  the  holders  of  all
         certificates  which  theretofore  represented  shares of  Common  Stock
         shall,  subject to  applicable  law, only have the right to receive the
         Converted Shares and the amount of cash, if any,  deliverable  pursuant
         to Section 2.02(d) hereof.

         SECTION 2.02.     Exchange and Surrender of Certificates.

                  (a) As soon as  practicable  after the  Effective  Time,  each
         holder of a certificate previously evidencing Converted Shares shall be
         entitled,  upon the  surrender  thereof to Parent or an exchange  agent
         designated  by  Parent,   to  receive  a  certificate  or  certificates
         representing  the  Tyler  Shares  into  which the  Converted  Shares so
         surrendered  have been  converted as described in Section 2.01, in such
         denominations and registered in such names as such holder may request.

                  (b)  All  shares  of  Parent  Common  Stock  issued  upon  the
         surrender  for  exchange  of   certificates   previously   representing
         Converted Shares in accordance with the terms of this Agreement will be
         deemed  to  have  been  issued  in  full  satisfaction  of  all  rights
         pertaining to such Converted  Shares.  At and after the Effective Time,
         there  will  be no  further  registration  of  transfers  on the  stock
         transfer  books of the Surviving  Corporation of Company Stock that was
         outstanding  immediately  prior to the  Effective  Time.  If, after the
         Effective Time, certificates that previously evidenced Converted Shares
         are presented to the Surviving Corporation for any reason, they will be
         canceled and exchanged as provided in this Article II.

                  (c) As  promptly  as  practicable  after the  Effective  Time,
         Parent will send or cause to be sent to each  record  holder of Company
         Common Stock at the Effective  Time a letter of  transmittal  and other
         appropriate materials for use in surrendering certificates contemplated
         hereby.

                  (d) No certificates or scrip evidencing  fractional  shares of
         Parent  Common Stock shall be issued upon the surrender for exchange of
         certificates,  and such fractional share interests will not entitle the
         owner thereof to any rights of a stockholder of Parent.  In lieu of any
         such  fractional  shares,  each  holder  of  a  certificate  previously
         representing  Converted Shares,  upon surrender of such certificate for
         exchange  pursuant to this  Article II, shall be paid an amount in cash
         (without  interest),   rounded  to  the  nearest  cent,  determined  by
         multiplying (a) the per share closing price as reported on the New York
         Stock Exchange of Parent Common Stock on the date of the Effective Time
         by (b) the fractional  interest to which such holder would otherwise be
         entitled (after taking into account all Converted Shares held of record
         by such holder at the Effective Time).

                  (e) Parent will be entitled  to deduct and  withhold  from the
         consideration  otherwise  payable  pursuant  to this  Agreement  to any
         former  holder of Company Stock such amounts as Parent or any Affiliate
         of Parent is required to deduct and withhold with respect to the making
         of such  payment  under the Internal  Revenue Code of 1986,  as amended
         (the "Code"),  or any provision of state, local, or foreign tax law. To
         the extent  that  amounts  are so  withheld  by Parent,  such  withheld
         amounts  will be treated for all  purposes of this  Agreement as having
         been paid to the  former  holder of  Company  Stock in respect of which
         such deduction and withholding was made by Parent.

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                                   ARTICLE III
                  REPRESENTATIONS AND WARRANTIES OF THE COMPANY

         The Company hereby  represents  and warrants to the Tyler  Companies as
follows:

         SECTION 3.01. Organization and Qualification; Stockholders. The Company
is a corporation duly organized,  validly  existing,  and in good standing under
the laws of the State of Texas,  has all  requisite  power and authority to own,
lease,  and operate  its  properties  and to carry on its  business as it is now
being  conducted,  and is duly  qualified and in good standing to do business in
each  jurisdiction  in which the nature of the  business  conducted by it or the
ownership or leasing of its properties makes such qualification necessary, other
than where the failure to be so duly  qualified and in good  standing  would not
have a Company Material Adverse Effect.  "Company Material Adverse Effect" means
any change,  effect,  or  condition  that,  would be  materially  adverse to the
business,  operations,  assets, financial condition, or results of operations of
the Company, taken as a whole.

         SECTION 3.02.  Charter and Bylaws.  The Company will, within 15 days of
the date of this Agreement, furnish to Parent true, complete, and correct copies
of the  certificate of  incorporation  and bylaws of the Company,  as amended or
restated to the date of this  Agreement.  The Company is not in violation in any
aspect of any of the provisions of its certificate of  incorporation  or, in any
material respect,  the provisions of the Company's bylaws, and such certificates
and bylaws remain in full force and effect.

         SECTION 3.03.     Capitalization.

                  (a) The  authorized  capital stock of the Company  consists of
         50,000,000  shares of Company Stock and 10,000,000  shares of preferred
         stock,  $.01  per  share,  of  which  6,743,902  shares  and 0  shares,
         respectively,  are  issued  and  outstanding.  Except as  disclosed  in
         Schedule 3.03(c) to the Disclosure Schedule, no shares of capital stock
         of the Company are reserved for any  purpose.  Each of the  outstanding
         shares of  capital  stock of the  Company is duly  authorized,  validly
         issued,  and fully paid and  nonassessable,  and has not been issued in
         violation of (nor are any of the authorized  shares of capital stock of
         the Company  subject to) any  preemptive  or similar  rights  under the
         certificate of incorporation or bylaws of the Company, federal or state
         securities laws, or any agreement to which the Company is a party or by
         which it is bound.

                  (b) The Company does not (i) directly or indirectly  own, (ii)
         have any agreement to purchase or otherwise acquire,  or (iii) hold any
         interest  convertible  into or  exchangeable  or  exercisable  for, any
         equity interest in any Person.

                  (c)  Except  as set forth in the  Company  SEC  Reports  or in
         Schedule  3.03(c) to the  Disclosure  Schedule,  there are no  options,
         warrants, or other rights, agreements,  arrangements, or commitments of
         any  character  to which the Company is a party or by which it is bound
         relating to the issued or unissued capital stock or other securities of
         the  Company or  obligating  the Company to grant,  issue,  or sell any
         shares of its capital stock or other securities. Except as set forth in
         the  Company  SEC  Reports or in  Schedule  3.03(c)  to the  Disclosure
         Schedule, there are no agreements,  arrangements, or commitments of any
         character  (contingent or otherwise) pursuant to which any Person is or
         may be  entitled  to  receive  any  payment  based on the  revenues  or
         earnings, or calculated in accordance therewith,  of the Company. There
         are no voting trusts, proxies, or other agreements or understandings to
         which the  Company  is a party or by which the  Company  is bound  with
         respect to the voting of any shares of capital stock of the Company.

                  (d)  Except  as set forth in the  Company  SEC  Reports  or in
         Schedule 3.03(d) to the Disclosure Schedule,  there are no obligations,
         contingent or otherwise,  of the Company to (i) repurchase,  redeem, or
         otherwise  acquire  any shares of the  Company  Stock or other  capital

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         stock or other  securities  of the Company;  or (ii)  provide  material
         funds to, or make any  material  investment  in (in the form of a loan,
         capital  contribution,  or  otherwise),  or provide any guarantee  with
         respect to the obligations of any Person.

         SECTION 3.04. Authority.  The Company has all requisite corporate power
and  authority to execute and deliver  this  Agreement  and the other  documents
contemplated  by this Agreement (the  "Ancillary  Agreements")  to which it is a
party,  to perform its obligations  hereunder and thereunder,  and to consummate
the transactions  contemplated hereby and thereby. The execution and delivery of
this  Agreement and the Ancillary  Agreements to which the Company is a party by
the Company and the consummation by the Company of the transactions contemplated
hereby and thereby  have,  subject to  satisfaction  of the  closing  conditions
contained herein, been duly authorized by all necessary corporate action, and no
other corporate  proceedings on the part of the Company or its  stockholders are
necessary to authorize this  Agreement or the Ancillary  Agreements to which the
Company is a party or to  consummate  the  transactions  contemplated  hereby or
thereby. This Agreement has been duly executed and delivered by the Company and,
assuming the due authorization, execution, and delivery of this Agreement by the
Tyler Companies,  constitutes the legal,  valid, and binding  obligations of the
Company  enforceable  in  accordance  with its  terms,  subject  to (i)  general
principals  of  equity,  regardless  of  whether  enforcement  is  sought  in  a
proceeding in equity or at law, and (ii) bankruptcy, reorganization, insolvency,
fraudulent conveyance,  moratorium,  receivership or other similar laws relating
to or affecting creditors' rights generally.

         SECTION 3.05.     No Conflict; Required Filings and Consents.

                  (a) Except as set forth in Schedule  3.05(a) to the Disclosure
         Schedule,  the execution and delivery of this  Agreement by the Company
         does not, and the consummation of the transactions contemplated thereby
         will not, (i) conflict with or violate the certificate of incorporation
         or bylaws, as amended or restated to the date of this Agreement, of the
         Company; (ii) to the knowledge of the Company, conflict with or violate
         in any material  respect any  federal,  state,  foreign,  or local law,
         statute,  ordinance,  rule,  regulation,  order,  judgment,  or decree,
         including,    without   limitation,   laws   relating   to   employment
         discrimination,  fair employment practices, fair labor standards, equal
         employment  opportunity,  individual or collective employee rights, and
         occupational health and safety (collectively, "Laws") applicable to the
         Company  or by which  any of their  respective  properties  is bound or
         subject;  or (iii)  result in any  material  breach of or  constitute a
         default  (or an event  that with  notice or lapse of time or both would
         become a  default)  under,  or give to any other  Person  any rights of
         termination,  amendment,  acceleration,  or cancellation of, or require
         payment  under,  or result in the creation of a lien or  encumbrance on
         any of the  properties  or  assets  of the  Company  pursuant  to,  any
         material note, bond, mortgage,  indenture,  contract, agreement, lease,
         license, permit,  franchise, or other instrument or obligation to which
         the  Company  is a party or by or to which  the  Company  or any of its
         properties is bound or subject.

