KOGER EQUITY INC, PRE 14A, 2000-04-07

KOGER EQUITY INC
PRE 14A, 2000-04-07
REAL ESTATE INVESTMENT TRUSTS

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SCHEDULE 14A
(RULE 14A-101)

INFORMATION REQUIRED IN PROXY STATEMENT

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

Filed by the Registrant [X]

Filed by a Party other than the Registrant [ ]

Check the appropriate box:

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[X] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
Koger Equity, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)

- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

[X] No fee required.

[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

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

(2) Aggregate number of securities to which transaction applies:

(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):

(4) Proposed maximum aggregate value of transaction:

(5) Total fee paid:

[ ] Fee paid previously with preliminary materials:

[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.

(1) Amount Previously Paid:

(2) Form, Schedule or Registration Statement No.:

(3) Filing Party:

(4) Date Filed:
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KOGER EQUITY, INC.
8880 FREEDOM CROSSING TRAIL
JACKSONVILLE, FLORIDA 32256
(904) 732-1000

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

Date: Thursday, May 18, 2000
Time: 11:00 a.m.
Place: Jacksonville Marriott Hotel
4670 Salisbury Road
Jacksonville, Florida

Dear Shareholder:

At our Annual Meeting, we will ask you:

1. To elect a board of nine (9) directors to serve for the
ensuing year or until their respective successors are elected
and qualified;

2. To amend the Koger Equity, Inc. Articles of Incorporation;

3. To amend the Koger Equity, Inc. 1998 Equity and Cash
Incentive Plan; and

4. To transact any other business that may properly be presented
at the Annual Meeting.

If you were a shareholder of record at the close of business on March 10, 2000,
you may vote at the Annual Meeting.

A copy of the Koger Equity, Inc. Annual Report for the year ended December 31,
1999, which reports financial and other information, is enclosed.

You are asked to mark, date sign and return the enclosed proxy. An envelope is
enclosed for your convenience. No postage is required if mailed in the United
States.

By order of the Board of Directors
W. Lawrence Jenkins, Secretary

April 18, 2000

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KOGER EQUITY, INC.
8880 FREEDOM CROSSING TRAIL
JACKSONVILLE, FLORIDA 32256
(904) 732-1000

--------------
PROXY STATEMENT
APRIL 18, 2000

---------------
INTRODUCTION

We sent you this Proxy Statement and the enclosed proxy card because
Koger Equity's Board of Directors is soliciting your proxy to vote at the 2000
Annual Meeting of Shareholders. This Proxy Statement summarizes the information
you need to know to vote intelligently at the Annual Meeting. However, you do
not need to attend the Annual Meeting to vote your shares. Instead, you may
simply complete, sign and return the enclosed proxy card. In this Proxy
Statement, Koger Equity, Inc., is sometimes referred to as either "Koger
Equity" or the "Company."

We will begin sending this Proxy Statement, the attached Notice of
Annual Meeting and the enclosed proxy card on April 18, 2000, to all
shareholders entitled to vote. Shareholders who owned Koger Equity common stock
at the close of business on March 10, 2000, are entitled to vote. On this
record date, there were 26,786,191 shares of Koger Equity common stock
outstanding. Koger Equity common stock is our only class of voting stock
outstanding. We are also sending along with this Proxy Statement, the Koger
Equity 1999 Annual Report, which includes our financial statements.

Each share of Koger Equity common stock that you own entitles you to
one vote. The proxy card indicates the number of shares of Koger Equity common
stock that you own. In this Proxy Statement Koger Equity common stock is
sometimes referred to as the "Shares."

VOTE BY PROXY

Whether you plan to attend the Annual Meeting or not, we urge you to
complete, sign and date the enclosed proxy card and to return it promptly in
the envelope provided. Returning the proxy card will not affect your right to
attend the Annual Meeting and vote.

If you properly fill in your proxy card and send it to us in time to
vote, your "proxy" (one of the individuals named on your proxy card) will vote
your shares as you have directed. If you sign the proxy card but do not make
specific choices, your proxy will vote your shares as recommended by the Board
as follows:

- "FOR" the election of all nine nominees for director of the Company,
and

- "FOR" the amendment to the Koger Equity Articles of Incorporation,
and

- "FOR" the amendment to the Koger Equity 1998 Equity and Cash
Incentive Plan.

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If any other matter is presented, your proxy will vote in accordance
with his best judgment. At the time this Proxy Statement went to press, we knew
of no other matters to be acted on at the Annual Meeting, other than those
discussed in this Proxy Statement.

TO REVOKE A PROXY

If you give a proxy, you may revoke it at any time before it is
exercised. You may revoke your proxy in any one of three ways:

1) You may send in another proxy with a later date.
2) You may notify Koger Equity's Corporate Secretary in
writing before the Annual Meeting that you have revoked
your proxy.
3) You may vote in person at the Annual Meeting.

TO VOTE IN PERSON

If you plan to attend the Annual Meeting and wish to vote in person,
we will give you a ballot when you arrive. You will complete the ballot at that
time and return it to the Inspectors of Election at the door. However, if your
shares are held in the name of your broker, bank or other nominee, you must
bring an account statement or letter from the nominee indicating that you are
the beneficial owner of the shares on March 10, 2000, the record date for
voting.

MATTERS TO BE CONSIDERED

PROPOSAL 1: ELECT NINE DIRECTORS

The nine nominees for director who receive the most votes will be
elected. So, if you do not vote for a particular nominee, or you indicate,
"withhold authority to vote" for a particular nominee on your proxy card, your
vote will not count either "for" or "against" the nominee.

A "broker non-vote" (discussed below in this section) will also have
no effect on the outcome since only a plurality of votes actually cast is
required to elect a director.

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PROPOSAL 2: APPROVAL OF THE AMENDMENT TO THE KOGER EQUITY ARTICLES OF
INCORPORATION

The affirmative vote of a majority of the outstanding shares of common
stock represented at the Annual Meeting either in person of by Proxy is
required to approve the amendment to our Articles of Incorporation.

PROPOSAL 3: APPROVAL OF THE AMENDMENTS TO THE KOGER EQUITY 1998 EQUITY AND CASH
INCENTIVE PLAN

The affirmative vote of a majority of the outstanding shares of common
stock represented at the Annual Meeting either in person or by Proxy is
required to approve the amendments to our 1998 Equity and Cash Incentive Plan.

BROKER VOTES

Under the rules of the New York Stock Exchange, if your broker holds
your shares in its name, the broker will be entitled to vote your shares on
Proposals 1, 2 and 3 even if it does not receive instructions from you. If your
broker received instructions from you, it must vote as instructed by you.

CONFIDENTIAL VOTING

We keep all the proxies, ballots and voting tabulations private as a
matter of practice. We only let our inspectors of Election, representatives of
Norwest Bank, and certain employees of our independent tabulating agent, Morrow
& Company, examine these documents. We will not disclose your vote to
management unless it is necessary to meet legal requirements. We will, however,
forward to management any written comments you make, on the proxy card or
elsewhere.

DISCUSSION OF PROPOSALS RECOMMENDED BY THE BOARD

PROPOSAL 1: ELECT NINE DIRECTORS

The Board has nominated nine directors for election at the Annual
Meeting. Each nominee is currently serving as one of our directors. If you
re-elect them, they will hold office until the next annual meeting or until
their successors have been elected and qualified.

We know of no reason why any nominee may be unable to serve as
director. If any nominee is unable to serve, your proxy may vote for another
nominee proposed by the Board, or the Board may reduce the number of directors
to be elected. If any director resigns, dies or is otherwise unable to serve
out his term, or the Board increases the number of directors, the Board may
fill the vacancy until the next annual meeting of shareholder.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF EACH OF
THE FOLLOWING NOMINEES.

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NAME
----
AGE
---
YEAR FIRST PRINCIPAL OCCUPATIONS
---------- ---------------------
BECAME A DURING THE FIVE-YEAR PERIOD
-------- ---------------------------
DIRECTOR ENDED ON DECEMBER 31, 1999
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D. PIKE ALOIAN Currently serves as a Director of Koger Equity. Mr. Aloian is also the
(2) Managing Director of Rothschild Realty Inc. (a real estate investment
management and advisory service firm); and a Director of Charter Oak
Age: 44 Group, Ltd. (a privately held owner and developer of factory outlet and
retail properties). Mr. Aloian is also a Director of Angeles
Director Since: Corporation (a holder of loans to and equity investments in residential
1993 real estate); and a Director of Merritt Properties, LLC (a privately
held owner and developer of light industrial buildings).

BENJAMIN C. BISHOP, JR. Currently serves as a Director of Koger Equity. Mr. Bishop is the
(1) Chairman of the Board of Allen C. Ewing & Co. (an investment banking
company). He is a former Director of Grubb & Ellis Company (a national
Age: 67 commercial real estate brokerage company); a former Trustee of GMR
Properties (a real estate investment trust); and a former Director of
Director Since: Cousins Properties, Inc. (a real estate investment trust).
1991

THOMAS J. CROCKER Currently serves as the Chief Executive Officer (since March 1 ,2000)
Director and Chief and a Director of Koger Equity. Mr. Crocker previously held the
Executive Officer position of Chief Executive Officer of Crocker Realty Trust, Inc. (a
Age: 46 private real estate investment trust), and Chief Executive Officer of
Crocker & Associates, L. P. (a private real estate limited partnership).
Director Since: Mr. Crocker is the former Chairman and Chief Executive Officer of Crocker
February 17, Realty Trust, Inc., (a public real estate investment trust) and previously
2000. served as the Chairman and Chief Executive Officer of Crocker Realty
Investors, Inc. (a public real estate investment trust). Mr. Crocker is
the former Chief Executive Officer of Crocker & Sons, Inc. (a private real
estate company).
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DAVID B. HILEY Currently serves as a Director of Koger Equity. Previously served as
the Executive Vice President and Chief Financial Officer (from April 1,
Age: 61 1998 to March 1, 2000). Mr. Hiley was formerly a financial consultant;
former Managing Director of Berkshire Capital Corporation (an investment
Director Since: banking services firm); Director and former Senior Executive Vice
1993 President of Thomson McKinnon Securities, Inc. (a securities
broker-dealer); consultant, Director and former Executive Vice President
of Thomson McKinnon, Inc. (a financial services holding company); and
former Director of Newcity Communications, Inc. (a communications firm).

VICTOR A. Currently serves as Chairman of the Board of Directors of Koger Equity,
HUGHES, JR. Inc. and previously served as the Chief Executive Officer (until March
Chairman of the 1, 2000). Mr. Hughes also is the former President, Chief Financial
Board Officer, Senior Vice President and Assistant Secretary of Koger Equity,
Inc.

Age: 63

Director Since:
1992

JOHN R. S. Currently serves as a Director of Koger Equity, and is the Partner
JACOBSSON responsible for investments at Apollo Real Estate Advisors II, L. P.
(2) (manager of three real estate investment funds). Mr. Jacobsson is also a
Director of Metropolis Realty Trust, Inc. (owner of high rise office
Age: 30 buildings) and a Director of Roland International, Inc. (a land
development company); and a Director of Oasis Car Wash, Inc. (a car care
Director Since: company) .
1997
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LEE S. NEIBART Currently serves as a Director of Koger Equity. Mr. Neibart is also
(1) Partner in charge of portfolio and asset management at Apollo Real
Estate Advisors II, L. P. (manager of three real estate investment
Age: 48 funds); and a Director of Wyndham International (a __________ company);
former Executive Vice President and Chief Operating Officer of the
Director Since: Robert Martin Company (a real estate development and management firm);
1996 Director of Atlantic Gulf Communities Corporation (a land development
company); Director of Meadowbrook Golf Group, Inc. (a golf management
company); Director and President of Metropolis Realty Trust, Inc. (owner
of high rise office buildings); Director of NextHealth, Inc. (operator
of wellness and spa facilities) and Director of Roland International,
Inc. (a land development company).

GEORGE F. STAUDTER Currently serves as a Director of Koger Equity. Mr. Staudter is a
(1)(2) managerial and financial consultant; Director of T. D. Waterhouse Family
of Funds, Inc. (a family of mutual funds); former Director of Waterhouse
Age: 67 Investor Services, Inc. (a securities broker-dealer); former President,
Chief Executive Officer and Director of Family Steak Houses of Florida,
Director Since: Inc. (a restaurant chain).
1993

JAMES C. TEAGLE Currently serves as a Director, President and Chief Operating Officer of
Koger Equity, Inc.; and Director, President and Chief Operating Officer of
Age 58 Koger Realty Services, Inc. (a Koger Equity, Inc. related entity and manager
of office properties in six markets). Mr. Teagle is the former Executive Vice
Director Since: President, Senior Vice President and Vice President of Koger Equity, Inc.
1996
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(1) Member of the Audit Committee.
(2) Member of the Compensation Committee.

