<PAGE>
PART I
ITEM 1. BUSINESS
- -----------------
BACKGROUND
JDN Realty Corporation is a real estate development company which
specializes in the development, redevelopment, asset management, and acquisition
of retail shopping centers anchored by value-oriented retailers. When referred
to herein, the term "Company" represents JDN Realty Corporation and its wholly-
owned subsidiaries. As of March 21, 1997, the Company owned and operated, either
directly or indirectly through affiliated entities or joint ventures, 49
shopping center properties containing approximately 6.3 million square feet of
gross leasable area ("Company GLA") located in ten states, primarily in the
southeastern United States, with the highest concentrations in Georgia, North
Carolina, and Tennessee. As of March 21, 1997, the Company, either directly or
indirectly through affiliated entities or joint ventures, had 11 retail projects
under construction. The principal tenants of the Company's properties include
Wal-Mart, Lowe's, Kroger and Bruno's. The Company owns, either directly or
indirectly through its investment in JDN Development Company, Inc. (see
discussion below) and in affiliated joint ventures, 35 undeveloped parcels of
land containing a total of 123 acres which are available for ground leasing,
tenant expansion or future retail development. As of March 21, 1997, no single
property accounted for 10% or more of the Company's total assets or total
revenues. The Company was incorporated under Maryland law in 1993 and is
operating as a real estate investment trust ("REIT") for federal income tax
purposes.
The Company is one of the largest developers of Wal-Mart anchored shopping
centers in the United States. The Company along with its predecessor and its
founders have developed or jointly developed 125 shopping center projects, 91 of
which were built on assignment from Wal-Mart, and have developed, sold or leased
more than 140 outparcels. On March 29, 1994, the Company completed an initial
public offering of 6,785,000 shares of common stock (the "1994 Offering"). The
net cash proceeds from the 1994 Offering, along with proceeds from a $75
million, seven-year term loan, were used primarily to purchase third party or
the Company's founders' interests in certain shopping center properties and to
repay all outstanding Company debt. Upon completion of the 1994 Offering, the
Company owned 33 shopping center properties. In 1995, 1996, and 1997, the
Company completed four follow-on offerings of common stock totaling 7,923,600
shares which netted proceeds of $184.4 million to the Company. The Company used
the proceeds of these offerings to retire interim financing related to the
Company's development, redevelopment, expansion and acquisition activities and
to fund the Company's ongoing development and redevelopment activities.
The Company's business objective is to increase its funds from operations
by (i) development of new shopping centers anchored by strong retail tenants,
(ii) redevelopment and expansion of its existing properties, (iii) effective
leasing and management of its properties and ground leasing of adjacent
outparcels, and (iv) acquisition of existing shopping centers. The Company is a
fully integrated real estate firm with in-house development, redevelopment,
expansion, leasing, property management and acquisition expertise.
DESCRIPTION OF BUSINESS
DEVELOPMENT
Management believes that development of new shopping center properties
represents the greatest opportunity for increasing funds from operations and
enhancing shareholder value. The Company's primary emphasis is on developing
new shopping centers in the Southeast. Management believes that attractive
shopping center development opportunities exist, particularly in this region,
for several reasons. Changes in retail patterns have included some movement
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away from urban centers and regional malls to power and community centers
anchored by discount or other specialty retailers. Several of the Company's
anchor tenants, such as Wal-Mart and Lowe's, are leading or participating in the
change in retail patterns, and the Company has benefited from their expansion
and growth. Additionally, high occupancy rates in existing, well-located
shopping centers have resulted in an increased demand for new shopping centers.
The Company generally develops shopping centers on assignment from major
tenants such as Wal-Mart and Lowe's which meet the Company's return-on-cost
criteria. The Company's in-house team of development and leasing professionals
initiates the development process through long-standing relationships with major
tenants and closely monitors the architectural, engineering and construction
process through completion and tenant occupancy. This involvement is a critical
part of the Company's goal of completing quality shopping centers for tenant
occupancy on schedule, within estimated costs and at anticipated returns.
The Company participated in the organization of JDN Development Company,
Inc. ("Development Company") in December 1994 to enhance its development
flexibility. Current tax law restricts the ability of REITs to engage in
certain activities, such as the sale of certain properties and third-party fee
development, but these restrictions do not apply to the activities of a company
that is not a REIT, such as Development Company, whose income is subject to
federal income tax. Development Company enables the Company to, among other
things, develop an entire shopping center and sell all or a portion of the
shopping center, such as anchor tenant space, with the intent of increasing
total returns on cost. Development Company may also hold and sell parcels
adjacent to projects under development by the Company. In order to comply with
the REIT rules, Development Company's ownership has been structured so that the
Company owns 99% of the economic interest while J. Donald Nichols, the Company's
Chairman and Chief Executive Officer, owns the remaining 1% and controls
Development Company's operations and activities through his voting common stock
ownership.
During 1996, the Company, either directly or indirectly through Development
Company and joint ventures, completed all or portions of seven development
projects. These projects added approximately 1.1 million square feet of gross
leasable area to the operating portfolio of shopping center properties. As of
December 31, 1996, the Company, either directly or indirectly through
Development Company and joint ventures in which either the Company or
Development Company had an interest, had begun construction of a total of 10
projects which are expected to add approximately 1.5 million square
feet of gross leasable area to the operating portfolio of shopping center
properties.
REDEVELOPMENT AND EXPANSION
The Company's objective of continued growth focuses on the selective
redevelopment, retenanting and expansion of its existing shopping centers to
increase cash flows and property values while also increasing its tenants'
retail sales prospects. Management is active in its tenants' expansion plans as
increased sales may warrant expansion. Redevelopment projects have included
adding anchor tenants and changing the tenant mix and reconfiguring shopping
centers. The Company has worked closely with several anchor tenants to enlarge
their stores and enhance merchandising capabilities at existing properties.
LEASING AND PROPERTY MANAGEMENT
The Company's in-house leasing and property management teams work together
to attract and retain national, regional and local tenants and to maintain
productive relationships with these tenants. Further, the strong relationships
of the Company's leasing staff with national and regional non-anchor tenants
have resulted in a majority of the non-anchor retail space of each development
project being leased prior to completion. The leasing staff seeks a
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complementary mix of financially qualified tenants. The Company requires its
leasing agents to analyze the financial condition of each retail prospect,
evaluate its business plan and suitability as a tenant in a particular center
and make a recommendation to management. This process increases long-term
occupancy and reduces tenant turnover. Successful initial leasing and tenant
retention enable the Company to reduce the cost of re-leasing and to maintain
occupancy levels. With respect to the 36 properties owned by the Company for
all of 1996 and 1995:
. Net operating income increased 1.8% for the year ended December 31, 1996 as
compared to the year ended December 31, 1995, primarily due to leasing of
vacant space, rental increases from existing tenants and higher percentage
rent payments.
. At December 31, 1996, the occupancy rate was 98.1%.
. Annualized base rent per square foot increased to $6.50 for the year ended
December 31, 1996 from $6.42 for the year ended December 31, 1995.
The occupancy rate for the Company's operating portfolio of 48 shopping
center properties at December 31, 1996 was 98.2%.
ACQUISITIONS
The Company also seeks to increase its funds from operations through
selective acquisition activity. The Company intends to continue to acquire, for
long-term investment, high quality, well-located shopping centers with
attractive initial yields and strong prospects for future cash flow growth and
capital appreciation. The Company's strategy focuses on properties to which its
leasing and property management teams can add value through redevelopment or
expansion, leasing of vacant space or increasing rental rates over time. During
1996, the Company acquired a 123,000 square foot shopping center in Decatur,
Alabama anchored by Food World for $6.8 million. As of December 31, 1996, the
shopping center was 97.8% leased.
In December 1996, the Company entered into a contract to purchase a
shopping center in Fayetteville, North Carolina, for $12.9 million which is to
close no sooner than January 29, 1998 and no later than February 28, 1998. In
connection with this contract, the Company purchased a $10.5 million mortgage
loan which bears interest at 11.0%, matures in January 1998 and is secured by
the shopping center. At December 31, 1996, the Company had entered into two
additional contracts to purchase shopping center properties, one of which was
acquired in February 1997. The remaining property under contract and the
Fayetteville, North Carolina property under contract are subject to various
conditions to closing and there can be no assurance that these properties will
be acquired. The Company is pursuing other acquisition opportunities in the
ordinary course of business which are not subject to definitive agreements. In
an effort to close these and other acquisitions, the Company may utilize various
means of acquiring properties which could include, for example, assumption of
indebtedness, purchase of mortgage loans or issuance of partnership units in a
"Down REIT" structure.
MAJOR TENANTS
As of December 31, 1996, approximately 59% of gross leasable area owned
directly by the Company was leased to Wal-Mart, Lowe's, Kroger, Bruno's and
Kmart, and approximately 48% of total annualized base rents was attributable to
these tenants. At December 31, 1996, Wal-Mart occupied approximately 29% of
gross leasable area owned directly by the Company and for the year ended
December 31, 1996, Wal-Mart accounted for approximately 22% of the Company's
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total minimum and percentage rent. At December 31, 1996, Lowe's occupied
approximately 12% of gross leasable area owned by the Company and for the year
ended December 31, 1996, Lowe's accounted for 11% of the Company's total minimum
rent. No other tenants account for more than 10% of gross leasable area or
total minimum and percentage rent in 1996. The loss of any of these anchor
tenants or the inability of any of them to pay rent could have an adverse effect
on the Company's business.
COMPETITION
The Company competes with commercial developers, real estate companies and
other real estate owners for development and acquisition opportunities in its
market area. Certain of these competitors may have greater capital and other
resources than those of the Company. The operations of each shopping center in
the Company's portfolio are subject to competition from similar shopping centers
in their respective locations. Management believes that the Company is well-
positioned to compete effectively for development and acquisition opportunities
and is generally well-positioned to compete in markets in which its shopping
center properties are located.
ENVIRONMENTAL MATTERS
The Company is subject to federal, state and local environmental
regulations that apply to the development of real property, including
construction activities and the ownership and operation of real property. In
developing shopping centers, the Company engages environmental consultants to
determine whether there are any flood plains, wetlands or environmentally
sensitive areas that are part of the property to be developed. If flood plains
are identified, any necessary governmental permits or consents are sought and,
if required, development and construction is planned so that flood plain areas
are preserved or alternative flood plain capacity is created in conformance with
federal and local flood plain management requirements.
Stormwater discharge from a construction facility is evaluated in
connection with the requirements for stormwater permits under the Clean Water
Act. This is an evolving program in most states. It is anticipated that
general stormwater permits will be applicable to the Company's activities and
individual permits will not be required for existing or new developments.
Operations of the Company's shopping centers have been and will continue to
be subject to numerous federal, state and local environmental laws, ordinances
and regulations. None of the buildings on the Company's properties is known to
contain friable asbestos building materials. Some of the buildings located in
the shopping centers, however, were built when low concentrations of non-friable
asbestos were commonly used in building materials such as roof flashings and
vinyl floor tile. Therefore, some of the centers may contain non-friable
asbestos building materials. Management believes building materials that
contain low concentrations of non-friable asbestos when properly managed and
maintained generally do not impose any environmental hazard. Management does
not believe that the presence of such materials will result in removal costs
that would have a material adverse effect on the Company's financial condition
or results of operations in the event of any future renovation activities.
Further, any one or more of the Company's shopping centers can potentially
be negatively impacted, either through physical contamination or by virtue of an
adverse effect on property values by the release of hazardous or toxic
substances emanating from areas adjacent to or near the centers. Several of the
centers are adjacent to or near areas that either contain or have contained
above-ground and underground petroleum storage tanks that either have or may
have released petroleum products into the soil or groundwater. At least one of
the Company's shopping center properties at one time contained underground
storage tanks that were used to store petroleum products.
The Company had Phase I environmental assessments conducted on each
property on which it began construction during 1996 and on the one property it
acquired during 1996. The Company's general policy is to obtain a new or updated
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environmental assessment each time it develops or acquires a property. As a
result of such an environmental assessment on the Company's Greenville, North
Carolina development, management was made aware that the seller of the property
owns an adjoining tract which contained contaminated soil that is being removed
under a remediation plan approved by the North Carolina environmental regulatory
authorities. The Company received a comprehensive indemnity from the seller and
is conducting regular monitoring activities to detect any contamination of the
Company's property.
The terms of all agreements for purchase and sale of properties the Company
has acquired or will acquire contain or will contain representations related to
the sellers' knowledge of existing environmental conditions. Most of the
sellers have not assumed responsibility for any liability relating to existing
adverse environmental conditions that are not known by the seller. Moreover,
because the terms of the Company's leases with its shopping center tenants do
not give the Company control over the day-to-day operational activities of the
tenants, no assurance can be given that any lessee of a property owned or to be
owned by the Company has not and will not create an environmental condition not
known to the Company.
The Company has not been notified by any governmental authority of any
material noncompliance, environmental claim or liability in connection with any
of its shopping centers. The Company has not been notified of any claim for
personal injury or property damage by a private party in connection with any of
its properties as a result of environmental conditions. The Company is not
aware of any other environmental condition or liability with respect to any of
its properties that management believes would have a material adverse effect on
the Company's financial position or results of operations.
EMPLOYEES
As of March 21, 1997, the Company and Development Company employed 45 full-
time persons and one part-time person including executive, administrative and
field personnel.
<TABLE>
<CAPTION>
EXECUTIVE OFFICERS
Name Age Positions with the Company
-------------------- --- --------------------------------------------
<S> <C> <C>
J. Donald Nichols 56 Chairman and Chief Executive Officer
Elizabeth L. Nichols 43 President and Director
William J. Kerley 41 Chief Financial Officer, Secretary, Treasurer
Jeb L. Hughes 45 Vice President, Development of JDN Development
Company, Inc.
Leilani L. Jones 35 Vice President and Director of Property Management
David L. Henzlik 34 Vice President, Leasing
C. Sheldon Whittelsey IV 35 Vice President, Development
John D. Harris, Jr. 37 Controller, Assistant Secretary
</TABLE>
The following is a biographical summary of the experience of the executive
officers of the Company:
J. Donald Nichols. Mr. Nichols has served as Chairman and Chief Executive
Officer of the Company since its formation in December 1993. In 1978, Mr.
Nichols formed JDN Enterprises, Inc., the Company's predecessor ("Enterprises"),
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for the purpose of developing shopping centers anchored primarily by Wal-Mart.
He served as President of Enterprises from its inception until 1989, at which
time Mr. Nichols became Chairman. Mr. Nichols served as Chairman of Enterprises
until he assumed his current position with the Company.
Elizabeth L. Nichols. Ms. Nichols has served as President of the Company
since its formation in December 1993. Ms. Nichols joined Enterprises in 1980,
where she arranged permanent and construction financing, performed market due
diligence and site acquisition, and negotiated leases. Ms. Nichols organized
the formation of Enterprises' in-house property management and leasing
departments in 1984. Ms. Nichols was Vice President of Finance for Enterprises
from 1982 until 1989, when she became President. Ms. Nichols served as President
of Enterprises until she assumed her current position with the Company.
William J. Kerley. Mr. Kerley has served as Chief Financial Officer of the
Company since its formation in December 1993. Mr. Kerley served as Chief
Financial Officer of Enterprises from August 1993 to December 1993. From 1989
to 1993, Mr. Kerley was a consultant to Enterprises and other real estate and
operating companies in the southeastern United States.
Jeb L. Hughes. Mr. Hughes has served as Vice President, Development of
Development Company since May 1996. Mr. Hughes joined Enterprises in 1989
and managed the development and construction of shopping centers for Enterprises
until it was merged into the Company in December 1993. Mr. Hughes was self-
employed and acted as a consultant to Development Company from January 1994 to
May 1996.
Leilani L. Jones. Ms. Jones has served as Vice President and Director of
Property Management of the Company since its formation in December 1993. Ms.
Jones joined Enterprises in 1985 and served as Vice President and Director of
Property Management from 1990 until December 1993.
David L. Henzlik. Mr. Henzlik joined Enterprises in 1989 as a leasing agent
and has served as Vice President, Leasing of the Company since March 1995.
C. Sheldon Whittelsey, IV. Mr. Whittelsey has served as Vice President,
Development of the Company since its formation in December 1993. Mr. Whittelsey
joined Enterprises in 1986 where he was involved in site acquisition,
development and outparcel sales.
John D. Harris, Jr. Mr. Harris joined the Company as Controller in July
1994. From 1984 to July 1994, Mr. Harris was employed by the Atlanta, Georgia,
office of Ernst & Young, most recently holding the position of Senior Manager,
where he specialized in serving real estate and entrepreneurial companies. Mr.
Harris is a certified public accountant.
6
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FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS
The Company is in the business of developing, redeveloping, asset managing
and acquiring shopping centers. The Company considers its activities to consist
of a single industry segment. See the Consolidated Financial Statements and
Notes thereto included in Item 8 of this annual report on Form 10-K for certain
information required in Item 1.
ITEM 2. PROPERTIES
- -------------------
The Company's corporate headquarters are located at 3340 Peachtree Road,
N.E., Suite 1530, Atlanta, Georgia 30326, and are leased from an unrelated
third party under a lease agreement expiring in June 1998. The Company
coordinates most of its corporate activities from its headquarters in Atlanta,
Georgia, although the Company also maintains branch offices in Nashville,
Tennessee and Charlotte, North Carolina.
As of December 31, 1996, the Company owned and operated, either directly or
indirectly, 48 shopping center properties totaling approximately 6.1 million
square feet of gross leasable area. The following table sets forth information
on these properties as of December 31, 1996:
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JDN REALTY CORPORATION
OPERATING PORTFOLIO
DECEMBER 31, 1996
<TABLE>
<CAPTION>
Annualized
Year Built/ Base Rent Per
Renovated Total Company Percent Annualized Leased
Location or Expanded GLA(1) GLA Leased Base Rent Square Foot Major Tennants
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
ALABAMA
Decatur 1965/1996 123,031 123,031 97.8% $ 765,468 $ 6.36 Food World
Gadsden 1979 131,044 85,341 100.0% 317,808 3.72 Public Wholesale, Food World(2),
Eckerd
Opelika 1993/1995 306,225 306,225 100.0% 1,821,732 5.95 Wal-Mart, Lowe's, Winn-Dixie,
Goody's, Revco
--------------------- ----------
Sub Total 560,300 514,597 2,905,008
% of Portfolio Total 7.0% 8.4% 7.0%
FLORIDA
Fort Walton Beach 1986 124,851 21,901 89.0% 218,376 11.20 Wal-Mart(2)
Tallahassee 1990/1994 265,299 109,052 100.0% 734,376 6.73 Wal-Mart(2), Lowe's
--------------------- ----------
Sub Total 390,150 130,953 952,752
% of Portfolio Total 4.8% 2.1% 2.3%
GEORGIA
Canton 1983 130,926 65,052 95.7% 431,940 6.94 Wal-Mart(2), Ingles, Revco
Canton(4) 1996 238,026 238,026 94.1% 1,526,508 6.81 Wal-Mart
Cartersville 1984 135,813 135,813 94.0% 492,288 3.86 Wal-Mart, Ingles, Eckerd
Cartersville 1995 375,828 375,828 100.0% 2,325,996 6.19 Wal-Mart, Lowe's
Conyers(6) 1996 366,799 57,662 100.0% 549,060 9.52 Wal-Mart(2), Home Depot(2),
Rhodes, The Sport Shoe
Eastman 1990 82,904 41,603 100.0% 278,220 6.69 Wal-Mart(2), Food Lion
Fayetteville 1990 156,063 156,063 96.1% 1,371,348 9.14 Bruno's, Cinemark Movies, Revco
Fort Oglethorpe 1973/1992 176,903 176,903 97.7% 770,004 4.45 Kmart, FoodMax, Revco
Griffin 1986 172,545 64,771 100.0% 434,520 6.71 Wal-Mart(2), Winn-Dixie
LaFayette 1990 70,849 70,849 96.6% 422,640 6.17 Food Lion, Goody's, Revco
LaGrange 1984 62,990 62,990 100.0% 233,064 3.70 Wal-Mart
Lawrenceville-LTC 1989/1995 320,880 277,082 95.6% 2,089,620 7.88 Wal-Mart, Kroger, Regal Cinemas
Lawrenceville-FFV 1990 89,064 89,064 97.2% 866,724 10.01 Winn-Dixie, Eckerd
Lilburn 1990 73,950 73,950 95.9% 622,620 8.78 Kroger
Loganville(5) 1995 90,496 90,496 93.8% 839,496 9.89 Kroger
Madison 1989 106,100 106,100 95.7% 489,732 4.82 Wal-Mart, Ingles, Revco
Newnan 1995 423,667 360,669 100.0% 2,444,355 6.78 Wal-Mart, Lowe's, Uptons(2)
Riverdale 1989 134,878 22,402 84.5% 261,264 13.81 Kroger(2)
Stockbridge 1988 162,779 162,779 100.0% 806,844 4.96 Kmart, Bruno's
Union City 1986 181,954 100,004 96.5% 774,480 8.02 Wal-Mart(2), Ingles, Drug Emporium
Woodstock 1995 164,452 164,452 100.0% 1,442,556 8.77 Wal-Mart
Ground Leases 1996 0 0 100.0% 250,704 N/A Pike Nurseries
--------------------- ----------
Sub Total 3,717,866 2,892,558 19,723,983
% of Portfolio Total 46.2% 47.2% 47.7%
KENTUCKY
Richmond 1992 229,313 158,042 100.0% 1,004,304 6.35 Kmart, Lowe's(2), Food Lion
--------------------- ----------
Sub Total 229,313 158,042 1,004,304
% of Portfolio Total 2.9% 2.6% 2.4%
NORTH CAROLINA
Asheville(5) 1996 148,370 148,370 100.0% 1,399,908 9.44 Food Lion, Circuit City, Carmike
Cinemas, Goody's(3), Office Max,
Michaels
Greenville 1996 323,822 226,822 94.8% 2,225,772 10.35 Target(2), Kroger, T.J. Maxx,
Circuit City, Barnes & Noble,
Reading China
Hendersonville 1988/1995 168,120 133,052 100.0% 716,280 5.38 Wal-Mart, Ingles
Rockingham 1988 168,776 168,776 98.8% 917,232 5.50 Wal-Mart, Lowe's, Harris Teeter
Wallace 1989 118,990 118,990 100.0% 536,760 4.51 Wal-Mart, Wilson's
Wilmington 1991 169,432 169,432 100.0% 1,092,984 6.45 Wal-Mart, Winn-Dixie
--------------------- ----------
Sub Total 1,097,510 965,442 6,888,936
% of Portfolio Total 13.7% 15.7% 16.7%
</TABLE>
8
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JDN REALTY CORPORATION
OPERATING PORTFOLIO
DECEMBER 31, 1996
<TABLE>
<CAPTION>
Annualized
Year Built/ Base Rent Per
Renovated Total Company Percent Annualized Leased
Location or Expanded GLA(1) GLA Leased Base Rent Square Foot Major Tenants
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
OHIO
Burlington 1991/1995 356,179 159,359 100.0% $ 1,035,012 $ 6.49 Lowe's, Sam's Club(2), Wal-Mart(2)
Steubenville(4) 1996 130,497 130,497 100.0% 871,236 6.68 Lowe's
--------------------- -----------
Sub Total 486,676 289,856 1,906,248
% of Portfolio Total 6.1% 4.7% 4.6%
SOUTH CAROLINA
Charleston 1991 188,886 188,886 98.6% 1,438,344 7.72 Wal-Mart, Food Lion
Cheraw 1990 111,028 45,099 100.0% 310,608 6.89 Wal-Mart(2), Food Lion
Lake City 1991 135,962 135,962 100.0% 714,672 5.26 Wal-Mart, Food Lion
Sumter 1987 158,293 19,143 86.5% 120,180 7.26 Wal-Mart(2), Kroger(2)
--------------------- -----------
Sub Total 594,169 389,090 2,583,804
% of Portfolio Total 7.4% 6.3% 6.2%
TENNESSEE
Chattanooga 1992 214,579 214,579 96.7% 1,479,444 7.13 Kmart, FoodMax
Columbia 1993 68,948 68,948 100.0% 511,272 7.42 FoodMax
Farragut 1991 71,311 71,311 100.0% 510,960 7.17 BI-LO
Franklin 1983 185,999 18,000 100.0% 131,940 7.33 Big Lots(2)
Goodlettsville 1987 84,945 84,945 96.7% 672,372 8.18 Kroger
Memphis 1993 64,223 64,223 100.0% 537,624 8.37 Kroger
Murfreesboro 1972/1993 117,750 117,750 97.2% 748,452 6.54 FoodMax
Tullahoma 1989 70,766 70,766 96.5% 426,384 6.24 BI-LO
--------------------- ----------
Sub Total 878,521 710,522 5,018,448
% of Portfolio Total 10.9% 11.6% 12.1%
VIRGINIA
Lexington 1989 83,570 83,570 100.0% 405,408 4.85 Wal-Mart
--------------------- ----------
Sub Total 83,570 83,570 405,408
% of Portfolio Total 1.0% 1.4% 1.0%
TOTAL 8,038,075 6,134,630 98.2% $41,388,891 $6.87
==================================================================================================================================
</TABLE>
(1) Represents Company GLA plus square footage of the property not owned by the
Company.