                  (b) The  execution  and  delivery  of this  Agreement  and the
         Ancillary  Agreements by the Company does not, and  consummation of the
         transactions  contemplated  hereby and  thereby  will not,  require the
         Company to obtain  any  consent,  license,  permit,  approval,  waiver,
         authorization,  or order of, or to make any filing with or notification
         to, any  governmental  or  regulatory  authority,  domestic  or foreign
         (collectively,  "Governmental  Entities"),  except  (i) the  filing and
         recordation  of the  Articles of Merger as required by Delaware Law and
         Texas Law, (ii) the filing and approval of a definitive proxy statement
         with and by the  Securities  and  Exchange  Commission  which seeks the
         approval  of  the  Merger  by the  Company's  stockholders,  (iii)  the
         approval  of the Merger by the  Company's  stockholders  as required by
         Texas Law and the  articles  and  bylaws of the  Company,  and (iv) the
         filing of a  registration  statement  with the  Securities and Exchange
         Commission  covering the Tyler  Shares  being  issued to the  Company's
         stockholders.

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         SECTION 3.06. Permits;  Compliance. The Company is in possession of all
material  franchises,  grants,  authorizations,  licenses,  permits,  easements,
variances, exemptions,  consents, certificates,  approvals, and orders necessary
to own, lease,  and operate its properties and to carry on its business as it is
now being  conducted  (collectively,  the  "Company  Permits"),  and there is no
action, proceeding, or investigation pending or, to the knowledge of the Company
or any Stockholder,  threatened  regarding  suspension or cancellation of any of
the Company Permits. Except for instances that would not have a Company Material
Adverse  Effect,  the Company is not in conflict with or in default or violation
of (a) any Law applicable to the Company or by or to which any of its properties
is bound or to which they may be subject or (b) any of the Company Permits.  The
Company has not received any written notice with respect to possible  conflicts,
defaults, or violations of Laws from any Governmental Entity.

         SECTION 3.07.     Company SEC Reports; Financial Statements.

                  (a) Since  March  1998,  the  Company  has  filed  all  forms,
         reports,  statements, and other documents required to be filed with the
         Securities  and Exchange  Commission  (the "SEC"),  including,  without
         limitation,  (i) all Annual  Reports on Form 10-K,  (ii) all  Quarterly
         Reports on Form 10-Q, (iii) all proxy statements relating to any annual
         or special  meeting of  shareholders,  (iv) all Current Reports on Form
         8-K, and (v) all other reports, schedules,  registration statements, or
         other documents (collectively,  the "Company SEC Reports"). The Company
         SEC Reports,  including  all of the Company SEC Reports filed after the
         date of this  Agreement  and prior to the Effective  Time,  (A) were or
         will be  prepared  in all  material  respects  in  accordance  with the
         requirements  of  applicable  Law and (B) did not at the time they were
         filed,  or will not at the time  they are  filed,  contain  any  untrue
         statement of material fact or omit to state a material fact required to
         be stated therein or necessary in order to make the statements therein,
         in  light  of  the  circumstances  under  which  they  were  made,  not
         misleading.

                  (b) Each of the consolidated  financial statements (including,
         in each case, any related notes  thereto)  contained in the Company SEC
         Reports  filed  prior to the  Effective  Time (i) have  been or will be
         prepared in accordance  with the published rules and regulations of the
         SEC and generally accepted accounting  principles ("GAAP") applied on a
         consistent  basis  throughout  the periods  involved  and (ii)  present
         fairly or will present fairly, in all material respects,  the financial
         position  of  the  Company  at the  dates  shown  and  the  results  of
         operations and cash flows for the periods covered,  except that (A) any
         unaudited  interim  financial  statements  were or will be  subject  to
         normal  and  recurring  year-end  adjustments  and (B)  any  pro  forma
         financial   statements   contained  in  such   consolidated   financial
         statements are not necessarily indicative of the consolidated financial
         position of the Company and its subsidiaries as of the respective dates
         thereof and the  consolidated  results of operations and cash flows for
         the periods indicated.

                  (c) Notwithstanding the foregoing contained in subsections (a)
         and (b) of this Section 3.07, the Tyler Companies  acknowledge that the
         Company has  disclosed to them the  existence of  litigation  which has
         arisen  in  connection  with  the  application  of  S.O.P.  97-2 to the
         Company's  financial  statements for the fiscal year ended December 31,
         1998.

         SECTION  3.08.  Absence  of  Certain  Changes  or  Events.   Except  as
contemplated  by this Agreement or as set forth in the Company SEC Reports or in
Schedule 3.08 to the Disclosure  Schedule,  since December 31, 1998, the Company
has  conducted  its  business  only  in the  ordinary  course  and  in a  manner
consistent with past practice,  and there has not been (a) any material  damage,
destruction,  or loss (whether or not covered by insurance)  with respect to any
assets of the Company;  (b) any change by the Company in its  accounting  or tax
reporting methods, principles, or practices; (c) any declaration, setting aside,
or payment of any  dividends  or  distributions  in respect of shares of Company
Stock, or any redemption, repurchase, or other acquisition by the Company of any
of the  Company's  securities;  (d) any increase in the benefits  under,  or the
establishment  or  amendment  of,  any  bonus,  insurance,  severance,  deferred
compensation,  pension,  retirement,  profit sharing,  stock option  (including,
without limitation,  the granting of stock options,  stock appreciation  rights,
performance  awards,  or restricted  stock  awards),  stock  purchase,  or other
employee benefit plan, or any increase in the compensation  payable or to

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become payable to directors,  officers,  or employees of the Company  outside of
the ordinary course of business;  (e) any entry by the Company into any material
commitment or transaction  not in the ordinary course of business and consistent
with past practice (other than this Agreement and the transactions  contemplated
by this  Agreement);  (f) any  material  increase in  indebtedness  for borrowed
money; or (g) any Company Material Adverse Effect.

         SECTION 3.09. Absence of Litigation. Except as set forth in the Company
SEC Reports or in Schedule 3.09 to the Disclosure  Schedule,  there is no claim,
action, suit, litigation, proceeding, arbitration, or investigation of any kind,
at law  or in  equity  (including  actions  or  proceedings  seeking  injunctive
relief),  pending or, to the  knowledge of the Company,  threatened  against the
Company  or any  properties  or  rights  of the  Company,  or  relating  to this
Agreement or the  transactions  contemplated by this Agreement which the Company
reasonably believes has a potential expense to the Company in excess of $50,000,
individually, and the Company is not subject to any continuing order of, consent
decree,  settlement  agreement,  or other  similar  written  agreement  with, or
continuing  investigation by, any Governmental  Entity, or any judgment,  order,
writ,  injunction,  decree,  or award of any Governmental  Entity or arbitrator,
including, without limitation, cease-and-desist or other orders.

         SECTION 3.10.     Employee Benefit Plans; Labor Matters.

                  (a) Set forth in Schedule  3.10(a) to the Disclosure  Schedule
         is a complete  and correct  list of all  "employee  benefit  plans" (as
         defined in the Employee  Retirement  Income  Security  Act of 1974,  as
         amended  ("ERISA")),  all  plans  or  policies  providing  for  "fringe
         benefits"  (including  but not  limited  to  vacation,  paid  holidays,
         personal leave,  employee  discount,  educational  benefit,  or similar
         programs),  and each other  bonus,  incentive,  compensation,  deferred
         compensation,  profit sharing,  stock, severance,  retirement,  health,
         life,  disability,  group insurance,  employment,  stock option,  stock
         purchase, stock appreciation right, supplemental unemployment,  layoff,
         consulting,   or  any  other  similar  plan,   agreement,   policy,  or
         understanding  (whether  written or oral,  qualified  or  nonqualified,
         currently  effective or terminated),  and any trust,  escrow,  or other
         agreement  related  thereto  that  (i)  is  or  has  been  established,
         maintained, or contributed to by the Company or any ERISA Affiliate (as
         defined  below)  or with  respect  to which  the  Company  or any ERISA
         Affiliate has any liability,  or (ii) provides  benefits,  or describes
         policies or procedures applicable, to any officer, employee,  director,
         former officer,  former employee,  or former director of the Company or
         any ERISA Affiliate,  or any dependent  thereof,  regardless of whether
         funded  (each,  an "Employee  Plan," and  collectively,  the  "Employee
         Plans").  For purposes of this Agreement,  "ERISA  Affiliate" means the
         Company  and each  Person or other  trade or  business,  whether or not
         incorporated,  that is or has  been  treated  as a single  employer  or
         controlled  group member with the Company  pursuant to Code section 414
         or ERISA section 4001.

                  (b)  Except as  contained  in the  Agreements  referred  to in
         Section 3.10(c), no written or oral  representations  have been made to
         any  employee  or officer or former  employee or officer of the Company
         promising or guaranteeing  any coverage under any employee welfare plan
         for any period of time beyond the end of the current  plan year (except
         to the extent of coverage  required under Code section  4980B),  and no
         Employee Plan  provides  benefits to any employee of the Company or any
         ERISA  Affiliate  or  any  employee's  dependents  after  the  employee
         terminates  employment  other than as required by law. The consummation
         of the transactions  contemplated by this Agreement will not accelerate
         the time of payment or vesting,  or increase the amount of compensation
         (including  amounts  due under  Employee  Plans)  due to any  employee,
         officer, former employee, or former officer of the Company.

                  (c)  Except  as set forth in the  Company  SEC  Reports  or in
         Schedule  3.10(c) to the  Disclosure  Schedule,  all  employees  of the
         Company are terminable at the will of the Company,  and the Company has
         not,  nor has any present or former  director,  officer,  employee,  or
         agent of the  Company,  made any binding  commitments  of the  Company,
         written or oral, to any present or 

                                       7
<PAGE>
          former  director,  officer,  agent, or employee  concerning his or her
          term, condition, or benefits of employment by the Company.

                  (d) To the knowledge of the Company,  neither the Company, nor
         any ERISA  Affiliate,  nor any plan  fiduciary of any Employee Plan has
         engaged in any  transaction  in violation  of section  406(a) or (b) of
         ERISA or any "prohibited transaction" (as defined in section 4975(c)(1)
         of the Code), that could subject the Company,  any ERISA Affiliate,  or
         the Parent to any taxes, penalties, or other liabilities resulting from
         such  prohibited  transaction.  To the  knowledge  of the  Company,  no
         condition  exists that would subject the Company,  any ERISA Affiliate,
         or the Parent to any excise tax,  penalty  tax, or fine  related to any
         Employee Plan.