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PROPOSAL 2: APPROVE AMENDMENT TO THE ARTICLES OF INCORPORATION

As a condition to the Company's Shares being admitted to trading on
the New York Stock Exchange, which began on March 9, 2000, the Exchange
required the Company to agree to amend at its next annual meeting of
shareholders its Articles of Incorporation to state that nothing in its
Articles of Incorporation would preclude the settlement of any transaction
entered into through the facilities of the New York Stock Exchange. Therefore,
Section (D) of Article V of the Koger Equity Amended and Restated Articles of
Incorporation is proposed to be amended by adding a subsection 10 which reads
as follows:

While nothing contained herein shall in any way limit the
powers of the Board of Directors, neither the exercise of
such power nor the provisions of subsections 5. and/or 8. of
this Section (D) shall preclude the settlement of any
transaction entered into through the facilities of the New
York Stock Exchange.

Section (D) of Article V sets forth restrictions on transfer of the
Company's Common Stock and the Company's right to redeem Shares for the primary
purpose of the Company being able to maintain its qualification as a real
estate investment trust under the Internal Revenue Code of 1986. The above
amendment required by the New York Stock Exchange should have no effect on the
Company's ability to maintain that qualification.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE APPROVAL OF THE AMENDMENT TO
THE ARTICLES OF INCORPORATION.

PROPOSAL 3: APPROVE AMENDMENT TO THE 1998 EQUITY AND CASH INCENTIVE PLAN

On March 10, 1998, the Company's Board of Directors adopted, subject
to shareholder approval, the Company's 1998 Equity and Cash Incentive Plan,
which provided for the issuance of up to 1,000,000 Shares pursuant to awards
thereunder. This plan was approved by shareholders on May 19, 1998. The
amendment which was adopted by the Company's Board of Directors on March 29,
2000, subject to shareholder approval would permit, if approved, the issuance
of an additional 1,000,000 Shares for awards under this plan. Currently, the
1998 Equity and Cash Incentive Plan provides for the payment of performance
Awards based upon a performance goal for calendar years 2004 and thereafter to
be conditioned upon re-approval by the Company's shareholders no later than the
first meeting of shareholders in 2003. With the approval of the amendment, such
re-approval will now be required no later than at the first meeting of
shareholders in 2005. Attached, as Exhibit A to this Proxy Statement, is the
full text of the 1998 Equity and Cash Incentive Plan as Amended and Restated
(the "1998 Incentive Plan").

The purpose of the 1998 Incentive Plan has been, and continues to be,
the advancement of the interests of the Company and its subsidiaries by
enhancing their ability to attract and retain employees and other persons or
entities who are in a position to make significant contributions to the success
of the Company and its subsidiaries, and to reward participants for

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such contributions through ownership of Shares and cash incentives. The 1998
Incentive Plan is intended to accomplish these goals by enabling the Company to
grant awards in the form of options, stock appreciation rights, restricted
stock, unrestricted stock, deferred stock, or performance awards (in cash or
stock).

GENERAL

The 1998 Incentive Plan is administered by a committee of the Board of
Directors designated for such purposes consisting of at least two directors
(the "Committee") who will be "non-employee directors" as defined under the
Securities Exchange Act of 1934 and "outside directors" as defined in the
Internal Revenue Code of 1986 (the "Code"). Under the 1998 Incentive Plan, the
Committee may grant stock options, stock appreciation rights, restricted stock,
unrestricted stock, deferred stock and performance Awards (in cash or stock),
or combinations thereof, and may waive the terms and conditions of any award. A
total of 1,000,000 Shares were initially reserved for issuance under the 1998
Incentive Plan. The amendment would provide for an additional reserve of
1,000,000 Shares for issuance under this plan. The Committee has the authority,
among other things, to waive compliance by a holder of an Award with any
obligations imposed under the Award, waive any terms or conditions of an Award,
and amend or cancel an existing Award in whole or in part, and if an Award is
canceled, grant another Award in its place on terms and conditions determined
by the Committee.

Awards under the 1998 Incentive Plan may also include provision for
the payment of dividend equivalents with respect to shares subject to Awards.
Employees of the Company and its subsidiaries and other persons or entities,
including, but not limited to, directors of the Company, who are in a position
to make a significant contribution to the success of the Company, are eligible
to receive Awards under the 1998 Incentive Plan.

Section 162(m) of the Code places annual limitations on the
deductibility by public companies of compensation in excess of $1,000,000 paid
to any of the chief executive officer and the other four most highly
compensated officers, unless, among other things, the compensation is
performance-based. For compensation attributable to stock options and stock
appreciation rights to qualify as performance-based, among other required
events, the plan, under which the stock options or stock appreciation rights
are granted, must state a maximum number of shares with respect to which
options and rights may be granted to an individual during a specified period
and must be approved by the company's shareholders. To comply with these
requirements, the 1998 Incentive Plan provides that the maximum number of
shares as to which Awards may be granted to any participant in any one calendar
year is 250,000, and the 1998 Incentive Plan was, and this amendment is being,
submitted for shareholder approval.

Stock Options. The exercise price of an incentive stock option ("ISO")
granted under the 1998 Incentive Plan or an option intended to qualify as
performance-based compensation under Section 162(m) of the Code shall not be
less than 100% of the fair market value of the Shares at the time of grant.
Subject to the foregoing, the exercise price of options granted under the 1998
Incentive Plan is determined by the Committee. Options granted under the 1998
Incentive Plan will expire and terminate no later than 10 years from the date
of grant. The exercise price may be paid in cash or check acceptable to the
Company. Subject to certain

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additional limitations, the Committee may also permit the exercise price to be
paid by tendering Shares, by delivering to the Company an undertaking by a
broker, bank or other financial institution, acceptable to the Company, to
deliver promptly sufficient funds to pay the exercise price, or a combination
of the foregoing.

Stock Appreciation Rights (SARs). Stock appreciation rights ("SARs")
may be granted either alone or in tandem with stock option grants. Each SAR
entitles the holder, upon exercise, to receive an amount in cash or Shares or a
combination thereof (such form to be determined by the Committee) determined in
whole or in part by reference to appreciation in the fair market value of a
Share. SARs may be based solely on appreciation in the fair market value of the
Shares or on a comparison of such appreciation with some other measure of
market growth. The date as of which such appreciation or other measure is
determined shall be the exercise date unless another date is specified by the
Committee. If a SAR is granted in tandem with an option, the SAR will be
exercisable only to the extent the option is exercisable. To the extent the
option is exercised, the accompanying SAR will cease to be exercisable, and
vice versa.

Stock Awards; Deferred Stock. The 1998 Incentive Plan provides for
Awards of nontransferable Shares of restricted stock subject to forfeiture
("Restricted Stock"), as well as for Awards of unrestricted Shares. Shares of
Restricted Stock may not be sold, transferred, pledged, assigned, or otherwise
alienated or hypothecated until the end of the applicable restricted period and
the satisfaction of any other conditions or restrictions established by the
Committee. Other Awards under the 1998 Incentive Plan may also be settled with
Restricted Stock. The 1998 Incentive Plan also provides for deferred grants
entitling the recipient to receive Shares in the future at such times and on
such conditions as the Committee may specify.

Performance Awards. The 1998 Incentive Plan provides for performance
Awards entitling the recipient to receive cash or Shares following the
attainment of performance goals determined by the Committee. Performance
conditions and provisions for deferred stock may also be attached to other
Awards under the 1998 Incentive Plan. In the case of any performance award
intended to qualify for the performance-based remuneration exception described
in Section 162(m) of the Code (an "Exempt Award"), the Committee will
pre-establish specific performance goals in writing that are based upon any one
or more of the following (determined on a consolidated, divisional, subsidiary,
line of business or geographical basis or in combinations thereof): (i) sales;
revenues; assets; expenses; earnings before or after deduction for all or any
portion of interest, taxes, depreciation or amortization, whether or not on a
continuing operations or an aggregate or per share basis; return on equity,
investment, capital or assets; inventory level or turns; one or more operating
ratios; borrowing levels, leverage ratios or credit rating; market share;
capital expenditures; cash flow; Share price; shareholder return; or any
combination of the foregoing; or (ii) acquisitions and divestitures (in whole
or in part); joint ventures and strategic alliances; spin-offs, split-ups and
the like; reorganizations; recapitalizations, restructurings, financings
(issuance of debt or equity) and refinancings; transactions that would
constitute a change of control (as defined under the 1998 Incentive Plan); or
any combination of the foregoing. Performance goals need not be based upon an
increase, a positive or improved result or avoidance of loss. The maximum
Exempt Award payable to an individual in respect of any performance goal for
any year cannot exceed

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$2,500,000. Currently, the 1998 Incentive Plan provides that for the payment of
performance Awards based upon a performance goal for calendar years 2004 and
thereafter to be conditioned upon re-approval by the Company's shareholders no
later than the first meeting of shareholders in 2003. With the approval of the
amendment, such re-approval will be moved forward to the first shareholders'
meeting in 2005.

Loans and Supplemental Grants. The 1998 Incentive Plan provides that
the Company may make loans to assist Participants with the purchase of Shares
under the Plan and/or the payment of taxes due with respect to an Award. The
Plan also provides that the Board may cause the Company to make supplemental
cash Awards ("Supplemental Grants") to assist Participants with the payment of
taxes relating to an Award and that Supplemental Grants may be made on a
grossed-up basis.

Termination. Except as otherwise provided by the Committee, (i) in the
case of a participant's death, options and SARs become fully exercisable
immediately without regard to any vesting requirements and may be exercised by
the participant's executor, administrator or personal representative or the
person to whom the option or SAR passes at death during a period of one year
following such death (or for the remainder of their original term, if less),
(ii) in the case of retirement or disability, options and SARs may be exercised
by the participant at any time in accordance with their original terms, except
that in the case of disability, options and SARs will become fully exercisable
without regard to any vesting requirements, (iii) in the case of termination
for any reason, outstanding Awards of Restricted Stock must be transferred to
the Company and deferred stock grants, performance Awards and Supplemental
Awards to which a participant is not irrevocably entitled will be forfeited
unless otherwise provided, and (iv) in the case of termination for reasons
other than death, retirement or disability, options and SARs remain
exercisable, to the extent they were exercisable immediately prior to
termination, for three months (or for the remainder of their original term, if
less), shares of Restricted Stock must be resold to the Company, and other
Awards terminate, except as otherwise provided.

In the case of a change of control as defined in the 1998 Incentive
Plan except as provided by the Committee at the time of grant, all Awards
pursuant to the plan shall immediately vest with options and SARs being
immediately exercisable, Restricted Stock becoming unrestricted and performance
Awards being fully due and payable to the participant. In the case of certain
mergers, consolidations or other transactions in which the Company is acquired
or is liquidated or otherwise ceases to exist, Awards payable in shares will
then terminate.

Amendment. The Committee may amend the 1998 Incentive Plan or any
outstanding Award at any time or may at any time terminate the Plan, provided
that no such amendment will, without the approval of the shareholders of the
Company, effectuate a change for which shareholder approval is required in
order for the 1998 Incentive Plan to continue to qualify for the award of ISOs
under section 422 of the Code or for the Award of performance-based
compensation under Section 162(m) of the Code.

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NEW PLAN BENEFIT

The future benefits or amounts that would be received under the 1998
Incentive Plan by the executive officers, the non-executive officer directors
and the non-executive officer employees are discretionary and are therefore not
determinable at this time.

FEDERAL TAX EFFECTS

The following discussion summarizes certain federal income tax
consequences of the issuance and receipt of options under the 1998 Incentive
Plan. The summary does not purport to cover federal employment tax or other
federal tax consequences that may be associated with the 1998 Incentive Plan,
nor does it cover state, local or non-U.S. taxes.

Incentive Stock Options. In general, an optionee realizes no taxable
income upon the grant or exercise of an ISO. However, the exercise of an ISO
may result in an alternative minimum tax liability to the optionee. With
certain exceptions, a disposition of Shares purchased under an ISO within two
years from the date of grant or within one year after exercise produces
ordinary income to the optionee (and a deduction to the Company) equal to the
value of the Shares at the time of exercise less the exercise price. Any
additional gain recognized in the disposition is treated as a capital gain for
which the Company is not entitled to a deduction. If the optionee does not
dispose of the Shares until after the expiration of these one- and two-year
holding periods, any gain or loss recognized upon a subsequent sale is treated
as a long-term capital gain or loss for which the Company is not entitled to a
deduction.

Nonstatutory (Non-ISO) Options. In general, in the case of a non-ISO,
the optionee has no taxable income at the time of grant but realizes income in
connection with exercise of the option in an amount equal to the excess (at the
time of exercise) of the fair market value of the Shares acquired upon exercise
over the exercise price; a corresponding deduction is available to the Company;
and upon a subsequent sale or exchange of the Shares, appreciation or
depreciation after the date of exercise is treated as capital gain or loss for
which the Company is not entitled to a deduction.