(2) Major tenant space that is not owned by the Company.
(3) Major tenant space that is currently under development by the Company.
(4) Property held by JDN Development Company, Inc.
(5) Property held through a joint venture interest.
(6) Property held by JDN Development Company, Inc. through a joint venture
interest.
9
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ITEM 3. LEGAL PROCEEDINGS
- --------------------------
The Company is not presently involved in any litigation nor, to
management's knowledge, is any litigation threatened against the Company, except
for litigation which arises in the ordinary course of business, which is not
material in the judgment of the Company's management.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
- ------------------------------------------------------------
No matter was submitted to a vote of security holders during the fourth
quarter of 1996.
10
<PAGE>
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDER MATTERS
- ------------------------------------------------------------------------------
The Company's common shares are traded on the New York Stock Exchange
("NYSE") under the symbol "JDN." The following table sets forth the high and
low trading prices per share for the periods indicated, as reported by the NYSE:
Distributions
High Low Declared Per Share
-------- -------- ------------------
1995
First Quarter $20.6250 $18.3750 $0.4375
Second Quarter 21.1250 18.0000 0.4550
Third Quarter 22.3750 19.6250 0.4550
Fourth Quarter 22.5000 20.0000 0.4550
1996
First Quarter 24.2500 20.6250 0.4550
Second Quarter 22.8750 20.3750 0.4750
Third Quarter 24.5000 20.8750 0.4750
Fourth Quarter 27.6250 23.7500 0.4750
The Company intends to pay regular quarterly distributions to shareholders.
Future distributions will be declared and paid at the discretion of the board of
directors and will depend upon cash generated by operating activities, the
Company's financial condition, capital requirements, annual distribution
requirements under the REIT provisions of the Internal Revenue Code of 1986 and
such other factors as the board of directors deems relevant.
The Company anticipates that cash available for distribution will be
greater than earnings and profits due to non-cash expenses, primarily
depreciation and amortization, to be incurred by the Company. Distributions by
the Company to the extent of its current accumulated earnings and profits for
federal income tax purposes will be taxable to shareholders as ordinary dividend
income. Distributions in excess of earnings and profits generally will be
treated as a non-taxable gain. Such distributions have the effect of deferring
taxation until the sale of a shareholders' common stock. In order to maintain
its qualification as a REIT, the Company must make annual distributions to
shareholders of at least 95% of its taxable income. Under certain
circumstances, which Management does not expect to occur, the Company could be
required to make distributions in excess of cash available for distributions in
order to meet such requirements.
The Company currently has the JDN Realty Corporation Dividend Reinvestment
and Stock Purchase Plan which enables its shareholders to automatically reinvest
distributions as well as make voluntary cash payments towards the purchase of
additional shares.
As of March 21, 1997, there were 372 holders of record of the Company's
common stock and approximately 11,350 beneficial holders.
11
<PAGE>
ITEM 6. SELECTED FINANCIAL DATA
- -------------------------------
<TABLE>
<CAPTION>
For the Year Ended December 31,
----------------------------------------------------------------------------
Pro Forma
(dollars in thousands, except per share data) 1996 1995 1994 (1) 1994 1993 1992
- ----------------------------------------------------------------------------------------------------------------------------
OPERATING DATA
<S> <C> <C> <C> <C> <C> <C>
Minimum and percentage rents $ 32,933 $ 27,386 $ 21,889 $ 19,013 $ 8,313 $ 9,625
Recoveries from tenants 3,475 3,325 2,806 2,500 1,070 1,291
Management fees and other revenue 215 651 515 512 1,177 1,995
----------------------------------------------------------------------------
Total revenues 36,623 31,362 25,210 22,025 10,560 12,911
Operating and maintenance expenses 2,586 2,231 1,878 1,618 893 934
Real estate taxes 1,817 1,970 1,504 1,321 545 793
General and administrative expenses 3,367 2,818 2,359 2,236 1,954 2,028
Depreciation and amortization 7,786 6,558 5,493 4,768 1,964 2,486
----------------------------------------------------------------------------
Total expenses 15,556 13,577 11,234 9,943 5,356 6,241
Income from operations 21,067 17,785 13,976 12,082 5,204 6,670
Interest expense 5,598 6,977 6,882 6,919 6,444 7,898
Income (loss) before extraordinary
items and cumulative effect of
change in accounting principle 16,697 11,268 7,024 5,093 4,216 (1,991)
Net income (loss) 16,682 10,737 7,024 3,001 4,398 (1,062)
FUNDS FROM OPERATIONS (2)
Funds from operations $ 24,683 $ 17,234 $ 12,492 $ 9,836 $ 855 $ 836
PER SHARE DATA
Net income per share $ 1.50 $ 1.22 $ 0.93 $ - $ - $ -
Dividends per share $ 1.88 $ 1.80 $ - $ 1.33 $ - -
Weighted average number of common
shares outstanding (in thousands) 11,086 8,819 7,531 - $ - $ -
December 31,
---------------------------------------------------------------
1996 1995 1994 1993 1992
- ----------------------------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA
Shopping center properties 48 42 38 25 25
Gross leasable area (square feet in thousands) 6,135 4,953 3,971 2,240 2,037
Percent of gross leasable area leased 98.2% 98.9% 97.9% 96.9% 93.2%
December 31,
---------------------------------------------------------------
(dollars in thousands) 1996 1995 1994 1993 1992
- ----------------------------------------------------------------------------------------------------------------------------
BALANCE SHEET DATA
Shopping center properties before accumulated
depreciation $332,669 $276,818 $229,522 $ 71,818 $ 85,937
Total assets 371,986 295,868 237,008 67,393 83,274
Total liabilities 145,447 135,882 118,837 72,371 90,533
Shareholders' equity (owners' deficit) 226,539 159,986 118,171 (4,978) (7,259)
</TABLE>
(1) Pro forma information represents the results of operations as if the
Company's initial public offering and related transactions had been
completed on January 1, 1994.
(2) Funds from operations ("FFO") is defined by the National Association of Real
Estate Investment Trusts, Inc. to mean net income, computed in accordance
with generally accepted accounting principles, excluding gains or losses
from debt restructuring and sales of property, plus depreciation and
amortization of real estate assets, and after adjustments for unconsolidated
partnerships and joint ventures. The Company generally considers FFO a
widely used and appropriate measure of performance for an equity REIT which
provides a relevant basis for comparison among REITs. The Company's method
of calculating FFO may be different from methods used by other REITs and,
accordingly, may not be comparable to such other REITs. FFO does not
represent cash flows from operations as defined by generally accepted
accounting principles, should not be considered an alternative to net income
as an indicator of operating performance and is not indicative of cash
available to fund all cash flow needs.
12
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
- --------------------------------------------------------------------------------
OF OPERATIONS
- -------------
The following discussion should be read in conjunction with the financial
statements and notes thereto appearing elsewhere in this report.
OVERVIEW
JDN Realty Corporation (the "Company") is a real estate development company
which specializes in the development and asset management of retail shopping
centers anchored by value-oriented retailers. As of December 31, 1996, the
Company owned and operated, either directly or through affiliated entities or
joint ventures, a total of 48 shopping center properties and had 10 retail
projects under construction. The Company is operating as a real estate
investment trust ("REIT") for federal income tax purposes.
The Company has an interest in JDN Development Company, Inc. ("Development
Company") which is structured such that the Company owns 99% of the economic
interest while J. Donald Nichols, the Company's Chairman and Chief Executive
Officer, owns the remaining 1% and controls Development Company's operations and
activities through his voting common stock ownership. Current tax law restricts
the ability of REITs to engage in certain activities, such as the sale of
certain properties and third party fee development; because it is not a REIT,
Development Company may engage in real estate development activities such as the
sale of all or portions of a development project. As of December 31, 1996, the
Company had invested $5.6 million in Development Company in the form of equity
capital, $23.4 million in the form of secured notes receivable and $7.5 million
in unsecured advances.
RESULTS OF OPERATIONS
Comparison of the Year Ended December 31, 1996 to the Year Ended December 31,
1995
Minimum and percentage rents increased $5.5 million or 20% to $32.9 million
for the year ended December 31, 1996 as compared to the same period in 1995. Of
this increase, $4.8 million relates to newly developed and redeveloped
properties, and the remaining $700,000 relates to properties acquired in
Goodlettsville, Tennessee in December 1995 and Decatur, Alabama in December 1996
(the "Recent Acquisitions").
Recoveries from tenants increased $230,000 or 7% to $3.5 million between
years. Of this increase, $176,000 relates to the newly developed and
redeveloped properties and $116,000 relates to the Recent Acquisitions. The
increases are offset by a decrease in recoveries at the remaining properties due
to a decrease in recoverable expenses.
Management fees and other revenue decreased $436,000 or 67% between the
years ended December 31, 1996 and 1995. This decrease is the result of a
planned reduction in the number of properties under third party management and a
decrease in development fees earned by the Company.
Operating and maintenance expenses increased $355,000 or 16% between years.
Of this increase, $169,000 relates to newly developed and redeveloped
properties, and $79,000 relates to the Recent Acquisitions. The remaining
increase is primarily the result of higher non-recoverable repair and
maintenance costs at the existing properties.
Real estate taxes decreased $153,000 or 8% to $1.8 million for the year
ended December 31, 1996 from $2.0 million for the same period in 1995. This
decrease results from a $289,000 decrease in property taxes on the existing
properties, due primarily to the separate tax platting of an anchor tenant
tract, offset by a $79,000 increase in property taxes associated with newly
developed and redeveloped properties and a $57,000 increase in property taxes
associated with the Recent Acquisitions.
13
<PAGE>
General and administrative expenses increased $549,000 or 19% between the
years ended December 31, 1996 and 1995. General and administrative expenses as
a percentage of minimum and percentage rents remained constant at 10% for the
years ended December 31, 1996 and 1995. The increase in absolute dollars
primarily reflects the cost of additional employees and other expenses
associated with an increase in the number of properties managed and leased by
the Company and higher public company costs.
Depreciation and amortization expense increased $1.2 million or 19% to $7.8
million between years. Of this increase, $1.0 million relates to newly
developed and redeveloped properties and $139,000 relates to the Recent
Acquisitions. The remaining increase relates primarily to amortization of
tenant improvements, tenant allowances and leasing commissions for new tenants.
Interest expense decreased $1.4 million or 20% to $5.6 million between
years. This decrease is primarily attributable to lower average debt balances
between periods. The Company reduced average debt balances with net proceeds
from a total of three common stock offerings in 1995 and 1996 (see Liquidity and
Capital Resources below).
Equity in net income of unconsolidated entities represents the Company's
share of the net income of Development Company and two joint ventures formed for
the purpose of developing shopping center properties. The increase of $1.3
million between periods is primarily the result of increased net operating
income from operating properties in Development Company and the joint ventures
and increased land sale activity in Development Company.
Net loss on real estate sales was $15,000 for the year ended December 31,
1996 compared to a net gain on real estate sales of $486,000 for the year ended
December 31, 1995. The 1996 loss resulted from additional expenses associated
with the fourth quarter 1995 sale of a shopping center located in Hickory, North
Carolina. The 1995 net gain was attributable to the sale of the Hickory, North
Carolina shopping center resulting in a gain of $541,000 offset by a $55,000
loss incurred in conjunction with shopping centers sold in previous periods.
There were no extraordinary items for the year ended December 31, 1996
compared to $531,000 for the year ended December 31, 1995. The 1995 loss
represented charges to earnings of unamortized deferred financing costs of
$403,000 associated with the extinguishment of a secured line of credit with a
bank and $128,000 in unamortized deferred financing costs related to an
unscheduled principal payment on a loan.
Comparison of the Year Ended December 31, 1995 to the Year Ended December 31,
1994
Minimum and percentage rents increased $8.4 million or 44% to $27.5 million
for the year ended December 31, 1995 as compared to the same period in 1994. Of
this increase, $2.4 million relates to five newly developed and redeveloped
properties, and $5.6 million relates to increases in minimum and percentage
rents from 17 properties acquired in 1994 in conjunction with or subsequent to
the Company's initial public offering in March 1994 (the "Acquired Properties").
The Acquired Properties were included in the Company's financial statements for
an entire year in 1995 but only partial periods in 1994. The remaining increase
is the result of increased rentals and increased occupancy at the remaining
properties.
Recoveries from tenants increased $767,000 or 31% to $3.2 million between
years. This increase relates primarily to the operations of the Acquired
Properties.
Management fees and other revenue increased $139,000 or 27% between the
years ended December 31, 1995 and 1994. This increase is the result of
increased development fees resulting from increased development activities
partially offset by decreases in management and leasing fees due to decreases in
the number of properties under third party management.
14
<PAGE>
Operating and maintenance expenses increased $613,000 or 38% between years.
Of this increase, $364,000 relates to the operations of the Acquired Properties.
The remaining amount relates to newly developed and redeveloped properties.
Real estate taxes increased $649,000 or 49% to $2.0 million for the year
ended December 31, 1995 from $1.3 million for the same period in 1994. Of this
increase, $42,000 relates to newly developed and redeveloped properties and
$590,000 relates to the operations of the Acquired Properties. The remaining
amount results from increased assessed property values and increased property
tax rates at the remaining properties.
General and administrative expenses increased $582,000 or 26% between the
years ended December 31, 1995 and 1994. General and administrative expenses as
a percentage of minimum and percentage rents decreased from 12% for the year
ended December 31, 1994 to 10% for the year ended December 31, 1995. The
increase in absolute dollars primarily reflects the added costs of operating as
a public company for all of 1995.
Depreciation and amortization expense increased $1.8 million or 38% to $6.6
million between years. Of this increase, $1.4 million relates to increased
depreciation and amortization associated with the Acquired Properties. The
remaining amount relates to the newly developed and redeveloped properties.
Interest expense increased $58,000 or 1% between years. This increase is
due to an increase in expense on debt associated with the properties which were
added to the operating portfolio since the Company's initial public offering in
March 1994 (the "1994 Offering") offset by a decrease in interest expense
associated with the payoff of debt with the net proceeds from a common stock
offering in July 1995.
Equity in net income of unconsolidated entities represents the Company's
share of the net income of Development Company and two joint ventures formed for
the purpose of developing shopping center properties. These entities were
either not formed or had no significant activity prior to 1995.
Net gain on real estate sales was $486,000 for the year ended December 31,
1995 compared to a $134,000 loss for the same period in 1994. The 1995 net gain
was attributable to the sale of the Hickory, North Carolina shopping center
resulting in a gain of $541,000 offset by a $55,000 loss incurred in conjunction
with shopping centers sold in previous periods. The 1994 loss represents losses
on sales of various outparcels.
Extraordinary items represented losses of $531,000 for the year ended
December 31, 1995 compared with losses of $2.1 million for the same period in
1994. The 1995 loss represents charges to earnings of unamortized deferred
financing costs of $403,000 associated with the extinguishment of a secured line
of credit with a bank and $128,000 related to an unscheduled principal payment
on a loan. The extraordinary items of $2.1 million for the year ended December
31, 1994 represented losses which are attributable to prepayment penalties and
the charge to earnings of unamortized deferred financing costs on mortgage debt
paid off with the proceeds of the 1994 Offering and debt incurred concurrently
therewith.
FUNDS FROM OPERATIONS
Funds from operations ("FFO") is defined by the National Association of
Real Estate Investment Trusts, Inc. to mean net income, computed in accordance
with generally accepted accounting principles, excluding gains or losses from
debt restructuring and sales of property, plus depreciation and amortization of
real estate assets, and after adjustments for unconsolidated partnerships and
joint ventures. The Company generally considers FFO a widely used and
appropriate measure of performance for an equity REIT which provides a relevant
basis for comparison among REITs. The Company's method of calculating FFO may
be different from methods used by other REITs and, accordingly, may not be
15
<PAGE>
comparable to such other REITs. FFO does not represent cash flows from
operations as defined by generally accepted accounting principles, should not be
considered an alternative to net income as an indicator of operating performance
and is not indicative of cash available to fund all cash flow needs. The
Company has presented below the calculation of FFO:
<TABLE>
<CAPTION>
Years Ended December 31,
------------------------
1996 1995 1994 1994
(historical) (historical) (pro forma) (historical)
---------------------------------------------------------------
<S> <C> <C> <C> <C>
Net income $ 16,682 $ 10,737 $ 7,024 $ 3,001
Depreciation of real estate assets 7,303 6,149 5,125 4,400
Amortization of tenant allowances and tenant improvements 104 106 86 86
Amortization of deferred leasing commissions 255 197 123 123
Net (gain) loss on real estate sales 15 (486) 134 134
Extraordinary items - 531 - 2,092
Depreciation of real estate assets held in unconsolidated entities 324 - - -
---------------------------------------------------------------
FFO $ 24,683 $ 17,234 $ 12,492 $ 9,836
===============================================================
</TABLE>
OCCUPANCY
The Company's properties were 98.2% leased as of December 31, 1996, 98.9%
leased as of December 31, 1995 and 97.9% leased as of December 31, 1994.
FORWARD-LOOKING STATEMENTS
Management has included below certain forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities and Exchange Act of 1934, as amended. When used,
statements which are not historical in nature, including the words "anticipate,"
"estimate," "should," "expect," "believe," "intend" and similar expressions are
intended to identify forward-looking statements. Such statements are, by their
nature, subject to certain risks and uncertainties. Among the factors that
could cause actual results to differ materially from those projected are the
following: business conditions and the general economy, especially as they
affect interest rates; business conditions, especially as they affect value-
oriented retailers; the federal, state and local regulatory environment;
availability of debt and equity capital with favorable terms and conditions;
availability of new development and acquisition opportunities; changes in the
financial condition or corporate strategy of the Company's primary retail
tenants and in particular Wal-Mart Stores, Inc. and Lowe's Companies, Inc.;
ability to complete and lease existing development projects on schedule and
within budget; and inability of the Company to maintain its qualification as a
REIT. Other risks, uncertainties and factors that could cause actual results to
differ materially than those projected are detailed from time to time in reports
filed by the Company with the Securities and Exchange Commission, including
Forms 8-K, 10-Q and 10-K.
LIQUIDITY AND CAPITAL RESOURCES
The Company's primary sources of funds are cash generated from operating
activities and proceeds from construction loans, lines of credit and equity
offerings. The Company's primary uses of funds are development, redevelopment
and acquisition of shopping center properties, distributions to shareholders,
scheduled debt amortization, and capital improvements to its existing shopping
center properties. The Company generally uses funds provided by operations to
16
<PAGE>
fund its distributions to shareholders, capital improvements to existing
properties and scheduled amortization of its indebtedness. The Company uses
proceeds from construction loans and its line of credit to finance its
development, redevelopment and acquisition activities. The Company uses
proceeds from equity offerings to repay construction loans, amounts outstanding
under its line of credit and to fund its ongoing development, redevelopment and
acquisition activities.
Since its initial public offering in March of 1994, the Company has
completed four follow-on offerings of common stock which have allowed the
Company to strengthen its capital structure. In July 1995, the Company
completed a public offering of 2,479,600 shares of common stock which netted
proceeds of $46.9 million to the Company. In February 1996, the Company
completed a public offering of 1,000,000 shares of common stock which netted
proceeds of $21.7 million to the Company. In December 1996, the Company
completed a public offering of 2,044,000 shares of common stock which netted
proceeds of $49.9 million to the Company. In March 1997, the Company completed
a public offering of 2,400,000 shares of common stock which netted proceeds of
$65.9 million to the Company; in connection with this offering, the Company
granted the underwriters an over allotment option which expires April 4, 1997 to
purchase up to an additional 360,000 shares of common stock. The Company used
the proceeds from these offerings to repay construction loans and amounts
outstanding under its secured line of credit. As a result, the Company's
leverage has declined over the past three years. The Company's debt to total
market capitalization ratio has declined from 42.9% as of December 31, 1994 to
36.5% as of December 31, 1995 to 28.2% as of December 31, 1996. Management
believes that this lower leverage enables the Company to borrow more
competitively and increases its flexibility in the financing of its development,
redevelopment, and acquisition activities with debt and equity securities.