                  (e) There are no agreements that will or may provide  payments
         to any officer, employee, stockholder, or highly compensated individual
         that will be  "parachute  payments"  under Code  section  280G that are
         nondeductible  to the Company or subject to tax under Code section 4999
         for which the  Company or any ERISA  Affiliate  would have  withholding
         liability.

                  (f) There is no Employee Plan that is or was subject to Part 3
         of Title I of ERISA or Title IV of ERISA;  each  Employee Plan has been
         operated in all material  respects in compliance with ERISA,  the Code,
         and all other  applicable  laws; none of the Employee Plans is or was a
         "multiple  employer  plan" or  "multiemployer  plan" (as  described  or
         defined  in  ERISA  or the  Code),  nor has the  Company  or any  ERISA
         Affiliate  ever  contributed or been required to contribute to any such
         plan;  there are no material  unfunded  liabilities  existing under any
         Employee  Plans;  and each Employee  Plan that has not been  terminated
         could  be  terminated  as of the  Closing  Date  without  any  material
         liability  to the Parent,  the  Company,  or any ERISA  Affiliate.  All
         contributions  required to be made to the Employee Plans have been made
         timely.

                  (g)  Except  as set forth in the  Company  SEC  Reports  or in
         Schedule 3.10(g) to the Disclosure Schedule, the Company is not a party
         to or bound by any severance agreements,  programs, policies, plans, or
         arrangements,   whether  or  not  written.   Schedule  3.10(g)  to  the
         Disclosure  Schedule sets forth, and the Company has provided to Parent
         true and correct copies of, (i) all employment agreements with officers
         or employees of the Company;  (ii) all agreements  with  consultants of
         the Company  obligating  the Company to make annual cash payments in an
         amount exceeding $10,000; and (iii) all noncompetition  agreements with
         the Company.

                  (h) The Company has not amended or taken any other action with
         respect to any of the  Employee  Plans or any of the  plans,  programs,
         agreements,  policies, or other arrangements  described in this Section
         3.10 since December 31, 1998.

                  SECTION 3.11.     Taxes.

                  (a) All  returns and reports  (the "Tax  Returns")  of or with
         respect to any Tax that are  required to be filed by or with respect to
         the  Company or its  business or  activities  have been duly and timely
         filed,  within the  required  time period,  as  extended.  All items of
         income, gain, loss, deduction, and credit or other items required to be
         included  in  each  such  Tax  Return  have  been  included,   and  all
         information  provided  in each such Tax  Return is true,  correct,  and
         complete in all material respects.  All Taxes that have been or are due
         have been timely  paid in full.  The Company is not subject to taxation
         by any  jurisdiction  where the Company does not file Tax Returns.  All
         withholding Tax requirements  imposed on or with respect to the Company
         have been satisfied in full in all respects.  No penalty,  interest, or
         other  charge is due with  respect  to the late  filing of any such Tax
         Return or late  payment of any such Tax.  The Company has  disclosed on
         its federal income Tax Returns all positions taken that could give rise
         to a  substantial  understatement  of  federal  income  Tax  within the
         meaning of Code section 6662.

                  (b) Except as set forth on Schedule  3.11(b) to the Disclosure
         Schedule,  there is not in force any  extension of time with respect to
         the due date for the filing of any Tax Return of or

                                       8
<PAGE>
          with  respect  to the  Company  nor any  waiver or  agreement  for any
          extension of time for the  assessment,  collection,  or payment of any
          Tax of or with respect to the Company.

                  (c)  There  are  no  pending  audits,  actions,   proceedings,
         investigations,  disputes,  or claims  with  respect to or against  the
         Company for or with respect to any Taxes; no assessment, deficiency, or
         adjustment has been assessed or proposed with respect to any Tax Return
         of or with respect to the Company; and to the knowledge of the Company,
         there is no reasonable  basis on which any claim for material Taxes can
         be asserted  against the Company,  other than those  disclosed  (and to
         which are  attached  true and  complete  copies of all audit or similar
         reports)  on  Schedule  3.11(c) to the  Disclosure  Schedule.  Schedule
         3.11(c) to the Disclosure  Schedule also indicates all Tax Returns that
         have been audited by any taxing authority.

                  (d) The  Company  is not  liable  for the Taxes of any  Person
         under federal, state, foreign, or local law as a transferee, successor,
         by contract, or otherwise.

                  (e) Except for inchoate  statutory liens for current Taxes not
         yet due, no liens for Taxes exist upon the assets of the Company.

                  (f) The Company  will not be required to include any amount in
         income for any taxable  period  beginning  after December 31, 1998 as a
         result of a change in accounting  method for any taxable  period ending
         on or before  December 31, 1998 or pursuant to any  agreement  with any
         Tax authority with respect to any such taxable period.

                  (g) No property of the Company is held in an  arrangement  for
         which partnership Tax Returns are being filed, and the Company does not
         own any interest in any controlled  foreign  corporation (as defined in
         section  957 of the  Code),  passive  foreign  investment  company  (as
         defined in section 1296 of the Code),  foreign  trust,  or other Person
         the income of which is  required  to be  included  in the income of the
         Company.

                  (h) No  property  of the  Company is subject to a  safe-harbor
         lease  (pursuant to section 168(f) (8) of the Internal  Revenue Code of
         1954 as in  effect  after  the  Economic  Recovery  Tax Act of 1981 and
         before  the Tax  Reform Act of 1986) or is  "tax-exempt  use  property"
         (within the meaning of section 168(h) of the Code) or "tax-exempt  bond
         financed  property"  (within the  meaning of section  168(g) (5) of the
         Code).

                  (i) The Company has not made an election  under section 341(f)
         of the Code.  The Company is not a United States real property  holding
         corporation  within the meaning of Code  section  897(c)(2)  during the
         applicable period specified in Code section 897(c)(1)(A)(ii).

         SECTION 3.12. Certain Business  Practices.  Neither the Company nor, to
the knowledge of the Company, any director,  officer,  agent, or employee of the
Company  has  (a)  used  any  funds  on  behalf  of  the  Company  for  unlawful
contributions,  gifts,  entertainment,  or other unlawful  expenses  relating to
political  activity;  (b) made any  unlawful  payment  to  foreign  or  domestic
government officials or employees or to foreign or domestic political parties or
campaigns or violated  any  provision of the Foreign  Corrupt  Practices  Act of
1977, as amended; or (c) made any other unlawful payment.

         SECTION 3.13.  Environmental  Matters.  Except for matters disclosed in
the Company SEC Reports, (a) the properties,  operations,  and activities of the
Company  comply  currently  with,  and  have at all  times  complied  with,  all
applicable  Environmental  Laws (as  defined  below);  (b) the  Company  (or its
properties or  operations) is not subject to any existing,  pending,  or, to the
knowledge  of  the  Company,  threatened  action,  suit,  claim,  investigation,
inquiry,   or  proceeding  by  or  before  any  Governmental  Entity  under  any
Environmental Law; (c) to the knowledge of the Company, there are no physical or
environmental  conditions  existing  on any  property  used  by the  Company  or
resulting from the Company's  operations or activities,  past or present, at any
location,  that would give rise to any on-site or off-site 

                                       9
<PAGE>
remedial  obligations or other liabilities  imposed under any Environmental Laws
or that would affect the soil, groundwater,  surface water, or human health; and
(d) to the knowledge of the Company, there has been no exposure of any Person or
property to hazardous substances or any pollutant or contaminant,  nor has there
been any release of hazardous  substances or any pollutant or  contaminant  into
the  environment,  by the  Company  or in  connection  with  its  properties  or
operations.

         For purposes of this Agreement, the term "Environmental Laws" means any
and all  Laws,  statutes,  ordinances,  rules,  regulations,  or  orders  of any
Governmental Entity pertaining to health or the environment  currently in effect
in any and all  jurisdictions  in which the  Company  owns  property or conducts
business,   including  without  limitation,  the  Comprehensive   Environmental,
Response,  Compensation,  and Liability Act of 1980 ("CERCLA"),  as amended; the
Resource  Conservation and Recovery Act of 1976 ("RCRA"),  as amended; any state
Laws  implementing  the  foregoing  federal  laws;  and all other  environmental
conservation  or  protection  Laws.  For purposes of this  Agreement,  the terms
"hazardous  substance" and "release"  have the meanings  specified in CERCLA and
RCRA,  and the term  "disposal"  has the meaning  specified  in RCRA;  provided,
however,  that to the  extent  the laws of the  state in which the  property  is
located establish a meaning for "hazardous  substance," "release," or "disposal"
that is broader  than that  specified  in either  CERCLA or RCRA,  such  broader
meaning will apply.

         SECTION 3.14. Vote Required.  The only vote of the holders of any class
or series of the  Company's  capital  stock  necessary to approve the Merger and
adopt this  Agreement  is the  affirmative  vote or  consent  of the  holders of
two-thirds of the outstanding shares of Company Stock.

         SECTION  3.15.  Brokers;  Other  Transactions.  Except  as set forth in
Schedule  3.15 to the  Disclosure  Schedule,  no broker,  finder,  or investment
banker is entitled to any  brokerage,  finder's,  or other fee or  commission in
connection  with the  transactions  contemplated  by this  Agreement  based upon
arrangements made by or on behalf of the Company or any Stockholder.

         SECTION  3.16.  Insurance.  Except as set forth on Schedule 3.16 to the
Disclosure  Statement,  the Company is currently insured, and during each of the
past three calendar years has been insured,  for reasonable amounts against such
risks as companies  engaged in a similar business and similarly  situated would,
in accordance with good business practice, customarily be insured.