In general, an ISO that is exercised more than three months after
termination of employment (other than termination by reason of death) is
treated as a non-ISO. ISOs are also treated as non-ISOs to the extent they
first become exercisable by an individual in any calendar year for Shares
having a fair market value (determined as of the date of grant) in excess of
$100,000.

Under the so-called "golden parachute" provisions of the Code, the
vesting or accelerated exercisability of Awards in connection with a change in
control of the Company may be required to be valued and taken into account in
determining whether participants have received compensatory payments,
contingent on the change in control, in excess of certain limits. If these
limits are exceeded, a substantial portion of amounts payable to the
participant, including income recognized by reason of the grant, vesting or
exercise of Awards under the 1998 Incentive Plan, may be subject to an
additional 20% federal tax and may be nondeductible to the Company.

11
<PAGE> 14

THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE APPROVAL OF THE
KOGER EQUITY, INC. 1998 EQUITY AND CASH INCENTIVE PLAN, AS AMENDED AND
RESTATED.

A vote of a majority of the Shares represented either in person or by
proxy at the annual meeting is necessary to approve the amendment.

Unless instructions are given to the contrary, it is the intention of
the persons named as proxies to vote the Shares to which the proxy is related
FOR approval of the amendment to the 1998 Incentive Plan.

INFORMATION ABOUT KOGER EQUITY COMMON STOCK OWNERSHIP

SHAREHOLDERS OWNING AT LEAST 5% OF KOGER EQUITY

The following table shows, as of December 31, 1999, all persons we
know to be "beneficial owners" of more than five percent of the Koger Equity
common stock (1). This information is based on Schedule 13G reports filed with
the Securities and Exchange Commission (SEC) by each of the firms listed in the
table below. If you wish, you may obtain these reports from the SEC.

NAME AND ADDRESS OF NUMBER OF SHARES OWNED
BENEFICIAL OWNER BENEFICIALLY PERCENT OF CLASS
(1)
-------------------------------------------------------------------------------

<S> <C> <C>
APOLLO REAL ESTATE
INVESTMENT FUND II, L. P.
1301 Avenue of the Americas 5,733,771 21.4%
New York, NY 10019

ALLIANCE CAPITAL MANAGEMENT, INC.
1290 Avenue of the Americas
New York, NY 10104 2,489,899(2) 9.3%

PUBLIC EMPLOYEES RETIREMENT SYSTEM
277 East Town Street
Columbus, Ohio 43215 2,100,168 7.9%

EQSF ADVISERS INC. ET AL
767 Third Avenue
New York, New York 10017 1,462,136 5.5%
</TABLE>

12
<PAGE> 15

(1) "Beneficial ownership" is a technical term broadly defined by the SEC
to mean more than ownership in the usual sense. So, for example, you
"beneficially" own Koger Equity common stock not only if you hold it
directly, but also if you indirectly (through a relationship, a
position as a director or trustee, or a contract or understanding),
have (or share) the power to vote the stock, or to sell it, or you
have the right to acquire it within 60 days.

(2) Sole voting power as to 265,080 Shares; shared voting power as to
2,209,025 Shares; sole dispositive power as to 2,489,899 Shares and
shared dispositive power as to 6,454 Shares.

STOCK OWNED BY DIRECTORS AND EXECUTIVE OFFICERS

The following table shows, as of February 28, 2000, the Koger Equity
common stock owned beneficially by Koger Equity directors and executive
officers. All directors and executive officers as a group own beneficially
6.78% of the shares of Koger Equity common stock.

NAME OF BENEFICIAL OWNER BENEFICIALLY OWNED PERCENT OF
CLASS
-----------------------------------------------------------------------------
<S> <C> <C>
Directors:
D. Pike Aloian 11,539 .04%(1)
Benjamin C. Bishop, Jr. 31,177 .12%(1)
Thomas J. Crocker 500,000 1.82%(2)
David B. Hiley 292,228 1.08%(3)
Victor A. Hughes, Jr. 510,715 1.88%(4)
John R. S. Jacobsson 7,720 .03%(1)(5)
Lee S. Neibart 9,074 .03%(1)(5)
George F. Staudter 14,406 .05%(1)
James C. Teagle 234,197 .86%(6)
Executive Officers:
Robert N. Bridger 51,815 .19%(7)
W. Lawrence Jenkins 52,404 .19%(8)
James L. Stephens 49,115 .18%(9)
Robert E. Onisko 150,000 .55%(2)

Total Shares Held by All
Executive Officers and 1,914,389 6.78%(10)
Directors as a Group
(13 persons)
</TABLE>

13
<PAGE> 16

(1) Includes 4,000 Shares which are subject to presently exercisable
options.

(2) Includes Shares which are subject to certain Rights to acquire Shares
granted by the Board of Directors on February 17, 2000. As to Mr.
Crocker, includes 500,000 Rights; as to Mr. Onisko, includes 150,000
Rights.

(3) Includes 129,000 Shares which are subject to presently exercisable
options.

(4) Includes 180,000 Shares which are subject to presently exercisable
options.

(5) Beneficial ownership excludes 5,733,771 shares of Common Stock of
Koger Equity, Inc. (the "Issuer"), owned by Apollo Real Estate
Investment Fund II, L.P. ("AREIF II") and AREIF II Realty Trust, Inc.
("ARTI"), a subsidiary of AREIF II. The general partner of AREIF II is
Apollo Real Estate Advisors II, L.P. ("ARE Advisors II"). The general
partner of ARE Advisors II is Apollo Real Estate Capital Advisors II,
Inc. ("ARECA II"). Messrs. Jacobsson and Neibart are officers of ARECA
II and limited partners of ARE Advisors II. Each of Messrs. Jacobsson
and Neibart disclaim beneficial ownership of all securities owned by
ARTI, AREIF II and any of their affiliates.

(6) Includes 162,916 Shares which are subject to presently exercisable
options.

(7) Includes 21,801 Shares which are subject to presently exercisable
options.

(8) Includes 21,840 Shares which are subject to presently exercisable
options.

(9) Includes 22,416 Shares which are subject to presently exercisable
options.

(10) Sole voting and dispositive power as to 1,914,389 Shares, and no
shares with shared voting and dispositive power. Includes 557,973
Shares which are subject to presently exercisable options, or options
which are exercisable within 60 days.

DIRECTORS, EXECUTIVE OFFICERS AND GREATER-THAN-10% SHAREHOLDERS COMPLIANCE WITH
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING IN 1999

Section 16(a) of the Securities Exchange Act of 1934 requires our
directors, executive officers, and greater-than-10% stockholders to file
reports with the SEC and the New York Stock Exchange on changes in their
beneficial ownership of Koger Equity common stock and to provide Koger Equity
with copies of the reports. Based on our review of these reports and of
certifications furnished to us, we believe that all of these reporting persons
complied with their filing requirements for 1999.

14
<PAGE> 17

INFORMATION ABOUT DIRECTORS AND EXECUTIVE OFFICERS

THE BOARD OF DIRECTORS

The Board of Directors oversees the business and affairs of Koger
Equity and monitors the performance of management. In accordance with corporate
governance principles, the Board does not involve itself in day-to-day
operations. The directors keep themselves informed through discussions with the
Chairman, other key executives and our principal external advisers (legal
counsel, auditors, investment bankers and other consultants), by reading
reports and other materials that we send them and by participating in Board and
committee meetings.

Each of the Directors attended at least 75% of the Board of Directors
meetings and meetings held by Committees of the Board of Directors of which they
were members, except Mr. Lee S. Neibart.

THE COMMITTEES OF THE BOARD

The Audit Committee. The Audit Committee recommends the selection of
the independent auditors to the Board, approves the scope of the annual audit by
the independent auditors, reviews audit findings and accounting policies. The
Committee meets privately, outside the presence of Koger Equity management, with
both the independent auditors and the Company's internal auditors. The Audit
Committee met two times in 1999 and members of the Audit Committee consulted
with the officers of the Company, the Company's internal auditors and the
independent auditors at various times throughout the year.

The Compensation Committee. The Compensation Committee establishes and
approves all elements of compensation for certain executive officers. Each
year, as the SEC requires, the Committee reports to you on executive
compensation. The Committee's Report on Executive Compensation for 1999 is
printed below at pages [ __ to__ ]. The Committee administers the Stock Option
Plans and the 1998 Equity and Cash Incentive Plan and has sole authority for
awards under the Plans, including timing, pricing and amount. The Committee
also administers Koger Equity's Supplemental Executive Retirement Plan. The
Committee met three times during 1999.

HOW WE COMPENSATE DIRECTORS

Annual Retainer Fee. We compensate directors (except for the Chairman)
who are not employees of Koger Equity or our subsidiaries with an annual
retainer of $20,000. Effective February 17, 2000, following his retirement as
Chief Executive Officer, the Board authorized the payment of an annual
retainer of $50,000 to the Chairman of the Board.

Meeting Fees. We pay non-employee directors a fee of:

- $2,000 for attendance at each Board meeting; and

- $500 for attendance at each committee meeting.

15
<PAGE> 18

Expenses and Benefits. We reimburse all directors for travel and other
related expenses incurred in attending stockholder, Board and committee
meetings.

Special Fee Paid to a Director. At its meeting held on February 17,
2000, the Board of Directors authorized the payment of $100,000 to D. Pike
Aloian, in consideration of extraordinary services he provided to the Company
during 1999 as a member of the finance committee of the Board of Directors in
connection with transactions considered by the Company.

Directors who are Koger Equity Inc. Employees. We do not compensate
our employees for service as a director. We do, however, reimburse them for
travel and other related expenses.

Award of Restricted Shares to Members of the Board of Directors. The
Compensation Committee of the Board of Directors at its meeting held on March 5,
1999, granted 200 shares of the Company's Common Stock to each member of the
Board, effective as of May 1, 1999. The Shares were held by the Company until
certain vesting restrictions were met. In January, 2000, the Company determined
that the vesting restrictions had been met. As a result, the shares were issued
and delivered to the Directors. At December 31, 1999, the Shares were valued at
$16.875 per share.

Stock Options Held by Board Members. Each member of the Board of
Directors who is not also an employee of the Company currently holds an option
to purchase 4,000 Shares. These options were granted on August 19, 1997 and
are fully exercisable at a per share price of $19.8125.

The Stock Investment Plan. Directors may elect to receive payment of
part or all of their monthly retainer in Shares by participating in the Stock
Investment Plan. Additional information concerning the Stock Investment Plan
is printed on pages ___ to ____.

16
<PAGE> 19

COMPENSATION OF EXECUTIVE OFFICERS

The following table shows annual compensation and long-term
compensation of the Chief Executive Officer and the other named executive
officers whose salary and bonus for the fiscal year ended December 31, 1999,
exceeded $100,000. Throughout the remainder of this Proxy Statement, these five
persons will be referred to as the "Executive Officers".

SUMMARY COMPENSATION TABLE

Long Term Compensation
Annual Compensation Awards
------------------------- --------------------------
Securities
Restricted Underly-
Stock ing
Award(s) Options/ All Other
Name and Principal Salary (#) SARS (#) Compensation
Position Year ($)(1) Bonus ($) (2) (3) ($)(4)
------------------------- ------- ---------- ------------- ------------- ------------ -----------------
<S> <C> <C> <C> <C> <C> <C>
VICTOR A. 1999 $ 315,000 $ 156,058(5) $ 67,500 -- $ 10,026(6)
HUGHES, JR. 1998 $ 308,750 $ 156,058 -- 180,000 $ 10,711
Chairman of the Board 1997 $ 268,750 $ 275,770 -- -- $ 2,237,714
and Chief Executive
Officer(5)

JAMES C. TEAGLE 1999 $ 241,500 $ 104,645(5) $ 67,500 -- $ 8,441(6)
President and 1998 $ 236,708 $ 104,645 -- 100,000 $ 8,850
Chief Operating Officer 1997 $ 198,780 $ 204,423 -- -- $ 8,800

DAVID B. HILEY 1999 $ 200,000 $ 103,846(5) $ 67,500 -- $ 18,256(6)(7)
Executive Vice 1998 $ 150,000 $ 102,855 -- 125,000 $ 46,536
President and Chief 1997 -- -- -- 4,000 $ 40,690
Financial Officer (7)

W. LAWRENCE JENKINS 1999 $ 136,708 $ 54,798(5) $ 13,500 -- $ 7,790(6)
Vice President and 1998 $ 129,893 $ 27,599 -- 20,000 $ 7,867
Corporate Secretary 1997 $ 120,833 $ 41,467 -- -- $ 6,518

ROBERT N. BRIDGER 1999 $ 158,617 $ 88,550(5) $ 13,500 -- $ 9,919(6)
Senior Vice 1998 $ 152,917 $ 47,044 -- 20,000 $ 96,039
President/ 1997 $ 130,833 44,784 -- -- $ 126,102
Development
</TABLE>

(1) Includes an amount of salary paid by KRSI for the 1999 salary of Mr.
Hughes $82,673, Mr. Teagle $84,468, Mr. Hiley $53,325, Mr. Jenkins
$36,492, and Mr. Bridger $26,250.