During 1996, the Company reduced spreads on its floating rate debt and
hedged its exposure to increasing interest rates by entering into a swap
transaction. The Company reduced its weighted average spread over LIBOR on its
construction loans from 1.67% as of December 31, 1995 to 1.51% as of December
31, 1996. On June 21, 1996, the Company executed an amendment to its $40
million line of credit with a bank (the "Bank Credit Facility") which reduced
the interest rate on the Bank Credit Facility by 50 basis points to 150 basis
points over the rate for 30-day Eurodollar deposits. On July 10, 1996, the
Company and Morgan Guaranty Trust Company of New York ("Morgan") entered into a
swap transaction as a hedge against increasing rates on its floating rate debt.
Under the initial terms of the agreement, the Company paid a fixed rate of 6.44%
and received a variable rate equal to the rate for the one-month LIBOR rate
based on the notional amount in the contract. As of December 31, 1996, the
notional amount was $70 million; on January 1, 1997, the notional amount
increased to $80 million. On February 12, 1997, the Company amended the terms
of the swap transaction by reducing the notional amount to $50 million,
increasing the fixed rate the Company pays to 6.48% and extending the maturity
date to January 1, 2001.
17
<PAGE>
As of December 31, 1996, the Company's indebtedness consisted of the
following:
<TABLE>
<CAPTION>
Effective Percent
Principal Interest Maturity of Total
Balance Rate (1) Date Indebtedness
--------- --------- --------- ------------
<S> <C> <C> <C> <C>
(in thousands)
Fixed Rate
Term Loan $ 71,771 8.63% 29-Mar-01 50.6%
Mortgage note payable 6,553 7.38% 1-Dec-03 4.6%
--------- ---- -----
78,324 8.53% 55.2%
Floating Rate
Bank Credit Facility 28,800 7.90(2) 30-Jun-98 20.3%
Construction loan - Opelika, Alabama 1,552 7.23(3) 5-Dec-97 1.1%
Construction loan - Greenville, North Carolina 14,042 6.88(4) 23-Jan-99 9.9%
Construction loan - Newnan, Georgia 19,164 7.01(4) 21-Aug-98 13.5%
--------- ---- -----
63,558 7.39% 44.8%
--------- ---- -----
$ 141,882 8.02% 100.0%
========= ==== =====
WEIGHTED AVERAGE INTEREST RATES:
Weighted
Average Weighted
Principal Effective Average
Balance Interest Rate Interest Rate (5)
--------- ------------- -----------------
Fixed Rate Debt $ 78,324 8.53% 6.80%
Hedged Floating Rate Debt 63,558 8.30% 7.95%
--------- ---- ----
Total Debt $ 141,882 8.42% 7.31%
========= ==== ====
</TABLE>
(1) Represents stated rate plus amortization of deferred loan costs. Excludes
effect of swap transaction.
(2) Stated rate of 30-day Eurodollar plus 1.50%.
(3) Stated rate of LIBOR plus 1.75%.
(4) Stated rate of LIBOR plus 1.50%.
(5) Interest when the amortization of deferred loan costs is excluded.
As of December 31, 1996, the Company had $11.2 million available under the
Bank Credit Facility and $2.4 million available under its construction loans.
In March 1997, the Company entered into a commitment letter with a bank for
a $150 million unsecured line of credit (the "Unsecured Line") which is intended
to replace the Bank Credit Facility. Borrowings under the Unsecured Line are
currently expected to initially bear interest at LIBOR plus 1.40%. The interest
rate under the Unsecured Line is currently expected to decrease if the Company
receives an investment grade rating from Moody's and Standard & Poors' rating
agencies. The Company expects to close the Unsecured Line by April 30, 1997;
however, there can be no assurance that the Unsecured Line will close and the
inability to close as a delay in closing could have an adverse effect on the
Company's ability to fund its development and acquisition activities.
As of December 31, 1996, the Company had development activities underway
totaling approximately 1.5 million square feet of gross leasable area which the
Company expects to own. This development activity was being undertaken by the
Company directly, through Development Company, or through joint ventures in
which either the Company or Development Company participates directly or
indirectly (the "Joint Ventures"). Management expects completion of these
projects to have a positive effect on cash generated by operating activities.
As of December 31, 1996, additional funding required for these projects was
estimated to be $55.0 million. As of December 31, 1996, the Company,
Development Company and the Joint Ventures had construction loans in place which
18
<PAGE>
are expected to fund $21.1 million of these costs. Management expects to fund
the remaining costs of these projects and costs of any future projects
undertaken by the Company or Development Company with construction loans from
financial institutions and advances on its Bank Credit Facility or the Unsecured
Line. If the Company is unable to fund future projects with construction
lending arrangements or advances on its Bank Credit Facility or the Unsecured
Line, it will seek other sources of funding which may include, for example,
joint ventures, public or private placements of equity, or public or private
placements of debt. However, there can be no assurance that these sources will
be available.
As of December 31, 1996, the Company had executed contracts to purchase
three shopping center properties. In February 1997, the Company purchased one
of these properties for a purchase price of approximately $9.1 million, $7.3
million of which was funded with assumed indebtedness. The remaining two
contracts are subject to various conditions to closing and there can be no
assurance that these shopping center properties will be acquired. Additionally,
the Company is obligated to purchase the interests of its joint venture partners
in two limited liability companies each formed for the purpose of developing a
shopping center project. The Company is pursuing other acquisition and
development opportunities in the ordinary course of business which are not yet
subject to definitive agreements. The Company expects to fund the purchase of
these projects with proceeds from the Bank Credit Facility, the Unsecured Line
or indebtedness assumed in the purchase transactions.
In order for the Company to continue to qualify as a REIT, it must annually
distribute at least 95% of its taxable income to shareholders. Management
believes that the Company will meet this requirement in 1997 with cash generated
by operating activities. In addition, management believes that cash generated
by operating activities will be adequate to fund improvements to the Company's
shopping center properties, leasing costs and scheduled debt amortization in
1997.
In order to meet the Company's long term liquidity requirements, management
intends to continue to grow its cash from operating activities with quality new
developments, redevelopments, expansions, acquisitions and improved operations
at existing centers. These activities should enable the Company to make its
distributions to shareholders, maintain and improve its properties, make
scheduled debt payments, and obtain debt or equity financing for its
development, redevelopment and acquisition projects. All of the Company's debt
requires balloon payments in the future. The Bank Credit Facility matures in
1998, the Term Debt matures in 2001, construction loans totaling $34.8 million
mature through 1999 and a note payable of $6.6 million matures in 2003.
Management believes that the Company's operations and financial position at such
times will be sufficient to enable it to refinance these loans or pay them off
with proceeds from other sources of capital. Management will evaluate various
alternatives and select the best options based on market conditions at the time.
Management may also seek additional equity financing when market conditions are
favorable in order to maintain its debt to total capitalization ratio within
acceptable limits. However, there can be no assurance that debt and equity
markets will be favorable in the future, and unfavorable markets could limit the
Company's ability to grow its business or repay or refinance maturing debt.
INFLATION
The Company's leases generally contain provisions designed to mitigate the
adverse impact of inflation on net income. These provisions include clauses
enabling the Company to pass through to tenants certain operating costs,
including real estate taxes, common area maintenance, utilities and insurance,
thereby reducing the Company's exposure to increases in costs and operating
expenses resulting from inflation. Certain of the Company's leases contain
clauses enabling the Company to receive percentage rents based on tenants' store
sales, which generally increase as prices rise, and, in certain cases,
escalation clauses, which generally increase rental rates during the terms of
19
<PAGE>
the leases. In addition, many of the Company's leases with non-anchor tenants
are for terms of less than ten years, which permits the Company to seek
increased rents as market conditions permit.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
- ----------------------------------------------------
The financial statements and supplementary data required under Regulation
S-X and listed in Item 14(a)(1) below are included in a separate section of this
report.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
- ------------------------------------------------------------------------
FINANCIAL DISCLOSURE
- --------------------
None.
20
<PAGE>
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
- ------------------------------------------------------------
The information relating to Directors of the Company set forth in the
Company's Proxy Statement relating to the Annual Meeting of Shareholders to be
held on May 22, 1997 under the caption "Election of Directors" is incorporated
herein by reference.
The information relating to Executive Officers of the Company is included
in Item 1 of this annual report on Form 10-K under the caption "Executive
Officers."
ITEM 11. EXECUTIVE COMPENSATION
- --------------------------------
The information set forth in the Company's Proxy Statement relating to the
Annual Meeting of Shareholders to be held on May 22, 1997 under the caption
"Executive Compensation" is incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
- ------------------------------------------------------------------------
The information set forth in the Company's Proxy Statement relating to the
Annual Meeting of Shareholders to be held on May 22, 1997 under the caption
"Security Ownership of Certain Beneficial Owners and Management" is incorporated
herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
- --------------------------------------------------------
The information set forth in the Company's Proxy Statement relating to the
Annual Meeting of Shareholders to be held on May 22, 1997 under the caption
"Certain Relationships and Related Transactions" is incorporated herein by
reference.
21
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
- -------------------------------------------------------------------------
(A) (1) FINANCIAL STATEMENTS
The following financial statements are included in and filed pursuant to
Item 8 and are included herein on the pages indicated:
<TABLE>
<CAPTION>
<C> <S>
Consolidated balance sheets - December 31, 1996 and 1995........................... F-1
Consolidated statements of income - Years ended
December 31, 1996, 1995, and 1994............................................ F-2
Consolidated statements of shareholders' equity and owners' deficit - Years ended
December 31, 1996, 1995, and 1994............................................ F-3
Consolidated statements of cash flows - December 31, 1996, 1995, and 1994.......... F-4
Notes to consolidated financial statements......................................... F-5
Report of Ernst & Young LLP, Independent Auditors.................................. F-16
</TABLE>
(2) FINANCIAL STATEMENT SCHEDULES
The following financial statement schedules are included in and filed
pursuant to Item 14(d) and are included herein on the pages indicated:
Schedule II - Valuation and Qualifying Accounts................. F-17
Schedule III - Real Estate and Accumulated Depreciation......... F-18
All other schedules for which provision is made in the applicable
accounting regulation of the Securities and Exchange Commission are not required
under the related instructions or are inapplicable and therefore have been
omitted.
(3) EXHIBITS
<TABLE>
<CAPTION>
Exhibit Number Description
-------------- -----------
<C> <S>
3.1 Articles of Restatement of JDN Realty Corporation (1)
3.2 Articles of Merger of JDN Enterprises, Inc. with and into the
Company (2)
3.3 Bylaws of the Company (1)
4 Specimen stock certificate (3)
10.1 JDN Realty Corporation 1993 Incentive Stock Plan, as amended (4)
10.2 JDN Realty Corporation 1993 Non-Employee Director Stock Option
Plan (2)
10.3 JDN Realty Corporation Savings and Profit Sharing Plan (2)
</TABLE>
22
<PAGE>
<TABLE>
<CAPTION>
<C> <S>
10.4 Indemnification Agreement by and between J. Donald Nichols and JDN Realty Corporation, dated February 23,
1994 (2)
10.5 Indemnification Agreement by and between Elizabeth L. Nichols and JDN Realty Corporation, dated February 23,
1994 (2)
10.6 Indemnification Agreement by and between William J. Kerley and JDN Realty Corporation, dated February 23,
1994 (2)
10.7 Term Credit Agreement dated as of March 25, 1994 between JDN Structured Finance 1, Inc., as Borrower, and
Bankers Trust Company, as Lender (5)
10.8 Amended and Restated Revolving Credit Agreement dated as of August 29, 1995 among JDN Realty Corporation, as
Borrower, The Lenders Party Hereto and Bankers Trust Company, as Agent (6)
10.9 JDN Realty Corporation Dividend Reinvestment and Stock Purchase Plan (7)
10.10 JDN Realty Corporation 1995 Employee Stock Purchase Plan (4)
10.11 First Amendment to Amended and Restated Revolving Credit Agreement by and between Bankers Trust Company, as
Agent, and the Company dated June 21, 1996 (8)
10.12 Swap Transaction between Morgan Guaranty Trust Company of New York and JDN Realty Corporation, dated July
10, 1996 (7)
10.13 Employment Agreement by and between J. Donald Nichols and the Company, dated as of December 1, 1996
10.14 Employment Agreement by and between Elizabeth L. Nichols and the Company, dated as of December 1, 1996
10.15 Employment Agreement by and between William J. Kerley and the Company, dated as of December 1, 1996
10.16 Employment Agreement by and between David L. Henzlik and the Company, dated as of December 1, 1996
11 Statement regarding computation of per share earnings
21 Subsidiaries of the Company
23 Consent of Independent Auditors
27 Financial Data Schedule
(1) Filed as an exhibit to the Company's filing on Form 8-K dated November
7, 1996, previously filed pursuant to the Securities Exchange Act of
1934, and hereby incorporated by reference.
(2) Filed as an exhibit to the Company's Registration Statement on Form S-
11 (No. 33-73710) previously filed pursuant to the Securities Act of
1933 and hereby incorporated by reference.
(3) Filed as an exhibit to the Company's Registration Statement on Form S-3
(No. 333-22339) previously filed pursuant to the Securities Act of 1933
and hereby incorporated by reference.
(4) Filed as an exhibit to the Company's Registration Statement on Form S-
8 (No. 333-1848) previously filed pursuant to the Securities Act of
1933 and hereby incorporated by reference.
(5) Filed as an exhibit to the Company's quarterly report on Form 10-Q for
the quarter ended March 31, 1994, previously filed pursuant to the
Securities Exchange Act of 1934 and hereby incorporated by reference.
(6) Filed as an exhibit to the Company's quarterly report on Form 10-Q for
the quarter ended September 30, 1995, previously filed pursuant to the
Securities Exchange Act of 1934 and hereby incorporated by reference.
(7) Filed as an exhibit to the Company's Registration Statement on Form S-
3 (No. 33-90868) previously filed pursuant to the Securities Act of
1933 and hereby incorporated by reference.
</TABLE>
23
<PAGE>
<TABLE>
<CAPTION>
<C> <S>
(8) Filed as an exhibit to the Company's quarterly report on Form 10-Q for
the quarter ended June 30, 1996, previously filed pursuant to the
Securities Exchange Act of 1934 and hereby incorporated by reference.
(9) Filed as an exhibit to the Company's quarterly report on Form 10-Q for
the quarter ended September 30, 1996, previously filed pursuant to the
Securities Exchange Act of 1934 and hereby incorporated by reference.
</TABLE>
24
<PAGE>
Executive Compensation Plans and Arrangements
The following is a list of all executive compensation plans and
arrangements filed as exhibits to this annual report on Form 10-K or
incorporated herein by reference:
1. JDN Realty Corporation 1993 Incentive Stock Plan, as amended (Exhibit
10.1)
2. JDN Realty Corporation Savings and Profit Sharing Plan (Exhibit 10.3)
3. Employment Agreement, dated as of December 1, 1996, by and between J.
Donald Nichols and the Company (Exhibit 10.13)
4. Employment Agreement, dated as of December 1, 1996, by and between
Elizabeth L. Nichols and the Company (Exhibit 10.14)
5. Employment Agreement, dated as of December 1, 1996, by and between
William J. Kerley and the Company (Exhibit 10.15)
6. Employment Agreement, dated as of December 1, 1996, by and between
David L. Henzlik and the Company (Exhibit 10.16)
7. Indemnification Agreement, dated as of February 23, 1994, by and
between J. Donald Nichols and the Company (Exhibit 10.4)
8. Indemnification Agreement, dated as of February 23, 1994, by and
between Elizabeth L. Nichols and the Company (Exhibit 10.5)
9. Indemnification Agreement, dated as of February 23, 1994, by and
between William J. Kerley and the Company (Exhibit 10.6)
10. JDN Realty Corporation 1995 Employee Stock Purchase Plan (Exhibit
10.10)
(B) REPORTS ON FORM 8-K
During the three months ended December 31, 1996, the Company filed the
following reports on Form 8-K:
(i) Form 8-K dated November 7, 1996 containing the Company's Articles of
Restatement and Bylaws.
(ii) Form 8-K dated November 22, 1996 relating to the Company's execution of an
Underwriting Agreement dated November 13, 1996 with Smith Barney Inc. and
The Robinson-Humphrey Company, Inc. (the "Underwriters") in connection with
the sale by the Company to the Underwriters of 1,900,000 shares of the
Company's common stock.
(C) EXHIBITS
The response to this portion of Item 14 is submitted as a separate section
of this report.
(D) FINANCIAL STATEMENT SCHEDULES
The response to this portion of Item 14 is submitted as a separate section
of this report.
25
<PAGE>
ITEM 8
------
FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA
------------------------------------------
ITEM 14(d)
----------
FINANCIAL STATEMENT SCHEDULES
-----------------------------
26
<PAGE>
JDN REALTY CORPORATION
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
December 31,
-----------------------------
(dollars in thousands, except per share data) 1996 1995
- ---------------------------------------------------------------------------------------------------------------
ASSETS
<S> <C> <C>
Shopping center properties, at cost:
Land $ 50,455 $ 40,576
Buildings and improvements 262,568 223,649
Property under development 19,646 12,593
-----------------------------
332,669 276,818
Less: accumulated depreciation and amortization (27,973) (20,312)
-----------------------------
Shopping center properties, net 304,696 256,506
Cash and cash equivalents 2,709 3,109
Restricted cash - escrow 3,659 3,060
Rents receivable, net of allowance for doubtful accounts of $410 and $277
in 1996 and 1995, respectively 2,208 2,628
Investments in and advances to unconsolidated entities:
JDN Development Company, Inc. 36,517 18,780
Other 4,736 3,784
Deferred costs, net of amortization 6,181 7,459
Other assets 11,280 542
-----------------------------
$ 371,986 $ 295,868
=============================
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Mortgage notes payable $ 141,882 $ 128,839
Accounts payable and accrued expenses 1,264 5,720
Other liabilities 2,301 1,323
-----------------------------
Total liabilities 145,447 135,882
Shareholders' Equity
Preferred stock, par value $.01 per share - authorized 20,000,000
shares, none outstanding - -
Common stock, par value $.01 per share - authorized 150,000,000
shares, issued and outstanding 13,056,054 and 10,012,054 shares
in 1996 and 1995, respectively 131 100
Paid-in capital 233,497 166,975
Accumulated deficit (7,089) (7,089)
-----------------------------
226,539 159,986
-----------------------------
$ 371,986 $ 295,868
=============================
See accompanying notes.
</TABLE>
F-1
<PAGE>
<TABLE>
<CAPTION>
JDN REALTY CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
Years Ended December 31,
----------------------------------------------------------
(in thousands, except per share data) 1996 1995 1994
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Revenues:
Minimum and percentage rents $ 32,933 $ 27,466 $ 19,035
Recoveries from tenants 3,475 3,245 2,478
Other revenue 215 651 512
----------------------------------------------------------
Total revenues 36,623 31,362 22,025
Operating expenses:
Operating and maintenance 2,586 2,231 1,618
Real estate taxes 1,817 1,970 1,321
General and administrative 3,367 2,818 2,236
Depreciation and amortization 7,786 6,558 4,768
----------------------------------------------------------
Total operating expenses 15,556 13,577 9,943
----------------------------------------------------------
Income from operations 21,067 17,785 12,082
Other income (expense):
Interest expense, net (5,598) (6,977) (6,919)
Other income (expense), net (187) (151) 64
Equity in net income of unconsolidated entities 1,415 125 -
----------------------------------------------------------
Income before net gain (loss) on real estate sales and
extraordinary items 16,697 10,782 5,227
Net gain (loss) on real estate sales (15) 486 (134)
----------------------------------------------------------
Income before extraordinary items 16,682 11,268 5,093
Extraordinary items - (531) (2,092)
----------------------------------------------------------
Net income $ 16,682 $ 10,737 $ 3,001
==========================================================
Income per share
Income before extraordinary items $ 1.50 $ 1.28
Extraordinary items - (0.06)
-------------------------------
Net income $ 1.50 $ 1.22
===============================
</TABLE>
See accompanying notes.
F-2
<PAGE>
JDN REALTY CORPORATION
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY AND OWNERS' DEFICIT
<TABLE>
<CAPTION>
Owners' Common Paid-in Accumulated
(in thousands, except per share data) Deficit Stock Capital Deficit Total
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balance, January 1, 1994 $ (4,978) $ - $ - $ - $ (4,978)
Capital distributions to Principals,
January 1, 1994 to March 28, 1994 (1,907) - - - (1,907)
Net loss, January 1, 1994 to March 28, 1994 (197) - - - (197)
Proceeds from offering of common stock - 68 135,881 - 135,949
Transfer of Principals' interests at time of
the 1994 Offering 7,082 7 - (7,089) -
Net capital distributions to Principals,
March 29, 1994 to December 31, 1994
in conjunction with the 1994 Offering and
related formation transactions - - (3,900) - (3,900)
Distributions, March 29, 1994 to December 31, 1994
($1.33 per share) - - (6,796) (3,198) (9,994)
Net income, March 29, 1994 to December 31, 1994 - - - 3,198 3,198
---------------------------------------------------------------
Balance, December 31, 1994 - 75 125,185 (7,089) 118,171
Proceeds from offering of common stock - 25 46,852 - 46,877
Issuance of shares under dividend
reinvestment plan - - 33 - 33
Distributions ($1.80 per share) - - (5,095) (10,737) (15,832)
Net income - - - 10,737 10,737
---------------------------------------------------------------
Balance, December 31, 1995 - 100 166,975 (7,089) 159,986
Proceeds from offerings of common stock - 31 71,513 - 71,544
Distributions ($1.88 per share) - - (4,991) (16,682) (21,673)
Net income - - - 16,682 16,682
---------------------------------------------------------------
Balance, December 31, 1996 $ - $ 131 $233,497 $ (7,089) $226,539
===============================================================
</TABLE>
See accompanying notes.