         SECTION 3.17.  Properties.  Except for liens disclosed in Schedule 3.17
of the  Disclosure  Statement,  and arising in the  ordinary  course of business
after the date of this Agreement and  properties  and assets  disposed of in the
ordinary  course of business  after  December 31, 1998, the Company has good and
marketable  title,  free and clear of all liens and  adverse  claims,  to all of
their  respective  properties  and  assets,   whether  tangible  or  intangible,
reflected  in the SEC  Company  Reports as being owned by the Company as of such
date or purported to be owned on the date of this  Agreement.  All buildings and
all fixtures,  equipment, and other property and assets that are material to the
business of the Company and are held under  leases by the Company are held under
valid instruments enforceable by the Company in accordance with their respective
terms.  The  properties  and  equipment  of  the  Company,  including,   without
limitation,  their information systems, (i) have been maintained and are in good
and  serviceable  condition,  reasonable  wear and tear  excepted,  and (ii) are
adequate for the uses to which they are being put.

         SECTION 3.18  Intellectual  Property.  To the knowledge of the Company,
the  Company's   ownership  of  all  trademarks,   tradenames,   service  marks,
copyrights,   patents  and  other   proprietary   intellectual   property   (the
"Intellectual  Property")  is valid and  enforceable,  and the  Company  has the
exclusive  right to use such  Intellectual  Property.  To the  knowledge  of the
Company,  the current use by the Company of such Intellectual  Property does not
infringe the rights of any other Person,  and no other Person is infringing  the
rights of the Company in any such Intellectual Property.

                                       10
<PAGE>
         SECTION 3.19.     Certain Contracts; Licenses; Etc.

                  (a) Schedule  3.19(a) to the Disclosure  Schedule lists, as of
         the date of this Agreement, each agreement,  contract, or commitment to
         which  the  Company  is a party or by which  the  Company  is bound (i)
         involving  a lease  for  real  property  or  consideration  during  the
         previous twelve months in excess of $50,000 or that could reasonably be
         expected to involve  consideration in the twelve month period following
         the date of this  Agreement  in  excess  of  $50,000,  or (ii)  that is
         otherwise material to the financial  condition,  results of operations,
         or current or future  business or operations of the Company and that is
         not otherwise listed pursuant to this Section 3.19.

                  (b) The  Company is in  compliance  in all  material  respects
         under all leases, licenses, agreements,  contracts, permits, plans, and
         commitments  by which any of its  properties or assets is bound and, to
         the  knowledge  of  the  Stockholders,   no  event  has  occurred  that
         constitutes  a violation or breach of or a default (with the passage of
         time or the giving of notice or both) in respect  of any  thereof,  and
         each of the other  parties  thereto or bound  thereby has performed all
         the  obligations  required to be  performed by it to date and is not in
         default  thereunder.  Each of the items  required  to be  disclosed  in
         Schedule  3.19  to  the  Disclosure  Schedule  is  in  full  force  and
         constitutes a legal,  valid, and binding  obligation of the Company and
         the other parties  thereto,  enforceable in accordance  with its terms.
         Except as disclosed on Schedule 3.19 to the  Disclosure  Schedule,  the
         Company does not know or have reason to know that any  material  client
         or customer intends to terminate its relationship with the Company as a
         result of the Merger or any of the related transactions.

         SECTION 3.20.  Employees.  Schedule 3.20(a) to the Disclosure  Schedule
sets forth an  accurate,  correct,  and  complete  list of all  employees of the
Company as of March 31, 1999,  including  name,  title or position,  the present
annual  compensation  or wage  rate,  any  interests  in any bonus or  incentive
compensation plan, and any other perquisite or form of non-cash compensation. To
the  knowledge  of the  Company,  no  employee  of the  Company  is subject to a
non-competition  or any other form of agreement,  whether  written or oral, that
would  prevent  such  employee  from  continuing  as an  employee of Merger Sub,
Parent,  and their  respective  Affiliates  upon  consummation  of the Merger or
devoting his full talents,  knowledge,  and efforts to Merger Sub,  Parent,  and
their respective Affiliates upon consummation of the Merger. Schedule 3.20(b) to
the  Disclosure  Schedule sets forth an accurate and complete list of all loans,
debts, and other obligations in excess of $2,500 each  (collectively,  "Employee
Loans")  owed by any  employee of the Company to the  Company.  All  outstanding
Employee  Loans  owed to the  Company by any  Stockholder  will be repaid to the
Company at Closing.

         SECTION  3.21.  Year 2000  Compliance.  All of the material  management
information  systems  and  software  utilized  in the  Company's  business  (the
"Systems")  comply in all material  respects with all of the following  criteria
(compliance  with  such  criteria   referred  to  herein  as  being  "Year  2000
Compliant"):  (a) the Systems must operate with dates that are less than,  equal
to, or greater  than 2000 when the date is 1999 or less;  (b) the  Systems  must
operate  with dates that are less than,  equal to, or greater than 2000 when the
date is 2000 or greater;  (c) the Systems must work when the date rolls  between
12/31/99  and  01/01/2000;  (d) if any System is passing a date that  contains a
year less than four digits to another application or system, it must pass enough
information for the receiving system to comply with Section 3.23(a)-(c);  (e) if
any System is  receiving a date that  contains a year less than four digits from
another application or system, it must be able to interpret the date received to
comply with Section  3.23(a)-(c);  (f) the Systems must recognize year 2000 as a
leap year and operate  accordingly;  (g) the Systems must  recognize the correct
day of the week where required;  (h) date values must sort  correctly;  (i) date
value calculations must operate and provide correct results; and (j) date values
stored, calculated, imported, exported, or displayed with less than a four digit
year must be completely ambiguous.

         SECTION  3.22.  Information  Supplied.  Without  limiting  any  of  the
representations and warranties contained in this Agreement, no representation or
warranty  of the Company and no  statement  by the Company or other  information
contained in the  Disclosure  Schedule,  as of the date of such  

                                       11
<PAGE>
representation,  warranty, statement, or document, contains any untrue statement
of material  fact, or omits to state a material fact  necessary in order to make
the statements contained therein, in light of the circumstances under which such
statements were made, not misleading.


                                   ARTICLE IV
              REPRESENTATIONS AND WARRANTIES OF THE TYLER COMPANIES

         Parent hereby represents and warrants to the Company as follows:

         SECTION  4.01.   Organization.   Each  of  the  Tyler  Companies  is  a
corporation  duly organized,  validly  existing,  and in good standing under the
laws of the state of its incorporation, has all requisite power and authority to
own,  lease and operate its properties and to carry on its business as it is now
being conducted,  and is duly qualified and in good standing to do business as a
foreign  corporation  in each  jurisdiction  in which the nature of the business
conducted  by it or the  ownership  or  leasing  of its  properties  makes  such
qualification  necessary other than where the failure to be so duly qualified in
good standing would not have a Tyler Material  Adverse  Effect.  The term "Tyler
Material  Adverse Effect" means any change,  effect,  or condition that would be
materially adverse to the business,  operations, assets, financial condition, or
results of operations of the Tyler Companies.

         SECTION 4.02.  Capitalization.  The authorized  capital stock of Parent
consists of 50,000,000  shares of Parent  Common Stock and  1,000,000  shares of
preferred stock, $10 per share (the "Preferred Stock"), of which, as of December
31, 1998,  34,489,931  shares of Parent  Common Stock and no shares of Preferred
Stock were issued and  outstanding.  Each of the  outstanding  shares of capital
stock  of  Parent  is duly  authorized,  validly  issued,  and  fully  paid  and
nonassessable, and has not been issued in violation of any preemptive or similar
rights under the certificate of  incorporation  or bylaws of Parent,  federal or
state  securities  laws, or any agreement to which Parent is a party or by which
it is bound.

         SECTION 4.03.  Tyler Shares.  The Tyler Shares to be issued pursuant to
the Merger will,  when issued and  delivered at the Closing in  accordance  with
this  Agreement,   be  duly   authorized,   validly  issued,   fully  paid,  and
nonassessable and not subject to statutory preemptive rights.

         SECTION 4.04. Authority.  Each of the Tyler Companies has all requisite
corporate  power and  authority  to execute and deliver this  Agreement  and the
Ancillary  Agreements  to  which  it is a  party,  to  perform  its  obligations
hereunder and thereunder, and to consummate the transactions contemplated hereby
and thereby.  The  execution  and delivery of this  Agreement  and the Ancillary
Agreements  to  which  it is a  party  by each of the  Tyler  Companies  and the
consummation  by each of the Tyler  Companies of the  transactions  contemplated
hereby and thereby have been duly authorized by all necessary  corporate  action
and no other corporate proceedings on the part of any of the Tyler Companies are
necessary to authorize this  Agreement and the Ancillary  Agreements to which it
is a party or to consummate the  transactions  contemplated  hereby and thereby.
This  Agreement  and the  Ancillary  Agreements  have  been  duly  executed  and
delivered by each of the Tyler  Companies that is a party thereto and,  assuming
the  due  authorization,  execution,  and  delivery  of this  Agreement  and the
Ancillary Agreements by the Company and the Stockholders,  constitute the legal,
valid,  and binding  obligations of each of the Tyler  Companies that is a party
thereto,  enforceable in accordance with their respective terms,  subject to (i)
general principals of equity,  regardless of whether  enforcement is sought in a
proceeding in equity or at law, and (ii) bankruptcy, reorganization, insolvency,
fraudulent conveyance,  moratorium,  receivership or other similar laws relating
to or affecting creditors' rights generally.

         SECTION 4.05.     No Conflict; Required Filings and Consents.

                  (a) The  execution  and  delivery  of this  Agreement  and the
         Ancillary  Agreements  by each of the Tyler  Companies  that is a party
         thereto do not, and the consummation of the  transactions  contemplated
         thereby  will not,  (i)  conflict  with or violate the  certificate  of

                                       12
<PAGE>
         incorporation or bylaws,  in each case as amended or restated as of the
         date of this Agreement,  of any Tyler Company; (ii) to the knowledge of
         the Tyler  Companies,  conflict with or violate any Laws  applicable to
         any  Tyler  Company  or by  which  any of its  properties  is  bound or
         subject;  or (iii) result in any breach of or  constitute  any material
         default  (or an event  that with  notice or lapse of time or both would
         become a default)  under,  or give to others any rights of termination,
         amendment,  accelerations or cancellation of, or result in the creation
         of a lien or  encumbrance  on any of the  properties  or  assets of any
         Tyler  Company  pursuant  to,  any  note,  bond,  mortgage,  indenture,
         contract,  agreement,  lease,  license,  permit,  franchise,  or  other
         instrument or obligation to which any Tyler Company is a party or by or
         to which any Tyler Company or any of its respective properties is bound
         or subject.