17
<PAGE> 20

(2) Effective May 1, 1999, the Compensation Committee of the Board of
Directors authorized the issuance of Restricted Shares to certain
Executive Officers as described below:

Number of
Restricted
Executive Officer Shares
----------------------- ------------
<S> <C>
Victor A. Hughes, Jr. 4,000
James C. Teagle 4,000
David B. Hiley 4,000
Robert N. Bridger 800
W. Lawrence Jenkins 800
</TABLE>

The shares were held by the Company until the following vesting
restrictions were met:

- 100% vesting if the Company obtained a per Share increase in
funds from operations of 10.6% for the year ended December 31,
1999 over the prior year.

- 50% vesting if the Company obtained a per Share increase in
funds from operations of 8%, but less than 10.6%, for the year
ended December 31, 1999, over the prior year with the remainder
forfeited.

In January, 2000, the Company determined that the funds from operations
for 1999 was $2.32 per Share, a 11.5% increase over $2.08 per Share for
the prior year. As a result the restrictions on the above shares were
released and delivered to each person named above. As of December 31,
1999, the Shares were valued at $16.875 per share.

There were no restricted stock awards or long-term incentive plan
payouts for 1998 or 1997.

(3) There were no options granted to the CEO and the other Executive
Officers during the fiscal year ended December 31, 1999.

For information concerning the number and market value of Shares
subject to the Company's stock option plans as to the Executive
Officers, reference is made to the "Option/SAR Exercises and Year-End
Values" table and the notes thereto.

(4) Includes the taxable portion of certain excess life insurance premiums
(as defined by the Internal Revenue Code) paid by the Company on
behalf of each qualifying employee, including the Executive Officers
(the "Life Insurance Premiums") and 401(k) Plan contributions, each of
which were Company benefits which did not discriminate in scope, terms
or operation in favor of the Executive Officers and were available
generally to all salaried employees of the Company.

(5) Includes a cash bonus which was earned for calendar year 1999, but was
paid in 2000: as to Mr. Hughes $150,000, as to Mr. Hiley $100,000, as
to Mr. Teagle $100,000, as to Mr. Jenkins $52,125 and as to Mr. Bridger
$85,450.

(6) For 1999, includes a matching contribution in the form of Shares made
by the Company to the account of each qualifying employee, including
each Executive Officer, under the 401(k) Plan, which contribution was
equal to 50% of such employee's contributions to his or her account
under the 401(k) Plan, subject to a maximum employee contribution of
6% of eligible

18
<PAGE> 21

compensation, and was based on the market value of the Shares on
December 31, 1999, which was $16.875 per Share (the "401(k)
Contribution").

- As to Mr. Hughes, for 1999, includes Life Insurance Premiums in
the amount of $4,771, and a 401(k) Contribution in the amount of
$4,800.

- As to Mr. Teagle, for 1999 includes Life Insurance Premiums in
the amount of $3,186, and a 401(k) Contribution in the amount of
$4,800.

- As to Mr. Hiley, for 1999, includes Life Insurance Premiums in
the amount of $4,941, and a 401(k) Contribution in the amount of
$4,800.

- As to Mr. Jenkins, for 1999 includes Life Insurance Premiums in
the amount of $2,535, and a 401(k) Contribution in the amount of
$4,800.

- As to Mr. Bridger, for 1999, includes Life Insurance Premiums in
the amount of $ 4,664, and a 401(k) Contribution in the amount of
$4,800.

(7) In 1999, the Company paid relocation expenses to Mr. Hiley totaling
$32,240 for the period April 1, 1998 through March 31,1999, of which
$8,060 was allocated to 1999 compensation and $24,180 was allocated to
1998 compensation.

19
<PAGE> 22
OPTION GRANTED DURING 1999

There were no options granted to the CEO or any other Executive
Officers during the fiscal year ended December 31, 1999. The Company has no
outstanding stock appreciation rights.

AGGREGATED OPTION EXERCISES AND FISCAL YEAR-END OPTION

The table below provides the following information: (1) the aggregate
number of options exercised and the value realized by the Executive Officers
during the year ended December 31, 1999, and (2) the aggregate number of
options and the value of the in-the-money options in each case held by the
Executive Officer as of December 31, 1999. The Company has no outstanding
stock appreciation rights. In the event of a change of control (as defined in
the option agreements), all stock options become vested.

AGGREGATED OPTION EXERCISES DURING 1999 AND YEAR-END OPTION VALUES

<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED IN THE
SHARES VALUE OPTIONS/SARS AT FISCAL MONEY OPTIONS/SARS AT
NAME ACQUIRED ON REALIZED ($) YEAR-END (#) FISCAL YEAR-END ($)
EXERCISE (#) (1) EXERCISABLE/ EXERCISABLE/
UNEXERCISABLE UNEXERCISABLE (2)
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Victor A. Hughes, Jr. 66,666 -0- 93,333/120,000 $50,001/$-0-
James C. Teagle -0- -0- 170,000/80,000 $820,781/$-0-
David B. Hiley -0- -0- 45,667/83,333 $-0-/$-0-
W. Lawrence Jenkins -0- -0- 48,647/27,000 279,917/$16,500
Robert N. Bridger -0- -0- 32,819/27,000 $133,659/$16,500
</TABLE>

(1) This valuation represents the difference between $16.875, the closing price
of the Koger

20
<PAGE> 23

Equity common stock on the American Stock Exchange on December 31, 1999, and
the exercise price of the stock options. "In-the-money" stock options are
options for which the exercise price is less than the market price of the
underlying stock on a particular date.

(2) The value reported herein is based on a per Share price of $16.875,
which is the closing price of the Shares on December 31, 1999, as reported on
the American Stock Exchange.

Effective March 9, 2000, the Shares ceased being traded on the
American Stock Exchange and began being traded on the New York Stock Exchange.

LONG-TERM INCENTIVE PLAN AWARDS

The Company made no long-term incentive plan awards to any Executive
Officer during the fiscal year ended December 31, 1999.

EXECUTIVE EMPLOYMENT AND RETIREMENT AGREEMENTS

On June 21, 1996, the Company entered into three-year employment
agreements with both Messrs. Hughes and Teagle. Effective April 1, 1998, the
Company entered into new employment agreements with these executives. Also,
effective April 1, 1998, Mr. Hiley, a Director of the Company, was engaged as
the Company's Executive Vice President and Chief Financial Officer. In this
connection, the Company entered into a three-year employment agreement with Mr.
Hiley commencing April 1, 1998.

Effective February 29, 2000, Messrs. Hughes and Hiley retired from
their respective positions as Chairman of the Board and Chief Executive Officer
and Executive Vice President and Chief Financial Officer. At that time the
Company entered into severance agreements with Messrs. Hughes, Teagle and Hiley.
Pursuant to these agreements, Mr. Hughes was paid a lump sum severance benefit
of $1,617,361 and Mr. Hiley was paid a lump sum severance benefit of $911,538.
Under Mr. Teagle's severance agreement, in the event his employment as President
is terminated during the remaining term of his employment contract, at his
option or at the Company's option, or at the end of his employment contract,
which runs through March 31, 2001, Mr. Teagle will receive a lump sum severance
benefit of $1,207,158. Messrs. Hughes and Hiley, and Mr. Teagle after the
termination of his employment, (1) will continue to participate in the Company's
medical arrangements for employees, (2) are deemed to have satisfied the vesting
requirements for benefits under the Supplemental Executive Retirement Plan for
Executives of Koger Equity, Inc. (the "SERP"), and (3) are vested in all stock
options which will continue to be exercisable for their original term. Messrs.
Hughes, Teagle and Hiley continue to serve on the Board.

On February 17, 2000, Thomas J. Crocker was elected to the Company's
Board of Directors, and effective March 1, 2000, he was appointed the Company's
Chief Executive Officer. Also, effective March 1, 2000, Robert E. Onisko was
appointed the Company's Chief Financial Officer.

21
<PAGE> 24

THE SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

The SERP generally provides a gross benefit for life to Messrs. Hughes
and Teagle equal to 50% of final three-year average annual base salary, and a
gross benefit for life to Mr. Hiley equal to 35% of final three-year average
annual base salary, with the surviving spouse of these three Executive Officers
receiving a lifetime benefit of 50% of the Executive Officer's benefit. The
SERP provides a gross benefit for 15 years certain to the other Executive
Officers (reduced in any case in which such Executive Officer has less than 20
years of service) equal to 50% of final three-year average annual base salary.
The benefits will be reduced by:

(i) 50% of social security benefits received by the applicable
Executive Officer and

(ii) the annuitized equivalent of profit sharing contributions made by
the Company to the account of such Executive Officer under the
401(k) Plan.

At retirement, benefits under the SERP are paid in annuity form.

With Mr. Hughes' retirement on February 29, 2000, he commenced receiving
an annual benefit under the SERP of $134,739, and with Mr. Hiley's retirement
on February 29, 2000, he commenced receiving an annual benefit under the SERP
of $60,250.

The SERP also provides Messrs. Hughes, Teagle and Hiley and their
spouses with lifetime medical coverage (which is intended to be roughly
equivalent to that provided by the Company for certain Executive Officers).

Benefits under the SERP generally vest only if the applicable Executive
Officer remains in the Company's employ for a period ranging from two to five
years after commencement of his participation in the SERP (depending upon such
Executive Officer's age at the commencement of his participation in the SERP).
However, if a change of control of the Company (as defined in the SERP) occurs
and a covered Executive Officer leaves the employ of the Company under certain
circumstances, then

(a) in the case of Mr. Teagle, he would be entitled to his benefits,
commencing immediately and without regard to the vesting requirement, and

(b) in the case of each other covered Executive Officer, such Executive
Officer, at his option, would be entitled to:

a. continue to receive his or her base salary for a period of 18
months, or

b. immediately become fully vested in his or her retirement
benefits, receive one year of annual base salary, in lump sum
payment, and continue to be provided all medical and other
insurance benefits for one year following termination.

The table below illustrates the annual pension benefits payable to
executive officers under the SERP. Since benefits shown in the table reflect a
straight life form of annuity benefit, if payment is made in the form of a
joint and survivor annuity, the annual amounts of benefit could be
substantially below those illustrated.

22
<PAGE> 25

PENSION PLAN TABLE

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------
YEARS OF SERVICE
- --------------------------------------------------------------------------------------------------------
FINAL AVERAGE
ANNUAL REMUNERATION 15 20 25 30 35
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$125,000 $ 46,875 $ 62,500 $ 62,500 $ 62,500 $ 62,500
150,000 56,250 75,000 75,000 75,000 75,000
175,000 65,625 87,500 87,500 87,500 87,500
200,000 100,000 100,000 100,000 100,000 100,000
225,000 112,500 112,500 112,500 112,500 112,500
250,000 125,000 125,000 125,000 125,000 125,000
300,000 150,000 150,000 150,000 150,000 150,000
350,000 175,000 175,000 175,000 175,000 175,000
</TABLE>

The compensation base used by the SERP is average base salary for the
final three years of employment. As of December 31, 1999, the base salary and
estimated years of service credit for each Executive Officer is listed below:

<TABLE>
<CAPTION>
<S> <C> <C>
Mr. Bridger $161,200 37 years
Mr. Hiley $200,000 21 months
Mr. Hughes $315,000 17 years
Mr. Jenkins $139,000 29 years
Mr. Teagle $241,500 27 years
</TABLE>

STOCK INVESTMENT PLAN

The Company has a Stock Investment Plan (the "SIP") pursuant to which
participating employees and directors of the Company may purchase Shares. Under
the SIP, the Company is authorized to purchase up to an aggregate of 200,000
Shares on behalf of such participating employees and directors. Each
participating employee pays for his or her Shares pursuant to a monthly payroll
deduction plan established by the participating employees, and each
participating director pays for his Shares pursuant to a deduction from such
director's retainer.

23
<PAGE> 26

Under the SIP, the Company contributes a portion of the purchase price
of such Shares, which contribution equals the following percentage of the total
monthly deduction from such employee's pay or such director's retainer:

- 25% of each monthly deduction less than or equal to $50;
- 20% of each monthly deduction greater than $50 but less than or equal
to $100; and
- 15% of each monthly deduction greater than $100 but less than or
equal to $1,700.

The Company also pays all commissions and related expenses of the SIP.
The Company's contribution and expenses incurred in administering the SIP
totaled approximately $54,700 for the year ended December 31, 1999.