F-3
<PAGE>
JDN REALTY CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Years Ended December 31,
--------------------------------------------------------
(in thousands) 1996 1995 1994
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 16,682 $ 10,737 $ 3,001
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation 7,516 6,250 4,487
Amortization 1,774 1,670 1,603
Equity in net income of unconsolidated entities (1,415) (125) -
Net (gain) loss on real estate sales 15 (486) 134
Extraordinary items - 531 2,092
Changes in assets and liabilities:
Rents receivable 420 (802) (898)
Accounts payable and accrued expenses 99 223 (399)
Other liabilities 979 54 (315)
--------------------------------------------------------
Net cash provided by operating activities 26,070 18,052 9,705
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of shopping center properties (6,815) (5,053) (134,176)
Improvements to shopping center properties (772) (964) (1,494)
Development of shopping center properties (48,264) (43,021) (14,333)
Change in restricted cash for land purchase escrow - 3,662 (3,662)
Proceeds from real estate sales - 1,671 667
Investments in and advances to JDN Development Company, Inc. (16,495) (13,364) (4,257)
Investments in and advances to joint ventures (772) (3,767) -
Other (10,865) (282) 635
--------------------------------------------------------
Net cash used in investing activities (83,983) (61,118) (156,620)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from mortgages and notes payable 82,251 54,227 109,721
Principal payments on mortgages and notes payable (69,208) (38,720) (73,323)
Distributions paid (26,229) (14,571) (6,700)
Distributions to Principals - - (5,495)
Net proceeds from offerings of common stock 71,544 46,877 135,949
Net proceeds from issuance of shares under dividend reinvestment plan - 33 -
Deferred financing costs (246) (328) (10,663)
Prepayment penalties - - (1,760)
Change in restricted cash for debt escrows (599) (1,780) (1,006)
Other - - 544
--------------------------------------------------------
Net cash provided by financing activities 57,513 45,738 147,267
--------------------------------------------------------
Increase (decrease) in cash and cash equivalents (400) 2,672 352
Cash and cash equivalents at beginning of year 3,109 437 85
--------------------------------------------------------
Cash and cash equivalents at end of year $ 2,709 $ 3,109 $ 437
========================================================
</TABLE>
See accompanying notes.
F-4
<PAGE>
JDN Realty Corporation
Notes to Consolidated Financial Statements
December 31, 1996
(dollars in thousands, except per share data)
1. THE COMPANY AND BASIS OF PRESENTATION
The Company
JDN Realty Corporation (the "Company") is a real estate development company
which specializes in the development and asset management of retail shopping
centers which are located primarily in the Southeast and are anchored by value-
oriented retailers.
The Company was incorporated on December 2, 1993 by the shareholders of JDN
Enterprises, Inc. (the "Principals") and merged with JDN Enterprises, Inc.
("Enterprises") on December 29, 1993. The Company was formed to continue and
expand the real estate businesses of the Principals and Enterprises. On March
29, 1994, the Company completed an initial public offering of 6,785,000 shares
of its common stock (the "1994 Offering") which netted proceeds of $135,949 to
the Company. Concurrently, the Company obtained a $75,000, seven-year, fixed
rate term loan (the "Term Debt").
The net proceeds from the 1994 Offering and the Term Debt of approximately
$210,949 were used as follows: $74,803 to repay debt (including prepayment
penalties), $71,005 to purchase eight properties acquired from parties unrelated
to the Company, $35,934 to purchase third party investors' interests and $5,495
to purchase the Principals' interests in certain of the properties, $10,663 to
pay costs associated with the Term Debt and a secured line of credit and $13,049
to partially fund the purchase of properties subsequent to the 1994 Offering.
In 1995 and 1996, the Company completed three follow-on offerings of common
stock totaling 5,523,600 shares which netted proceeds of $118,421 to the
Company. The Company used the proceeds of these offerings to retire interim
financing related to the Company's development, redevelopment, expansion and
acquisition activities and to fund the Company's ongoing development and
redevelopment activities.
The Company elected to be taxed as a real estate investment trust ("REIT")
beginning with the taxable period ended December 31, 1994.
Basis of Presentation
The financial statements for periods prior to the 1994 Offering represent
the combined accounts of the Company, its predecessor ("Enterprises") and
certain partnerships or properties in which the Principals owned a controlling
interest (collectively, the "Predecessor Businesses"). The financial statements
for periods after the 1994 Offering represent the consolidated financial
statements of the Company and its wholly-owned subsidiaries. The Company
recorded a net loss in 1994 of $197 for the period prior to the 1994 Offering
and recorded net income in 1994 of $3,198 for the period subsequent to the 1994
Offering. All significant intercompany balances and transactions have been
eliminated.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Investments in Unconsolidated Entities
The Company uses the equity method of accounting for investments in non-
majority owned entities including those where the Company's ownership is below
20% and the Company has the ability to exercise significant influence over
operating and financial policies.
F-5
<PAGE>
Real Estate Assets
Shopping center properties are stated at cost less accumulated
depreciation. The Company capitalizes costs of construction, property taxes,
interest and other miscellaneous costs incurred during the development period of
projects until such time as the project becomes operational. Depreciation and
amortization are provided on a straight-line basis over the estimated useful
lives of the assets. Expenditures for maintenance and repairs are charged to
operations as incurred. Renovations which improve or extend the life of the
related assets are capitalized.
In 1996, the Company adopted Financial Accounting Standards Board Statement
No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed Of." This standard requires the Company to record
impairment losses on long-lived assets used in operations when indicators of
impairment are present and the estimated undiscounted cash flows related to
those assets are less than their carrying amounts. The effect of the adoption
was not material.
Deferred Costs
Costs and fees associated with the Company's debt obligations are included
in deferred costs in the accompanying consolidated balance sheets and are
amortized over the terms of the related debt agreements. Amortization of these
deferred financing costs is included in interest expense on the statements of
income. Accumulated amortization totaled approximately $3,948 and $2,426 at
December 31, 1996 and 1995, respectively.
Revenue Recognition
The Company leases space in its shopping centers to tenants and recognizes
minimum base rentals as revenue on a straight-line basis over the terms of the
operating leases. The tenants are required to pay additional rentals based on
common area maintenance expenses, and the Company recognizes such rentals as the
revenue is earned. In addition, certain tenants pay incremental rental amounts
based on store sales and these percentage rentals are recognized as earned.
The tenant base includes primarily national or regional retail chains and
local retailers, and consequently the Company's credit risk is concentrated in
the retail industry. Rents receivable in excess of security deposits are
unsecured and are subject to credit losses to this extent.
Net Gain (Loss) on Real Estate Sales
Net gain (loss) on real estate sales relates to the sale of parcels of land
or fully developed shopping centers. The applicable gain or loss is recognized
at closing, when the earnings process is deemed to be complete, which generally
coincides with the receipt of cash.
Interest Costs
Interest costs incurred during the development period of new projects are
capitalized and depreciated over the building life. Interest costs capitalized
were $1,993, $1,538, and $343 for the years ended December 31, 1996, 1995, and
1994, respectively. Interest payments totaled $10,293, $8,542, and $6,390
during the years ended December 31, 1996, 1995, and 1994, respectively.
Stock-Based Compensation
The Company uses the intrinsic value method for valuing its awards of stock
options and recording the related compensation expense, if any. See Note 8 for
pro forma disclosures using the fair value method as described in Financial
Accounting Standards Board Statement No. 123, "Accounting for Stock-Based
Compensation ("FAS 123")."
F-6
<PAGE>
Income Taxes
The financial statements for periods prior to the 1994 Offering include
various partnerships, joint ventures and individually owned properties which
were not subject to corporate federal or state income taxes. Each partner,
venturer, or owner reflected its pro-rata share of income or losses in its
individual tax return.
Effective January 1, 1994, the Company elected "S" corporation status and
operated as such until March 26, 1994. This election had no material effect on
the financial statements. As a result, no entities subject to federal income
taxes were included in the financial statements in 1994 prior to March 26, 1994
and accordingly no provision for income taxes was recorded for that period.
The Company elected to be taxed as a REIT under the Internal Revenue Code
of 1986 (the "Code") and began operating as such on March 27, 1994. As a
result, the Company is not subject to federal income taxes to the extent that it
distributes annually at least 95% of its taxable income to its shareholders and
satisfies certain other requirements defined in the Code. Accordingly, no
provision was made for federal income taxes in the accompanying consolidated
financial statements for periods subsequent to March 27, 1994.
The Company declared distributions per share of $1.88, $1.80, and $1.33
during the years ended December 31, 1996, 1995, and 1994, and these
distributions are summarized as follows:
Years ended December 31,
1996 1995 1994
------------------------------------
Ordinary income $ 1.58 $ 1.43 $ 0.52
Return of capital 0.30 0.34 0.77
Long term capital gains - 0.03 0.04
------------------------------------
$ 1.88 $ 1.80 $ 1.33
====================================
Per Share Data
Earnings per share data for 1994 are not relevant because the results of
operations include the period prior to the 1994 Offering, which represents
combined operations of partnerships and corporations. Net income per share for
the period subsequent to the 1994 Offering, March 29, 1994 to December 31, 1994,
was $.42 based on weighted average shares outstanding of 7,530,844. Net income
per share for the years ended December 31, 1996 and 1995 was based on weighted
average shares outstanding of 11,085,835 and 8,819,303.
Statements of Cash Flows
The Company considers all highly liquid investments with original
maturities of three months or less when purchased to be cash equivalents. In
connection with the 1994 purchase of shopping center properties, the Company
assumed two loans totaling $11,820 whose effects have been excluded from the
statements of cash flows.
Restricted Cash
Restricted cash includes escrow deposits for, among other things, debt
service, property taxes and replacement reserves held by a lender.
Use of Estimates
The preparation of the Company's financial statements in conformity with
generally accepted accounting principles requires management to make estimates
F-7
<PAGE>
and assumptions that affect the amounts reported in the consolidated financial
statements and accompanying notes. Actual results could differ from those
estimates.
Reclassifications
Certain amounts as previously reported have been reclassified to conform to
the current year's presentation.
3. MORTGAGE NOTES PAYABLE
The Company's mortgage notes payable consisted of the following:
December 31,
---------------------------
1996 1995
- -----------------------------------------------------------------
Term Debt $ 71,771 $ 72,663
Bank Credit Facility 28,800 11,300
Mortgage Note Payable 6,553 6,677
Construction Loans 34,758 38,199
---------------------------
$ 141,882 $ 128,839
===========================
The Term Debt represents a 6.75% fixed rate loan secured by 20 of the
Company's properties with a net book value of $130,596. Principal and interest
are payable to certificate holders of JDN REMIC Trust in monthly installments of
$479 through March 2001. At that date, all remaining unpaid principal is due.
The Bank Credit Facility represents a $40 million line of credit with a
bank secured by 17 of the Company's properties with a net book value of $59,592.
The Company may draw on the Bank Credit Facility in amounts not to exceed 60% of
the value of the 17 properties securing the Bank Credit Facility or 635% of the
aggregate Net Operating Income, as defined, of the 17 properties for the most
recent four quarters. Interest on the Bank Credit Facility is 1.50% above the
rate for 30-day Eurodollar deposits and is payable monthly. At December 31,
1996, the Company had the ability to draw an additional $11,200 on the Bank
Credit Facility and the rate was 7.12%. Advances on the Bank Credit Facility
mature in June 1998.
The Mortgage Note Payable represents a 7.38% fixed rate loan secured by one
property with a net book value of $8,766. Principal and interest are due
monthly in installments of $50 through December 2003 at which time all remaining
unpaid principal is due.
The Construction Loans represent various loans to fund construction of
shopping center developments whose costs generally approximate the loan
balances. The loans are secured by the land and improvements on the shopping
center developments. Interest on the Construction Loans is payable monthly at
rates ranging from LIBOR plus 1.50% to LIBOR plus 1.75%, and the Construction
Loans mature in 1997, 1998, and 1999. At December 31, 1996, the weighted
average interest rate for the Construction Loans was 6.95% and $2,394 was
available to fund additional construction costs.
During 1996, the Company entered into a swap transaction as a hedge against
increasing rates on its floating rate debt. Under the initial terms of the
agreement, the Company paid a fixed rate of 6.44% and received a variable rate
equal to the rate for the one-month LIBOR rate based on the notional amount in
the contract. As of December 31, 1996, the notional amount was $70,000; on
January 1, 1997, the notional amount increased to $80,000. On February 12,
1997, the Company amended the terms of the swap transaction by reducing the
notional amount to $50,000, increasing the fixed rate the Company pays to 6.48%
and extending the maturity date to January 1, 2001. The Company records net
amounts received or paid under this contract as adjustments to interest expense.
F-8
<PAGE>
As of December 31, 1996, principal payments are due as follows:
- ------------------------------------------------------------------------------
1997 $ 2,611
1998 49,407
1999 14,944
2000 1,296
2001 67,792
Thereafter 5,832
----------
$ 141,882
==========
Based upon borrowing rates management believes are available to the Company
for loans with similar terms and average maturities, the fair value of mortgage
notes payable was estimated to be $143,257 at December 31, 1996. Based upon
amounts that the Company would pay to terminate the swap transaction on December
31, 1996, the fair value of the swap transaction is estimated to be $631 at
December 31, 1996.
4. INVESTMENTS IN AND ADVANCES TO UNCONSOLIDATED ENTITIES
The Company owns 1% of the outstanding voting stock and 100% of the outstanding
non-voting stock of JDN Development Company, Inc. ("Development Company"). J.
Donald Nichols, the Company's Chairman and Chief Executive Officer, owns the
remaining 99% of the outstanding voting stock of Development Company. The
Company accounts for its investment in Development Company on the equity method
because management believes that it is able to exercise significant influence
over the operating and financial policies of Development Company. The Company
also owns 50% economic interests in two joint ventures formed for the purpose of
developing shopping centers in Loganville, Georgia, and Asheville, North
Carolina.
F-9
<PAGE>
Combined summarized financial information on these three entities is as
follows:
<TABLE>
<CAPTION>
December 31,
1996 1995
-----------------------------------------
<S> <C> <C>
Assets
Operating property $ 47,972 $ 4,497
Property under development 38,546 31,785
-----------------------------------------
Total real estate 86,518 36,282
Other assets 6,636 1,067
-----------------------------------------
$ 93,154 $ 37,349
=========================================
Liabilities
Mortgage notes payable $ 48,474 $ 14,595
Notes and advances payable to JDN Realty Corporation 30,977 14,482
Other liabilities 3,599 378
-----------------------------------------
83,050 29,455
Equity 10,104 7,894
-----------------------------------------
$ 93,154 $ 37,349
=========================================
Years Ended December 31,
1996 1995
-----------------------------------------
Rental revenues $ 2,969 $ 88
Operating expenses (654) (13)
-----------------------------------------
Income from operations 2,315 75
Interest expense (1,313) (178)
Net gain on real estate sales 2,358 1,042
Other expense, net (1,344) (806)
=========================================
Net income $ 2,016 $ 133
=========================================
</TABLE>
There were no significant items of income or expense related to these
entities for the year ended December 31, 1994.
Income (losses) from sitework development contracts associated with sales
of land parcels are included in net gain on real estate sales. Changes in
estimates associated with these contracts increased net gain on real estate
sales in 1996 by approximately $1,153 and increased net income by approximately
$679. The Company's share of this increase was $672 which is included in equity
in net income of unconsolidated entities in the accompanying statements of
income.
5. OPERATING LEASES
Shopping center properties are leased to tenants under operating leases
with expiration dates extending to the year 2021. As of December 31, 1996,
approximate future minimum rentals due under noncancellable operating leases,
excluding tenant reimbursements of operating expenses and additional
F-10
<PAGE>
rentals based on tenants' sales volume, were as follows:
- ------------------------------------------------------------------------------
1997 $ 35,659
1998 33,406
1999 30,686
2000 28,416
2001 26,317
Thereafter 262,209
----------
$ 416,693
==========
As of December 31, 1996, Wal-Mart Stores, Inc., a national retailer, was an
anchor in 26 of the Company's shopping centers. Wal-Mart was a tenant of the
Company in 16 of the shopping centers and in the remaining 10, an unrelated
party owned that portion of the center. Rentals from this significant tenant
were approximately 22%, 20%, and 20% of total minimum and percentage rent for
the years ended December 31, 1996, 1995, and 1994, respectively. As of December
31, 1996, Lowe's Companies, Inc., a national retailer, was an anchor in seven of
the Company's shopping centers. Lowe's was a tenant of the Company in six of
the shopping centers and in the remaining one, an unrelated party owned that
portion of the center. Rentals from this significant tenant were 11%, 8%, and 6%
of total minimum and percentage rent for the years ended December 31, 1996,
1995, and 1994, respectively. There were no other tenants which represented more
than 10% of the Company's total minimum and percentage rent in any year
presented.
6. EXTRAORDINARY ITEMS
In 1995, the Company terminated and satisfied in full a secured line of
credit with a bank which was scheduled to mature in 1997. The Company charged
unamortized deferred financing costs related to this facility of $403 to
earnings as a component of extraordinary items. Also charged to extraordinary
items in 1995 was $128 in unamortized deferred financing costs related to an
unscheduled principal payment on the Term Debt. During 1994, in connection with
the 1994 Offering, the Company charged to extraordinary items prepayment
penalties of $1,760 on the early extinguishment of several notes payable. In
addition, the Company charged unamortized deferred financing fees of $332 to
earnings related to notes paid off in conjunction with the 1994 Offering as a
component of extraordinary items.
7. RELATED PARTY TRANSACTIONS
The Company had the following related party transactions in 1994 increasing
or (decreasing) shareholders' equity and owners' deficit which were consummated
prior to, in contemplation of, or in conjunction with the 1994 Offering:
Year Ended
December 31,
1994
- --------------------------------------------------------------------------------
Non-cash transactions
Distributions of property to the Principals $ (2,096)
Distribution of note payable to the Principals 2,921
Distribution of notes receivable to the Principals (1,137)
Cash distributions to the Principals (5,495)
---------
$ (5,807)
=========
F-11
<PAGE>
8. STOCK OPTION PLANS
During 1993, the Company adopted the JDN Realty Corporation 1993 Incentive
Stock Plan under which 1,320,813 shares of the Company's common stock are
reserved for issuance to individuals providing services to the Company, its
subsidiaries and affiliated entities at the discretion of the Compensation
Committee of the Board of Directors. Under the plan, the exercise price of the
options granted will not be less than the fair market value of the shares on the
date of grant for incentive stock options and will not be less than 50% of the
fair market value of the shares on the date of grant for non-qualified stock
options. The options expire 10 years from the date of grant. Options granted
in 1994 vest one-third after six months and one-third in each of the two
successive twelve month periods thereafter. Options granted in 1995 vest nine
years after the grant date; however, the vesting period may accelerate if
certain performance measures are met. As of December 31, 1996, 408,000 options
were available for grant and 612,813 of the options granted were exercisable.
The following is a summary of plan activity since inception:
<TABLE>
<CAPTION>
Number of Shares Option Price
1993 Incentive Stock Plan Underlying Options Per Share
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Options outstanding, January 1, 1994 - -
Granted 633,813 $22.00 to $23.25
Exercised - -
------------------------------------------------------------------
Options outstanding, December 31, 1994 633,813 $22.00 to $23.25
Granted 300,000 $20.25
Exercised - -
Forfeited (13,000) $23.25
------------------------------------------------------------------
Options outstanding, December 31, 1995 920,813 $20.25 to $23.25
Granted - -
Exercised - -
Forfeited (8,000) $23.25
------------------------------------------------------------------
Options outstanding, December 31, 1996 912,813 $20.25 to $23.25
==================================================================
</TABLE>
During 1993, the Company adopted the JDN Realty Corporation 1993 Non-
Employee Directors Stock Option Plan reserving 300,000 shares of common stock to
be granted as follows: 3,000 options to each Non-Employee Director serving the
Company on the closing date of the 1994 Offering and thereafter on January 1 of
each year. The exercise price of each option will equal the fair market value
of the shares on the date of grant. The options expire 10 years from the date
of grant and vest in the following manner: (1) one-third two years after the
date of grant, (2) one-third three years after the date of grant, and (3) one-
third four years after the date of grant. As of December 31, 1996, 273,000
shares were available for grant and 3,000 of the options granted were
exercisable. The following is a summary
F-12
<PAGE>
of plan activity:
<TABLE>
<CAPTION>
Number of Shares Option Price
1993 Non-Employee Directors Stock Option Plan Underlying Options Per Share
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Options outstanding, January 1, 1994 - -
Granted 12,000 $22.00
Exercised - -
------------------------------------------------------------------
Options outstanding, December 31, 1994 12,000 $22.00
Granted 12,000 $20.00
Exercised - -
Forfeited (6,000) $20.00 to $22.00
------------------------------------------------------------------
Options outstanding, December 31, 1995 18,000 $20.00 to $22.00
Granted 9,000 $22.375
Exercised - -
Forfeited - -
------------------------------------------------------------------
Options outstanding, December 31, 1996 27,000 $20.00 to $22.375
==================================================================
</TABLE>
Pro forma information regarding net income and earnings per share is
required by FAS 123 using an acceptable fair value method for all options
granted by the Company subsequent to December 31, 1994. The Company estimated
the fair value for these options at the date of grant using a Black-Scholes
option pricing model with the following weighted-average assumptions: risk-free
interest rate of 6.39%; dividend yield of 6.80%; volatility factor of the
expected market price of the Company's common stock of 0.15, and a weighted-
average expected life of the option of 9 years. The effect on net income and
net income per share for pro forma disclosure purposes was not material for 1996
or 1995.
9. PROFIT SHARING PLAN
The Company offers to employees the JDN Realty Corporation Savings and
Profit Sharing Plan, a defined contribution plan, which intends to qualify under
Section 401(a) and 401(k) of the Code. All employees of the Company as of the
plan adoption date were eligible to participate in the plan. Employees hired
after such date and who have completed six months of service with the Company
may participate in the plan. Participants may contribute up to 20% of their
base salary to the plan and any matching contribution by the Company is
discretionary. During the years ended December 31, 1996 and 1995, the Company
contributed $25 and $25 respectively, to the plan.
10. EMPLOYEE STOCK PURCHASE PLAN
During 1995, the Company adopted the JDN Realty Corporation 1995 Employee
Stock Purchase Plan which is expected to qualify as an "Employee Stock Purchase
Plan" within the meaning of Section 423 of the Code. The plan became effective
on March 1, 1996. The plan authorizes the sale of up to 100,000 shares of
common stock to eligible employees of the Company at a 15% discount from the
market price. During 1996 and 1995, no shares were issued under the plan.
11. DIVIDEND REINVESTMENT AND STOCK PURCHASE PLAN
During 1995, the Company adopted the JDN Realty Corporation Dividend
Reinvestment and Stock Purchase Plan. The plan allows shareholders to
automatically reinvest cash dividends in and make optional cash purchases of
shares of the Company's common stock. As of December 31, 1996, 1,610 shares had
been issued under the plan and 498,390 were reserved for issuance.