                  (b) The  execution  and  delivery  of this  Agreement  and the
         Ancillary  Agreements  by each of the Tyler  Companies  that is a party
         thereto do not, and the consummation of the  transactions  contemplated
         by this Agreement and the Ancillary  Agreements  will not,  require any
         Tyler Company to obtain any consent, license, permit, approval, waiver,
         authorization,  or order of, or to make any filing with or notification
         to, any Governmental Entity,  except for (i) the filing and recordation
         of the  Articles of Merger as  required by Delaware  Law and Texas Law,
         (ii) the filing and approval of a definitive  proxy  statement with and
         by the Securities and Exchange  Commission  which seeks the approval of
         the Merger by the  Company's  stockholders,  (iii) the  approval of the
         Merger by the Company's  stockholders  as required by Texas Law and the
         articles  and  bylaws  of  the  Company,  and  (iv)  the  filing  of  a
         registration  statement  with the  Securities  and Exchange  Commission
         covering the Tyler Shares.

         SECTION 4.06.     Parent SEC Reports; Financial Statements.

                  (a) Since  January  1,  1997,  Parent  has  filed  all  forms,
         reports,  statements, and other documents required to be filed with the
         SEC (the "SEC"), including,  without limitation, (i) all Annual Reports
         on Form 10-K, (ii) all Quarterly  Reports on Form 10-Q, (iii) all proxy
         statements  relating to any annual or special meeting of  shareholders,
         (iv) all  Current  Reports  on Form  8-K,  and (v) all  other  reports,
         schedules,  registration statements,  or other documents (collectively,
         the "Parent SEC Reports"). The Parent SEC Reports, including all of the
         Parent SEC Reports filed after the date of this  Agreement and prior to
         the  Effective  Time,  (A)  were or will be  prepared  in all  material
         respects in accordance with the  requirements of applicable Law and (B)
         did not at the time they were  filed,  or will not at the time they are
         filed, contain any untrue statement of material fact or omit to state a
         material  fact  required to be stated  therein or necessary in order to
         make the statements  therein, in light of the circumstances under which
         they were made, not misleading.

                  (b) Each of the consolidated  financial statements (including,
         in each case,  any related notes  thereto)  contained in the Parent SEC
         Reports  filed  prior to the  Effective  Time (i) have  been or will be
         prepared in accordance  with the published rules and regulations of the
         SEC and GAAP  applied on a  consistent  basis  throughout  the  periods
         involved  and  (ii)  present  fairly  or will  present  fairly,  in all
         material respects,  the financial position of Parent at the dates shown
         and the results of operations  and cash flows for the periods  covered,
         except that (A) any unaudited interim financial statements were or will
         be subject to normal and recurring year-end adjustments and (B) any pro
         forma financial  statements  contained in such  consolidated  financial
         statements are not necessarily indicative of the consolidated financial
         position  of Parent and its  subsidiaries  as of the  respective  dates
         thereof and the  consolidated  results of operations and cash flows for
         the periods indicated.

         SECTION  4.07.  Absence  of  Certain  Changes  or  Events.   Except  as
contemplated  by this  Agreement  or as  otherwise  disclosed  by  Parent to the
Company and the  Stockholders,  since  December 31,  1998,  there has not been a
Parent Material Adverse Effect.

         SECTION 4.08.  Brokers.  No broker,  finder,  or  investment  banker is
entitled to any  brokerage,  finder's,  or other fee or commission in connection
with the  transactions  contemplated by this Agreement  

                                       13
<PAGE>
based upon  arrangements  made by or on behalf of the Parent or any Affiliate of
the Parent for which any Stockholder or the Company will have any liability.

         SECTION  4.09.  Information  Supplied.  Without  limiting  any  of  the
representations and warranties contained in this Agreement, no representation or
warranty  of  Parent,  as of the  date  of  such  representation,  warranty,  or
statement  contains any untrue  statement of material  fact, or omits to state a
material fact necessary in order to make the statements  contained  therein,  in
light  of  the  circumstances   under  which  such  statements  were  made,  not
misleading.


                                    ARTICLE V
                            COVENANTS AND AGREEMENTS

         SECTION 5.01.  Affirmative Covenants of the Company. The Company hereby
covenants  and  agrees  that,  prior to the  Effective  Time,  unless  otherwise
expressly  contemplated  by this Agreement or on Schedule 5.01 to the Disclosure
Schedule or consented to in writing by Parent,  the Company will, (a) operate in
the ordinary  course of business and consistent  with past practices and use its
best  efforts to preserve  the  goodwill  of the  Company and of its  employees,
customers, suppliers,  Governmental Entities and others having business dealings
with the Company;  (b) not engage in any transaction outside the ordinary course
of business,  including,  without limitation,  making any material  expenditure,
investment, or commitment or entering into any material agreement or arrangement
obligating  the Company to more than $50,000  through  December  31,  1999;  (c)
maintain all insurance  policies and all Company  Permits (or obtain  reasonable
substitutes) that are required for the Company to carry on its business; (d) not
take or permit any action that would cause the conditions on the  obligations of
the parties to effect the transactions  contemplated by this Agreement not to be
fulfilled,  including,  without limitation, by taking or causing to be taken any
action that would cause the  representations  and warranties made by the Company
in this Agreement not to be true and correct;  (e) not increase the compensation
payable to or to become payable to any stockholder,  director, or officer of the
Company;  (f) not grant any severance or termination pay (other than pursuant to
the normal  severance  policy of the Company as in effect on December  31, 1998)
to, or enter into or amend any  employment  or  severance  agreement  with,  any
stockholder,  director,  officer, or employee of the Company; (g) not establish,
adopt, or enter into any employee benefit plan or arrangement;  (h) not amend in
any  respect,  or take any other  actions  with  respect to, any of the Employee
Plans or any of the plans, programs, agreements, policies, or other arrangements
described in Section  3.10;  (i) not declare or pay any dividend on, or make any
other  distribution in respect of,  outstanding shares of capital stock; (j) not
redeem,  purchase,  or otherwise  acquire any shares of its capital stock or any
securities or obligations convertible into or exchangeable for any shares of its
capital  stock,  or any  options,  warrants,  or  conversion  or other rights to
acquire any shares of its capital stock or any such  securities or  obligations;
(k) not effect any reorganization or re-capitalization;  (l) not split, combine,
or  reclassify  any of its capital  stock or issue or  authorize  or propose the
issuance of any other  securities  in respect of, in lieu of or in  substitution
for, shares of its capital stock; (m) not issue, deliver, award, grant, or sell,
or authorize or propose the issuance, delivery, award, grant, or sale (including
the grant of any security  interests,  liens,  claims,  pledges,  limitations in
voting rights,  charges,  or other  encumbrances) of, any shares of any class of
its capital stock or other securities  (including shares held in treasury),  any
securities  convertible  into or exercisable or exchangeable for any such shares
or other  securities,  or any rights,  warrants,  or options to acquire any such
shares or other securities;  (n) not acquire or agree to acquire,  by merging or
consolidating  with,  by  purchasing  an equity  interest in or a portion of the
assets  of, or by any other  manner,  any  business  or any  Person or  division
thereof, or otherwise acquire or agree to acquire any assets of any other Person
(other than the  purchase of assets from  suppliers  or vendors in the  ordinary
course of business and  consistent  with past  practice);  (o) not sell,  lease,
exchange, mortgage, pledge, transfer, or otherwise dispose of, or agree to sell,
lease, exchange, mortgage, pledge, transfer, or otherwise dispose of, any of its
material assets or any interest therein,  except for dispositions of inventories
and of assets  in the  ordinary  course of  business  and  consistent  with past
practice;  (p) not adopt or propose to adopt any  amendments  to its articles of
incorporation or bylaws or similar organizational  documents; (q) not (i) change
any of its methods of  accounting  in effect at December  31,  1998,  or make or
rescind  any  express  or deemed  election  relating  to 

                                       14
<PAGE>
taxes;  (ii)  settle  or  compromise  any  claim,  action,   suit,   litigation,
proceeding, arbitration, investigation, audit, or controversy relating to taxes;
or (iii) change any of its methods of reporting income or deductions for federal
income tax purposes from those employed in the preparation of the federal income
tax returns for the taxable year ending December 31, 1998, except, in each case,
as may be required by Law or generally accepted accounting  principles;  (r) not
incur any obligation for borrowed money or purchase money indebtedness,  whether
or not evidenced by a note, bond,  debenture,  or similar instrument;  (s) enter
into any  transaction  with any  Affiliate of the  Company;  and (s) to take all
reasonable steps to cause to be fulfilled the conditions  precedent to the Tyler
Companies'  obligations  to consummate  the  transactions  contemplated  by this
Agreement that are dependent on the actions of the Stockholders or the Company.

         SECTION 5.02.     No-Shop Provisions.

                  (a) Until the earlier of the Closing  Date or August 31, 1999,
         the Company will comply with the following no-shop provisions:  (a) the
         Company will each negotiate  exclusively  and in good faith with Parent
         with  respect to the sale of the  Company;  (b) the  Company  will not,
         directly or  indirectly  (through  agents or  otherwise),  encourage or
         solicit  any  inquiries  or accept any  proposals  by, or engage in any
         discussions or  negotiations  with or furnish any  information  to, any
         other Person  concerning a sale of a substantial  portion of the assets
         or business of the Company  (whether through an asset sale, stock sale,
         merger or otherwise);  and (c) the Company will promptly communicate to
         Parent the material substance of any inquiry or proposal concerning any
         such transaction  that may be received by any of them.  Notwithstanding
         the foregoing,  in the event that the  transaction has not received all
         necessary regulatory approval prior to August 31, 1999, the date of the
         no shop  provision  will  extend  for sixty  days if and only if Parent
         extends the maturity date of the $1,000,000  bridge  financing  entered
         into  simultaneous  with this  Agreement,  as well as any other interim
         financing  subsequently  provided by Parent,  for an  additional  sixty
         days.

