Filed Pursuant to Rule 424(b)(3)
Under The Securities Act of 1933
Registration No. 333-20975
PROSPECTUS
500,000 SHARES
OF
KOGER EQUITY, INC.
COMMON STOCK
----------------
DIVIDEND REINVESTMENT PLAN
----------------
The Dividend Reinvestment Plan (the "Plan") of Koger Equity, Inc. (the
"Company") provides holders of shares of the Company's Common Stock (the "Common
Stock") with a simple and convenient method of purchasing additional shares of
the Common Stock without payment of any brokerage commission or service charge.
Owners of shares of Common Stock, either of record and/or in a dividend
reinvestment account, may participate in the Plan.
Participants in the Plan may have all or a part of their cash dividends
on their shares of the Company's Common Stock automatically reinvested.
The price of shares of Common Stock purchased pursuant to the Plan will
be the price paid by the Plan Administrator in the open market or in negotiated
transactions or based on the market price when shares are purchased from the
Company.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY
STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED
OF THESE SECURITIES OR PASSED UPON THE ADEQUACY OR
ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
This Prospectus relates to 500,000 shares of Common Stock of the
Company registered for purchase under the Plan. These shares have been listed,
or approved for listing, when issued, for trading on the New York Stock
Exchange. It is suggested that this Prospectus be retained for future reference.
The date of this Prospectus is October 31, 2001.
1
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company files annual, quarterly, and current reports, proxy and
information statements and other information with the Securities and Exchange
Commission (the "SEC"). The SEC allows the Company to "incorporate by reference"
the information it files with the SEC. This means that the Company can disclose
information to you by referring you to those documents. Information incorporated
by reference is part of this Prospectus. Later information filed with the SEC
updates and supersedes this Prospectus. Until this offering is completed, the
Company incorporates by reference into this Prospectus the documents listed
below which are filed with the SEC under File No. 1-9997 pursuant to Sections
12(b), 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934 (the
"Exchange Act"):
(1) Annual Report on Form 10-K for the fiscal year ended December
31, 2000;
(2) Proxy Statement, dated April 20, 2001, relating to the
Company's Annual Meeting of Shareholders held on May 23, 2001;
(3) Quarterly Reports on Form 10-Q for the periods ended March 31,
and June 30, 2001;
(4) Current Report on Form 8-K, dated August 23, 2001; and
(5) Description of the shares of Common Stock contained in the
Company's registration statement filed pursuant to Section
12(b) of the Exchange Act and any amendment thereto or reports
filed for the purpose of updating such description.
WHERE TO FIND INFORMATION CONCERNING THE COMPANY
You may read a copy of any document the Company files with the SEC at
its Public Reference Rooms in Washington, D.C., New York, New York, and Chicago,
Illinois. The SEC's Public Reference Room in Washington, D.C. is at 450 Fifth
Street, N.W., Washington, D.C. 20549. You may obtain information on the
operations of the Public Reference Room by calling the SEC at 1-800-SEC-0330. In
addition, the SEC maintains an internet site that contains reports, proxy and
information statements and other information regarding the Company that is filed
electronically with the SEC, and the address of that site is http://www.sec.gov.
You may also inspect the Company's SEC reports and other information at the New
York Stock Exchange, 20 Broad Street, New York, New York 10005. Information as
of particular dates concerning directors and officers of the Company, their
remuneration, and any material interest of such persons in transactions with the
Company is disclosed in proxy statements distributed to shareholders of the
Company and filed with the SEC.
2
The Company has filed with the SEC a registration statement on Form
S-3, File No. 333-20975, (herein, together with all amendments and exhibits,
referred to as the "Registration Statement") under the Securities Act of 1933,
as amended. This Prospectus does not contain all of the information set forth in
the Registration Statement, certain parts of which are omitted in accordance
with the rules and regulations of the SEC. For further information, reference is
hereby made to the Registration Statement.
The Company will provide you without charge upon written or oral
request, a copy of all of the information incorporated by reference into this
Prospectus (other than exhibits to such documents unless such exhibits are
specifically incorporated by reference into the documents that this Prospectus
incorporates). You may request a copy of these documents, other than exhibits,
and additional information concerning the Plan described in this Prospectus and
its administration by contacting:
Pamela K. Walker
Koger Equity, Inc.
8880 Freedom Crossing Trail, Suite 101
Jacksonville, Florida 32256-8280
Telephone Number (904) 538-8871
You may also obtain information concerning the Company at its internet address
which is www.koger.com.
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THE COMPANY
GENERAL
The Company is a self-administered and self-managed equity REIT which
develops, owns, operates and manages suburban office centers in the southeastern
and southwestern United States. As of June 30, 2001, the Company's portfolio
consisted of 192 office buildings in 20 office centers and four freestanding
buildings located in 13 metropolitan areas throughout the Southeast and
Southwest. The Office Buildings contained approximately 10.85 million rentable
square feet and were on average 88% leased as of June 30, 2001.