24
<PAGE> 27

During 1999, the Company paid the following amounts on behalf of the
following directors:
<TABLE>
<CAPTION>
STOCK INVESTMENT PLAN
- -----------------------------------------------------------------------------------------
DIRECTOR NAME COMPANY
CONTRIBUTION
- -----------------------------------------------------------------------------------------
<S> <C>
D. Pike Aloian $ 3,090
Benjamin C. Bishop, Jr. $ 3,090
Thomas J. Crocker -0-
David B. Hiley -0-
Victor A. Hughes, Jr. -0-
John R. S. Jacobsson $ 3,090
Lee S. Neibart $ 3,090
George F. Staudter $ 3,090
James C. Teagle -0-
Total Company Contribution on behalf of Directors $15,450
</TABLE>

25
<PAGE> 28

REPORT ON EXECUTIVE COMPENSATION FOR 1999 BY THE COMPENSATION COMMITTEE

The Compensation Committee of the Board administers Koger Equity's
executive compensation program. The members of the Committee were independent
non-employee, non-affiliated directors. The Committee has furnished the
following report on executive compensation for 1999:

Executive Compensation Philosophy. The Compensation Committee is
responsible for setting the total compensation of the Chairman of the Board and
Chief Executive Officer (the "CEO"), the President and Chief Operating Officer
(the "COO"), and the Executive Vice President and Chief Financial Officer (the
"CFO"). It also reviews the compensation, including year-end bonuses, proposed
by management for other Executive Officers of the Company. The Compensation
Committee is also responsible for:

(i) making grants under the Company's stock option and other
incentive plans,

(ii) making contributions, subject to approval by the Board of
Directors, under the 401(k) Plan and any other plan or plans
as may be determined by the Board of Directors, and

(iii) approving participation in the Supplemental Executive
Retirement Plan.

The Committee has designed Koger Equity's executive compensation
program to support what we believe to be an appropriate relationship between
executive pay and the creation of shareholder value. To emphasize equity
incentives, we link a significant portion of executive compensation to the
market performance of the Koger Equity common stock. The objectives of our
program are:

- To support a pay-for-performance policy among all
executives based on both their individual performance and
the performance of Koger Equity;

- To align the interests of executives with the long-term
interests of shareholders through awards whose value over
time depends upon the market value of Koger Equity's
common stock;

- To provide compensation comparable to that offered by
other leading companies in our industry, enabling Koger
Equity to compete for and retain talented executives who
are critical to our long-term success; and

- To motivate key executives to achieve strategic business
initiatives and to reward them for their achievement.

We compensate our executives through base salary, bonus paid in cash
(or a combination of cash and shares or restricted stock awards), and long-term
incentive awards (usually grants of stock options).

26
<PAGE> 29

We also provide our executives with employee benefits, such as
retirement and health benefits. Koger Equity has entered into employment
agreements and/or change of control agreements with certain of our executive
officers to provide for certain payments and other benefits if they are
terminated following a change in control of Koger Equity.

GENERAL

The Committee annually reviews the base salaries of our executives to
determine if adjustments are appropriate to ensure that their salaries are
competitive and that they reflect the executive's increased responsibilities as
Koger Equity grows.

In determining the compensation paid to the Executive Officers in
1999, the Compensation Committee took into consideration a number of factors,
including among others, the following:

(i) increase in shareholder value;
(ii) the improvement in the Company's operations,
including increases in rental revenues and lease
terms; and
(iii) the continued implementation of an active and
aggressive, yet prudent, development and acquisition
program.

During 1999, the Company accomplished the following:

(i) The overall percent leased rate of its buildings
increased from 90% at December 31, 1998, to 93% at
December 31, 1999.

(ii) Its average rental rate per square foot increased
from $15.82 to $16.79, or 6.1% over the prior year.

(iii) Its rental and other rental services revenues
increased from $133,663,000 to $156,153,000, or
16.8% over the prior year.

(iv) Funds From Operations increased 15.1%, to $65 million.

(v) Dividends paid increased 18.2%, to $1.30 per diluted
share.

(vi) The Company increased its term loan from an insurance
company by $45 million at an annual interest rate of
7.1%. The Company continues to maintain a $150
million revolving credit facility.

(vii) Koger Equity completed construction of six new
buildings containing approximately 628,300 square
feet and finalized the purchase of four buildings
containing approximately 508,600 square feet.

(viii) Consistent with its policy of recycling capital by
disposing of assets which no longer fit its
portfolio standards, the Company sold two of its
oldest office centers, reducing the number of its
operating properties to

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<PAGE> 30

218 buildings from 251 and reducing the size of its
portfolio by approximately 300,000 square feet.

(ix) At December 31, 1999, the Company had six new
office buildings under construction on some of its
existing land, which buildings will contain
approximately 260,400 square feet.

While the Compensation Committee considered all of these
accomplishments and although the Committee has from time to time reviewed the
executive compensation levels of other real estate investment trusts and
referred to other available information concerning the salaries of executive
officers in peer group companies, it did not, and has not as yet, set any
specific criteria in arriving at any particular Executive Officer's
compensation. Therefore, the Compensation Committee made a subjective
determination in setting the compensation of the CEO, the COO and the CFO.

In arriving at the compensation paid Victor A. Hughes, Jr., the CEO,
during 1999, the Compensation Committee considered the outstanding performance
of the Company under his leadership as CEO, as well as his experience in
corporate finance.

BASE SALARIES OF THE EXECUTIVES

The Committee accepted Mr. Hughes's recommendation to increase the
base salaries of only certain of Koger Equity's executives. The Committee
notes, however, that while it increased the salaries of certain of our
executives (excluding the CEO) for 1999, the base salaries of our executives
still approximate the median for salaries of executives in the Comparison
Group.

BASE SALARY OF THE CHIEF EXECUTIVE OFFICER

Upon the recommendation of Mr. Hughes, the Committee did not increase
the base salary of Mr. Hughes in 1999; it remained at $315,000 for the year.

BONUS COMPENSATION FOR 1999

General. The total amount of bonus compensation that the Committee
paid executives was based upon Koger Equity's success in certain performance
categories that we had identified at the beginning of 1999. The categories
were:

- an increase of funds from operations per share, and
- total return to stockholders

BONUS COMPENSATION FOR EXECUTIVES OFFICERS

The Committee awarded bonus compensation for 1999 to each executive
based on the executive's scope of responsibility, and the specific
contributions made by the executive to Koger Equity's performance overall and
to the performance within the executive's area of responsibility. We also
considered the Chief Executive Officer's recommendations.

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<PAGE> 31

BONUS COMPENSATION FOR THE CHIEF EXECUTIVE OFFICER

For 1999, the Committee determined that Mr. Hughes' contributions to
Koger Equity's performance warranted a bonus of $150,000, payable in cash on
February 17, 2000, the date the bonus was granted.

LONG-TERM INCENTIVE AWARDS IN 1999

We provide long-term incentive awards for executives by granting stock
options. The Committee believes that the granting of stock options helps align
the interests of its top executives with stockholders because these executives
receive value only if the market value of the common stock increases.

CONCLUSION

The Compensation Committee believes that the compensation packages of
the Company's Executive Officers have been generally commensurate with the
Company's financial performance and the total value received by its
shareholders. The Compensation Committee intends to continue the review of
Executive Officers' compensation with the assistance of an outside compensation
consultant and will make such modifications in its approach to executive
compensation as it determines to be appropriate in light of the Company's
financial condition, the performance of its officers and peer group analysis.

This report has been furnished by the Compensation Committee.

D. Pike Aloian
John R. S. Jacobsson
George F. Staudter, Chairman

SHAREHOLDER RETURN PERFORMANCE PRESENTATION

The line graph below sets forth the cumulative total shareholder
return on the Shares as compared with the cumulative total return of each of
the American Stock Exchange Market Value Index and the NAREIT Total Return
Index, in each case (i) on an annual basis for the period commencing December
31, 1994 and ending December 31, 1999 and (ii) assuming that $100 was invested
on December 31, 1994 and that all dividends were reinvested.

[Insert Graph Here]

------------------------------------------------------------------------------------------------------
1994 1995 1996 1997 1998 1999
------------------------------------------------------------------------------------------------------
<S> <C>
KE $100
AMEX $100
NAREIT $100
</TABLE>

- KE - Koger Equity, Inc.
- AMEX - American Stock Exchange Market Value Index
- NAREIT - NAREIT Total Return Index

The Company has used a different industry group for compensation
comparisons from that used for its shareholder return performance presentation.

<PAGE> 32

CERTAIN RELATIONSHIPS AND TRANSACTIONS

In 1995 certain entities which are wholly owned subsidiaries of a
co-mingled pension trust for which Morgan Guaranty Trust Company of New York is
the Trustee and J. P. Morgan Investment Management, Inc. is the investment
manager (the "Morgan Entities"), acquired certain properties from the Company
and from a partnership of which a subsidiary of the Company was the corporate
general partner. In connection with this acquisition the Morgan entities
entered into a Management Agreement with Koger Realty Services, Inc., a
Delaware corporation ("KRSI"), in which the Company has a significant economic
interest, pursuant to which KRSI will manage such properties for a five-year
period, subject to renewal on July 31, 2000.

KRSI was incorporated to provide, among other things, leasing and
property management services to owners of commercial office buildings. The
Company owns all of the preferred stock of KRSI, which currently represents in
excess of 95% (by value) of the economic benefits of KRSI. Such preferred stock
is nonvoting stock and is not convertible into the common stock of KRSI while
held by the Company. All of the outstanding common stock of KRSI was acquired
by officers and employees of KRSI, including: Victor A. Hughes, Jr., James C.
Teagle, W. Lawrence Jenkins, James L. Stephens, all of whom are officers of the
Company, and certain other employees of KRSI who are not employed by the
Company. In the event that any of the forgoing persons leave the employ of
KRSI, KRSI has the right to reacquire any Shares of common stock of KRSI held
by such officer or employee. In addition to serving as officers of KRSI,
Messrs. Hughes, Teagle, Hiley and Jenkins comprise the Board of Directors of
KRSI.

The Company accounts for its investment in the preferred stock of KRSI
using the equity method. During 1999, KRSI earned approximately $5.3 million
in management fees from the Morgan Entities and other entities for which it
performs services.

Messrs. Neibart and Jacobsson, Directors of the Company, are partners
of Apollo Real Estate Advisors II, L. P., which is the general partner of
Apollo Real Estate Investment Fund II, L. P. ("Apollo") which owned at December
31, 1999, 5,733,771 Shares or 21.4% of the Koger Equity common stock. Pursuant
to agreements between the Company and Apollo, Apollo has been granted
registration rights and a conditional exemption from certain of the Company's
takeover defenses so long as Apollo does not acquire more than 25% of the
Company's outstanding stock.

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<PAGE> 33

INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

During the year ended December 31, 1999, the Company engaged Deloitte
& Touche LLP to provide certain audit services. The services included the audit
of the annual financial statements, a review of the quarterly data furnished by
the Company to the SEC for the quarters ended March 31, June 30, and September
30, 1999, services performed in connection with filing of this Proxy Statement
and the Annual Report on Form 10-K by the Company with the SEC, attendance at
meetings with the Audit Committee and consultation on matters relating to
accounting, tax and financial reporting. The Audit Committee approved all
services performed by Deloitte & Touche LLP in advance of their performance.
Deloitte & Touche LLP has acted as independent certified public accountants for
the Company since its organization on June 21, 1988. Neither Deloitte & Touche
LLP nor any of its associates have any relationship to the Company or any of
its subsidiaries except in its capacity as auditors.

It is expected that representatives of the independent public
accountants will attend the Annual Meeting and be available to respond to
appropriate questions and be permitted to make a statement concerning the
Company should they desire.

As of the date hereof, the Board of Directors has not selected
independent public accountants to audit the books and accounts of the Company
for the fiscal year ending December 31, 2000. It is anticipated that auditors
will be selected later in the fiscal year.

OTHER BUSINESS

It is not anticipated that there will be presented to the Annual
Meeting any business other than the election of directors and the approval of
the amendments to the Company's Articles of Incorporation and its 1998 Equity
and Cash Incentive Plan. At the time this Proxy Statement went to press, we
knew of no other matters to be acted on at the Annual Meeting, other than those
discussed in this Proxy Statement. If any other business should properly come
before the Annual Meeting or any adjournment thereof, the persons named on the
enclosed proxy will have discretionary authority to vote such proxy in
accordance with their best judgement.

STOCKHOLDER PROPOSALS AND NOMINATIONS TO THE BOARD

If a shareholder intends to present a proposal for action at the 2001
Annual Meeting and wishes to have such proposal considered for inclusion in the
Company's proxy materials in reliance on Rule 14a-8 under the Securities
Exchange Act of 1934, the proposal must be submitted in writing and received by
the Company by December 19, 2001. Such proposals must also meet the other
requirements of the rules of the Securities and Exchange Commission relating to
shareholders' proposals.

The Bylaws of the Company establish an advance notice procedure with
regard to certain matters, including shareholder proposals and nominations of
individuals for election to the Board of Directors. In general, notice of a
shareholder proposal or a director

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<PAGE> 34

nomination for a shareholders meeting must be received by the Company not less
than 70 days, nor more than 90 days before the date of the annual meeting and
must contain specified information and conform to certain requirements, as set
forth in the Bylaws. If the presiding officer at any shareholders' meeting
determines that a shareholder proposal or director nomination was not made in
accordance with the Bylaws, the Company may disregard such proposal or
nomination.