                  (b)  Notwithstanding the provisions of Section 5.02(a) hereof,
         nothing herein shall be construed to prohibit the Board of Directors of
         the Company from performing what they reasonably  believe,  upon advice
         of  independent  counsel,  to be  their  fiduciary  obligations  to the
         shareholders   of  the  Company  in  the  event  that  any   competing,
         comparable,  or other offer to acquire all or a substantial part of the
         assets or securities of the Company is received.

         SECTION 5.03. Access and Information.  Each of the Constituent Entities
has  caused  and  will,  until the  Closing  Date,  continue  to cause the other
Constituent  Entities and their  representatives  to have  reasonable  access to
their directors,  officers,  employees,  agents,  assets, and properties and all
relevant books,  records and documents of or relating to the business and assets
during normal business hours and will furnish to the other Constituent  Entities
such  information,  financial  records  and  other  documents  relating  to  its
operations  and  business  as the  other  Constituent  Entities  may  reasonably
request.  Each of the  Constituent  Entities  will  permit  the others and their
representatives  reasonable access to their  accountants,  auditors,  customers,
suppliers,  and Governmental Entities having dealings with them for consultation
or verification of any information  obtained by the other  Constituent  Entities
and will use their  respective  best  efforts to cause such Persons to cooperate
with  the  other  Constituent   Entities  and  their   representatives  in  such
consultation and in verifying such information.

         SECTION 5.04. Supplemental  Disclosure.  The Company will have a period
of fourteen  days from the date of this  Agreement for the purpose of completing
and/or  altering any of the Disclosure  Schedules,  at which time the Disclosure
Schedules will be deemed final between the parties. After such time, the Company
will promptly supplement or amend each of the Disclosure  Schedules with respect
to any matter  that  arises or is  discovered  after the date of this  Agreement
that,  if  existing  or known at the date of this  Agreement,  would  have  been
required to be set forth or listed in the  Disclosure  Schedule;  provided that,
for purposes of determining the rights and obligations of the parties under this
Agreement  (other than the  obligations of the Company under this Section 5.04),
any such  supplemental or amended  disclosure after the fourteen day period will
not be deemed to have been disclosed to Parent unless Parent otherwise expressly
consents in writing.

                                       15
<PAGE>
         SECTION 5.05.  Information for Filings.  Each party will furnish to the
other with all information concerning such party as is required for inclusion in
any application or filing made by the other party to any Governmental  Entity in
connection with the transactions contemplated by this Agreement.

         SECTION  5.06.  Publicity.  The Tyler  Companies  and the Company  will
cooperate  with  each  other in the  development  and  distribution  of all news
releases and other public disclosures relating to the transactions  contemplated
by this  Agreement.  Neither  the  Tyler  Companies,  on the one  hand,  nor the
Company, on the other hand, will issue or make, or allow to have issued or made,
any  press  release  or  public   announcement   concerning   the   transactions
contemplated  by this Agreement  without the advance  approval in writing of the
form and substance  thereof by the other parties,  unless otherwise  required by
applicable legal or stock exchange requirements.

         SECTION 5.07.  Transaction  Costs.  The Company and Tyler will each pay
prior  to  the  Closing  all  attorneys',   accountants',   finders',  brokers',
investment  banking and other fees, costs and expenses incurred by such party in
connection with the preparation, negotiation, execution, and performance of this
Agreement or any of the  transactions  contemplated by this Agreement,  provided
that (in addition to any other remedies that the Tyler  Companies may have under
this Agreement),  the Company agrees to reimburse Parent for all of its expenses
incurred in connection  with this Agreement if Parent  terminates this Agreement
as a result of any breach by the Company. Parent agrees to reimburse the Company
for all of the Company's  expenses incurred in connection with this Agreement if
the Company terminates this Agreement as a result of any breach by Parent.

         SECTION 5.08. Confidential Information. Each party acknowledges that it
has had access to the other  party's  confidential  information,  and may in the
future have access to information  proprietary to, used by, or in the possession
of the other party, or their respective  Affiliates,  or any of their respective
customers or not generally known in the industry, including, but not limited to,
records  regarding sales,  price and cost  information,  marketing plans,  trade
secrets, customer names, customer lists, sales techniques, distribution plans or
procedures,  and other  material  relating to the other  party's  business  (the
"Confidential Information").  The parties agree that any non-public Confidential
Information  exchanged  during  due  diligence  is  confidential  and that  such
information  will not be disclosed to any third party  without the prior written
consent of the owner of such information. In the event the proposed transactions
contemplated by this Agreement are not consummated,  the parties will return all
information  furnished to them and they will not thereafter use such information
for any purpose or permit such information to be disclosed publicly.

         SECTION 5.09.  Termination of Representations  and Warranties.  Each of
the parties hereby agrees that the representations and warranties of the parties
contained in Article III and Article IV will terminate at the Effective Time.

         SECTION 5.10. Pooling of Interests and Tax Treatment.  It is the intent
of the parties that the transactions contemplated by this Agreement qualify as a
pooling-of-interests  transaction  for  accounting  purposes  and as a  tax-free
reorganization  pursuant to Section 368(a) for tax purposes.  Accordingly,  each
party agrees to use commercially  reasonable efforts to not take any action that
could  prevent  the  Merger  from  being  treated  as  a  pooling  of  interests
transaction  for  accounting  purposes or as a tax-free  reorganization  for tax
purposes.

         SECTION 5.11. Registration Statement; Proxy Statement.

                  (a) Promptly after the expiration of thirty (30) days from the
         date  of  this  Agreement,  Parent  and  the  Company  will  use  their
         respective  commercially  reasonable  efforts  to  prepare  and  file a
         registration  statement  on Form S-4 with the SEC,  containing  a proxy
         statement  /  prospectus  for  the  stockholders  of  the  Company,  in
         connection  with the  registration  of the  offer and sale of the Tyler
         Shares. Parent and the Company will use commercially reasonable efforts
         to cause any such  registration  statement to be declared  effective by
         the SEC.  Each of Parent and the 

                                       16
<PAGE>
          Company will furnish to the other all  information  concerning  it and
          the holders of its capital stock as the other may  reasonably  request
          in connection with such actions.

                  (b)  As  promptly  as  practicable   after  the   registration
         statement  has been  declared  effective by the SEC, the Company  shall
         mail the Company  proxy  statement  /  prospectus  to its  stockholders
         entitled  to  notice  of  and  to  vote  at the  company's  meeting  of
         stockholders  and shall take all other actions  necessary in accordance
         with Texas Law, the rules and  regulations of the SEC, and its articles
         of incorporation and bylaws to convene a meeting of the stockholders to
         act on this  Agreement and the proposed  Merger.  The  Company's  proxy
         statement  /  prospectus  shall  include  the   recommendation  of  the
         Company's board of directors to in favor of the Merger and the adoption
         of this  Agreement,  unless  otherwise  necessary  in  accordance  with
         Section 5.02.

                  (c) The  information  supplied by each party for  inclusion in
         the  registration  statement and the proxy statement / prospectus shall
         not contain any untrue  statement of material fact or omit to state any
         material  fact  required to be stated  therein or necessary in order to
         make the statements therein not misleading. If at any time prior to the
         Effective Time any event or  circumstance  relating to the  information
         disclosed  in  such   registration   statement  or  proxy  statement  /
         prospectus  should  be  discovered  that  should  be  set  forth  in an
         amendment or supplement to such document, then each party will promptly
         inform the other in writing.

         SECTION 5.12.  NYSE Listing.  Parent shall cause the Tyler Shares to be
approved for listing  (subject to official notice of issuance) on the NYSE prior
to the Effective Time.

         SECTION 5.13.  Continuing  Indemnification.  The Tyler  Companies agree
that  subsequent  to the Merger they shall cause the Company  through the Merger
Sub to act diligently in the defense of all existing  litigation of the Company,
including,  but not limited to, the class actions  previously  filed against the
Company in connection  with the  restatement of the Company's  earnings in 1998,
and that the Board of Directors,  officers, employees, and agents of the Company
shall continue to be indemnified by the surviving  entities to the Merger in the
same  manner  for all acts that  occurred  prior to the  Effective  Time as such
indemnification existed prior to the Merger.

         SECTION 5.14.     Stock Option Plans.

                  (a)  Parent  and the  Company  shall  take  such  actions  not
         inconsistent    with   the   Merger   being    accounted   for   as   a
         pooling-of-interests transaction to permit Parent to assume, and Parent
         shall  assume,  effective at the  Effective  Time,  each Company  stock
         option that remains unexercised in whole or in part as of the Effective
         Time and  substitute  shares of Parent  Common  Stock for the shares of
         Company  Stock  purchasable  under each such assumed  option  ("Assumed
         Option"),  which  assumption  and  substitution  will  be  effected  as
         follows:

                           (i) the Assumed  Option  shall not give the  optionee
                  additional  benefits that such optionee did not have under the
                  stock option  before such  assumption  and shall be assumed on
                  the same  terms  and  conditions  as the  stock  option  being
                  assumed;

                           (ii) the  number of shares  of  Parent  Common  Stock
                  purchasable  under the  Assumed  Option  shall be equal to the
                  number of shares of Parent Common Stock that the holder of the
                  stock  option  would  have  received  (without  regard  to any
                  vesting  schedule)  upon  consummation  of the Merger had such
                  stock option been exercised in full  immediately  prior to the
                  consummation of the Merger; and

                           (iii) the per share  exercise  price of such  Assumed
                  Option shall be equal to the per share  exercise  price of the
                  Stock Option being assumed multiplied by three.

                  (b)  Parent  shall  take all  corporate  action  necessary  to
         reserve for  issuance a  sufficient  number of shares of Parent  Common
         Stock for delivery upon exercise of the Assumed  Options,  and, as soon
         as  practicable   after  the  Effective  Time,   Parent  shall  file  a
         registration 

                                       17
<PAGE>
          statement  on Form S-8 with  respect  to the  shares of Parent  Common
          Stock subject to the Assumed Option.

          SECTION 5.15. Senior Debt. Parent covenants and agrees to pay off the
senior debt of the Company held by Hanifen Imboff  Mezzanine  Fund, L.P. in full
at Closing.