The principal executive offices of the Company are located at 433 Plaza
Real, Suite 335, Boca Raton, Florida 33432, and its telephone number is (561)
395-9666. Unless the context indicates otherwise, references in this Prospectus
to the Company include all of the Company's subsidiaries.
RECENT DEVELOPMENTS
On August 23, 2001, the Company entered into an agreement to sell
select non-core assets to AREIF II Realty Trust, Inc. ("AREIF"), an affiliate of
Apollo Real Estate Advisors, LP, for a total price in excess of $300 million,
including cash of $208.3 million and the exchange of Apollo's approximately 20
percent equity interest in the Company of 5.73 million shares of its Common
Stock. Included in the sale are ten properties comprising 75 suburban office
buildings and one retail center containing over 3.9 million rentable square
feet. The Company will retain an interest in the assets sold of a 20 percent
participation in the net cash flow after AREIF has received a 15 percent
internal rate of return on its equity investment. The sale is expected to result
in a tax gain of approximately $33.3 million, with a closing scheduled for
December, 2001.
The net cash proceeds from this sale are expected to be used to fund
strategic investment opportunities in higher-growth markets, repay debt and fund
a one-time special gain distribution to shareholders. The per share amount of
the one-time special gain distribution will vary depending upon the final amount
of the gain and the number of shares outstanding at the record date of the
dividend, but is anticipated to be approximately $1.50, based on a share price
of $16.50. The Company will continue to manage the disposed assets and receive a
standard property management fee after the transaction closes.
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CAUTIONARY STATEMENT CONCERNING
FORWARD-LOOKING STATEMENTS
Certain matters discussed in this Prospectus may be forward-looking
statements within the meaning of the Private Securities Litigation Reform Act of
1995. Although Koger Equity, Inc. believes the expectations reflected in such
forward-looking statements are based on reasonable assumptions, there can be no
assurance that its expectations will be attained. Certain factors that could
cause actual results to differ materially from the Company's expectations are
set forth as risk factors in the Company's SEC reports and filings, including
its annual report on Form 10-K. Included among these factors are changes in
general economic conditions, including changes in the economic conditions
affecting industries in which its principal tenants compete; its ability to
timely lease or re-lease space at current or anticipated rents; its ability to
achieve economies of scale over time; the demand for tenant services beyond
those traditionally provided by landlords; changes in interest rates; changes in
operating costs; its ability to attract and retain high-quality personnel at a
reasonable cost in a highly competitive labor environment; future demand for its
debt and equity securities; its ability to refinance its debt on reasonable
terms at maturity; and its ability to complete current and future development
projects on schedule and on budget. Many of these factors are beyond the
Company's ability to control or predict. Forward-looking statements are not
guarantees of performance. For forward-looking statements contained or
incorporated by reference herein, the Company claims the protection of the safe
harbor for forward-looking statements contained in the Private Securities
Litigation Reform Act of 1995. The Company assumes no obligation to update or
supplement forward-looking statements that become untrue because of subsequent
events.
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DIVIDEND REINVESTMENT PLAN
DESCRIPTION OF THE PLAN
The following is a description of the provisions of the Plan in a
question and answer format and constitutes the terms of the Plan.
PURPOSE
1. What is the purpose of the Plan?
The purpose of the Plan is to provide all record owners of shares of
the Company's Common Stock with a simple and convenient way to invest all or a
part of their cash dividends in shares of Common Stock without payment of any
brokerage commission or service charge. The shares of Common Stock will be
purchased by the Plan Administrator, either in the open market or negotiated
transactions or directly from the Company from its authorized but unissued
Common Stock or from shares held as Company treasury stock.
ADVANTAGES
2. What are the advantages of the Plan?
The Plan provides shareholders of record with a convenient, systematic
method of purchasing additional shares of the Company's Common Stock.
Participants in the Plan may: (a) purchase shares of Common Stock with
reinvested dividends; (b) have dividends invested in Common Stock without any
charges for brokerage commissions or record keeping; (c) derive full investment
use of funds, as the Plan provides for fractions of shares to be credited to
Participants' accounts; and (d) protects against the loss, theft or destruction
of stock certificates through the Plan's safekeeping feature for both Plan
shares and any certificated shares held by the participant. In addition,
cumbersome safekeeping requirements and record keeping costs are eliminated
through the free custodial service and reporting provisions of the Plan.
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ADMINISTRATION
3. Who administers the Plan?
Wells Fargo Bank Minnesota, N.A. (the "Plan Administrator"), St. Paul,
Minnesota, or such other bank or trust company as the Company may from time to
time designate as Plan Administrator for the participating shareholders,
administers the Plan for Participants, keeps records, sends Statements of
Accounts to Participants and performs other duties relating to the Plan. The
Plan Administrator purchases shares of Common Stock and credits the shares to
the accounts of the individual Participants. Shares of Common Stock purchased
under the Plan will be registered in the name of the Plan Administrator (or its
nominee) and held by the Plan Administrator for each Participant in the Plan.