In addition, if a shareholder submits a proposal outside of Rule 14a-8
for the 2001 Annual Meeting, and the proposal fails to comply with the advance
notice procedure prescribed by the Bylaws, then the Company's proxy may confer
discretionary authority on the persons who have been appointed as proxies on
behalf of management to vote on the proposal. Proposals and nominations should
be addressed to the Corporate Secretary of the Company, W. Lawrence Jenkins,
Koger Equity, Inc., Post Office Box 58120, Jacksonville, Florida 32241-8120.

GENERAL

The Company will bear the costs of solicitation of proxies. In
addition to the use of the mails, proxies may be solicited by personal
interview, telephone and telegram by directors, officers and employees of the
Company, and no additional compensation will be paid to such individuals. The
Company also has retained Morrow & Co., Inc., 445 Park Avenue, New York, New
York 10022 to solicit proxies by mail, personal interview, telephone, or
telegraph, for which service the Company anticipates a cost not in excess of
$5,000 plus reasonable out-of-pocket expenses. Arrangements may also be made
with the stock transfer agent and with brokerage houses and other custodians,
nominees, and fiduciaries who are record holders of Shares for the forwarding
of solicitation material to the beneficial owners of Shares. The Company will,
upon the request of any such entity, pay such entity's reasonable expenses for
completing the mailing of such material to such beneficial owners.

Consistent with state law and pursuant to the Company's bylaws, a
majority of the Shares entitled to vote on a particular matter, present in
person or represented by proxy, constitutes a quorum as to such matter.

The Company's Annual Report to Shareholders for the fiscal year ended
December 31, 1999, which contains financial statements and other information,
is being mailed to shareholders with this Proxy Statement, but it is not to be
regarded as proxy soliciting material.

AN ADDITIONAL COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FILED
WITH THE SEC MAY BE OBTAINED, WITHOUT CHARGE, BY ANY SHAREHOLDER UPON WRITTEN
REQUEST TO THE CORPORATE SECRETARY, KOGER EQUITY, INC., POST OFFICE BOX 58120,
JACKSONVILLE, FLORIDA 32241; PROVIDED HOWEVER, THAT A COPY OF THE EXHIBITS TO
SUCH ANNUAL REPORT ON FORM 10-K FOR WHICH THERE MAY BE A REASONABLE CHARGE,
WILL NOT BE SUPPLIED TO SUCH SHAREHOLDER UNLESS SPECIFICALLY REQUESTED.

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<PAGE> 35

EXHIBIT A

KOGER EQUITY, INC.
1998 EQUITY AND CASH INCENTIVE PLAN,
AS AMENDED AND RESTATED

The 1998 Equity and Cash Incentive Plan of Koger Equity, Inc. (the
"Company") was originally adopted on May 10, 1998, by the Company's Board of
Directors, subject to shareholder approval, which was obtained on May 19, 1998.
This Plan originally provided for the issuance of up to 1,000,000 shares of the
Company's Common Stock, par value $.01 per share ("Stock") pursuant to awards
made under the Plan. This Amendment permits the issuance of an additional
1,000,000 shares of Stock for awards under the Plan. The Plan also provided
that for the payment of Performance Awards, and extends the date by which
re-approval by shareholders of performance based awards made under the Plan
after 2004 from the first shareholders' meeting in 2003 to the first
shareholders' meeting in 2005.

1. PURPOSE

The purpose of this Equity and Cash Incentive Plan, as Amended and
Restated, (the "Plan") is to advance the interests of the Company and its
subsidiaries by enhancing their ability to attract and retain employees and
other persons or entities who are in a position to make significant
contributions to the success of the Company and its subsidiaries through
ownership of shares of Stock and cash incentives.

The Plan is intended to accomplish these goals by enabling the Company
to grant Awards in the form of Options, Stock Appreciation Rights, Restricted
Stock or Unrestricted Stock Awards, Deferred Stock Awards or Performance Awards
in Stock, cash or both, Loans or Supplemental Grants, or combinations thereof,
(the "Award(s)") all as more fully described below.

2. ADMINISTRATION

Unless otherwise determined by the Board of Directors of the Company
(the "Board"), the Plan will be administered by a Committee of the Board
designated for such purpose (the "Committee"). The Committee shall consist of
at least two directors. A majority of the members of the Committee shall
constitute a quorum, and all determinations of the Committee shall be made by a
majority of its members. Any determination of the Committee under the Plan may
be made without notice or meeting of the Committee by a writing signed by a
majority of the Committee members. During such times as the Company's Common
Stock is registered under the Securities Exchange Act of 1934 (the "1934 Act"),
at least two members of the Committee shall be "non-employee directors" within
the meaning of Rule 16b-3 promulgated under the 1934 Act and "outside
directors" within the meaning of Section 162(m)(4)(C)(I) of the Internal

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<PAGE> 36

Revenue Code of 1986, as amended (the "Code").

The Committee will have authority, not inconsistent with the express
provisions of the Plan and in addition to other authority granted under the
Plan, to (a) grant Awards at such time or times as it may choose; (b) determine
the size of each Award, including the number of shares of Stock subject to the
Award; (c) determine the type or types of each Award; (d) determine the terms
and conditions of each Award; (e) waive compliance by a holder of an Award with
any obligations to be performed by such holder under an Award and waive any
terms or conditions of an Award; (f) amend or cancel an existing Award in whole
or in part (and if an Award is canceled, grant another Award in its place on
such terms and conditions as the Committee shall specify), except that the
Committee may not, without the consent of the holder of an Award, take any
action under this clause with respect to such Award if such action would
adversely affect the rights of such holder; (g) prescribe the form or forms of
instruments that are required or deemed appropriate under the Plan, including
any written notices and elections required of Participants (as defined below),
and change such forms from time to time; (h) adopt, amend and rescind rules and
regulations for the administration of the Plan; and (i) interpret the Plan and
decide any questions and settle all controversies and disputes that may arise
in connection with the Plan. Such determinations and actions of the Committee,
and all other determinations and actions of the Committee made or taken under
authority granted by any provision of the Plan, will be conclusive and will
bind all parties. Nothing in this paragraph shall be construed as limiting the
power of the Committee to make adjustments under Section 8.6.

3. EFFECTIVE DATE AND TERM OF PLAN

The Plan will become effective on the date on which it is approved by
the stockholders of the Company. Awards may be made prior to such stockholder
approval if made subject thereto. No Award may be granted under the Plan after
May 19, 2008, but Awards previously granted may extend beyond that date.

4. SHARES SUBJECT TO THE PLAN

Subject to adjustment as provided in Section 8.6, the aggregate number
of shares of Stock that have been, or may be, delivered under the Plan are
____________. If any Award requiring exercise by the Participant for delivery
of Stock terminates without having been exercised in full, or if any Award
payable in Stock or cash is satisfied in cash rather than Stock, the number of
shares of Stock as to which such Award was not exercised or for which cash was
substituted will be available for future grants.

Subject to Section 8.6(a), the maximum number of shares of Stock as to
which Options or Stock Appreciation Rights may be granted to any Participant in
any one calendar year is 250,000, which limitation shall be construed and
applied consistently with the rules under Section 162(m) of the Code.

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<PAGE> 37

Stock delivered under the Plan may be either authorized but unissued
Stock or previously issued Stock acquired by the Company and held in treasury.
No fractional shares of Stock will be delivered under the Plan.

5. ELIGIBILITY AND PARTICIPATION

Each employee of the Company or any of its subsidiaries (an
"Employee") and each other person or entity (including without limitation
non-Employee directors of the Company or a subsidiary of the Company) who, in
the opinion of the Committee, is in a position to make a significant
contribution to the success of the Company or its subsidiaries will be eligible
to receive Awards under the Plan (each such Employee, person or entity
receiving an Award, a "Participant"). A "subsidiary" for purposes of the Plan
will be a corporation in which the Company owns, directly or indirectly, stock
possessing 50% or more of the total combined voting power of all classes of
stock.

6. TYPES OF AWARDS

6.1. Options

(1) Nature of Options. An Option is an Award giving the recipient
the right, on exercise thereof, to purchase Stock.

Both "incentive stock options," as defined in Section 422(b) of the
Code (any Option intended to qualify as an incentive stock option being
hereinafter referred to as an "ISO"), and Options that are not ISOs, may be
granted under the Plan. ISOs shall be awarded only to Employees. An Option
awarded under the Plan shall be a non-ISO unless it is expressly designated as
an ISO at time of grant.

(2) Exercise Price. The exercise price of an Option will be
determined by the Committee subject to the following:

(1) The exercise price of an ISO or an Option intended to
qualify as performance based compensation under Section 162(m) of the
Code shall not be less than 100% of the fair market value of the Stock
subject to the Option, determined as of the time the Option is
granted.

(2) In no case may the exercise price paid for Stock
which is part of an original issue of authorized Stock be less than
the par value per share of the Stock.

(3) Duration of Options. The latest date on which an Option may be
exercised will be the tenth anniversary of the day immediately preceding the
date the Option was granted, or such earlier date as may have been specified by
the Committee at the time the Option was

3
<PAGE> 38

granted.

(4) Exercise of Options. An Option will become exercisable at such
time or times, and on such conditions, as the Committee may specify. The
Committee may at any time and from time to time accelerate the time at which
all or any part of the Option may be exercised. Any exercise of an Option must
be in writing, signed by the proper person and delivered or mailed to the
Company, accompanied by (1) any documents required by the Committee and (2)
payment in full in accordance with paragraph (e) below for the number of shares
for which the Option is exercised.

(5) Payment for Stock. Stock purchased on exercise of an Option
must be paid for as follows: (1) in cash or by check (acceptable to the Company
in accordance with guidelines established for this purpose), bank draft or
money order payable to the order of the Company or (2) if so permitted by the
Committee at or after the grant of the Option or by the instrument evidencing
the Option, (i) through the delivery of shares of Stock which have been held
for at least six months (unless the Committee approves a shorter period) and
which have a fair market value equal to the exercise price, (ii) by delivery of
an unconditional and irrevocable undertaking by a broker, bank or other
financial institution, acceptable to the Company, to deliver promptly to the
Company sufficient funds to pay the exercise price, or (iii) by any combination
of the foregoing permissible forms of payment.

(6) Discretionary Payments. If (i) the market price of shares of
Stock subject to an Option (other than an Option which is in tandem with a
Stock Appreciation Right as described in Section 6.2) exceeds the exercise
price of the Option at the time of its exercise, and (ii) the person exercising
the Option so requests the Committee in writing, the Committee may in its sole
discretion cancel the Option and cause the Company to pay in cash or in shares
of Stock (at a price per share equal to the fair market value per share) to the
person exercising the Option an amount equal to the difference between the fair
market value of the Stock which would have been purchased pursuant to the
exercise (determined on the date the Option is canceled) and the aggregate
exercise price which would have been paid.

6.2. Stock Appreciation Rights.

(1) Nature of Stock Appreciation Rights. A Stock Appreciation
Right (or "SAR") is an Award entitling the holder, on exercise, to receive an
amount in cash or Stock or a combination thereof (such form to be determined by
the Committee) determined in whole or in part by reference to appreciation,
from and after the date of grant, in the fair market value of a share of Stock.
SARs may be based solely on appreciation in the fair market value of Stock or
on a comparison of such appreciation with some other measure of market growth
such as (but not limited to) appreciation in a recognized market index. The
date as of which such appreciation or other measure is determined shall be the
exercise date unless another date is specified by the Committee.

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<PAGE> 39

(2) Grant of Stock Appreciation Rights. SARs may be granted in
tandem with, or independently of, Options granted under the Plan.

(1) Rules Applicable to Tandem Awards. When SARs are
granted in tandem with Options, (a) the SAR will be exercisable only
at such time or times, and to the extent, that the related Option is
exercisable and will be exercisable in accordance with the procedure
required for exercise of the related Option; (b) the SAR will
terminate and no longer be exercisable upon the termination or
exercise of the related Option, except that a SAR granted with respect
to less than the full number of shares covered by an Option will not
be reduced until the number of shares as to which the related Option
has been exercised or has terminated exceeds the number of shares not
covered by the SAR; (c) the Option will terminate and no longer be
exercisable upon the exercise of the related SAR; and (d) the SAR will
be transferable only with the related Option.

(2) Exercise of Independent SARs. A SAR not granted in tandem with
an Option will become exercisable at such time or times, and on such
conditions, as the Committee may specify. The Committee may at any
time accelerate the time at which all or any part of the SAR may be
exercised.

Any exercise of an independent SAR must be in writing, signed by the
proper person and delivered or mailed to the Company, accompanied by any other
documents required by the Committee.