F-13
<PAGE>
12. COMMITMENTS AND CONTINGENCIES
As of December 31, 1996, the Company guaranteed all or portions of five
loans of Development Company or its subsidiaries in the amount of $29,354. The
loans are secured by property owned by Development Company or its subsidiaries
and are due in 1998 and 1999.
As of December 31, 1996, the Company had executed construction contracts at
three of its development sites and had $1,939 in costs remaining to be incurred
under these contracts.
The Company is obligated to purchase the interests of its joint venture
partners in two limited liability companies each formed for the purpose of
developing a shopping center project. In addition as of December 31, 1996, the
Company has executed contracts to purchase three shopping center projects which
are subject to certain due diligence contingencies. On February 14, 1997, the
Company purchased a shopping center property in Jackson, Mississippi, for $9.1
million. The Company is pursuing other acquisition and development
opportunities in the ordinary course of business which are not yet subject to
definitive agreements.
In conjunction with the purchase contract for one of the projects noted
above, the Company purchased a $10.5 million mortgage loan secured by the
project under contract which accrues interest at 11% and matures January 15,
1998. This loan is included in other assets on the balance sheet.
13. QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
The following is a summary of the unaudited quarterly financial information
for the years ended December 31, 1996 and 1995:
<TABLE>
<CAPTION>
Quarters
First Second Third Fourth
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1996:
Revenues $ 8,688 $ 8,910 $ 9,159 $ 9,866
Net income 3,618 4,155 4,311 4,598
Per share:
Net income $ 0.35 $ 0.38 $ 0.39 $ 0.39
1995:
Revenues $ 7,452 $ 7,591 $ 7,839 $ 8,480
Income before extraordinary items 2,076 1,902 3,288 4,002
Net income 2,076 1,902 2,757 4,002
Per share:
Income before extraordinary items $ 0.28 $ 0.25 $ 0.33 $ 0.40
Net income 0.28 0.25 0.28 0.40
</TABLE>
F-14
<PAGE>
14. PRO FORMA FINANCIAL INFORMATION (UNAUDITED)
The following unaudited supplemental pro forma information has been
prepared as if the 1994 Offering and related transactions had been consummated
on January 1, 1994. In management's opinion, all adjustments necessary to
reflect the effects of the formation transactions in connection with the 1994
Offering have been made.
<TABLE>
<CAPTION>
1994 1994
Historical Adjustments Pro Forma
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Revenues:
Revenues from rental properties $ 21,513 $ 3,182(1) $ 24,695
Other 512 3(1) 515
--------------------------------------------------------------
Total revenues 22,025 3,185 25,210
Operating expenses:
Expenses from rental properties 2,939 443(2) 3,382
General and administrative 2,236 123(3) 2,359
Depreciation and amortization 4,768 725(4) 5,493
-------------------------------------------------------------
Total operating expenses 9,943 1,291 11,234
Income from operations 12,082 1,894 13,976
Interest expense, net (6,919) 37(5),(6) (6,882)
Other, net 64 - 64
-------------------------------------------------------------
Income from continuing operations 5,227 1,931 7,158
Net loss on real estate sales (134) - (134)
-------------------------------------------------------------
Income before extraordinary items 5,093 1,931 7,024
Extraordinary items (2,092) 2,092 -
-------------------------------------------------------------
Net income $ 3,001 $ 4,023 $ 7,024
=============================================================
Per share data:
Net income $ 0.93
===============
Weighted average shares outstanding 7,530,844
===============
</TABLE>
(1) Reflects the revenue of eight properties acquired from third parties and
four properties which were previously accounted for on the cost or equity
method.
(2) Reflects expenses associated with the 12 properties described above.
(3) Reflects estimated additional general and administrative expenses which
would have been incurred operating as a public company.
(4) Reflects additional depreciation and amortization associated with the 12
properties described above.
(5) Reflects increased interest expense and amortization of deferred loan costs
due to the Term Debt, less the effect of the payoff of certain mortgages
with proceeds from the 1994 Offering and the Term Debt.
(6) Reflects increased interest income related to the investment of excess 1994
Offering and Term Debt proceeds.
F-15
<PAGE>
REPORT OF INDEPENDENT AUDITORS
SHAREHOLDERS AND BOARD OF DIRECTORS
JDN REALTY CORPORATION
We have audited the accompanying consolidated balance sheets of JDN Realty
Corporation and Predecessor Businesses as of December 31, 1996 and 1995 and the
related consolidated statements of income, shareholders' equity and owners'
deficit, and cash flows for each of the three years in the period ended December
31, 1996. Our audits also included the financial statement schedules listed in
the Index at Item 14(a). These financial statements and schedules are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements and schedules based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of JDN Realty
Corporation and Predecessor Businesses at December 31, 1996 and 1995 and the
consolidated results of their operations and cash flows for each of the three
years in the period ended December 31, 1996 in conformity with generally
accepted accounting principles. Also in our opinion, the related financial
statement schedules, when considered in relation to the basic financial
statements taken as a whole, present fairly in all material respects the
information set forth therein.
ERNST & YOUNG LLP
Atlanta, Georgia
February 21, 1997
F-16
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
JDN REALTY CORPORATION
(In thousands)
- ------------------------------------------------------------------------------------------------------------------------------------
COL. A COL. B COL. C COL. D COL. E
- ------------------------------------------------------------------------------------------------------------------------------------
Additions
------------------------------------
Balance at Beginning Charged to Costs Charged to Other Deducions Balance at End
Description of Period and Expenses Accounts-Describe Describe of Period
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Year ended December 31, 1996:
Deduct from asset accounts:
Allowance for Doubtful Accounts $277 $350 $217(1) $410
==== ==== ==== ====
Year ended December 31, 1995:
Deduct from asset accounts:
Allowance for Doubtful Accounts $265 $132 $120(1) $277
==== ==== ==== ====
Year ended December 31, 1994:
Deduct from asset accounts:
Allowance for Doubtful Accounts $371 $ 11 $117(1) $265
==== ==== ==== ====
</TABLE>
(1) Write-off of uncollectible rents receivable.
F-17
<PAGE>
Schedule III - Real Estate and Accumulated Depreciation
JDN Realty Corporation
December 31, 1996
(In thousands)
<TABLE>
<CAPTION>
COL. A COL. B COL. C COL. D
- --------------------------------------------------------------------------------------------------------------------
Cost Capitalized Subsequent
Initial Cost to Company to Acquisition
----------------------- -----------------------------
Buildings and Carrying
Description Encumbrances Land Improvements Improvements Costs
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
OPERATING PROPERTY:
Pepperell Corners (Opelika, AL) $ 6,675 $ 2,062 $ 11,705 $ 67 $ -
White Sands (Fort Walton, FL) 718 556 - 1,022 -
Capital West (Tallahassee, FL) 3,373 2,400 - 4,855 -
Felton's Crossing (Cartersville, GA) 1,651 358 - 3,230 -
Banks Station (Fayetteville, GA) 5,455 1,672 9,604 152 -
Five Forks Village (Lawrenceville, GA) 4,091 1,245 7,065 70 -
Ellis Crossing (Griffin, GA) 1,364 300 - 2,476 -
Town Center (Lawrenceville, GA) 9,832 2,962 17,037 228 -
Five Forks Crossing (Lilburn, GA) 3,014 930 5,287 19 -
Merchant Square (Riverdale, GA) 718 191 - 1,347 -
Shannon Square (Union City, GA) 2,081 517 - 4,114 -
East Ridge Crossing (Hendersonville, NC) 2,081 - - 4,224 -
Pineridge Crossing (Rockingham, NC) 3,517 510 - 7,000 -
Wallace Crossing (Wallace, NC) 2,225 665 3,843 44 -
Myrtle Grove (Wilmington, NC) 5,168 2,500 - 8,801 -
Ashley Crossing (Charleston, SC) 5,885 2,182 10,354 27 -
Overlook at Hamilton Place (Chattanooga, TN) 6,962 1,595 12,725 38 -
Farragut Pointe (Farragut, TN) 2,368 731 4,165 19 -
Country Bridge (Memphis, TN) 2,440 750 4,294 14 -
Lexington Commons (Lexington, VA) 2,153 1,000 - 3,581 -
</TABLE>
<TABLE>
<CAPTION>
COL. A COL. E COL. F
- ----------------------------------------------------------------------------------------------------------------
Gross Amount at which Carried
at close of Period
-----------------------------------------
Buildings and Accumulated
Land Improvements Total Depreciation
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
OPERATING PROPERTY:
Pepperell Corners (Opelika, AL) $ 2,062 $11,772 $ 13,834 $ 1,030
White Sands (Fort Walton, FL) 452 1,022 1,474 297
Capital West (Tallahassee, FL) 2,040 4,855 6,895 988
Felton's Crossing (Cartersville, GA) 177 3,230 3,407 1,179
Banks Station (Fayetteville, GA) 1,522 9,756 11,278 863
Five Forks Village (Lawrenceville, GA) 1,245 7,135 8,380 625
Ellis Crossing (Griffin, GA) 302 2,476 2,778 833
Town Center (Lawrenceville, GA) 2,962 17,265 20,227 1,537
Five Forks Crossing (Lilburn, GA) 930 5,306 6,236 465
Merchant Square (Riverdale, GA) 191 1,347 1,538 299
Shannon Square (Union City, GA) 195 4,114 4,309 1,218
East Ridge Crossing (Hendersonville, NC) - 4,224 4,224 1,055
Pineridge Crossing (Rockingham, NC) 203 7,000 7,203 1,590
Wallace Crossing (Wallace, NC) 665 3,887 4,552 338
Myrtle Grove (Wilmington, NC) 1,877 8,801 10,678 1,542
Ashley Crossing (Charleston, SC) 2,182 10,381 12,563 917
Overlook at Hamilton Place (Chattanooga, TN) 1,595 12,763 14,358 1,096
Farragut Pointe (Farragut, TN) 731 4,184 4,915 367
Country Bridge (Memphis, TN) 750 4,308 5,058 378
Lexington Commons (Lexington, VA) 882 3,581 4,463 745
</TABLE>
<TABLE>
<CAPTION>
COL. A COL. G COL. H COL. I
- ------------------------------------------------------------------------------------------------------
Life on which depreciation
Date of Date in latest income statements
Construction Acquired is computed
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
OPERATING PROPERTY:
Pepperell Corners (Opelika, AL) 1993 1994 Building 31.5 years (1)
White Sands (Fort Walton, FL) 1986 1985 Building 31.5 years (1)
Sign 20 years (2)
Capital West (Tallahassee, FL) 1990 1989 Building 31.5 years (1)
Sign 20 years (2)
Felton's Crossing (Cartersville, GA) 1984 1983 Building 31.5 years (1)
Banks Station (Fayetteville, GA) 1990 1994 Building 31.5 years (1)
Five Forks Village (Lawrenceville, GA) 1990 1994 Building 31.5 years (1)
Ellis Crossing (Griffin, GA) 1986 1985 Building 31.5 years (1)
Sign 20 years (2)
Town Center (Lawrenceville, GA) 1989 1994 Building 31.5 years (1)
Five Forks Crossing (Lilburn, GA) 1990 1994 Building 31.5 years (1)
Merchant Square (Riverdale, GA) 1989 1989 Building 31.5 years (1)
Shannon Square (Union City, GA) 1986 1984 Building 31.5 years (1)
Sign 20 years (2)
East Ridge Crossing (Hendersonville, NC) 1988 1988 Building 31.5 years (1)
Sign 20 years (2)
Pineridge Crossing (Rockingham, NC) 1988 1986 Building 31.5 years (1)
Wallace Crossing (Wallace, NC) 1989 1994 Building 31.5 years (1)
Myrtle Grove (Wilmington, NC) 1991 1988 Building 31.5 years (1)
Sign 20 years (2)
Ashley Crossing (Charleston, SC) 1991 1994 Building 31.5 years (1)
Overlook at Hamilton Place (Chattanooga, TN) 1992 1994 Building 31.5 years (1)
Farragut Pointe (Farragut, TN) 1991 1994 Building 31.5 years (1)
Country Bridge (Memphis, TN) 1993 1994 Building 31.5 years (1)
Lexington Commons (Lexington, VA) 1989 1988 Building 31.5 years (1)
</TABLE>
F-18
<PAGE>
Schedule III - Real Estate and Accumulated Depreciation
JDN Realty Corporation
December 31, 1996
(In thousands)
<TABLE>
<CAPTION>
COL. A COL. B COL. C COL. D
- --------------------------------------------------------------------------------------------------------------------
Cost Capitalized Subsequent
Initial Cost to Company to Acquisition
----------------------- -----------------------------
Buildings and Carrying
Description Encumbrances Land Improvements Improvements Costs
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
OPERATING PROPERTY:
Southland Plaza (Decatur, AL) $ - $ 1,013 $ 5,802 $ - $ -
East Side Plaza (Gadsden, AL) 1,037 172 - 2,318 -
Pepperell Corners, Phase II (Opelika, AL) 1,552 744 1,628 (35) -
Riverplace (Canton, GA) 950 456 - 2,188 -
River Pointe (Canton, GA) - 370 2,301 39 -
Bartow Marketplace (Cartersville, GA) - 3,513 16,688 129 -
Dodge County (Eastman, GA) 1,066 350 - 2,316 -
Foodmax Plaza (Fort Oglethorpe, GA) 3,110 1,092 6,204 57 -
North Main Street (LaFayette, GA) 1,382 215 - 3,137 -
LaGrange Wal-Mart (LaGrange, GA) 662 180 - 1,404 -
Beacon Heights (Madison, GA) 1,987 607 - 4,106 -
Newnan Crossing (Newnan, GA) 19,164 3,750 17,745 129 -
Pike Nursery (Peachtree City, GA) - 1,007 1 - -
Freeway Junction (Stockbridge, GA) 2,794 979 5,550 26 -
Woodstock Place (Woodstock, GA) - 48 - 7,649 -
Pike Nursery (Woodstock, GA) - 1,320 1 - -
University Commons (Greenville, NC) 14,042 3,557 15,865 - -
Chesterfield Commons (Cheraw, SC) 979 141 - 2,144 -
Kelley Corners (Lake City, SC) 2,477 415 5,385 26 -
Merchants Walk (Sumter, SC) 403 130 - 786 -
</TABLE>
<TABLE>
<CAPTION>
COL. A COL. E COL. F
- ----------------------------------------------------------------------------------------------------------------
Gross Amount at which Carried
at close of Period
-----------------------------------------
Buildings and Accumulated
Land Improvements Total Depreciation
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
OPERATING PROPERTY:
Southland Plaza (Decatur, AL) $ 1,013 $ 5,802 $ 6,815 $ -
East Side Plaza (Gadsden, AL) 130 2,318 2,448 954
Pepperell Corners, Phase II (Opelika, AL) 744 1,593 2,337 89
Riverplace (Canton, GA) 66 2,188 2,254 983
River Pointe (Canton, GA) 370 2,340 2,710 -
Bartow Marketplace (Cartersville, GA) 3,513 16,817 20,330 603
Dodge County (Eastman, GA) 172 2,316 2,488 485
Foodmax Plaza (Fort Oglethorpe, GA) 1,092 6,261 7,353 478
North Main Street (LaFayette, GA) 123 3,137 3,260 647
LaGrange Wal-Mart (LaGrange, GA) 183 1,404 1,587 558
Beacon Heights (Madison, GA) 550 4,106 4,656 985
Newnan Crossing (Newnan, GA) 3,750 17,874 21,624 376
Pike Nursery (Peachtree City, GA) 1,007 1 1,008 -
Freeway Junction (Stockbridge, GA) 979 5,576 6,555 370
Woodstock Place (Woodstock, GA) 1,692 7,649 9,341 579
Pike Nursery (Woodstock, GA) 1,320 1 1,321 -
University Commons (Greenville, NC) 3,557 15,865 19,422 68
Chesterfield Commons (Cheraw, SC) 127 2,144 2,271 497
Kelley Corners (Lake City, SC) 415 5,411 5,826 510
Merchants Walk (Sumter, SC) 130 786 916 281
</TABLE>
<TABLE>
<CAPTION>
COL. A COL. G COL. H COL. I
- ------------------------------------------------------------------------------------------------------
Life on which depreciation
Date of Date in latest income statements
Construction Acquired is computed
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
OPERATING PROPERTY:
Southland Plaza (Decatur, AL) 1965 1996 Building 31.5 years (1)
East Side Plaza (Gadsden, AL) 1979 1980 Building 31.5 years (1)
Pepperell Corners, Phase II (Opelika, AL) 1995 1995 Building 31.5 years (1)
Riverplace (Canton, GA) 1983 1983 Building 31.5 years (1)
River Pointe (Canton, GA) 1996 1996 Building 31.5 years (1)
Sign 20 years (2)
Bartow Marketplace (Cartersville, GA) 1995 1995 Building 31.5 years (1)
Sign 20 years (2)
Dodge County (Eastman, GA) 1990 1986 Building 31.5 years (1)
Sign 20 years (2)
Foodmax Plaza (Fort Oglethorpe, GA) 1973 1994 Building 31.5 years (1)
North Main Street (LaFayette, GA) 1990 1988 Building 31.5 years (1)
Sign 20 years (2)
LaGrange Wal-Mart (LaGrange, GA) 1984 1983 Building 31.5 years (1)
Beacon Heights (Madison, GA) 1989 1987 Building 31.5 years (1)
Newnan Crossing (Newnan, GA) 1995 1995 Building 31.5 years (1)
Sign 20 years (2)
Pike Nursery (Peachtree City, GA) 1996 Building 31.5 years (1)
Freeway Junction (Stockbridge, GA) 1988 1994 Building 31.5 years (1)
Woodstock Place (Woodstock, GA) 1985 1982 Building 31.5 years (1)
Sign 20 years (2)
Pike Nursery (Woodstock, GA) 1996 Building 31.5 years (1)
University Commons (Greenville, NC) 1996 1996 Building 31.5 years (1)
Sign 20 years (2)
Chesterfield Commons (Cheraw, SC) 1990 1986 Building 31.5 years (1)
Sign 20 years (2)
Kelley Corners (Lake City, SC) 1991 1994 Building 31.5 years (1)
Sign 20 years (2)
Merchants Walk (Sumter, SC) 1987 1986 Building 31.5 years (1)
Sign 20 years (2)
</TABLE>
F-19
<PAGE>
Schedule III - Real Estate and Accumulated Depreciation
JDN Realty Corporation
December 31, 1996
(In thousands)
<TABLE>
<CAPTION>
COL. A COL. B COL. C COL. D
- --------------------------------------------------------------------------------------------------------------------
Cost Capitalized Subsequent
Initial Cost to Company to Acquisition
----------------------- -----------------------------
Buildings and Carrying
Description Encumbrances Land Improvements Improvements Costs
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
OPERATING PROPERTY:
Foodmax Plaza (Columbia, TN) $ 1,930 $ 673 $ 3,836 $ 37 $ -
Alexander Plaza (Franklin, TN) 202 397 - 426 -
Northcreek Commons (Goodlettsville, TN) 2,189 743 4,311 59 -
Memorial Village (Murfreesboro, TN) 2,822 991 5,636 15 -
Cherokee Square (Tullahoma, TN) 1,440 503 2,868 18 -
Tri-State Plaza (Burlington, OH) 3,370 1,563 6,585 (201) -
Carriage Gate (Richmond, KY) 6,553 1,398 7,944 38 -
-------- ------- -------- ------- ---
Total Operating Property $141,882 $49,453 $194,429 $68,139 $ -
-------- ------- -------- ------- ---
UNDEVELOPED LAND:
Gadsden, Alabama $ - $ 55 $ - $ - $ -
Eastman, Georgia - 68 - - -
Fayetteville, Georgia - 150 - - -
LaFayette, Georgia - 84 - - -
Lawrenceville, Georgia - 601 - - -
Madison, Georgia - 22 - - -
Hickory, North Carolina - 300 - - -
Rockingham, North Carolina - 301 - - -
Wallace, North Carolina - 251 - - -
Wilmington, North Carolina - 451 - - -
Charleston, South Carolina - 179 - - -
Lexington, Virginia - 202 - - -
-------- ------- -------- ------- ---
Total Undeveloped Land $ - $ 2,664 $ - $ - $ -
-------- ------- -------- ------- ---
Subtotal $141,882 $52,117 $194,429 $68,139 $ -
-------- ------- -------- ------- ---
Property under Development
Cumming, Georgia $ - $ 4,100 $ 1,698 $ - $ -
Warner Robins, Georgia - 384 24 - -
Marietta, Georgia - 3,295 85 - -
Greensboro, North Carolina - 6,780 3,217 - -
Other - - 63 - -
-------- ------- -------- ------- ---
Total Property under Development $ - $14,559 $ 5,087 $ - $ -
-------- ------- -------- ------- ---
Total $141,882 $66,676 $199,516 $68,139 $ -
======== ======= ======== ======= ===
</TABLE>
<TABLE>
<CAPTION>
COL. A COL. E COL. F
- ----------------------------------------------------------------------------------------------------------------
Gross Amount at which Carried
at close of Period
-----------------------------------------
Buildings and Accumulated
Land Improvements Total Depreciation
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
OPERATING PROPERTY:
Foodmax Plaza (Columbia, TN) $ 673 $ 3,873 $ 4,546 $ 297
Alexander Plaza (Franklin, TN) 24 426 450 55
Northcreek Commons (Goodlettsville, TN) 743 4,370 5,113 139
Memorial Village (Murfreesboro, TN) 991 5,651 6,642 436
Cherokee Square (Tullahoma, TN) 503 2,886 3,389 255
Tri-State Plaza (Burlington, OH) 1,563 6,384 7,947 354
Carriage Gate (Richmond, KY) 1,398 7,982 9,380 612
------- -------- -------- -------
Total Operating Property $47,791 $262,568 $310,359 $27,973
------- -------- -------- -------
UNDEVELOPED LAND:
Gadsden, Alabama $ 55 $ - $ 55 $ -
Eastman, Georgia 68 - 68 -
Fayetteville, Georgia 150 - 150 -
LaFayette, Georgia 84 - 84 -
Lawrenceville, Georgia 601 - 601 -
Madison, Georgia 22 - 22 -
Hickory, North Carolina 300 - 300 -
Rockingham, North Carolina 301 - 301 -
Wallace, North Carolina 251 - 251 -
Wilmington, North Carolina 451 - 451 -
Charleston, South Carolina 179 - 179 -
Lexington, Virginia 202 - 202 -
------- -------- -------- -------
Total Undeveloped Land $ 2,664 $ - $ 2,664 $ -
------- -------- -------- -------
Subtotal $50,455 $262,568 $313,023(3) $27,973
------- -------- -------- -------
Property under Development
Cumming, Georgia $ 4,100 $ 1,698 $ 5,798 $ -
Warner Robins, Georgia 384 24 408 -
Marietta, Georgia 3,295 85 3,380 -
Greensboro, North Carolina 6,780 3,217 9,997 -
Other - 63 63 -
------- -------- -------- -------
Total Property under Development $14,559 $ 5,087 $ 19,646 $ -
------- -------- -------- -------
Total $65,014 $267,655 $332,669 $27,973
======= ======== ======== =======
</TABLE>
<TABLE>
<CAPTION>
COL. A COL. G COL. H COL. I
- ------------------------------------------------------------------------------------------------------
Life on which depreciation
Date of Date in latest income statements
Construction Acquired is computed
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
OPERATING PROPERTY:
Foodmax Plaza (Columbia, TN) 1993 1994 Building 31.5 years (1)
Alexander Plaza (Franklin, TN) 1983 1983 Building 31.5 years (1)
Northcreek Commons (Goodlettsville, TN) 1987 1995 Building 31.5 years (1)
Memorial Village (Murfreesboro, TN) 1972 1994 Building 31.5 years (1)
Cherokee Square (Tullahoma, TN) 1989 1994 Building 31.5 years (1)
Tri-State Plaza (Burlington, OH) 1995 1995 Building 31.5 years (1)
Sign 20 years (2)
Carriage Gate (Richmond, KY) 1992 1994 Building 31.5 years (1)
</TABLE>
F-20
<PAGE>
JDN Realty Corporation
December 31, 1996
(in thousands)
- ------------
(1) Estimated useful life of building.