Any questions or correspondence should be directed to:
Wells Fargo Bank Minnesota, N.A.
Shareowner Services
P.O. Box 64856
St. Paul, MN 55164-0856
Telephone Number - (800) 468-9716
PARTICIPATION
4. Who is eligible to participate?
All record holders of Common Stock may become Participants in the Plan.
A record holder may participate in the Plan with respect to all or any portion
of the shares of the Common Stock registered in his or her name ("Participating
Shares"). To be eligible to participate in the Plan, a beneficial owner whose
shares are held in a name other than his or her own (e.g., in the name of a
broker or bank nominee) must either (i) become a shareholder of record by having
such shares transferred into his or her name, or (ii) make appropriate
arrangements with his or her nominee to participate on behalf of the beneficial
owner. Otherwise, those beneficial owners who are not holders of record of
Participating Shares will not be eligible to participate in the Plan. The
Company reserves the right to refuse to permit a broker, bank nominee or other
record holder to participate in the Plan if the terms of such participation
would, in the Company's judgment, result in excessive cost or burden on the
Company. In addition, the Company may refuse participation in the Plan to
shareholders residing in states whose securities laws do not exempt offers and
sales pursuant to the Plan from registration.
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5. How does an Eligible Shareholder participate?
An Eligible Shareholder may elect to become a participant in the Plan
("Participant") by returning to the Plan Administrator a properly completed
Authorization Card. The completed Authorization Card appoints the Plan
Administrator as agent for the Participant and:
(a) authorizes the Company to pay to the Plan Administrator for
the Participant's account all or a part of their cash
dividends payable on the Common Stock which the Participant
has enrolled in the Plan; and
(b) authorizes the Plan Administrator as agent to retain for
credit to the Participant's account any cash dividends and any
shares of Common Stock distributed as non-cash dividend or
otherwise on the shares of Common Stock purchased pursuant to
the Plan ("Plan Shares") and credited to the Participant's
account, and to distribute to the Participant any other
non-cash dividend paid on such Plan Shares; and
(c) authorizes the Plan Administrator as agent to apply such cash
dividends to the purchase of shares of Common Stock in
accordance with the terms and conditions of the Plan.
6. When may an Eligible Shareholder join the Plan?
An Eligible Shareholder may join the Plan at any time. Once you become
a Participant in the Plan, you will remain a Participant until you discontinue
your participation or until all shares are removed from your Plan Account.
If an Authorization Card specifying reinvestment of dividends is
received by the Plan Administrator on or before the fifth business day preceding
the record date established for a particular dividend, reinvestment will
commence with that dividend.
Dividend payment dates are anticipated to be in February, May, August
and November each year. The record date is usually the last day of the previous
calendar quarter end. Actual dividend record and payment dates are established
by the Company's Board of Directors.
If the Authorization Card is received after the fifth business day
preceding the record date established for a particular dividend, then the
reinvestment of dividends may not begin until the dividend payment date
following the next record date, as applicable.
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7. What does the Authorization Card provide?
The authorization Card provides for the purchase of additional shares
of Common Stock through the following investment option:
The Dividend Reinvestment feature directs the Plan Administrator to
invest, in accordance with the Plan, your cash dividends on all or a part of the
shares, as you direct, then or subsequently registered in your name, and on all
shares held for your benefit in your Plan account.
Cash dividends on all of the shares held by the Plan Administrator in
your account under the Plan will be reinvested in accordance with the Plan.
8. How does a Participant specify the amount of dividends to be reinvested in
additional shares and the amount of dividends to be paid in cash?
The Authorization Card provides all Participants with the option of
allocating the dividends earned on their shares of record so that a portion of
the dividends will be applied to the Plan to purchase additional shares and a
portion of the dividends will be paid to the shareholder by check.
9. What dividends will be credited to the Participant's Plan account?
After timely receipt of the properly completed Authorization Card, the
Plan Administrator, as agent for the Participant, will open an account under the
Plan and will credit to such account:
(a) all cash dividends received by the Plan Administrator from the
Company on those shares of Common Stock registered in the
Participant's name and specified by the Participant to be
enrolled in the Plan;
(b) all cash dividends received by the Plan Administrator on any
full or fractional Plan Shares credited to the Participant's
account;
(c) all full or fractional Plan Shares purchased for the
Participant's account after making appropriate deduction for
the purchase price of such shares;
(d) any shares of Common Stock distributed by the Company as a
dividend or otherwise on Plan Shares credited to the
Participant's account; and
(e) any shares of Common Stock transferred by the Participant
pursuant to the Plan.
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10. How may a Participant change investment features under the Plan?