6.3. Restricted and Unrestricted Stock.

(1) Grant of Restricted Stock. Subject to the terms and provisions
of the Plan, the Committee may grant shares of Stock in such amounts and upon
such terms and conditions as the Committee shall determine subject to the
restrictions described below ("Restricted Stock").

(2) Restricted Stock Agreement. The Committee may require, as a
condition to an Award, that a recipient of a Restricted Stock Award enter into
a Restricted Stock Award Agreement, setting forth the terms and conditions of
the Award. In lieu of a Restricted Stock Award Agreement, the Committee may
provide the terms and conditions of an Award in a notice to the Participant of
the Award, on the Stock certificate representing the Restricted Stock, in the
resolution approving the Award, or in such other manner as it deems
appropriate.

(3) Transferability and Other Restrictions. Except as otherwise
provided in this Section 6.3, the shares of Restricted Stock granted herein may
not be sold, transferred, pledged, assigned, or otherwise alienated or
hypothecated until the end of the applicable period or periods established by
the Committee and the satisfaction of any other conditions or restrictions
established by the Committee (such period during which a share of Restricted
Stock is subject to such restrictions and conditions is referred to as the
"Restricted Period"). Except as the Committee may otherwise determine under
Section 7.1, if a Participant suffers a Termination

5
<PAGE> 40

of Service (as defined at Section 7.1) for any reason during the Restricted
Period, the Company may purchase the shares of Restricted Stock subject to such
restrictions and conditions for the amount of cash paid by the Participant for
such shares; provided, that if no cash was paid by the Participant such shares
of Restricted Stock shall be automatically forfeited to the Company.

During the Restricted Period with respect to any shares of Restricted
Stock, the Company shall have the right to retain in the Company's possession
the certificate or certificates representing such shares.

(4) Removal of Restrictions. Except as otherwise provided in this
Section 6.3, a share of Restricted Stock covered by a Restricted Stock grant
shall become freely transferable by the Participant upon completion of the
Restricted Period, including the passage of any applicable period of time and
satisfaction of any conditions to vesting. The Committee, in its sole
discretion, shall have the right at any time immediately to waive all or any
part of the restrictions and conditions with regard to all or any part of the
shares held by any Participant.

(5) Voting Rights, Dividends and Other Distributions. During the
Restricted Period, Participants holding shares of Restricted Stock granted
hereunder may exercise full voting rights and shall receive all regular cash
dividends paid with respect to such shares. Except as the Committee shall
otherwise determine, any other cash dividends and other distributions paid to
Participants with respect to shares of Restricted Stock, including any
dividends and distributions paid in shares, shall be subject to the same
restrictions and conditions as the shares of Restricted Stock with respect to
which they were paid.

(6) Other Awards Settled with Restricted Stock. The Committee may,
at the time any Award described in this Section 6 is granted, provide that any
or all the Stock delivered pursuant to the Award will be Restricted Stock.

(7) Unrestricted Stock. Subject to the terms and provisions of the
Plan, the Committee may grant shares of Stock free of restrictions under the
Plan in such amounts and upon such terms and conditions as the Committee shall
determine.

(8) Notice of Section 83(b) Election. Any Participant making an
election under Section 83(b) of the Code with respect to Restricted Stock must
provide a copy thereof to the Company within 10 days of filing such election
with the Internal Revenue Service. (1)

6.4. Deferred Stock.

A Deferred Stock Award entitles the recipient to receive shares of
Stock to be delivered in the future. Delivery of the Stock will take place at
such time or times, and on such conditions, as the Committee may specify. The
Committee may at any time accelerate the time at which delivery of all or any
part of the Stock will take place. At the time any Award described in this

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<PAGE> 41

Section 6.4 is granted, the Committee may provide that, at the time Stock would
otherwise be delivered pursuant to the Award, the Participant will instead
receive an instrument evidencing the Participant's right to future delivery of
Deferred Stock.

6.5. Performance Awards; Performance Goals.

(1) Nature of Performance Awards. A Performance Award entitles the
recipient to receive, without payment, an amount in cash or Stock or a
combination thereof (such form to be determined by the Committee) following the
attainment of Performance Goals (as hereinafter defined). Performance Goals may
be related to personal performance, corporate performance, departmental
performance or any other category of performance established by the Committee.
The Committee will determine the Performance Goals, the period or periods
during which performance is to be measured and all other terms and conditions
applicable to the Award.

(2) Other Awards Subject to Performance Condition. The Committee
may, at the time any Award described in this Section 6.5 is granted, impose the
condition (in addition to any conditions specified or authorized in this
Section 6 or any other provision of the Plan) that Performance Goals be met
prior to the Participant's realization of any payment or benefit under the
Award. Any such Award made subject to the achievement of Performance Goals
(other than an Option or SAR) shall be treated as a Performance Award for
purposes of Section 6.5(c) below.

(3) Limitations and Special Rules. In the case of any Performance
Award intended to qualify for the performance-based remuneration exception
described in Section 162(m)(4)(C) of the Code and the regulations thereunder
(an "Exempt Award"), the Committee shall in writing preestablish specific
Performance Goals. A Performance Goal must be established prior to passage of
25% of the period of time over which attainment of such goal is to be measured.
"Performance Goal" means criteria based upon any one or more of the following
(on a consolidated, divisional, subsidiary, line of business or geographical
basis or in combinations thereof): (i) sales; revenues; assets; expenses;
earnings before or after deduction for all or any portion of interest, taxes,
depreciation or amortization, whether or not on a continuing operations or an
aggregate or per share basis; return on equity, investment, capital or assets;
inventory level or turns; one or more operating ratios; borrowing levels,
leverage ratios or credit rating; market share; capital expenditures; cash
flow; stock price; stockholder return; or any combination of the foregoing; or
(ii) acquisitions and divestitures (in whole or in part); joint ventures and
strategic alliances; spin-offs, split-ups and the like; reorganizations;
recapitalizations, restructurings, financings (issuance of debt or equity) and
refinancings; transactions that would constitute a Change of Control; or any
combination of the foregoing. A Performance Goal and targets with respect
thereto determined by the Committee need not be based upon an increase, a
positive or improved result or avoidance of loss. The maximum Exempt Award
payable to any Participant in respect of any such Performance Goal for any year
shall not exceed $2,500,000. Payment of Exempt Awards based upon a Performance
Goal for calendar years 2004 and thereafter is conditioned upon reapproval by
Company's shareholders no later than Employer's first meeting

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<PAGE> 42

of shareholders in 2005.

6.6 LOANS AND SUPPLEMENTAL GRANTS.

(a) Loans. The Company may make a loan to a Participant ("Loan"),
either on the date of or after the grant of any Award to the Participant. A
Loan may be made either in connection with the purchase of Stock under the
Award or with the payment of any Federal, state and local income tax with
respect to income recognized as a result of the Award. The Committee will have
full authority to decide whether to make a Loan and to determine the amount,
terms and conditions of the Loan, including the interest rate (which may be
zero), whether the Loan is to be secured or unsecured or with or without
recourse against the borrower, the terms on which the Loan is to be repaid and
the conditions, if any, under which it may be forgiven. However, no Loan may
have a term (including extensions) exceeding ten years in duration.

(b) Supplemental Grants. In connection with any Award, the
Committee may at the time such Award is made or at a later date, provide for
and grant a cash award to the Participant ("Supplemental Grant") not to exceed
an amount equal to (1) the amount of any federal, state and local income tax on
ordinary income for which the Participant may be liable with respect to the
Award, determined by assuming taxation at the highest marginal rate, plus (2)
an additional amount on a grossed-up basis intended to make the Participant
whole on an after-tax basis after discharging all the Participant's income tax
liabilities arising from all payments under this Section 6. Any payments under
this subsection (b) will be made at the time the Participant incurs Federal
income tax liability with respect to the Award.

7. EVENTS AFFECTING OUTSTANDING AWARDS

7.1. Termination of Service.

If a Participant who is an Employee ceases to be an Employee, or if
there is a termination of the consulting, service or similar relationship in
respect of which a non-Employee Participant was granted an Award hereunder
(such termination of the employment or other relationship to be referred to as
a "Termination of Service"), except as otherwise provided by the Committee with
respect to an Award, the following will apply:

(1) Options and SARs.

(1) All Options and SARs held by the Participant
immediately prior to the Termination of Service may be exercised as
follows:

(i) If the Termination of Service is on account of the
Participant's death, such Awards may be fully exercised without regard
to vesting requirements by the Participant's executor, administrator
or personal representative or the person or persons to whom the Option
or Right is transferred by will or the applicable laws of descent and

8
<PAGE> 43

distribution, at any time within the one year period ending with the
first anniversary of the Participant's death, and shall thereupon
terminate.

(ii) If Termination of Service is on account of retirement
due to disability, as determined by the Company's Employee Policy
Manual, such Award may be immediately fully exercised in accordance
with the original terms of the Award, except there shall be no vesting
requirements.

(iii) If the Termination of Service is on account of the
Participant's retirement as determined by the Company's Employee
Policy Manual other than as the result of disability, as described
above, such Awards may be exercised by the Participant at any time in
accordance with the original terms of the Award.

(iv) If the Termination of Service is for any other reason,
such Awards may be exercised, to the extent exercisable, by the
Participant at any time within the three-month period following the
Termination, and shall thereupon terminate, unless the Award provides
by its terms for immediate termination of the Award in the event of
such a Termination of Service or unless the Termination of Service
results from a discharge for cause that, in the opinion of the
Committee, casts such discredit on the Participant as to justify
immediate termination of the Award.

(2) In no event, however, shall an Option or SAR remain
exercisable beyond the latest date on which it could have been
exercised without regard to this Section 7.

(3) Options and SARs held by a Participant immediately prior
to the Termination of Service that are not then exercisable shall
terminate upon the Termination of Service.

(2) Restricted Stock. Restricted Stock held by the Participant
must be transferred to the Company (and, in the event the certificates
representing such Restricted Stock are held by the Company, such Restricted
Stock will be so transferred without any further action by the Participant) in
accordance with Section 6.3(c).

(3) Deferred Stock and Performance Awards. Any payment or benefit
under a Deferred Stock Award, Performance Award or Supplemental Grant to which
the Participant was not irrevocably entitled prior to the Termination of
Service will be forfeited and the Award canceled upon the Termination of
Service.

(4) Special Circumstances. In the case of a Participant who is an
Employee, a Termination of Service shall not be deemed to have resulted by
reason of (i) a sick leave or other bona fide leave of absence approved in
accordance with the Company's Employee Policy Manual, or (ii) a transfer of
employment between the Company and a subsidiary or between subsidiaries, or to
the employment of a corporation (or a parent or subsidiary corporation of such

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<PAGE> 44

corporation) issuing or assuming an option in a transaction to which Section
424(a) of the Code applies.

7.2. Change of Control Provisions.

(1) Effect of Change of Control. Notwithstanding any other
provision of the Plan to the contrary, except as otherwise explicitly
provided by the Committee in writing with respect to a particular Award at
the time the Award is granted, in the event of a Change of Control:

(1) Acceleration of Awards. As of the date on which such
Change of Control is determined to have occurred, (i) Options and SARs
that are outstanding and that are not then exercisable shall become
exercisable to the full extent of the original grants; (ii) shares of
Restricted Stock that are not otherwise vested shall vest (and any
Stock to be delivered under any other Award as Restricted Stock shall
upon delivery be unrestricted); (iii) holders of Performance Awards
granted hereunder as to which the relevant performance period has not
ended shall be entitled at the time of the Change of Control to
receive a cash payment per Performance Award equal to the full value
of the cash component of such Award (if any) plus the fair market
value of any Stock included in such Award; (iv) any Deferred Stock
that has been awarded but not delivered shall be delivered
immediately; (v) any Supplemental Grant that has been awarded but not
paid shall be paid immediately; and (vi) any Loan containing a
provision for forgiveness shall be forgiven immediately, and any other
Loan may, at the discretion of the Committee, be forgiven regardless
of the original conditions of the Loan.

(2) Termination of Awards in Certain Transactions. If, as
part of, or in connection with, the Change of Control, there occurs a
merger or consolidation in which the Company is not the surviving
corporation or which results in the acquisition of substantially all
the Company's outstanding stock by a person, entity or group of
persons and/or entities acting in concert or there is a dissolution or
liquidation of the Company, Awards payable in Stock that are not
cashed out or otherwise disposed of in or prior to the transaction
will terminate.

(3) Restriction on Termination of Awards Due to
Termination of Employment. Awards that remain outstanding after a
Change of Control shall not be terminated as a result of a Termination
of Service, other than by reason of death, and shall continue to be
exercisable in accordance with their original terms.

(4) Restriction on Amendment. In connection with or
following a Change of Control, neither the Committee nor the Board may
impose additional conditions upon exercise or otherwise amend or
restrict an Award, or amend the terms of the Plan in any manner
adverse to the holder thereof, without the written consent of such
holder.