(2) Estimated useful life of sign.
(3) Aggregate cost for Federal income tax purposes of $315,851.
(4) Reconciliation of "Real Estate and Accumulated Depreciation":
<TABLE>
<CAPTION>
Years Ended December 31,
1996 1995 1994
------------------------------
<S> <C> <C> <C>
Investment in Real Estate
Balance at beginning of year $276,818 $229,986 $ 72,080
Additions/Improvements 56,538 49,187 157,906
Deductions (687) (2,355) -
-------- -------- --------
Balance at end of year $332,669 $276,818 $229,986
======== ======== ========
Accumulated Depreciation
Balance at beginning of year $ 20,312 $ 14,034 $ 9,991
Additions charged to costs and expenses 7,739 6,511 4,958
Deductions (78) (233) (915)
-------- -------- --------
Balance at end of year $ 27,973 $ 20,312 $ 14,034
======== ======== ========
</TABLE>
F-21
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
JDN REALTY CORPORATION
Dated: March 28, 1997 By: /s/ J. Donald Nichols
--------------------------------------
J. Donald Nichols
Chairman and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
Signature Title Date
--------- ----- ----
/s/ J. Donald Nichols Chairman and Chief Executive March 28, 1997
- ---------------------------- Officer
J. Donald Nichols
/s/ Elizabeth L. Nichols President and Director March 28, 1997
- ----------------------------
Elizabeth L. Nichols
/s/ William J. Kerley Chief Financial Officer March 28, 1997
- ----------------------------
William J. Kerley
/s/ John D. Harris, Jr. Controller March 28, 1997
- ----------------------------
John D. Harris, Jr.
/s/ Haywood D. Cochrane, Jr. Director March 28, 1997
- ----------------------------
Haywood D. Cochrane, Jr.
/s/ William B. Greene Director March 28, 1997
- ----------------------------
William B. Greene
/s/ Craig Macnab Director March 28, 1997
- ----------------------------
Craig Macnab
/s/ Robert P. Corker, Jr. Director March 28, 1997
- ----------------------------
Robert P Corker, Jr.
<PAGE>
<TABLE>
EXHIBIT INDEX
<S> <C>
3.1 Articles of Restatement of JDN Realty Corporation (1)
3.2 Articles of Merger of JDN Enterprises, Inc. with and into the Company (2)
3.3 Bylaws of the Company (1)
4 Specimen stock certificate (3)
10.1 JDN Realty Corporation 1993 Incentive Stock Plan, as amended (4)
10.2 JDN Realty Corporation 1993 Non-Employee Director Stock Option Plan (2)
10.3 JDN Realty Corporation Savings and Profit Sharing Plan (2)
10.4 Indemnification Agreement by and between J. Donald Nichols and JDN Realty Corporation, dated February 23, 1994 (2)
10.5 Indemnification Agreement by and between Elizabeth L. Nichols and JDN Realty Corporation, dated February 23, 1994 (2)
10.6 Indemnification Agreement by and between William J. Kerley and JDN Realty Corporation, dated February 23, 1994 (2)
10.7 Term Credit Agreement dated as of March 25, 1994 between JDN Structured Finance 1, Inc., as Borrower, and Bankers
Trust Company, as Lender (5)
10.8 Amended and Restated Revolving Credit Agreement dated as of August 29, 1995 among JDN Realty Corporation, as
Borrower, The Lenders Party Hereto and Bankers Trust Company, as Agent (6)
10.9 JDN Realty Corporation Dividend Reinvestment and Stock
Purchase Plan (7)
10.10 JDN Realty Corporation 1995 Employee Stock Purchase Plan (4)
10.11 First Amendment to Amended and Restated Revolving Credit Agreement by and between Bankers Trust Company, as Agent,
and the Company dated June 21, 1996 (8)
10.12 Swap Transaction between Morgan Guaranty Trust Company of New York and JDN Realty Corporation, dated July 10, 1996 (9)
10.13 Employment Agreement by and between J. Donald Nichols and the Company, dated as of December 1, 1996
10.14 Employment Agreement by and between Elizabeth L. Nichols and the Company, dated as of December 1, 1996
10.15 Employment Agreement by and between William J. Kerley and the Company, dated as of December 1, 1996
10.16 Employment Agreement by and between David L. Henzlik and the Company, dated as of December 1, 1996
11 Statement regarding computation of per share earnings
21 Subsidiaries of the Company
23 Consent of Independent Auditors
27 Financial Data Schedule
99.1 Cautionary Statements for Purposes of the Private Securities Litigation Reform Act of 1995 (10)
99.2 Federal Income Tax and ERISA Considerations (10)
</TABLE>
<PAGE>
(1) Filed as an exhibit to the Company's filing on Form 8-K dated November
7, 1996, previously filed pursuant to the Securities Exchange Act of
1934, and hereby incorporated by reference.
(2) Filed as an exhibit to the Company's Registration Statement on Form S-
11 (No. 33-73710) previously filed pursuant to the Securities Act of
1933 and hereby incorporated by reference.
(3) Filed as an exhibit to the Company's Registration Statement on Form S-
3 (No. 333-22339) previously filed pursuant to the Securities Act of
1933 and hereby incorporated by reference.
(4) Filed as an exhibit to the Company's Registration Statement on Form S-
8 (No. 333-1848) previously filed pursuant to the Securities Act of
1933 and hereby incorporated by reference.
(5) Filed as an exhibit to the Company's quarterly report on Form 10-Q for
the quarter ended March 31, 1994, previously filed pursuant to the
Securities Exchange Act of 1934 and hereby incorporated by reference.
(6) Filed as an exhibit to the Company's quarterly report on Form 10-Q for
the quarter ended September 30, 1995, previously filed pursuant to the
Securities Exchange Act of 1934 and hereby incorporated by reference.
(7) Filed as an exhibit to the Company's Registration Statement on Form S-
3 (No. 33-90868) previously filed pursuant to the Securities Act of
1933 and hereby incorporated by reference.
(8) Filed as an exhibit to the Company's quarterly report on Form 10-Q for
the quarter ended June 30, 1996, previously filed pursuant to the
Securities Exchange Act of 1934 and hereby incorporated by reference.
(9) Filed as an exhibit to the Company's quarterly report on Form 10-Q for
the quarter ended September 30, 1996, previously filed pursuant to the
Securities Exchange Act of 1934 and hereby incorporated by reference.
(10) Filed as an exhibit to the Company's filing on Form 8-K dated March
25, 1997 previously filed pursuant to the Securities Exchange Act of
1934, and hereby incorporated by reference.
<PAGE>
EXHIBIT 10.13
JDN REALTY CORPORATION
EMPLOYMENT AGREEMENT
THIS AGREEMENT, dated as of December 1, 1996 (the "Effective Date"),
is by and between J. DONALD NICHOLS (the "Employee") and JDN REALTY CORPORATION,
a Maryland corporation (the "Company").
WITNESSETH:
WHEREAS, the Employee and the Company entered into an Employment
Agreement dated as of February 23, 1994, and the Employee and the Company desire
to amend the terms and conditions of that Employment Agreement effective the
date hereof by entering into this Agreement, which is intended to supersede and
replace in all respects all previous employment agreements between the parties
hereto; and
WHEREAS, the Employee desires to be employed by the Company, and the
Company desires to employ the Employee, on the terms, covenants and conditions
hereinafter set forth in this Agreement.
NOW, THEREFORE, for the reasons set forth above, and in consideration
of the mutual promises and agreements herein set forth, the Company and the
Employee agree as follows:
1. EMPLOYMENT.
----------
Subject to the terms and conditions set forth in this Agreement, on
and as of the Effective Date the Company hereby employs and engages the Employee
to hold the titles of Chairman of the Board and Chief Executive Officer of the
Company and perform the duties of such positions as set forth in the Company's
Bylaws and as designated by the board of directors of the Company (the "Board of
Directors"). In such capacities, and subject to review by the Board of
Directors, the Employee shall also perform such duties and responsibilities as
may be assigned to him from time to time by the Board of Directors. The
Employee hereby accepts such employment and agrees to serve the Company as an
officer for the term of this Agreement.
2. TERM OF EMPLOYMENT.
------------------
Except as otherwise provided herein, the term of this Agreement shall
be for three (3) years commencing on the Effective Date and ending on the third
anniversary of the Effective Date (the "Employment Term"). While the Employee
is employed hereunder, the Employment Term shall automatically be extended for
one (1) year upon the occurrence of an anniversary of the Effective Date, unless
either party has given notice of intention to terminate ninety (90) days prior
<PAGE>
to such anniversary of the Effective Date, or unless the Employee's employment
has otherwise terminated as hereinafter provided.
3. DEVOTION TO DUTIES.
------------------
The Employee agrees that during the period that he is employed
hereunder he shall devote substantially all his business time and attention to
the business and affairs of the Company, shall use his best efforts to promote
the interests of the Company and shall not enter into any other business
affiliations or arrangements without the prior written consent of the Company.
4. COMPENSATION OF EMPLOYEE.
------------------------
4.1. BASE SALARY. During the term of this Agreement, the Company
-----------
shall pay to the Employee as compensation for the services to be performed by
the Employee a base salary of Three Hundred Thousand Dollars ($300,000) per year
(the "Base Salary"). The Base Salary shall be payable in installments in
accordance with the Company's normal payroll practice. Commencing on January 1,
1997 and on January 1 of each year thereafter, or as soon as practicable
thereafter, the Compensation Committee of the Board of Directors (the
"Compensation Committee"), or the Board of Directors if the Compensation
Committee is not then in existence, shall review the Base Salary, and shall
authorize, in its discretion, an appropriate increase in the Base Salary;
provided, however, that such increase shall at a minimum be equal to the
cumulative cost-of-living increment on the Base Salary as reported in the
Consumer Price Index, Atlanta, Georgia, All Items, All Urban Consumers,
published by the United States Department of Labor, with January 1, 1996 being
the base date for computing such increment.
4.2. BONUS. In addition to the compensation set forth elsewhere in
-----
this section 4, for each year or portion thereof during the term of this
Agreement and any extensions thereof, the Employee shall be entitled to receive
a bonus in an amount to be determined by the Compensation Committee, or the
Board of Directors if the Compensation Committee is not then in existence, in
its discretion, based upon its evaluation of the Employee's performance during
such year or portion thereof.
4.3. BENEFITS. The Employee shall be entitled to participate, during
--------
the period of actual employment, in all regular employee benefit and deferred
compensation plans established by the Company, including, without limitation,
any savings and profit sharing plan, incentive stock plan, dental and medical
plans, life insurance, and personal catastrophe and disability insurance, such
participation to be as provided in said employee benefit plans. The Employee
shall also be entitled during the period of actual employment to such paid
vacation as is provided in the policy adopted by the Board of Directors. For
purposes of this Agreement, the term "period of actual employment" means the
portion of the Employment Term during which the Employee is employed, but not
the portion following the Employee's termination of employment.
2
<PAGE>
4.4. OFFICE AND SECRETARY. The Employee shall have a private office,
--------------------
secretarial assistance and such other facilities and services as are suitable to
his position and appropriate for the performance of his duties.
4.5. AUTOMOBILES. The Employee shall be provided with automobiles
-----------
suitable to his position and appropriate for the performance of his duties in
Atlanta, Georgia and Nashville, Tennessee. The Company shall pay the operating
expenses of such automobiles.
4.6. REIMBURSEMENT OF EXPENSES. The Company shall provide for the
-------------------------
payment or reimbursement of all reasonable and necessary expenses incurred by
the Employee in connection with the performance of his duties under this
Agreement in accordance with the Company's expense reimbursement policy, as such
may change from time to time.
5. TERMINATION OF EMPLOYMENT.
-------------------------
5.1. TERMINATION FOR CAUSE. "Termination For Cause", as hereinafter
---------------------
defined, may be effected by the Company at any time during the term of this
Agreement by written notification to the Employee. Upon Termination For Cause,
the Employee shall immediately be paid all accrued salary, bonus compensation to
the extent earned, vested deferred compensation (other than pension plan or
profit sharing plan benefits which will be paid in accordance with the
applicable plan), any benefits under any plans of the Company in which the
Employee is a participant to the full extent of the Employee's rights under such
plans, accrued vacation pay and any appropriate business expenses incurred by
the Employee in connection with his duties hereunder, all to the date of
termination, but the Employee shall not be paid any other compensation or
reimbursement of any kind, including without limitation, severance compensation.
"Termination For Cause" shall mean termination by the Company of the Employee's
employment by the Company by reason of the Employee's willful dishonesty
towards, fraud upon, or deliberate injury or attempted injury to the Company or
by reason of the Employee's willful material breach of this Agreement which has
resulted in material injury to the Company.
5.2. TERMINATION OTHER THAN FOR CAUSE. Notwithstanding any other
--------------------------------
provisions of this Agreement, the Company may effect a "Termination Other Than
For Cause", as hereinafter defined, at any time upon giving written notice to
the Employee of such termination. Upon any Termination Other Than for Cause,
the Employee shall immediately be paid all accrued salary, bonus compensation to
the extent earned, vested deferred compensation (other than pension plan or
profit sharing plan benefits which will be paid in accordance with the
applicable plan), any benefits under any plans of the Company in which the
Employee is a participant to the full extent of the Employee's rights under such
plans, accrued vacation pay and any appropriate business expenses incurred by
the Employee in connection with his duties hereunder, all to the date of
termination, and all severance compensation provided in subsection 6.2.
"Termination Other Than for Cause" shall mean termination by the Company of the
3
<PAGE>
Employee's employment by the Company other than a termination pursuant to
subsection 5.1, 5.3, 5.4, 5.5 or 5.6, and shall include constructive termination
of the Employee's employment by reason of material breach of this Agreement by
the Company, such constructive termination to be effective upon notice from the
Employee to the Company of such constructive termination.
5.3. TERMINATION BY REASON OF DISABILITY. If, during the term of
-----------------------------------
this Agreement, the Employee, in the reasonable judgment of the Board of
Directors, has failed to perform his duties under this Agreement on account of
illness or physical or mental incapacity, and such illness or incapacity
continues for a period of more than twelve (12) consecutive months, the Company
shall have the right to terminate the Employee's employment hereunder by written
notification to the Employee and payment to the Employee of all accrued salary,
bonus compensation to the extent earned, vested deferred compensation (other
than pension plan or profit sharing plan benefits which will be paid in
accordance with the applicable plans), any benefits under any plans of the
Company in which the Employee is a participant to the full extent of the
Employee's rights under such plans, accrued vacation pay and any appropriate
business expenses incurred by the Employee in connection with his duties
hereunder, all to the date of termination, with the exception of medical and
dental benefits which shall continue through the expiration of this Agreement,
but the Employee shall not be paid any other compensation or reimbursement of
any kind, including without limitation, severance compensation.
5.4. DEATH. In the event of the Employee's death during the term of
-----
this Agreement, the Employee's employment shall be deemed to have terminated as
of the last day of the month during which his death occurs and the Company shall
pay to his estate or such beneficiaries as the Employee may from time to time
designate all accrued salary, bonus compensation to the extent earned, vested
deferred compensation (other than pension plan or profit sharing plan benefits
which will be paid in accordance with the applicable plan), any benefits under
any plans of the Company in which the Employee is a participant to the full
extent of Employee's rights under such plans, accrued vacation pay and any
appropriate business expenses incurred by the Employee in connection with his
duties hereunder, all to the date of termination, but the Employee's estate
shall not be paid any other compensation or reimbursement of any kind, including
without limitation, severance compensation.
5.5. VOLUNTARY TERMINATION. In the event of a "Voluntary
---------------------
Termination," as hereinafter defined, the Company shall immediately pay all
accrued salary, bonus compensation to the extent earned, vested deferred
compensation (other than pension plan or profit sharing plan benefits which will
be paid in accordance with the applicable plans), any benefits under any plans
of the Company in which the Employee is a participant to the full extent of the
Employee's rights under such plans, accrued vacation pay and any appropriate
business expenses incurred by the Employee in connection with his duties
hereunder, all to the date of termination, but no other compensation or
reimbursement of any kind, including without limitation, severance compensation.
"Voluntary Termination" shall mean termination by the Employee of Employee's
employment by the Company other than (i) constructive termination as described
in subsection 5.2, (ii) termination by reason of the Employee's disability as
described in subsection 5.3, (iii) termination by reason of the Employee's death
4
<PAGE>
as described in subsection 5.4, and (iv) Termination Upon a Change in Control as
described in subsection 5.6.
5.6. TERMINATION UPON A CHANGE IN CONTROL. In the event of a
------------------------------------
"Termination Upon a Change in Control," as hereinafter defined, the Employee
shall immediately be paid all accrued salary, bonus compensation to the extent
earned, vested deferred compensation (other than pension plan or profit sharing
plan benefits which will be paid in accordance with the applicable plans), any
benefits under any plans of the Company in which Employee is a participant to
the full extent of the Employee's rights under such plans, accrued vacation pay
and any appropriate business expenses incurred by the Employee in connection
with his duties hereunder, all to the date of termination, and all severance
compensation provided in subsection 6.1. "Termination Upon a Change in Control"
shall mean a termination by the Employee of the Employee's employment with the
Company following a "Change in Control," as hereinafter defined. "Change in
Control" shall mean (i) the date on which the Company first determines that any
person and all other persons which constitute a group, within the meaning of
Section 13(d)(3) of the Exchange Act, have acquired direct or indirect
beneficial ownership, within the meaning of Rule 13d-3 under the Exchange Act,
of twenty percent (20%) or more of the Company's outstanding securities, unless
a majority of the "Continuing Directors", as hereinafter defined, approves the
acquisition not later than ten (10) business days after the Company makes that
determination, or (ii) the first day on which a majority of the members of the
Board of Directors are not Continuing Directors. "Continuing Directors" shall
mean, as of any date of determination, any member of the Board of Directors who
(i) was a member of the Board of Directors on December 31, 1993, (ii) has been a
member of the Board of Directors for the two years immediately preceding such
date of determination, or (iii) was nominated for election or elected to the
Board of Directors with the affirmative vote of the greater of (A) a majority of
the Continuing Directors who were members of the Board of Directors at the time
of such nomination or election or (B) at least four Continuing Directors.
5.7. NOTICE OF TERMINATION. The Company or the Employee may effect a
---------------------
termination of the Employee's employment by the Company pursuant to the
provisions of this section 5 upon giving thirty (30) days' written notice to the
other party of such termination.
6. SEVERANCE COMPENSATION
----------------------
6.1. TERMINATION UPON CHANGE IN CONTROL. In the event the Employee's
----------------------------------
employment is terminated in a Termination Upon a Change in Control, the Employee
shall be paid the following as severance compensation:
(a) For each of the three (3) years following such
termination of employment, an amount (payable on the dates specified
in subsection 4.1 except as otherwise provided herein) equal to the
sum of (i) the Base Salary at the rate payable at the time of such
termination and (ii) the average of the annual bonus earned by the
Employee in the two (2) years immediately preceding the date of
termination. If, however, the Employee obtains other employment
5
<PAGE>
during such period, the amount payable under this paragraph (a) shall
be reduced by the amount of compensation that the Employee is
receiving from such other employment; provided, however, the Employee
is under no obligation to mitigate the amount due to the Employee
pursuant to this paragraph (a) by seeking other employment or
otherwise. Notwithstanding any provision in this paragraph (a) to the
contrary, the Employee may, in the Employee's sole discretion, by
delivery of a notice to the Company within thirty (30) days following
a Termination Upon a Change in Control, elect to receive from the
Company a lump sum severance payment by bank cashier's check equal to
the present value of the flow of cash payments that would otherwise be
paid to the Employee pursuant to this paragraph (a). Such present
value shall be determined as of the date of delivery of the notice of
election by the Employee and shall be based on a discount rate equal
to the interest rate on 90-day United States Treasury bills, as
reported in the Wall Street Journal, or similar publication, on the
date of delivery of the election notice. If the Employee elects to
receive a lump sum severance payment, the Company shall make such
payment to the Employee within ten (10) days following the date on
which the Employee notifies the Company of the Employee's election.
(b) In the event that the Employee is not otherwise entitled
to fully exercise all awards granted to the Employee under the
Company's Incentive Stock Plan, and the Incentive Stock Plan does not
otherwise provide for acceleration of exerciseability upon the
occurrence of the Change in Control described herein, such awards
shall become immediately exercisable upon a Change in Control.
(c) The Employee shall continue to accrue retirement
benefits and shall continue to enjoy any benefits under any plans of
the Company in which the Employee is a participant to the full extent
of the Employee's rights under such plans, including any perquisites
provided under this Agreement, through the remainder of the Employment
Term; provided, however, that the benefits under any such plans of the
Company in which the Employee is a participant, including any such
perquisites, shall cease upon the Employee's obtaining other
employment. If necessary to provide such benefits to the Employee,
the Company shall, at its election, either: (i) amend its employee
benefit plans to provide the benefits described in this paragraph (c),
to the extent that such is permissible under the nondiscrimination
requirements and other provisions of the Internal Revenue Code of 1986
(the "Code") and the provisions of the Employee Retirement Income
Security Act of 1974, or (ii) provide separate benefit arrangements or
cash payments so that the Employee receives amounts equivalent
thereto, net of tax consequences.