As a Participant, you may change your participation in the dividend
reinvestment feature at any time by completing a new Authorization Card and
returning it to the Plan Administrator.
COSTS
11. Are there any expenses to Participants in connection with purchases under
the Plan?
Participants will incur no brokerage commissions or service charges for
the purchases made under the Plan. All costs of administration of the Plan will
be paid by the Company.
If a shareholder's shares are registered in the name of a nominee or
broker, such nominee or broker may charge a commission or fee in connection with
the purchases under the Plan. Any such commissions or fees will be the
responsibility of such shareholder.
If a Participant requests that the Plan Administrator sell shares
credited to his or her account under the Plan (as described in Question 18
below), the Participant would pay brokerage commissions and transfer taxes in
connection with such sale.
PURCHASES
12. How many shares of Common Stock will be purchased for Participants?
The number of shares to be purchased cannot be specified by the
Participant since it depends on the amount of your dividends and the purchase
price of the Common Stock. Your account will be credited with that number of
shares, including fractions computed to three decimal places, equal to the total
dividend to be invested divided by the purchase price per share.
13. When and at what price will shares of Common Stock be purchased under the
Plan?
Cash dividends credited to a Participant's account will be commingled
with the cash dividends credited to all accounts under the Plan.
In the case of purchases in the open market or in negotiated
transactions, the price at which the Plan Administrator shall be deemed to have
acquired shares for the Participant's account shall be the average price of all
shares purchased by it as agent for all Participants with the proceeds of a
single cash dividend.
10
In the case of purchases from the Company, the price shall be the
closing price of the Common Stock as reported on the New York Stock Exchange on
the date of purchase.
If shares are purchased in the open market and from the Company, the
shares will be deemed to have been acquired at the average price of all shares
purchased by the Plan Administrator. A Participant's account will be credited
with fractional shares computed to three decimal places. All dividends will be
held pending investment in a non-interest bearing account maintained by the Plan
Administrator. Purchases of shares from the Company will be made by the Plan
Administrator for a participant's account effective as of the close of business
on the applicable dividend payment date. Purchases of shares in the open market
will be made by the Plan Administrator on or as soon as reasonably practicable
(and in no event later than 30 days) after the applicable dividend payment date,
subject to all applicable federal securities laws and regulations and stock
exchange rules and regulations. All open market purchases shall be made on such
terms as to price, delivery or otherwise as the Plan Administrator may
reasonably determine, and may be made through a brokerage firm affiliated with
the Plan Administrator. Dividend and voting rights will commence with respect to
Plan Shares upon settlement of the Plan Administrator's purchases under the
Plan.
The Company has directed Wells Fargo to process all purchases and sales
for the Plan through Wells Fargo Brokerage Services, L.L.C.
Wells Fargo Brokerage Services, L.L.C. has agreed to process all
purchases and sales of shares for the Plan on a non profit basis and will charge
fees only to the extent necessary to cover its cost in effecting the trade. In
addition, no minimum fee will be applied to any transaction.
If the Company elects to sell shares to the Plan Administrator, it must
notify the Plan Administrator of its election to sell at least ten days prior to
the investment date.
Since purchase prices for the Common Stock are established on the dates
of purchase, a shareholder loses any advantages otherwise available from being
able to select the timing of investments. Shareholders should recognize that
neither the Company nor the Plan Administrator can assure a profit or protect
against a loss on shares of Common Stock purchased under the Plan. Neither the
Company nor the Plan Administrator or its affiliates will have any liability to
Participants in connection with the timing of purchases, the price at which
shares are purchased or the failure to make purchases at any time because of
applicable legal restrictions.
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REPORTS TO PARTICIPANTS
14. What kind of reports will be sent to Participants in the Plan?
As soon as practicable after each purchase, a Participant will receive
a Statement of Account from Wells Fargo which shall include information
concerning the effective purchase price and the number of shares acquired. These
statements are a cumulative record of the shares purchased under the Plan and
the last statement in each calendar year should be retained for tax purposes. In
addition, each Participant will receive copies of the Company's annual and
quarterly reports to shareholders, proxy statements and dividend income
information for tax reporting purposes.
DIVIDENDS
15. Will Participants be credited with dividends on shares held in their
accounts under the Plan?
Yes. As the record holder for the shares held in Participants' accounts
under the Plan, the Plan Administrator will receive dividends for all such
shares held on the dividend record date, will credit such dividends to
Participants' accounts on the basis of full and fractional shares held in these
accounts, and will automatically reinvest such dividends in additional shares of
Common Stock.
CERTIFICATES FOR SHARES
16. Will certificates be issued for shares of Common Stock purchased under the
Plan?
Unless requested, the Company will not issue to Participants
certificates for shares of Common Stock purchased under the Plan. Your shares
will be held in the name of the Plan Administrator or its nominee. The number of
shares purchased for your account under the Plan will be shown on your Statement
of Account. This feature protects against loss, theft or destruction of stock
certificates.