Notwithstanding the foregoing, if any right granted pursuant to this Section
7.2 would make a

10
<PAGE> 45

Change of Control transaction ineligible for pooling of interests accounting
under applicable accounting principles that but for this Section 7.2 would
otherwise be eligible for such accounting treatment, the Committee shall have
the authority to substitute stock for the cash which would otherwise be
payable pursuant to this Section 7.2 having a fair market value equal to such
cash.

(b) Definition of Change of Control. A "Change of Control" shall be
deemed to have occurred if and when:

(1) The Company ceases to be a publicly owned corporation
having at least 500 stockholders; or

(2) There occurs any event or series of events that would be
required to be reported as a change of control in response to Item
1(a) on a Form 8-K filed by the Company under the 1934 Act or in any
other filing by the Company with the Securities and Exchange
Commission unless the person ("Person"), as that term is defined or
used in Section 13(d) or 14(d)(2) of the 1934 Act, acquiring control
is an affiliate of the Company as of the date the Plan is approved by
stockholders of the Company; or

(3) The Company executes an agreement of acquisition, merger,
or consolidation which contemplates that after the effective date
provided for in the agreement all or substantially all of the business
and/or assets of the Company will be controlled by another Person;
provided, however, for purposes of this subparagraph (3) that (i) if
such an agreement requires as a condition precedent approval by the
Company's shareholders of the agreement or transaction, a Change of
Control shall not be deemed to have taken place unless and until such
approval is secured and, (ii) if the voting shareholders of such other
Person shall, immediately after such effective date, be substantially
the same as the voting shareholders of the Company immediately prior
to such effective date, the execution of such agreement shall not, by
itself, constitute a "Change of Control"; or

(4) Any Person (other than the Company, a majority-owned
subsidiary of the Company, an employee benefit plan maintained by the
Company or a majority-owned subsidiary of the Company) becomes the
beneficial owner, directly or indirectly (either as a result of the
acquisition of securities or as the result of an arrangement or
understanding, including the holding of proxies, with or among
security holders), of securities of the Company representing more than
25% of the votes that could then be cast in an election for members of
the Board unless within 15 days of being advised that such ownership
level has been reached, the Company's board of directors adopts a
resolution approving the acquisition of that level of securities
ownership by such Person; or

(5) During any period of 24 consecutive months, commencing
after the date this Plan is approved by stockholders of the Company,
individuals who at the beginning of

11
<PAGE> 46

such 24-month period were directors of the Company shall cease to
constitute at least a majority of the Board, unless the election of
each director who was not a director at the beginning of such period
has been approved in advance by directors representing at least two
thirds of (i) the directors then in office who were directors at the
beginning of the 24-month period, or (ii) the directors specified in
clause (i) plus directors whose election has been so approved by
directors specified in clause (i).

8. GENERAL PROVISIONS

8.1. Documentation of Awards.

Awards will be evidenced by such written instruments, if any, as may
be prescribed by the Committee from time to time. Such instruments may be in
the form of agreements to be executed by both the Participant and the Company,
or certificates, letters or similar instruments, which need not be executed by
the Participant but acceptance of which will evidence agreement to the terms
thereof.

8.2. Rights as a Stockholder, Dividend Equivalents.

Except as specifically provided by the Plan, the receipt of an Award
will not give a Participant rights as a stockholder; the Participant will
obtain such rights, subject to any limitations imposed by the Plan or the
instrument evidencing the Award, only upon the issuance of Stock. However, the
Committee may, on such conditions as it deems appropriate, provide that a
Participant will receive a benefit in lieu of cash dividends that would have
been payable on any or all Stock subject to the Participant's Award had such
Stock been outstanding. Without limitation, the Committee may provide for
payment to the Participant of amounts representing such dividends, either
currently or in the future, or for the investment of such amounts on behalf of
the Participant.

8.3. Conditions on Delivery of Stock.

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<PAGE> 47

The Company will not be obligated to deliver any shares of Stock
pursuant to the Plan or to remove restriction from shares previously delivered
under the Plan (a) until all conditions of the Award have been satisfied or
removed, (b) until, in the opinion of the Company's counsel, all applicable
federal and state laws and regulation have been complied with, (c) if the
outstanding Stock is at the time listed on any stock exchange or The NASDAQ
National Market, until the shares to be delivered have been listed or
authorized to be listed on such exchange or market and the Company has received
official notice of the listing of such shares, and (d) until all other legal
matters in connection with the issuance and delivery of such shares have been
approved by the Company's counsel. If a sale of Stock which is required to be
registered under the Securities Act of 1933, as amended, has not been so
registered, the Company may require, as a condition to exercise of the Award,
such representations or agreements as counsel for the Company may consider
appropriate to avoid violation of such Act and may require that the
certificates evidencing such Stock bear an appropriate legend restricting
transfer.

If an Award is exercised by the Participant's legal representative,
the Company will be under no obligation to deliver Stock pursuant to such
exercise until the Company is satisfied as to the authority of such
representative.

8.4. Tax Withholding.

The Company will withhold from any cash payment made pursuant to an
Award an amount sufficient to satisfy all federal, state and local withholding
tax requirements (the "withholding requirements").

In the case of an Award pursuant to which Stock may be delivered, the
Committee will have the right to require that the Participant or other
appropriate person remit to the Company an amount sufficient to satisfy the
withholding requirements, or make other arrangements satisfactory to the
Committee with regard to such requirements, prior to the delivery of any Stock
or removal of restrictions thereon. If and to the extent that such withholding
is required, the Committee may permit the Participant or such other person to
elect at such time and in such manner as the Committee provides to have the
Company hold back from the shares to be delivered, or to deliver to the
Company, Stock having a value calculated to satisfy the withholding
requirement. The Committee may make such share withholding mandatory with
respect to any Award at the time such Award is made to a Participant.

If at the time an ISO is exercised the Committee determines that the
Company could be liable for withholding requirements with respect to the
exercise or with respect to a disposition of the Stock received upon exercise,
the Committee may require as a condition of exercise that the person exercising
the ISO agree (a) to provide for withholding under the preceding paragraph of
this Section 8.4, if the Committee determines that a withholding responsibility
may arise in connection with such exercise, (b) to inform the Company promptly
of any disposition (within the meaning of section 424(c) of the Code) of Stock
received upon exercise, and (c) to give such security as the Committee deems
adequate to meet the potential liability of the Company for the

13
<PAGE> 48

withholding requirements and to augment such security from time to time in any
amount reasonably deemed necessary by the Committee to preserve the adequacy of
such security.

8.5. Transferability of Awards.

Unless otherwise permitted by the Committee, no Award (other than an
Award in the form of an outright transfer of cash or Unrestricted Stock) may be
transferred other than by will or by the laws of descent and distribution.

8.6. Adjustments in the Event of Certain Transactions.

(1) In the event of a stock dividend, stock split or combination
of shares, recapitalization or other change in the Company's capitalization, or
other distribution to holders of Stock other than normal cash dividends, after
the effective date of the Plan, the Committee will make any appropriate
adjustments to the maximum number of shares that may be delivered under the
Plan under the first paragraph of Section 4 above and to the limits described
in the second paragraph of Section 4 and in Section 6.5(c).

(2) In any event referred to in paragraph (a), the Committee will
also make any appropriate adjustments to the number and kind of shares of Stock
or securities subject to Awards then outstanding or subsequently granted, any
exercise prices relating to Awards and any other provision of Awards affected
by such change. The Committee may also make such adjustments to take into
account material changes in law or in accounting practices or principles,
mergers, consolidations, acquisitions, dispositions or similar corporate
transactions, or any other event, if it is determined by the Committee that
adjustments are appropriate to avoid distortion in the operation of the Plan;
provided, that adjustments pursuant to this sentence shall not be made to the
extent it would cause any Award intended to be exempt under Section
162(m)(4)(c) of the Code to fail to be so exempt.

(3) In the case of ISOs, the adjustments described in (a) and (b)
will be made only to the extent consistent with continued qualification of the
Option under Section 422 of the Code (in the case of an ISO) or Section 162(m)
of the Code.

8.7. Employment Rights, Etc.

Neither the adoption of the Plan nor the grant of Awards will confer
upon any person any right to continued retention by the Company or any
subsidiary as an Employee or otherwise, or affect in any way the right of the
Company or subsidiary to terminate an employment, service or similar
relationship at any time. Except as specifically provided by the Committee in
any particular case, the loss of existing or potential profit in Awards granted
under the Plan will not constitute an element of damages in the event of
termination of an employment, service or similar relationship even if the
termination is in violation of an obligation of the Company to the Participant.

14
<PAGE> 49

8.8. Deferral of Payments.

The Committee may agree at any time, upon request of the Participant,
to defer the date on which any payment under an Award will be made.

8.9. Past Services as Consideration.

Where a Participant purchases Stock under an Award for a price equal
to the par value of the Stock, the Committee may determine that such price has
been satisfied by past services rendered by the Participant.

9. EFFECT, AMENDMENT AND TERMINATION

Neither adoption of the Plan nor the grant of Awards to a Participant
will affect the Company's right to grant to such Participant awards that are
not subject to the Plan, to issue to such Participant Stock as a bonus or
otherwise, or to adopt other plans or arrangements under which Stock may be
issued to Employees.

The Committee may at any time or times amend the Plan or any
outstanding Award for any purpose which may at the time be permitted by law, or
may at any time terminate the Plan as to any further grants of Awards, provided
that (except to the extent expressly required or permitted by the Plan) no such
amendment will, without the approval of the stockholders of the Company,
effectuate a change for which stockholder approval is required in order for the
Plan to continue to qualify for the award of ISOs under Section 422 of the Code
or for the award of performance-based compensation under Section 162(m) of the
Code.

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<PAGE> 50
FORM OF PROXY CARD

KOGER EQUITY, INC.
ANNUAL MEETING OF SHAREHOLDERS
May 18, 2000
11:00 a.m.
Jacksonville Marriott Hotel
4670 Salisbury Road
Jacksonville, Florida

[logo] Koger Equity, Inc.
8880 Freedom Crossing Trail, Jacksonville, Florida 32256 PROXY

This proxy is solicited by the Board of Directors for use at the Annual Meeting
on May 18, 2000, or any adjournments thereof.

The shares of stock you hold in your account will be voted as you specify below

If no choice is specified, the proxy will be voted "FOR" Items 1, 2, and 3.

By signing the proxy, you revoke all prior proxies and appoint Victor A.
Hughes, Jr., James C. Teagle and W. Lawrence Jenkins, and each of them, with
full power of substitution, to vote your shares on the matters shown on the
reverse side and any other matters which may come before the Annual meeting and
all adjournments.

See reverse for voting instructions

<PAGE> 51

Company #

Control #

VOTE BY MAIL
Mark, sign and date your proxy card and return it in the postage-paid envelope
we've provided or return it to Koger Equity, Inc., c/o Shareowner Services SM,
P. O. Box 64873, St. Paul, MN 55164-0873.

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
The Board of Directors Recommends a Vote FOR Items 1, 2, and 3.
--------------------------------------------------------------------------------------------------------------------
1. Election of directors:
--------------------------------------------------------------------------------------------------------------------
01 D. Pike Aloian 06 John R. S. Jacobsson [ ] Vote FOR all nominees
(except as marked)
--------------------------------------------------------------------------------------------------------------------
02 Benjamin C. Bishop, Jr. 07 Lee S. Neibart
--------------------------------------------------------------------------------------------------------------------
03 Thomas C. Crocker 08 George F. Staudter [ ] Vote WITHHELD from all
nominees.
--------------------------------------------------------------------------------------------------------------------
04 David B. Hiley 09 James C. Teagle
--------------------------------------------------------------------------------------------------------------------
05 Victor A. Hughes, Jr.
--------------------------------------------------------------------------------------------------------------------
(Instructions: To withhold authority to vote for any indicated nominee,
write the number(s) of the nominee(s) in the box provided to the right.
--------------------------------------------------------------------------------------------------------------------
2. To amend the Koger Equity Articles of [ ] For [ ] Against [ ] Abstain
Incorporation
--------------------------------------------------------------------------------------------------------------------
3. To amend the Koger Equity 1998 Equity and Cash [ ] For [ ] Against [ ] Abstain
Incentive Plan
--------------------------------------------------------------------------------------------------------------------
This Proxy when properly executed will be voted as directors or, if no direction is given,
will be voted FOR each proposal.
--------------------------------------------------------------------------------------------------------------------
Address Change? Mark Box [ ]
Indicate changes below: Date:
--------------------------------------------------------------------------------------------------------------------

--------------------------------------------------------------------------------------------------------------------
Signature(s) in Box
Please sign exactly as your name(s) appear on proxy. If
held in joint tenancy, all persons must sign. Trustees,
administrators, etc., should include title and authority.
Corporation should provide full name of corporation
and title of authorized officer signing the proxy.
--------------------------------------------------------------------------------------------------------------------
</TABLE>