6
<PAGE>
6.2. TERMINATION OTHER THAN FOR CAUSE. In the event the Employee's
--------------------------------
employment is terminated in a Termination Other Than for Cause, the Employee
shall be paid as severance compensation his Base Salary, at the rate payable at
the time of such termination, through the remainder of the Employment Term and
for an additional one (1) year period thereafter, on the dates specified in
subsection 4.1; provided, however, that if the Employee obtains other employment
during such period, the severance compensation payable to the Employee during
such period will be reduced by the amount of compensation that the Employee is
receiving from such other employment. Notwithstanding any provision in this
subsection 6.2 to the contrary, the Employee may, in the Employee's sole
discretion, by delivery of a notice to the Company within thirty (30) days
following a Termination Other Than for Cause, elect to receive from the Company
a lump sum severance payment by bank cashier's check equal to the present value
of the flow of cash payments that would otherwise be paid to the Employee
pursuant to this subsection 6.2. Such present value shall be determined as of
the date of delivery of the notice of election by the Employee and shall be
based on a discount rate equal to the interest rate on 90-day United States
Treasury bills, as reported in the Wall Street Journal, or similar publication,
on the date of delivery of the election notice. If the Employee elects to
receive a lump sum severance payment, the Company shall make such payment to the
Employee within ten (10) days following the date on which the Employee notifies
the Company of the Employee's election. In addition to the severance payment
payable under this subsection 6.2, the Employee shall be paid an amount equal to
the average annual bonus earned by Employee in the two (2) years immediately
preceding the date of termination and, notwithstanding any provision to the
contrary under the Company's Incentive Stock Plan or any agreements with the
Employee thereunder, the Employee shall be entitled to an accelerated vesting of
any awards granted to the Employee under the Company's Incentive Stock Plan.
6.3. TERMINATION UPON ANY OTHER EVENT. In the event of a Voluntary
--------------------------------
Termination, Termination For Cause, termination by reason of the Employee's
disability pursuant to subsection 5.5 or termination by reason of the Employee's
death pursuant to subsection 5.6, the Employee or his estate shall not be paid
any severance compensation.
6.4. PARACHUTE PAYMENT REDUCTION. Notwithstanding any other
---------------------------
provisions of this Agreement, any amounts payable under this Agreement
(including but not limited to severance payments) shall be limited to the
maximum amount that may be paid so that no such payment will, when combined with
all other amounts to be received by the Employee upon a change in control
(described in Section 280G(b)(2)(A) of the Code), constitute a "parachute
payment" (defined in Section 280G(b)(2) of the Code) and so that no "excess
parachute payments" (defined in Section 280G(b)(1) of the Code) made to the
Employee are taxable to the Employee pursuant to Section 4999 of the Code. The
parties intend that the Employee shall receive the maximum payments permissible
that are not subject to the taxes described in Sections 280G and 4999 of the
Code and shall interpret this provision in accordance with such intention. In
further accord with such intention, nothing herein shall be construed to limit
the Employee's right to receive payments that do not exceed reasonable
compensation for services or to receive payments that are otherwise not taken
into account in calculating "parachute payments" under Section 280G of the Code.
7
<PAGE>
7. OBLIGATIONS CONTINGENT ON PERFORMANCE.
-------------------------------------
The obligations of the Company under this Agreement, including its
obligation to pay the compensation provided for herein, shall be contingent upon
the Employee's performance of his obligations under this Agreement.
8. CONFIDENTIALITY.
---------------
The Employee agrees to hold in strict confidence all information
concerning any matters affecting or relating to the business of the Company,
including without limiting the generality of the foregoing its manner of
operation, plans, protocols, processes, computer programs, tenant lists, client
lists, marketing information and analyses, or other data, without regard to
whether all of the foregoing matters will be deemed confidential or material.
The Employee agrees that he will not, directly or indirectly, use any such
information for the benefit of others than the Company or disclose or
communicate any of such information in any manner whatsoever other than to the
directors, officers, employees, agents and representatives of the Company who
need to know such information, who shall be informed by the Employee of the
confidential nature of such information and directed by the Employee to treat
such information confidentially. Upon the Company's request, the Employee shall
return all information furnished to him related to the business of the Company.
The above limitations on use and disclosure shall not apply to information which
the Employee can demonstrate: (a) was known to the Employee before receipt
thereof from the Company; (b) is learned by the Employee from a third party
entitled to disclose it; or (c) becomes known publicly other than through the
Employee. The parties hereto stipulate that all such information is material
and confidential and gravely affects the effective and successful conduct of the
business of the Company and the Company's goodwill, and that any breach of the
terms of this section 8 shall be a material breach of this Agreement. The terms
of this section 8 shall remain in effect following the termination of this
Agreement.
9. USE OF PROPRIETARY INFORMATION.
------------------------------
The Employee recognizes that the Company possesses a proprietary
interest in all of the information described in section 8 and has the exclusive
right and privilege to use, protect by copyright, patent or trademark,
manufacture or otherwise exploit the processes, ideas and concepts described
therein to the exclusion of the Employee, except as otherwise agreed between the
Company and the Employee in writing. The Employee expressly agrees that any
products, inventions, discoveries or improvements made by the Employee, his
agents or affiliates, during the term of this Agreement, based on or arising out
of the information described in section 8 shall be the property of and inure to
the exclusive benefit of the Company. The Employee further agrees that any and
all products, inventions, discoveries or improvements developed by the Employee
(whether or not able to be protected by copyright, patent or trademark) during
the course of his employment, or involving the use of the Company's time,
materials or other resources, shall be promptly disclosed to the Company and
shall become the exclusive property of the Company.
8
<PAGE>
10. NON-COMPETITION AGREEMENT.
-------------------------
10.1. NON-COMPETITION.
---------------
(a) The Employee agrees that, during the period of actual
employment and, in addition, the period, if applicable, described
in subsection (b) or (c) below, the Employee shall not, without
the prior written consent of the Company, directly or indirectly,
own, manage, operate, control, be connected with as an officer,
employee, partner, consultant or otherwise, or otherwise engage
or participate in, except as an employee of the Company, or any
corporation directly or indirectly controlled by it, any
corporation or other business entity engaged in any activity
competitive with the Company, including the business of owning,
developing, leasing or managing shopping center properties.
Notwithstanding the foregoing, the ownership by the Employee of
less than 2% of any class of the outstanding capital stock of any
corporation conducting such a competitive business which is
regularly traded on a national securities exchange or in the
over-the-counter market shall not be a violation of the foregoing
covenant.
(b) The Employee agrees that if the Employee's employment is
terminated in a Termination Upon a Change in Control pursuant to
section 5.6 hereof, the non-compete restrictions of subsection
10.1(a) shall apply to Employee for one year from the date of
termination.
(c) The Employee agrees that if the Employee's
employment is terminated in a Termination Other Than for Cause
pursuant to section 5.2 hereof, the non-compete restrictions of
subsection 10.1(a) shall apply to Employee for the entire period
during which the Employee is entitled to severance compensation
pursuant to subsection 6.2 (notwithstanding an election by the
Employee to receive a lump sum severance payment for such
period).
10.2. NON-SOLICITATION. During the period of actual employment and,
----------------
in addition, the period, if any, during which the Employee shall be entitled to
severance compensation pursuant to section 6 (notwithstanding an election by the
Employee to receive a lump sum severance payment for such period), the Employee
shall not, except on behalf of or with the prior written consent of the Company,
(a) contact or solicit, directly or indirectly, any customer, client, tenant or
account whose identity the Employee obtained through association with the
Company, regardless of the geographical location of such customer, client,
tenant or account, or (b) directly or indirectly, entice or induce, or attempt
to entice or induce, any employee of the Company to leave such employ, or employ
any such person in any business similar to or in competition with that of the
Company. The Employee hereby acknowledges and agrees that the provisions set
9
<PAGE>
forth in this subsection 10.2 constitute a reasonable restriction on his ability
to compete with the Company.
10.3. SAVING PROVISION. The parties hereto agree that, in the event a
----------------
court of competent jurisdiction shall determine that the geographical or
durational elements of this covenant are unenforceable, such determination shall
not render the entire covenant unenforceable. Rather, the excessive aspects of
the covenant shall be reduced to the threshold which is enforceable, and the
remaining aspects shall not be affected thereby.
10.4. EQUITABLE RELIEF. The Employee acknowledges that the extent of
----------------
damages to the Company from a breach of sections 8, 9 and 10 of this Agreement
would not be readily quantifiable or ascertainable, that monetary damages would
be inadequate to make the Company whole in case of such a breach, and that there
is not and would not be an adequate remedy at law for such a breach. Therefore,
the Employee specifically agrees that the Company is entitled to injunctive or
other equitable relief from a breach of sections 8, 9 and 10 of this Agreement,
and hereby waives and covenants not to assert against a prayer for such relief
that there exists an adequate remedy at law, in monetary damages or otherwise.
11. INDEMNIFICATION.
---------------
11.1. RIGHT TO INDEMNIFICATION. The Company shall indemnify, and on
------------------------
request shall advance funds to, the Employee for expenses (including attorneys'
fees), judgments, penalties, fines and amounts paid in settlement if the
Employee becomes a party to, or is threatened to be made a party to, any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative, investigative or otherwise, by reason of the fact that
the Employee (a) is or was an employee of the Company, or (b) is or was serving
at the request of the Company as a director, officer, partner, trustee, employee
or agent of another corporation, partnership, joint venture, trust, employee
benefit plan or other enterprise, in the manner and to the fullest extent
permitted by applicable law; provided, however, that the Company shall not
indemnify the Employee (a) in any proceeding by or in the right of the Company
against such Employee wherein the Employee shall have been adjudged to be liable
to the Company; (b) in any proceeding charging improper personal benefit to the
Employee, whether or not involving action in the Employee's official capacity,
in which the Employee was adjudged to be liable on the basis that personal
benefit was improperly received; or (c) it is established that (i) the act or
omission of the Employee was material to the matter giving rise to the
proceeding and the act or omission was committed in bad faith or was the result
of active and deliberate dishonesty, (ii) the indemnitee actually received an
improper personal benefit in money, property or services, or (iii) in the case
of any criminal proceeding, the Employee had reasonable cause to believe the act
or omission was unlawful. If applicable law is hereafter amended, any such
amendment shall apply to this Agreement only to the extent mandated by law and
only as to the activities of the Employee subject to indemnification pursuant to
this subsection 11.1 which occur subsequent to the effective date of such
amendment.
10
<PAGE>
11.2. RIGHT OF CLAIMANT TO ENFORCE RIGHTS. Any indemnification or
-----------------------------------
advancement of funds required under this section 11 shall be made promptly, and
in any event within thirty (30) days of the written request of the Employee. If
a determination by the Company that the Employee is entitled to indemnification
pursuant to this section 11 is required, and the Company fails to respond within
thirty (30) days to a written request for indemnity, the Company shall be deemed
to have approved such request. If the Company denies a written request for
indemnity or advancement of expenses, in whole or in part, or if payment in full
pursuant to such request is not made within thirty (30) days, the right to
indemnification and advancement of expenses as granted by this section 11 shall
be enforceable by the Employee in any court of competent jurisdiction. The
Employee's costs and expenses incurred in connection with successfully
establishing the Employee's right to indemnification, in whole or in part, in
any such action or proceeding shall also be indemnified by the Company. Neither
the failure of the Company (including the Board of Directors, independent legal
counsel or the stockholders of the Company) to have made a determination prior
to the commencement of such action that indemnification of the Employee is
proper in the circumstances because the Employee has met the applicable standard
of conduct set forth in the General Corporation Law of the State of Maryland,
nor the fact that there has been an actual determination by the Company
(including the Board of Directors, independent legal counsel or the shareholders
of the Company) that the Employee has not met such applicable standard of
conduct, shall be a defense to the action or create a presumption that the
Employee has not met the applicable standard of conduct.
11.3. NON-EXCLUSIVITY OF RIGHTS. The indemnification and advancement
-------------------------
of expenses provided by, or granted pursuant to, this section 11 shall not be
deemed exclusive of any other rights to which the Employee may be entitled by
law, the Company's Articles of Incorporation or Bylaws, an agreement with the
Company, or a resolution of the Board of Directors or of the Company's
shareholders. Any repeal or modification of the provisions of this section 11
shall be prospective only and shall not adversely affect any right or protection
set forth herein in favor of the Employee at the time of such repeal or
modification.
11.4. INSURANCE. The Company may, to the fullest extent permitted by
---------
law, purchase and maintain insurance, at its expense, to protect itself and the
Employee against any liability asserted against the Employee and incurred by the
Employee in any such capacity, or arising out of the Employee's duties
hereunder, whether or not the Company would have the power to indemnify the
Employee against such liability under the provisions of this section 11, the
General Corporation Law of the State of Maryland or otherwise.
11.5. SAVING PROVISION. If this section 11 or any portion thereof
----------------
shall be invalidated on any ground by any court of competent jurisdiction, then
the Company shall nevertheless indemnify the Employee as to expenses (including
attorneys' fees), judgments, fines, penalties and amounts paid in settlement
with respect to any actual or threatened action, suit or proceeding, whether
civil, criminal, administrative, investigative or otherwise, to the fullest
extent permitted by any applicable portion of this section 11 which shall not
have been invalidated, by the General Corporation Law of the State of Maryland
or by any other applicable law.
11
<PAGE>
12. ENTIRE AGREEMENT.
----------------
This Agreement contains the complete agreement concerning the
employment arrangement between the parties and shall, as of the Effective Date,
supersede all other agreements or arrangements between the parties with regard
to the subject matter hereof.
13. BINDING AGREEMENT.
-----------------
This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective heirs, legal representatives, successors and
assigns. The obligations of the Company under this Agreement shall not be
terminated by reason of any liquidation, dissolution, bankruptcy, cessation of
business or similar event relating to the Company. This Agreement shall not be
terminated by reason of any merger, consolidation or reorganization of the
Company, but shall be binding upon and inure to the benefit of the surviving or
resulting entity.
14. MODIFICATION.
------------
No waiver or modification of this Agreement or of any covenant,
condition, or limitation herein contained shall be valid unless in writing and
duly executed by the party to be charged therewith and no evidence of any waiver
or modification shall be offered or received in evidence of any proceeding,
arbitration, or litigation between the parties hereto arising out of or
affecting this Agreement, or the rights or obligations of the parties
thereunder, unless such waiver or modification is in writing, duly executed as
aforesaid.
15. SEVERABILITY.
------------
All agreements and covenants contained herein are severable, and in
the event any of them shall be held to be invalid or unenforceable by any court
of competent jurisdiction, this Agreement shall be interpreted as if such
invalid agreements or covenants were not contained herein.
16. MANNER OF GIVING NOTICE.
-----------------------
All notices, requests and demands to or upon the respective parties
hereto shall be sent by hand, certified mail, overnight air courier service, or
telecopier (if within a reasonable time a permanent copy is given by any of the
other methods described above), in each case with all applicable charges paid or
otherwise provided for, addressed as follows, or to such other address as may
hereafter be designated in writing by the respective parties hereto:
12
<PAGE>
To Company:
----------
JDN Realty Corporation
3340 Peachtree Road, NE
Suite 1530
Atlanta, Georgia 30326
Telephone: (404) 262-3252
Facsimile: (404) 364-6446
To Employee:
-----------
Mr. J. Donald Nichols
416 Jackson Boulevard
Nashville, Tennessee 37205
Telephone: (615) 269-7444
Facsimile: (615) 269-7491
Such notices, requests and demands shall be deemed to have been given or made on
the date of delivery if delivered by hand or by telecopy and on the next
following date if sent by mail or by air courier service.
17. REMEDIES.
--------
In the event of a breach of this Agreement, the non-breaching party
shall be entitled to such legal and equitable relief as may be provided by law,
and shall further be entitled to recover all costs and expenses, including
reasonable attorneys' fees, incurred in enforcing the non-breaching party's
rights hereunder.
18. HEADINGS.
--------
The headings have been inserted for convenience only and shall not be
deemed to limit or otherwise affect any of the provisions of this Agreement.
19. CHOICE OF LAW.
-------------
It is the intention of the parties hereto that this Agreement and the
performance hereunder be construed in accordance with, under and pursuant to the
laws of the State of Maryland without regard to the jurisdiction in which any
action or special proceeding may be instituted.
13
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date first stated above.
JDN REALTY CORPORATION
By: /s/ Elizabeth L. Nichols
---------------------------------
Elizabeth L. Nichols, President
/s/ J. Donald Nichols
---------------------------------
J. DONALD NICHOLS
14
<PAGE>
EXHIBIT 10.14
JDN REALTY CORPORATION
EMPLOYMENT AGREEMENT
THIS AGREEMENT, dated as of December 1, 1996 (the "Effective Date"),
is by and between ELIZABETH L. NICHOLS (the "Employee") and JDN REALTY
CORPORATION, a Maryland corporation (the "Company").
WITNESSETH:
WHEREAS, the Employee and the Company entered into an Employment
Agreement dated as of February 23, 1994, and the Employee and the Company desire
to amend the terms and conditions of that Employment Agreement effective the
date hereof by entering into this Agreement, which is intended to supersede and
replace in all respects all previous employment agreements between the parties
hereto; and
WHEREAS, the Employee desires to be employed by the Company, and the
Company desires to employ the Employee, on the terms, covenants and conditions
hereinafter set forth in this Agreement.
NOW, THEREFORE, for the reasons set forth above, and in consideration
of the mutual promises and agreements herein set forth, the Company and the
Employee agree as follows:
1. EMPLOYMENT.
----------
Subject to the terms and conditions set forth in this Agreement, on
and as of the Effective Date the Company hereby employs and engages the Employee
to hold the title of President of the Company and perform the duties of such
position as set forth in the Company's Bylaws and as designated by the board of
directors of the Company (the "Board of Directors"). In such capacity, and
subject to review by the Board of Directors, the Employee shall also perform
such duties and responsibilities as may be assigned to her from time to time by
the Board of Directors. The Employee hereby accepts such employment and agrees
to serve the Company as an officer for the term of this Agreement.
2. TERM OF EMPLOYMENT.
------------------
Except as otherwise provided herein, the term of this Agreement shall
be for three (3) years commencing on the Effective Date and ending on the third
anniversary of the Effective Date (the "Employment Term"). While the Employee
is employed hereunder, the Employment Term shall automatically be extended for
one (1) year upon the occurrence of an anniversary of the Effective Date, unless
either party has given notice of intention to terminate ninety (90) days prior
<PAGE>
to such anniversary of the Effective Date, or unless the Employee's employment
has otherwise terminated as hereinafter provided.
3. DEVOTION TO DUTIES.
------------------
The Employee agrees that during the period that she is employed
hereunder she shall devote substantially all her business time and attention to
the business and affairs of the Company, shall use her best efforts to promote
the interests of the Company and shall not enter into any other business
affiliations or arrangements without the prior written consent of the Company.
4. COMPENSATION OF EMPLOYEE.
------------------------
4.1. BASE SALARY. During the term of this Agreement, the Company
-----------
shall pay to the Employee as compensation for the services to be performed by
the Employee a base salary of One Hundred Seventy-Two Thousand Five Hundred
Dollars ($172,500) per year (the "Base Salary"). The Base Salary shall be
payable in installments in accordance with the Company's normal payroll
practice. Commencing on January 1, 1997 and on January 1 of each year
thereafter, or as soon as practicable thereafter, the Compensation Committee of
the Board of Directors (the "Compensation Committee"), or the Board of Directors
if the Compensation Committee is not then in existence, shall review the Base
Salary, and shall authorize, in its discretion, an appropriate increase in the
Base Salary; provided, however, that such increase shall at a minimum be equal
to the cumulative cost-of-living increment on the Base Salary as reported in the
Consumer Price Index, Atlanta, Georgia, All Items, All Urban Consumers,
published by the United States Department of Labor, with January 1, 1996 being
the base date for computing such increment.
4.2. BONUS. In addition to the compensation set forth elsewhere in
-----
this section 4, for each year or portion thereof during the term of this
Agreement and any extensions thereof, the Employee shall be entitled to receive
a bonus in an amount to be determined by the Compensation Committee, or the
Board of Directors if the Compensation Committee is not then in existence, in
its discretion, based upon its evaluation of the Employee's performance during
such year or portion thereof.
4.3. BENEFITS. The Employee shall be entitled to participate, during
--------
the period of actual employment, in all regular employee benefit and deferred
compensation plans established by the Company, including, without limitation,
any savings and profit sharing plan, incentive stock plan, dental and medical
plans, life insurance, and personal catastrophe and disability insurance, such
participation to be as provided in said employee benefit plans. The Employee
shall also be entitled during the period of actual employment to such paid
vacation as is provided in the policy adopted by the Board of Directors. For
purposes of this Agreement, the term "period of actual employment" means the
portion of the Employment Term during which the Employee is employed, but not
the portion following the Employee's termination of employment.
2
<PAGE>
4.4. OFFICE AND SECRETARY. The Employee shall have a private office,
--------------------
secretarial assistance and such other facilities and services as are suitable to
her position and appropriate for the performance of her duties.
4.5. AUTOMOBILES. The Employee shall be provided with automobiles
-----------
suitable to her position and appropriate for the performance of her duties in
Atlanta, Georgia and Nashville, Tennessee. The Company shall pay the operating
expenses of such automobiles.
4.6. REIMBURSEMENT OF EXPENSES. The Company shall provide for the
-------------------------
payment or reimbursement of all reasonable and necessary expenses incurred by
the Employee in connection with the performance of her duties under this
Agreement in accordance with the Company's expense reimbursement policy, as such
may change from time to time.
5. TERMINATION OF EMPLOYMENT.
-------------------------
5.1. TERMINATION FOR CAUSE. "Termination For Cause", as hereinafter
---------------------
defined, may be effected by the Company at any time during the term of this
Agreement by written notification to the Employee. Upon Termination For Cause,
the Employee shall immediately be paid all accrued salary, bonus compensation to
the extent earned, vested deferred compensation (other than pension plan or
profit sharing plan benefits which will be paid in accordance with the
applicable plan), any benefits under any plans of the Company in which the
Employee is a participant to the full extent of the Employee's rights under such
plans, accrued vacation pay and any appropriate business expenses incurred by
the Employee in connection with her duties hereunder, all to the date of
termination, but the Employee shall not be paid any other compensation or
reimbursement of any kind, including without limitation, severance compensation.