Certificates for any number of whole shares credited to your account
under the Plan will be issued to you upon your written request. If you are
reinvesting cash dividends with respect to the shares registered in your name,
cash dividends with respect to shares withdrawn from your account will continue
to be reinvested unless you thereafter submit a signed written request canceling
or changing your dividend reinvestment participation. Dividends on any full or
fractional share remaining in your account will also continue to be reinvested.
12
The Company and Plan Administrator, at their discretion, may terminate
any account which contains only a fraction of a share by paying the account
holder the dollar value of such fractional share. Certificates for fractions of
shares will not be issued.
Accounts under the Plan will be maintained in the names in which
certificates of the Participants were registered at the time the Participants
entered the Plan. Should you want your shares reregistered or issued in a
different name or should you want to change the name in which your account is
maintained you must so indicate in a written request and comply with any
applicable transfer requirements.
WITHDRAWAL OF SHARES IN PLAN ACCOUNTS
17. How may a Participant withdraw shares purchased under the Plan?
You may withdraw all or a portion of the shares from your Plan account
by notifying the Plan Administrator in writing to that effect and specifying in
the notice the number of whole shares to be withdrawn. Certificates for the
whole shares of Common Stock so withdrawn will be issued to you. In no case will
certificates for fractional shares be issued. If you are reinvesting dividends
on shares registered in your name, dividends with respect to shares withdrawn
from your account will continue to be reinvested unless you thereafter submit a
signed written request canceling your participation in the dividend reinvestment
feature of the Plan.
18. How may a Participant sell, pledge or assign shares held in the Plan?
A Participant who desires to sell shares of Common Stock in a Plan
account must request that certificates for such shares be issued in the
Participant's name or, as an alternative, may request in writing, signed by all
persons on that account, the Plan Administrator to sell whole shares credited to
his or her account under the Plan. If a Participant requests that the Plan
Administrator sell shares credited to his or her Plan account, the Plan
Administrator will use its best efforts to make the sale in the open market
within ten (10) trading days after receipt of the written request. The
Participant will receive the proceeds of the sale minus any brokerage
commissions and transfer taxes. No Participant has the authority or power to
direct the date or sale price at which the Common Stock may be sold by the Plan
Administrator under this alternative.
Any written instructions that do not clearly indicate the whole number
of shares to be sold, or that "all" Plan shares are to be sold, will be returned
to the Participant with no action taken.
A Participant who wishes to sell some or all of his or her shares in
the Plan should be aware of the risk that the price of the Common Stock may
decrease between the time that the Participant determines to sell shares in the
Plan and the time that the sale is completed. This risk is borne solely by the
Participant. No check for the proceeds of such sales will be mailed prior to the
settlement of funds from the brokerage firm through which shares in the Plan are
sold. Settlement is normally three business days after the sale of the shares.
13
All information relating to the sale of shares in the Plan will be
reported to the Internal Revenue Service pursuant to applicable legal
requirements.
A Participant may not pledge or assign shares credited to a Plan
account. Any such purported pledge or assignment will be void. If a Participant
wants to pledge or assign such shares, the Participant must request that a
certificate for such shares be issued in the Participant's name.
19. May a Participant deliver certificates representing shares of Common Stock
in his or her possession to the Plan Administrator for credit to his or her
account maintained as part of the Plan?
Yes. Interested Participants should request the necessary forms from
the Plan Administrator.
20. What happens to the fraction of a share when a Participant withdraws all
shares from the Plan?
If a Participant's account contains a fractional share for which
withdrawal is requested, the Plan Administrator will make a cash payment based
on the sale price of the Common Stock on the date the fractional share is sold
by the Plan Administrator. In order to terminate participation in the Plan, a
Participant (or Participants if a joint registration) should send a written
request to the Agent. A withdrawal/termination form is provided on the reverse
side of the account statement for this purpose. This notice should be sent to
the Plan Administrator at the address shown in Questions 3 and 30. Upon receipt
of such request, the Plan Administrator shall promptly issue certificates for
whole Shares held in such Participant's account under the Plan and the dividend
reinvestment account will be closed. The Plan Administrator will accumulate
fractional shares until a whole share is available to sell. The Plan
Administrator will mail the withdrawing participant a check in the amount of the
then current market price less any brokerage commissions or other sales costs of
the participant's fractional Plan Share, generally no later than 15 days after
the Participant's account is closed. The value of a fraction of a Share will be
based upon the closing price of the Company's Common Stock on the New York Stock
Exchange on the next business day following the day the withdrawal request is
received by the Plan Administrator.
21. What happens to a Participant's Plan account if shares of Common Stock in
the Participant's own name are transferred or sold?