                                   ARTICLE VI
                               CLOSING CONDITIONS

         SECTION 6.01.  Conditions to the  Obligations  of Each Party Under This
Agreement. The respective obligations of each party to effect the Merger and the
other   transactions   contemplated   by  this  Agreement  are  subject  to  the
satisfaction at or prior to the Closing Date of the following conditions, any or
all of which may be waived in writing in the  absolute  discretion  of the other
parties, in whole or in part, to the extent permitted by applicable law:

                  (a) The registration  statement shall be declared effective by
         the SEC. No stop order suspending the effectiveness of the registration
         statement shall have been issued by the SEC and no proceedings for that
         purpose shall have been initiated by the SEC.

                  (b) This  Agreement and the Merger shall have been approved by
         the requisite vote of the stockholders of the Company.

                  (c) There  must be no pending  litigation  in any court or any
         proceeding   before  or  by  any   Governmental   Entity   against  the
         Stockholders,  the Company, or Parent to restrain or prohibit or obtain
         damages or other relief with respect to this Agreement or the Ancillary
         Agreements or the consummation of the transactions contemplated by this
         Agreement or the Ancillary Agreement.

                  (d) Each of the  Parent  and the  Company  shall be advised in
         writing by the  independent  auditors of each that the Merger should be
         treated for  financial  accounting  purposes as a  pooling-of-interests
         transaction.

                  (e) None of the Constituent  Entities shall have been informed
         by their outside  accountants or counsel that the  consummation  of the
         Merger  would not  qualify as a  tax-free  reorganization  pursuant  to
         Section 368(a) of the Code.

         SECTION 6.02.  Conditions to  Obligations of the Tyler  Companies.  The
obligations  of  the  Tyler  Companies  to  effect  the  Merger  and  the  other
transactions  contemplated by this Agreement are subject to the  satisfaction at
or prior to the Closing Date of the  following  conditions,  any or all of which
may be waived in writing in the absolute  discretion of the Parent,  in whole or
in part:

                  (a) Each of the  representations and warranties of the Company
         and the  Stockholders  contained  in this  Agreement  must be true  and
         correct in all material  respects as of the Closing Date as though made
         on and as of the Closing Date.

                  (b) The Company and the  Stockholders  must have  performed or
         complied with all agreements  and covenants  required by this Agreement
         to be  performed  or  complied  with by them on or prior to the Closing
         Date.

                  (c) All contractual and governmental consents,  approvals, and
         notifications required must have been obtained or given.

                                       18
<PAGE>
                  (d) The  Company  must  have  delivered  to  Parent a  closing
         certificate substantially in the form of Exhibit A.

                  (e) The Company must have delivered to Parent a certificate of
         the secretary of the Company substantially in the form of Exhibit B.

                  (f) The  Parent or the Merger  Sub and James K.  Hoofard,  Jr.
         shall have entered into an employment  contract  covering Mr. Hoofard's
         services  to the Parent and to the Merger Sub  following  the  Closing,
         based  upon terms  substantially  similar  to that  attached  hereto as
         Exhibit C.

         SECTION 6.03. Conditions to Obligations of the Company. The obligations
of the Company to effect the Merger and the other  transactions  contemplated by
this Agreement are subject to the  satisfaction  at or prior to the Closing Date
of the following conditions, any or all of which may be waived in writing in the
absolute discretion of the Company, in whole or in part:

                  (a) Each of the  representations  and  warranties of the Tyler
         Companies  contained in this  Agreement must be true and correct in all
         material  respects as of the  Closing  Date as though made on and as of
         the Closing Date.

                  (b) The Tyler  Companies  must have performed or complied with
         all agreements and covenants required by this Agreement to be performed
         or complied with by them on or prior to the Closing Date.

                  (c) All contractual and governmental consents,  approvals, and
         notifications must have been obtained or given.

                  (d)  Parent  must  have  delivered  to the  Company  a closing
         certificate substantially in the form of Exhibit D.

                  (e) Parent must have delivered to the Company a certificate of
         the secretary of the Parent substantially in the form of Exhibit E.

                  (f) The Company shall have received a fairness  opinion of the
         type customarily received in such transactions.

                  (g) The  Parent or the Merger  Sub and James K.  Hoofard,  Jr.
         shall have entered into an employment  contract  covering Mr. Hoofard's
         services  to the Parent and to the Merger Sub  following  the  Closing,
         based  upon terms  substantially  similar  to that  attached  hereto as
         Exhibit C.

                  (h) The Tyler Shares being  delivered to the  stockholders  of
         the  Company  shall have been  approved  for  listing on the NYSE,  and
         shall,  subject to certain limitations which may apply to affiliates of
         the Company  pursuant to Rule 145 of the Securities Act of 1933, or the
         pooling  of  interest  accounting  rules,  be  freely  tradable  by the
         recipients of such shares upon receipt.

                                   ARTICLE VII
                                  MISCELLANEOUS

         SECTION  7.01.   Termination.   This  Agreement  and  the  transactions
contemplated  by this  Agreement may be terminated and abandoned (a) at any time
prior to the Closing by mutual written consent of Parent and the Company; or (b)
by  Parent,  if at any  time  prior  to the  thirtieth  (30th)  day  immediately
following  execution of this Agreement,  the results of its due diligence review
of the Company are not satisfactory to Parent in its sole discretion; (c) by the
Company, if the Company's Board of Directors,  in the exercise of its' fiduciary
duties as set  forth in  Section  5.02(b)  and upon the  advice  of  independent
counsel,  determines  that it is required  to accept a  competing  offer for the
assets or securities 

                                       19
<PAGE>
of the Company,  or (d) by either Parent,  on the one hand,
or the  Company,  on the  other  hand,  if a  condition  to  performance  by the
terminating  party or parties  under this  Agreement  has not been  satisfied or
waived prior to August 31, 1999.  Notwithstanding  the foregoing clause (b), (i)
Parent  may  not  terminate  this  Agreement  if the  event  giving  rise to its
termination  right results from Parent's  willful  failure to perform or observe
any of its  covenants  or  agreements  set forth herein or if Parent is, at such
time, in breach of this  Agreement,  and (ii) the Company may not terminate this
Agreement if the event  giving rise to its  termination  right  results from the
willful  failure of the  Company to perform or observe any of its  covenants  or
agreements  set forth in this  Agreement or if the Company is, at such time,  in
breach of this  Agreement.  The right of any party to terminate  this  Agreement
pursuant to this Section 7.01 will remain operative and in full force and effect
regardless of any  investigation  made by or on behalf of any party,  any Person
controlling  any such party,  or any of their  respective  officers,  directors,
representatives,  or  agents,  whether  before  or after the  execution  of this
Agreement.  Upon  termination of this Agreement  pursuant to Section 7.01,  this
Agreement will become void,  there will be no liability on the part of the Tyler
Companies,  on the one hand, or the Company, on the other hand, to the other and
all rights and  obligations of each party to this  Agreement will cease,  except
that nothing in this  Agreement  will relieve any party of any liability for (a)
any breach of such party's covenants or agreements  contained in this Agreement,
or (b) any  knowing  or  willful  breach  of  such  party's  representations  or
warranties  contained in this  Agreement.  In addition to the foregoing,  in the
event  that the Board of  Directors  of the  Company  should  fail to oppose any
tender or exchange offer by a third party which is made prior to the Closing and
which is successfully consummated by September 30, 1999 for more than 50% of the
then outstanding  capital stock of the Company, or should the Company enter into
a binding  agreement to merge,  consolidate,  combine,  or otherwise sell all or
substantially  all of its assets or  securities  to any party other than a Tyler
Company prior to September 30, 1999, then in such event, the Company shall, upon
demand by the Tyler Companies,  pay to the Tyler Companies a cancellation fee of
$4,000,000,  as liquidated  damages,  not as a penalty,  payable in  immediately
available funds. The provisions for liquidated damages hereunder acknowledged by
the  parties  to be  reasonable  due to the  inability  to  accurately  estimate
damages, and shall be the sole remedy for such acts.

         SECTION  7.02.  Notices.  All notices that are required or may be given
pursuant to this  Agreement  must be in writing and delivered  personally,  by a
recognized  courier service,  by a recognized  overnight  delivery  service,  by
telecopy or by registered or certified mail, postage prepaid,  to the parties at
the following  addresses (or to the attention of such other person or such other
address as any party may  provide to the other  parties by notice in  accordance
with this Section 7.02):

                  If to Parent:

                           Tyler Corporation
                           2800 W. Mockingbird Lane
                           Dallas, Texas 75235
                           Attention:  Corporate Counsel
                           Telecopy: (214) 902-5058

                  If to the Company:

                           CPS Systems, Inc.
                           3400 Carlisle, Suite 500
                           Dallas, Texas  75204
                           Attention:  Paul Kana
                           Telecopy:  (214) 720-1380

                                       20
<PAGE>
                  with a copy to:

                           Edward H. Brown, Esq.
                           Schreeder, Wheeler & Flint, LLP
                           1600 Candler Building
                           127 Peachtree Street, N.E.
                           Atlanta, Georgia  30303-1845
                           Telecopy:  (404) 681-1046

Any such  notice or other  communication  will be deemed to have been  given and
received on the day it is  personally  delivered and signed for by addressee or,
if  delivered by courier or  overnight  delivery  service or sent by telecopy or
mailed, three days after sending.

         SECTION 7.03.  Attorneys'  Fees and Costs.  If attorneys' fees or other
costs  are  incurred  to  secure  performance  of  any  obligations  under  this
Agreement, or to establish damages for the breach thereof or to obtain any other
appropriate  relief,  whether by way of prosecution  or defense,  the prevailing
party will be entitled to recover reasonable  attorneys' fees and costs incurred
in connection therewith.

          SECTION 7.04. Further Assurances. Each party agrees to execute any and
all documents and to perform such other acts as may be necessary or expedient to
further the purposes of this Agreement and the transactions contemplated by this
Agreement.

          SECTION 7.05.  Counterparts.  This Agreement may be executed in one or
more  counterparts for the convenience of the parties to this Agreement,  all of
which together will constitute one and the same instrument.