If you dispose of all shares of Common Stock registered in your own
name, the Plan Administrator will continue to reinvest the dividends on the
shares held in your Plan account until you notify the Plan Administrator that
you wish to withdraw such shares from your account.
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DISCONTINUANCE OF DIVIDEND REINVESTMENT
22. How does a Participant discontinue the reinvestment of dividends under the
Plan?
A Participant may discontinue participation under the Plan as to any or
all of his or her participating shares by notifying the Plan Administrator in
writing. A request to terminate participation in the Plan must be received by
the Plan Administrator at least five business days prior to the next upcoming
record date prior to a dividend payment date, in which case, all dividends
thereafter will be paid in cash to the Participant. If the request to terminate
participation in the Plan is received on or after such date, any cash dividend
paid on the dividend payment date following such record date will be reinvested
and credited to the Participant's account in accordance with the Participant's
previous instructions under the Plan. The request to terminate will then be
processed as promptly as possible following such dividend payment date and,
thereafter, all dividends will be paid in cash to the Participant.
If a Participant discontinues participation in the Plan as to all of
his or her shares and less than five shares remain in such Participant's
account, the Company shall have the right, but shall not be obligated, to issue
certificates for such shares and liquidate any fractional interest in accordance
with provisions of the Plan.
OTHER INFORMATION
23. What happens if the Company declares a stock split, issues a stock dividend
or has a Common Stock rights offering?
Any shares resulting from stock splits or stock dividends with respect
to shares of Common Stock, both full and fractional, credited to Participants'
Plan accounts, will be added to their accounts. Participation in any rights
offering will be based upon both the shares of Common Stock registered in
Participant's names and the shares (including fractional shares) credited to
Participants' Plan accounts. Other securities and rights to subscribe received
in respect of the shares held in the accounts of Participants will be sold by
the Administrator and the proceeds distributed to the Participants.
24. How will a Participant's Plan shares be voted at a meeting of shareholders?
All shares of Common Stock credited to your account under the Plan will
be voted as you direct. If on the record date for a meeting of shareholders
there are shares credited to your account under the Plan, you will be sent the
proxy materials for such meeting. Shares held of record and shares held in your
Plan account will be combined in a single proxy and all shares will be voted.
You may then return the executed proxy to the proxy tabulating agent, in which
event all of such shares will be voted as indicated. If you do not return an
executed proxy, none of the shares will be voted.
15
25. What are the Federal income tax consequences of participation in the Plan?
Under the current provisions of the Internal Revenue Code, of 1986, as
amended (the "Code"), the purchase of shares of Common Stock under the Plan will
generally result in the following federal income tax consequences:
(a) A dividend on shares of Common Stock will be treated for
federal income tax purposes as a dividend received by the
shareholder notwithstanding that it is used to purchase
additional Common Stock pursuant to the Plan. The full amount
of cash dividends reinvested under the Plan represents
dividend income to participating shareholders. In addition,
the amount of any brokerage commissions, mark-ups or other
fees or expenses incurred by the Company on behalf of a
participating shareholder in connection with purchases on the
open market, will also constitute a dividend to such
shareholder for federal income tax purposes.
(b) Dividends paid to corporate shareholders, including amounts
taxable as dividends to corporate shareholders under (a)
above, will not be eligible for the corporate dividends-
received deduction under the Code.
(c) A shareholder's tax basis in additional shares of Common Stock
acquired under the Plan with reinvested dividends will be
equal to the purchase price of such shares as of the date
acquired. The shareholder's holding period for shares of
Common Stock acquired will commence on the day following the
date of purchase.
(d) A shareholder will not realize any taxable income upon the
receipt of a certificate for full shares credited to the
shareholder's account. A shareholder will, however, recognize
gain or loss when the shareholder sells or exchanges shares
received from the Plan or when a fractional share interest is
liquidated. Such gain or loss will equal the difference
between the amount which the shareholder received for such
fractional share interest or such shares and the tax basis
therefor.
In the case of participating shareholders whose dividends are subject
to withholding of federal income tax, dividends will be reinvested less the
amount of tax required to be withheld. See question 29.
The above is intended only as a general discussion of the current
federal income tax consequences of participation in the Plan. SHAREHOLDERS
SHOULD CONSULT THEIR OWN TAX ADVISERS REGARDING THE FEDERAL AND STATE INCOME TAX
CONSEQUENCES (INCLUDING THE EFFECTS OF ANY CHANGES IN LAW) OF THEIR INDIVIDUAL
PARTICIPATION IN THE PLAN.
16
The Company intends to file information returns (IRS Form 1099-DIV)
with respect to any participation in the Plan by a Participant. Such information
returns will be accompanied by a letter from the Company containing information
necessary to determine that portion of the dividend, and any other distributions
paid to the Participant on account of his or her holdings of the Company's
Common Stock, which are taxable as dividends and those portions which are in
excess of the Company's current or accumulated earnings and profits and,
therefore, are return of capital.
26. What is the responsibility of the Company and the Plan Administrator under
the Plan?
Neither the Company nor the Plan Administrator or its affiliates will
be liable in administering the Plan for any act done in good faith or for any
omission to act, including, without limitation, any claim of liability arising
out of failure to terminate a Participant's account upon such Participant's
death prior to receipt of notice in writing of such death, the prices at which
shares are purchased for the Participant's account, the times when purchases are
made or fluctuations in the market value of the Common Stock.
THE PARTICIPANT SHOULD RECOGNIZE THAT NEITHER THE COMPANY NOR THE PLAN
ADMINISTRATOR OR ITS AFFILIATES CAN PROVIDE ANY ASSURANCE OF A PROFIT OR
PROTECTION AGAINST LOSS ON ANY SHARES PURCHASED UNDER THE PLAN.
27. When will the Plan be discontinued or modified?
The Company intends to continue the Plan indefinitely; however, it
reserves the right to suspend or terminate the Plan at any time, without prior
notice to the Participants. It also reserves the right to make modifications to
the Plan. Participants will be notified of any such suspension, termination or
modification as soon as practicable. The Company also reserves the right to
terminate any Participant's participation in the Plan at any time.
28. How is the Plan to be interpreted?
Any question of interpretation arising under the Plan will be
determined by the Company and any such determination will be final.
29. What about domestic or foreign Participants in the Plan whose dividends are
subject to income tax withholding?
In the case of a shareholder who is participating in the Plan and whose
dividends are subject to United States Income Tax Withholding, the Plan
Administrator will purchase Common Stock in an amount equal to the net cash
dividend after the deduction of taxes withheld. See question 25.
17
30. Where should correspondence regarding the Plan be directed?
All correspondence concerning the Plan should be addressed as follows:
Wells Fargo Bank Minnesota, N.A.
Shareowner Services
P.O. Box 64856
St. Paul, MN 55164-0856
Telephone Number - (800) 468-9716
USE OF PROCEEDS
Although it is intended that the shares of Common Stock purchased
pursuant to the Plan be purchased in the open market or from sources other than
the Company, shares may be purchased from the Company. The Company is unable to
determine, and has no basis for estimating, either the number of shares of
Common Stock that will be purchased from it under the Plan or the proceeds that
will be received by the Company from the sale of such shares. The Company
proposes to use the proceeds from the sales of Common Stock offered hereby for
its general corporate purposes. See "The Company."
DESCRIPTION OF COMMON STOCK
The Amended and Restated Articles of Incorporation of the Company (the
"Restated Articles of Incorporation") authorize the issuance of up to
100,000,000 shares of Common Stock. As of June 30, 2001, there were 26,814,490
shares of Common Stock issued and outstanding, and the Company had reserved
4,027,887 shares of Common Stock for issuance upon the exercise of employee
stock options and other awards. In addition, as of June 30, 2001, the Company
held 2,774,868 shares of Common Stock in treasury. The Common Stock is listed on
the New York Stock Exchange under the trading symbol KE.
The following description of the Common Stock sets forth certain
general terms and provisions of the Common Stock to which this Prospectus
relates. The statements below describing the Common Stock are in all respects
subject to, and qualified in their entirety by, reference to the applicable
provisions of the Company's Amended and Restated Articles of Incorporation,
By-laws, as Amended and Restated, and Shareholder's Rights Plan.
18
Holders of Common Stock are entitled to receive dividends when, as and
if declared by the Board of Directors of the Company (the "Board of Directors"),
out of funds legally available therefor. Although the Company has not issued any
of its authorized preferred stock, payment and declaration of dividends on the
Common Stock and purchases of shares thereof by the Company would be subject to
certain restrictions if the Company fails to pay dividends on any shares of
preferred stock subsequently issued. Upon any liquidation, dissolution or
winding up of the Company, holders of Common Stock will be entitled to share
equally and ratably in any assets available for distribution to them, after
payment or provision for payment of the debts and other liabilities of the
Company and the preferential amounts owing with respect to any outstanding share
of preferred stock. The Common Stock possesses ordinary voting rights for the
election of directors and in respect of other corporate matters, each share
entitling the holder thereof to one vote. Holders of Common Stock do not have
cumulative voting rights in the election of directors, which means that holders
of more than 50% of all of the shares of Common Stock voting for the election of
directors can elect all of the directors if they choose to do so and the holders
of the remaining shares cannot elect any directors. Holders of Common Stock do
not have preemptive rights, which means they have no right to acquire any
additional shares of Common Stock that may be issued by the Company at a
subsequent date. However, certain shareholders have preemptive rights pursuant
to a contract with the Company. The outstanding Common Stock is, and, when
issued, the Common Stock to be issued in connection with this Prospectus will
be, fully paid and nonassessable.