          SECTION 7.06. Certain Definitions. For the purposes of this Agreement,
the following terms have the meanings specified:

                  (a)  "Affiliate"  means a Person that directly or  indirectly,
         through one or more intermediaries,  controls,  is controlled by, or is
         under common control with, the first mentioned Person.

                  (b)   "Control"    (including    the   terms    "controlling,"
         "controlled,"  "controlled  by," and "under common control with") means
         the possession,  directly or indirectly,  or as trustee or executor, of
         the  power to  direct  or cause  the  direction  of the  management  or
         policies of a Person,  whether through the ownership of securities,  or
         as trustee or executor, by contract or credit arrangement or otherwise.

                  (c)  "Knowledge" or "to the knowledge of" and other phrases of
         like substance are to be broadly construed (i) to include the knowledge
         of the Person making the  representation and (ii) to represent that the
         Person making the  representations  has made or caused such inquiry and
         investigation to be made into the matter represented to be true as such
         Person in good faith believes to be reasonable and sufficient.

                  (d) "Person"  will be broadly  construed to include to mean an
         individual,    corporation,     partnership,     association,    trust,
         unincorporated organization, Governmental Entity, other entity or group
         (as used in Section l3(d) of the Exchange Act).

                  (e) "Tax" or "taxes" means any and all taxes,  charges,  fees,
         levies,  assessments,  duties, or other amounts payable to any federal,
         state,  local,  or foreign  taxing  government,  authority,  or agency,
         including,  without limitation,  (i) income, franchise,  profits, gross
         receipts,  minimum,  alternative minimum,  estimated, ad valorem, value
         added, sales, use, service,  real or personal property,  capital stock,
         license, payroll, withholding, disability, employment, social security,
         workers compensation,  unemployment compensation,  utility,  severance,
         excise,  stamp,  windfall  profits,  transfer,  and gains  taxes;  (ii)
         customs, duties, imposts, charges, levies, or other 

                                       21
<PAGE>
          similar  assessments of any kind; and (iii) interest,  penalties,  and
          additions to tax imposed with respect thereto.

         SECTION 7.07. Assignment. Neither this Agreement nor any of the rights,
interests or  obligations  under this Agreement will be assigned or delegated by
the Company or Parent,  without the prior written  consent of the other parties;
except that Parent may assign its rights and obligations under this Agreement to
any direct or indirect  subsidiary of Parent.  This Agreement is not intended to
confer any rights or benefits to any Person (including,  without limitation, any
employees of the Company) other than the parties to this Agreement.

         SECTION  7.08.  Entire  Agreement.   This  Agreement  and  the  related
documents  contained  as Exhibits and  Schedules to this  Agreement or expressly
contemplated by this Agreement  contain the entire  understanding of the parties
relating to the subject  matter  hereof and  supersede all prior written or oral
and all  contemporaneous  oral  agreements  and  understandings  relating to the
subject  matter hereof.  This Agreement  cannot be modified or amended except in
writing signed by the party against whom enforcement is sought. The Exhibits and
Schedules to this Agreement are hereby incorporated by reference into and made a
part of this Agreement for all purposes.

         SECTION 7.09.  Governing  Law. This  Agreement will be governed by, and
construed  in  accordance  with,  the  substantive  laws of the  State of Texas,
without  giving effect to any  conflicts-of-law,  rule, or principle  that might
require the application of the laws of another jurisdiction.

                  [remainder of page intentionally left blank]

                                       22
<PAGE>
         IN WITNESS  WHEREOF,  each of the parties to this  Agreement has caused
this  Agreement  to be  executed  as of the date  first  written  above by their
respective officers thereunto duly authorized.


                                   TYLER CORPORATION,
                                   a Delaware corporation


                                   By:__________________________________________
                                   Name:   John M. Yeaman
                                   Title:  President


                                   CPS SYSTEMS, INC.,
                                   a Delaware corporation and wholly-owned
                                   subsidiary of Tyler Corporation


                                   By:__________________________________________
                                   Name:   John M. Yeaman
                                   Title:  President


                                   CPS SYSTEMS, INC.,
                                   a Texas corporation


                                   By:__________________________________________
                                   Name:   Paul E. Kana
                                   Title:  Chief Executive Officer

                                       23
<PAGE>
                                    Exhibit A

                    Closing Certificate of CPS Systems, Inc.




<PAGE>
                                CPS SYSTEMS, INC.
                               CLOSING CERTIFICATE


         The  undersigned  hereby  certifies on behalf of CPS  Systems,  Inc., a
Texas corporation (the "Company"), pursuant to the Agreement and Plan of Merger,
dated  as of March  30,  1999  (the  "Merger  Agreement"),  by and  among  Tyler
Corporation,  a Delaware corporation  ("Parent"),  CPS Systems, Inc., a Delaware
corporation  and  wholly-owned  subsidiary  of Parent  ("Merger  Sub"),  and the
Company (the "Stockholders"), that:

                  1. All representations and warranties of the Company contained
         in the Merger  Agreement are true and correct in all material  respects
         at  and  as of  the  Closing  with  the  same  effect  as  though  such
         representations and warranties were made at and as of the Closing.

                  2.  The  Company  has  performed  and  complied  with  all the
         covenants and agreements  and satisfied the conditions  required by the
         Merger Agreement to be performed,  complied with, or satisfied by it at
         or prior to the Closing.

         All  capitalized  terms not otherwise  defined herein have the meanings
assigned to such terms in the Merger Agreement.

         IN WITNESS  WHEREOF,  the undersigned has executed this  Certificate on
behalf of the Company to be effective as of _______________, 1999.

                                            CPS SYSTEMS, INC.,
                                            a Texas corporation



                                            By:      ________________________
                                            Name:    Paul E. Kana
                                            Title:   Chief Executive Officer

<PAGE>
                                    Exhibit B

                    CPS Systems, Inc. Secretary's Certificate

<PAGE>
                                CPS SYSTEMS, INC.
                            CERTIFICATE OF SECRETARY


         The undersigned,  being the duly elected and qualified Secretary of CPS
Systems,  Inc., a Texas corporation (the "Company"),  hereby certifies on behalf
of the Company,  pursuant to the Agreement and Plan of Merger, dated as of March
30, 1999 (the "Merger  Agreement"),  by and among Tyler Corporation,  a Delaware
corporation   ("Parent"),   CPS  Systems,   Inc.,  a  Delaware  corporation  and
wholly-owned   subsidiary  of  Parent  ("Merger  Sub"),  and  the  Company  (the
"Stockholders"), that:

                  1. Attached  hereto is a true,  correct,  and complete copy of
         resolutions  duly adopted by unanimous  written consent of the Board of
         Directors of the Company on March ____,  1999. Such resolutions are the
         only resolutions  relating to the Merger  Agreement,  and they have not
         been amended, modified, or rescinded since their adoption and are still
         in full force and effect as of the date of this Certificate.

         IN WITNESS  WHEREOF,  the undersigned has executed this  Certificate of
Secretary on behalf of the Company to be effective as of ___________, 1999.

                                           CPS SYSTEMS, INC.,
                                           a Texas corporation



                                           By:      ______________________
                                           Name:    ______________________
Title:   Secretary

<PAGE>
                                    Exhibit C

               Terms of James K. Hoofard, Jr. Employment Agreement

<PAGE>
                                    Exhibit D

                      Tyler Corporation Closing Certificate
<PAGE>
                                TYLER CORPORATION
                               CLOSING CERTIFICATE


         The  undersigned  hereby  certifies on behalf of Tyler  Corporation,  a
Delaware corporation  ("Parent"),  pursuant to the Agreement and Plan of Merger,
dated as of March 30, 1999 (the "Merger  Agreement"),  by and among Parent,  CPS
Systems,  Inc., a Delaware  corporation  and  wholly-owned  subsidiary of Parent
("Merger Sub"),  and CPS Systems,  Inc., a Texas  corporation  (the  "Company"),
that:

                  1. All  representations  and warranties of Parent contained in
         the Merger  Agreement are true and correct in all material  respects at
         and  as  of  the   Closing   with  the  same   effect  as  though  such
         representations and warranties were made at and as of the Closing.

                  2. Parent has  performed  and complied  with all the covenants
         and  agreements  and  satisfied the  conditions  required by the Merger
         Agreement  to be  performed,  complied  with,  or satisfied by it at or
         prior to the Closing.

         All  capitalized  terms not otherwise  defined herein have the meanings
assigned to such terms in the Merger Agreement.

         IN WITNESS  WHEREOF,  the undersigned has executed this  Certificate on
behalf of Parent to be effective as of _______________, 1999.

                                          TYLER CORPORATION,
                                          a Delaware corporation



                                          By:      ____________________
                                          Name:    John M. Yeaman
                                          Title:   President




<PAGE>
                                    Exhibit E

                    Tyler Corporation Secretary's Certificate


<PAGE>
                                TYLER CORPORATION
                            CERTIFICATE OF SECRETARY


         The  undersigned,  being the duly  elected and  qualified  Secretary of
Tyler Corporation, a Delaware corporation ("Parent"), hereby certifies on behalf
of Parent,  pursuant to the Agreement and Plan of Merger,  dated as of March 30,
1999 (the  "Merger  Agreement"),  by and among  Parent,  CPS  Systems,  Inc.,  a
Delaware  corporation and wholly-owned  subsidiary of Parent ("Merger Sub"), and
CPS Systems, Inc., a Texas corporation (the "Company"), that:

                  1. Attached  hereto is a true,  correct,  and complete copy of
         resolutions  duly adopted by unanimous  written consent of the Board of
         Directors of Parent on ___________, 1999. Such resolutions are the only
         resolutions  relating to the Merger  Agreement,  and they have not been
         amended,  modified,  or rescinded since their adoption and are still in
         full force and effect as of the date of this Certificate.

         IN WITNESS  WHEREOF,  the undersigned has executed this  Certificate of
Secretary on behalf of Parent to be effective as of ________________, 1999.

                                           TYLER CORPORATION,
                                           a Delaware corporation



                                           By:      _____________________
                                           Name:    Deanie Morel
                                           Title:   Secretary