The transfer agent and registrar of the Common Stock is Wells Fargo
Bank Minnesota, N.A., P.O. Box 64856, St. Paul, MN 55164-0856, Attention:
Shareowner Services, Telephone Number - (800) 468-9716.
The Company sends to its shareholders annual reports including
financial statements audited by independent public accountants and quarterly
unaudited interim financial reports.
LEGAL OPINION
The validity of the Common Stock is being passed upon for the Company
by Boling & McCart, a professional association, 1000 Riverside Avenue, Suite
555, Jacksonville, Florida 32204, counsel for the Company. At August 2, 2001, a
member of Boling & McCart owned beneficially 1,647 shares of the Company's
Common Stock.
19
EXPERTS
The consolidated financial statements incorporated in this prospectus
by reference from the Company's Annual Report on Form 10-K for the year ended
December 31, 2000, have been audited by Deloitte & Touche LLP, independent
auditors, as stated in their reports, which are incorporated herein by
reference, and have been so incorporated in reliance upon the reports of such
firm given upon their authority as experts in accounting and auditing.
With respect to the unaudited interim financial information for the
periods ended March 31, 2001, and June 30, 2001, which is incorporated herein by
reference, Deloitte & Touche LLP have applied limited procedures in accordance
with professional standards for a review of such information. However, as stated
in their reports included in the Company's Quarterly Reports on Form 10-Q for
the quarters ended March 31, 2001, and June 30, 2001, and incorporated by
reference herein, they did not audit and they do not express an opinion on that
interim financial information. Accordingly, the degree of reliance on their
reports on such information should be restricted in light of the limited nature
of the review procedures applied. Deloitte & Touche LLP are not subject to the
liability provisions of Section 11 of the Securities Act of 1933 for their
reports on the unaudited interim financial information because those reports are
not "reports" or a "part" of the registration statement prepared or certified by
an accountant within the meaning of Sections 7 and 11 of the Securities Act of
1933.
20
SEC POSITION ON INDEMNIFICATION FOR
SECURITIES LIABILITIES
The Company's Amended and Restated Articles of Incorporation provide
that the Company shall indemnify its officers and directors to the fullest
extent permitted by the General Corporation Law of the State of Florida
(predecessor statute to the Florida Business Corporate Act) as now or hereafter
in force, including the advance of expenses and reasonable counsel fees.
Florida law provides that a director, officer, agent and employee of a
corporation or its subsidiaries or other affiliates may be indemnified under
certain conditions by the corporation against expenses, including attorney's
fees, incurred in connection with civil, criminal, administrative or
investigative proceedings.
The Company has also entered into an Indemnification Agreement with
each of its directors and executive officers whereby the Company has the
affirmative obligation to indemnify such directors and officers to the fullest
extent permitted by law including the cost of enforcing the Indemnity Agreement.
In addition, the Company carries directors and officers liability insurance.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 (the "Act") may be permitted to directors and officers and
controlling persons of the Company pursuant to the provisions referred to in
Item 15 of the Registration Statement, the Company has been advised that in the
opinion of the SEC such indemnification is against public policy as expressed in
the Act and is, therefore, unenforceable.
21
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No dealer, salesman or any other person has been authorized to give any
information or to make any representations other than those contained in this
Prospectus, and, if given or made, such information and representations must not
be relied upon as having been authorized by the Company. This Prospectus does
not constitute an offer to sell or a solicitation of an offer to buy any of the
securities offered hereby in any jurisdiction to any person to whom it is
unlawful to make such offer or solicitation. Neither the delivery of this
Prospectus nor any sale hereunder shall, under any circumstances, create any
implication that there has been no change in the affairs of the Company since
the date thereof.
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TABLE OF CONTENTS
Page
----
Incorporation of Certain
Documents by Reference .................. 2
Where To Find Information
Concerning The Company .................. 2
The Company ...................................... 4
General ................................. 4
Recent Developments ..................... 4
Cautionary Statement Concerning
Forward-Looking Statements .............. 5
Dividend Reinvestment Plan ....................... 6
Description of the Plan ................. 6
Purpose ................................. 6
Advantages .............................. 6
Administration .......................... 7
Participation ........................... 7
Costs ................................... 10
Purchases ............................... 10
Reports to Participants ................. 12
Dividends ............................... 12
Certificates for Shares ................. 12
Withdrawal of Shares in
Plan Accounts ........................... 13
Discontinuance of Dividend
Reinvestment ............................ 15
Other Information ....................... 15
Use of Proceeds .................................. 18
Description of Common Stock ...................... 18
Legal Opinion .................................... 19
Experts .......................................... 20
SEC Position on Indemnification
For Securities Liabilities .............. 21
500,000 SHARES
[KOGER EQUITY, INC. LOGO]
COMMON STOCK
OFFERED PURSUANT TO ITS
DIVIDEND REINVESTMENT PLAN
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PROSPECTUS
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October 31, 2001
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