"Termination For Cause" shall mean termination by the Company of the Employee's
employment by the Company by reason of the Employee's willful dishonesty
towards, fraud upon, or deliberate injury or attempted injury to the Company or
by reason of the Employee's willful material breach of this Agreement which has
resulted in material injury to the Company.
5.2. TERMINATION OTHER THAN FOR CAUSE. Notwithstanding any other
--------------------------------
provisions of this Agreement, the Company may effect a "Termination Other Than
For Cause", as hereinafter defined, at any time upon giving written notice to
the Employee of such termination. Upon any Termination Other Than for Cause,
the Employee shall immediately be paid all accrued salary, bonus compensation to
the extent earned, vested deferred compensation (other than pension plan or
profit sharing plan benefits which will be paid in accordance with the
applicable plan), any benefits under any plans of the Company in which the
Employee is a participant to the full extent of the Employee's rights under such
plans, accrued vacation pay and any appropriate business expenses incurred by
the Employee in connection with her duties hereunder, all to the date of
termination, and all severance compensation provided in subsection 6.2.
"Termination Other Than for Cause" shall mean termination by the Company of the
Employee's employment by the Company other than a termination pursuant to
3
<PAGE>
subsection 5.1, 5.3, 5.4, 5.5 or 5.6, and shall include constructive termination
of the Employee's employment by reason of material breach of this Agreement by
the Company, such constructive termination to be effective upon notice from the
Employee to the Company of such constructive termination.
5.3. TERMINATION BY REASON OF DISABILITY. If, during the term of this
-----------------------------------
Agreement, the Employee, in the reasonable judgment of the Board of Directors,
has failed to perform her duties under this Agreement on account of illness or
physical or mental incapacity, and such illness or incapacity continues for a
period of more than twelve (12) consecutive months, the Company shall have the
right to terminate the Employee's employment hereunder by written notification
to the Employee and payment to the Employee of all accrued salary, bonus
compensation to the extent earned, vested deferred compensation (other than
pension plan or profit sharing plan benefits which will be paid in accordance
with the applicable plans), any benefits under any plans of the Company in which
the Employee is a participant to the full extent of the Employee's rights under
such plans, accrued vacation pay and any appropriate business expenses incurred
by the Employee in connection with her duties hereunder, all to the date of
termination, with the exception of medical and dental benefits which shall
continue through the expiration of this Agreement, but the Employee shall not be
paid any other compensation or reimbursement of any kind, including without
limitation, severance compensation.
5.4. DEATH. In the event of the Employee's death during the term of
-----
this Agreement, the Employee's employment shall be deemed to have terminated as
of the last day of the month during which her death occurs and the Company shall
pay to her estate or such beneficiaries as the Employee may from time to time
designate all accrued salary, bonus compensation to the extent earned, vested
deferred compensation (other than pension plan or profit sharing plan benefits
which will be paid in accordance with the applicable plan), any benefits under
any plans of the Company in which the Employee is a participant to the full
extent of Employee's rights under such plans, accrued vacation pay and any
appropriate business expenses incurred by the Employee in connection with her
duties hereunder, all to the date of termination, but the Employee's estate
shall not be paid any other compensation or reimbursement of any kind, including
without limitation, severance compensation.
5.5. VOLUNTARY TERMINATION. In the event of a "Voluntary
---------------------
Termination," as hereinafter defined, the Company shall immediately pay all
accrued salary, bonus compensation to the extent earned, vested deferred
compensation (other than pension plan or profit sharing plan benefits which will
be paid in accordance with the applicable plans), any benefits under any plans
of the Company in which the Employee is a participant to the full extent of the
Employee's rights under such plans, accrued vacation pay and any appropriate
business expenses incurred by the Employee in connection with her duties
hereunder, all to the date of termination, but no other compensation or
reimbursement of any kind, including without limitation, severance compensation.
"Voluntary Termination" shall mean termination by the Employee of Employee's
employment by the Company other than (i) constructive termination as described
in subsection 5.2, (ii) termination by reason of the Employee's disability as
described in subsection 5.3, (iii) termination by reason of the Employee's death
4
<PAGE>
as described in subsection 5.4, and (iv) Termination Upon a Change in Control as
described in subsection 5.6.
5.6. TERMINATION UPON A CHANGE IN CONTROL. In the event of a
------------------------------------
"Termination Upon a Change in Control," as hereinafter defined, the Employee
shall immediately be paid all accrued salary, bonus compensation to the extent
earned, vested deferred compensation (other than pension plan or profit sharing
plan benefits which will be paid in accordance with the applicable plans), any
benefits under any plans of the Company in which Employee is a participant to
the full extent of the Employee's rights under such plans, accrued vacation pay
and any appropriate business expenses incurred by the Employee in connection
with her duties hereunder, all to the date of termination, and all severance
compensation provided in subsection 6.1. "Termination Upon a Change in Control"
shall mean a termination by the Employee of the Employee's employment with the
Company following a "Change in Control," as hereinafter defined. "Change in
Control" shall mean (i) the date on which the Company first determines that any
person and all other persons which constitute a group, within the meaning of
Section 13(d)(3) of the Exchange Act, have acquired direct or indirect
beneficial ownership, within the meaning of Rule 13d-3 under the Exchange Act,
of twenty percent (20%) or more of the Company's outstanding securities, unless
a majority of the "Continuing Directors", as hereinafter defined, approves the
acquisition not later than ten (10) business days after the Company makes that
determination, or (ii) the first day on which a majority of the members of the
Board of Directors are not Continuing Directors. "Continuing Directors" shall
mean, as of any date of determination, any member of the Board of Directors who
(i) was a member of the Board of Directors on December 31, 1993, (ii) has been a
member of the Board of Directors for the two years immediately preceding such
date of determination, or (iii) was nominated for election or elected to the
Board of Directors with the affirmative vote of the greater of (A) a majority of
the Continuing Directors who were members of the Board of Directors at the time
of such nomination or election or (B) at least four Continuing Directors.
5.7. NOTICE OF TERMINATION. The Company or the Employee may effect a
---------------------
termination of the Employee's employment by the Company pursuant to the
provisions of this section 5 upon giving thirty (30) days' written notice to the
other party of such termination.
6. SEVERANCE COMPENSATION
----------------------
6.1. TERMINATION UPON CHANGE IN CONTROL. In the event the Employee's
----------------------------------
employment is terminated in a Termination Upon a Change in Control, the Employee
shall be paid the following as severance compensation:
(a) For each of the three (3) years following such termination of
employment, an amount (payable on the dates specified in subsection
4.1 except as otherwise provided herein) equal to the sum of (i) the
Base Salary at the rate payable at the time of such termination and
(ii) the average of the annual bonus earned by the Employee in the two
(2) years immediately preceding the date of termination. If, however,
the Employee obtains other employment during such period, the amount
5
<PAGE>
payable under this paragraph (a) shall be reduced by the amount of
compensation that the Employee is receiving from such other
employment; provided, however, Employee is under no obligation to
mitigate the amount due to the Employee pursuant to this paragraph (a)
by seeking other employment or otherwise. Notwithstanding any
provision in this paragraph (a) to the contrary, the Employee may, in
the Employee's sole discretion, by delivery of a notice to the Company
within thirty (30) days following a Termination Upon a Change in
Control, elect to receive from the Company a lump sum severance
payment by bank cashier's check equal to the present value of the flow
of cash payments that would otherwise be paid to the Employee pursuant
to this paragraph (a). Such present value shall be determined as of
the date of delivery of the notice of election by the Employee and
shall be based on a discount rate equal to the interest rate on 90-day
United States Treasury bills, as reported in the Wall Street Journal,
or similar publication, on the date of delivery of the election
notice. If the Employee elects to receive a lump sum severance
payment, the Company shall make such payment to the Employee within
ten (10) days following the date on which the Employee notifies the
Company of the Employee's election.
(b) In the event that the Employee is not otherwise entitled to
fully exercise all awards granted to the Employee under the Company's
Incentive Stock Plan, and the Incentive Stock Plan does not otherwise
provide for acceleration of exerciseability upon the occurrence of the
Change in Control described herein, such awards shall become
immediately exercisable upon a Change in Control.
(c) The Employee shall continue to accrue retirement benefits and
shall continue to enjoy any benefits under any plans of the Company in
which the Employee is a participant to the full extent of the
Employee's rights under such plans, including any perquisites provided
under this Agreement, through the remainder of the Employment Term;
provided, however, that the benefits under any such plans of the
Company in which the Employee is a participant, including any such
perquisites, shall cease upon the Employee's obtaining other
employment. If necessary to provide such benefits to the Employee,
the Company shall, at its election, either: (i) amend its employee
benefit plans to provide the benefits described in this paragraph (c),
to the extent that such is permissible under the nondiscrimination
requirements and other provisions of the Internal Revenue Code of 1986
(the "Code") and the provisions of the Employee Retirement Income
Security Act of 1974, or (ii) provide separate benefit arrangements or
cash payments so that the Employee receives amounts equivalent
thereto, net of tax consequences.
6.2. TERMINATION OTHER THAN FOR CAUSE. In the event the Employee's
--------------------------------
employment is terminated in a Termination Other Than for Cause, the Employee
shall be paid as severance compensation her Base Salary, at the rate payable at
6
<PAGE>
the time of such termination, through the remainder of the Employment Term and
for an additional one (1) year period thereafter, on the dates specified in
subsection 4.1; provided, however, that if the Employee obtains other employment
during such period, the severance compensation payable to the Employee during
such period will be reduced by the amount of compensation that the Employee is
receiving from such other employment. Notwithstanding any provision in this
subsection 6.2 to the contrary, the Employee may, in the Employee's sole
discretion, by delivery of a notice to the Company within thirty (30) days
following a Termination Other Than for Cause, elect to receive from the Company
a lump sum severance payment by bank cashier's check equal to the present value
of the flow of cash payments that would otherwise be paid to the Employee
pursuant to this subsection 6.2. Such present value shall be determined as of
the date of delivery of the notice of election by the Employee and shall be
based on a discount rate equal to the interest rate on 90-day United States
Treasury bills, as reported in the Wall Street Journal, or similar publication,
on the date of delivery of the election notice. If the Employee elects to
receive a lump sum severance payment, the Company shall make such payment to the
Employee within ten (10) days following the date on which the Employee notifies
the Company of the Employee's election. In addition to the severance payment
payable under this subsection 6.2, the Employee shall be paid an amount equal to
the average annual bonus earned by Employee in the two (2) years immediately
preceding the date of termination and, notwithstanding any provision to the
contrary under the Company's Incentive Stock Plan or any agreements with the
Employee thereunder, the Employee shall be entitled to an accelerated vesting of
any awards granted to the Employee under the Company's Incentive Stock Plan.
6.3. TERMINATION UPON ANY OTHER EVENT. In the event of a Voluntary
--------------------------------
Termination, Termination For Cause, termination by reason of the Employee's
disability pursuant to subsection 5.5 or termination by reason of the Employee's
death pursuant to subsection 5.6, the Employee or her estate shall not be paid
any severance compensation.
6.4. PARACHUTE PAYMENT REDUCTION. Notwithstanding any other
---------------------------
provisions of this Agreement, any amounts payable under this Agreement
(including but not limited to severance payments) shall be limited to the
maximum amount that may be paid so that no such payment will, when combined with
all other amounts to be received by the Employee upon a change in control
(described in Section 280G(b)(2)(A) of the Code), constitute a "parachute
payment" (defined in Section 280G(b)(2) of the Code) and so that no "excess
parachute payments" (defined in Section 280G(b)(1) of the Code) made to the
Employee are taxable to the Employee pursuant to Section 4999 of the Code. The
parties intend that the Employee shall receive the maximum payments permissible
that are not subject to the taxes described in Sections 280G and 4999 of the
Code and shall interpret this provision in accordance with such intention. In
further accord with such intention, nothing herein shall be construed to limit
the Employee's right to receive payments that do not exceed reasonable
compensation for services or to receive payments that are otherwise not taken
into account in calculating "parachute payments" under Section 280G of the Code.
7
<PAGE>
7. OBLIGATIONS CONTINGENT ON PERFORMANCE.
-------------------------------------
The obligations of the Company under this Agreement, including its
obligation to pay the compensation provided for herein, shall be contingent upon
the Employee's performance of her obligations under this Agreement.
8. CONFIDENTIALITY.
---------------
The Employee agrees to hold in strict confidence all information
concerning any matters affecting or relating to the business of the Company,
including without limiting the generality of the foregoing its manner of
operation, plans, protocols, processes, computer programs, tenant lists, client
lists, marketing information and analyses, or other data, without regard to
whether all of the foregoing matters will be deemed confidential or material.
The Employee agrees that she will not, directly or indirectly, use any such
information for the benefit of others than the Company or disclose or
communicate any of such information in any manner whatsoever other than to the
directors, officers, employees, agents and representatives of the Company who
need to know such information, who shall be informed by the Employee of the
confidential nature of such information and directed by the Employee to treat
such information confidentially. Upon the Company's request, the Employee shall
return all information furnished to her related to the business of the Company.
The above limitations on use and disclosure shall not apply to information which
the Employee can demonstrate: (a) was known to the Employee before receipt
thereof from the Company; (b) is learned by the Employee from a third party
entitled to disclose it; or (c) becomes known publicly other than through the
Employee. The parties hereto stipulate that all such information is material
and confidential and gravely affects the effective and successful conduct of the
business of the Company and the Company's goodwill, and that any breach of the
terms of this section 8 shall be a material breach of this Agreement. The terms
of this section 8 shall remain in effect following the termination of this
Agreement.
9. USE OF PROPRIETARY INFORMATION.
------------------------------
The Employee recognizes that the Company possesses a proprietary
interest in all of the information described in section 8 and has the exclusive
right and privilege to use, protect by copyright, patent or trademark,
manufacture or otherwise exploit the processes, ideas and concepts described
therein to the exclusion of the Employee, except as otherwise agreed between the
Company and the Employee in writing. The Employee expressly agrees that any
products, inventions, discoveries or improvements made by the Employee, her
agents or affiliates, during the term of this Agreement, based on or arising out
of the information described in section 8 shall be the property of and inure to
the exclusive benefit of the Company. The Employee further agrees that any and
all products, inventions, discoveries or improvements developed by the Employee
(whether or not able to be protected by copyright, patent or trademark) during
the course of her employment, or involving the use of the Company's time,
materials or other resources, shall be promptly disclosed to the Company and
shall become the exclusive property of the Company.
8
<PAGE>
10. NON-COMPETITION AGREEMENT.
-------------------------
10.1. NON-COMPETITION.
---------------
(a) The Employee agrees that, during the period of actual
employment and, in addition, the period, if applicable, described
in subsection (b) or (c) below, the Employee shall not, without
the prior written consent of the Company, directly or indirectly,
own, manage, operate, control, be connected with as an officer,
employee, partner, consultant or otherwise, or otherwise engage
or participate in, except as an employee of the Company, or any
corporation directly or indirectly controlled by it, any
corporation or other business entity engaged in any activity
competitive with the Company, including the business of owning,
developing, leasing or managing shopping center properties.
Notwithstanding the foregoing, the ownership by the Employee of
less than 2% of any class of the outstanding capital stock of any
corporation conducting such a competitive business which is
regularly traded on a national securities exchange or in the
over-the-counter market shall not be a violation of the foregoing
covenant.
(b) The Employee agrees that if the Employee's employment is
terminated in a Termination Upon a Change in Control pursuant to
section 5.6 hereof, the non-compete restrictions of subsection
10.1(a) shall apply to Employee for one year from the date of
termination.
(c) The Employee agrees that if the Employee's
employment is terminated in a Termination Other Than for Cause
pursuant to section 5.2 hereof, the non-compete restrictions of
subsection 10.1(a) shall apply to Employee for the entire period
during which the Employee is entitled to severance compensation
pursuant to subsection 6.2 (notwithstanding an election by the
Employee to receive a lump sum severance payment for such
period).
10.2. NON-SOLICITATION. During the period of actual employment and,
----------------
in addition, the period, if any, during which the Employee shall be entitled to
severance compensation pursuant to section 6 (notwithstanding an election by the
Employee to receive a lump sum severance payment for such period), the Employee
shall not, except on behalf of or with the prior written consent of the Company,
(a) contact or solicit, directly or indirectly, any customer, client, tenant or
account whose identity the Employee obtained through association with the
Company, regardless of the geographical location of such customer, client,
tenant or account, or (b) directly or indirectly, entice or induce, or attempt
to entice or induce, any employee of the Company to leave such employ, or employ
any such person in any business similar to or in competition with that of the
Company. The Employee hereby acknowledges and agrees that the provisions set
9
<PAGE>
forth in this subsection 10.2 constitute a reasonable restriction on her ability
to compete with the Company.
10.3. SAVING PROVISION. The parties hereto agree that, in the event
----------------
a court of competent jurisdiction shall determine that the geographical or
durational elements of this covenant are unenforceable, such determination shall
not render the entire covenant unenforceable. Rather, the excessive aspects of
the covenant shall be reduced to the threshold which is enforceable, and the
remaining aspects shall not be affected thereby.
10.4. EQUITABLE RELIEF. The Employee acknowledges that the extent of
----------------
damages to the Company from a breach of sections 8, 9 and 10 of this Agreement
would not be readily quantifiable or ascertainable, that monetary damages would
be inadequate to make the Company whole in case of such a breach, and that there
is not and would not be an adequate remedy at law for such a breach. Therefore,
the Employee specifically agrees that the Company is entitled to injunctive or
other equitable relief from a breach of sections 8, 9 and 10 of this Agreement,
and hereby waives and covenants not to assert against a prayer for such relief
that there exists an adequate remedy at law, in monetary damages or otherwise.
11. INDEMNIFICATION.
---------------
11.1. RIGHT TO INDEMNIFICATION. The Company shall indemnify, and on
------------------------
request shall advance funds to, the Employee for expenses (including attorneys'
fees), judgments, penalties, fines and amounts paid in settlement if the
Employee becomes a party to, or is threatened to be made a party to, any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative, investigative or otherwise, by reason of the fact that
the Employee (a) is or was an employee of the Company, or (b) is or was serving
at the request of the Company as a director, officer, partner, trustee, employee
or agent of another corporation, partnership, joint venture, trust, employee
benefit plan or other enterprise, in the manner and to the fullest extent
permitted by applicable law; provided, however, that the Company shall not
indemnify the Employee (a) in any proceeding by or in the right of the Company
against such Employee wherein the Employee shall have been adjudged to be liable
to the Company; (b) in any proceeding charging improper personal benefit to the
Employee, whether or not involving action in the Employee's official capacity,,
in which the Employee was adjudged to be liable on the basis that personal
benefit was improperly received; or (c) it is established that (i) the act or
omission of the Employee was material to the matter giving rise to the
proceeding and the act or omission was committed in bad faith or was the result
of active and deliberate dishonesty, (ii) the indemnitee actually received an
improper personal benefit in money, property or services, or (iii) in the case
of any criminal proceeding, the Employee had reasonable cause to believe the act
or omission was unlawful. If applicable law is hereafter amended, any such
amendment shall apply to this Agreement only to the extent mandated by law and
only as to the activities of the Employee subject to indemnification pursuant to
this subsection 11.1 which occur subsequent to the effective date of such
amendment.
10
<PAGE>
11.2. RIGHT OF CLAIMANT TO ENFORCE RIGHTS. Any indemnification or
-----------------------------------
advancement of funds required under this section 11 shall be made promptly, and
in any event within thirty (30) days of the written request of the Employee. If
a determination by the Company that the Employee is entitled to indemnification
pursuant to this section 11 is required, and the Company fails to respond within
thirty (30) days to a written request for indemnity, the Company shall be deemed
to have approved such request. If the Company denies a written request for
indemnity or advancement of expenses, in whole or in part, or if payment in full
pursuant to such request is not made within thirty (30) days, the right to
indemnification and advancement of expenses as granted by this section 11 shall
be enforceable by the Employee in any court of competent jurisdiction. The
Employee's costs and expenses incurred in connection with successfully
establishing the Employee's right to indemnification, in whole or in part, in
any such action or proceeding shall also be indemnified by the Company. Neither
the failure of the Company (including the Board of Directors, independent legal
counsel or the stockholders of the Company) to have made a determination prior
to the commencement of such action that indemnification of the Employee is
proper in the circumstances because the Employee has met the applicable standard
of conduct set forth in the General Corporation Law of the State of Maryland,
nor the fact that there has been an actual determination by the Company
(including the Board of Directors, independent legal counsel or the shareholders
of the Company) that the Employee has not met such applicable standard of
conduct, shall be a defense to the action or create a presumption that the
Employee has not met the applicable standard of conduct.
11.3. NON-EXCLUSIVITY OF RIGHTS. The indemnification and advancement
-------------------------
of expenses provided by, or granted pursuant to, this section 11 shall not be
deemed exclusive of any other rights to which the Employee may be entitled by
law, the Company's Articles of Incorporation or Bylaws, an agreement with the
Company, or a resolution of the Board of Directors or of the Company's
shareholders. Any repeal or modification of the provisions of this section 11
shall be prospective only and shall not adversely affect any right or protection
set forth herein in favor of the Employee at the time of such repeal or
modification.
11.4. INSURANCE. The Company may, to the fullest extent permitted by
---------
law, purchase and maintain insurance, at its expense, to protect itself and the
Employee against any liability asserted against the Employee and incurred by the
Employee in any such capacity, or arising out of the Employee's duties
hereunder, whether or not the Company would have the power to indemnify the
Employee against such liability under the provisions of this section 11, the
General Corporation Law of the State of Maryland or otherwise.
11.5. SAVING PROVISION. If this section 11 or any portion thereof
----------------
shall be invalidated on any ground by any court of competent jurisdiction, then
the Company shall nevertheless indemnify the Employee as to expenses (including
attorneys' fees), judgments, fines, penalties and amounts paid in settlement
with respect to any actual or threatened action, suit or proceeding, whether
civil, criminal, administrative, investigative or otherwise, to the fullest
extent permitted by any applicable portion of this section 11 which shall not
have been invalidated, by the General Corporation Law of the State of Maryland
or by any other applicable law.
11
<PAGE>
12. ENTIRE AGREEMENT.
----------------
This Agreement contains the complete agreement concerning the
employment arrangement between the parties and shall, as of the Effective Date,
supersede all other agreements or arrangements between the parties with regard
to the subject matter hereof.
13. BINDING AGREEMENT.
-----------------
This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective heirs, legal representatives, successors and
assigns. The obligations of the Company under this Agreement shall not be
terminated by reason of any liquidation, dissolution, bankruptcy, cessation of
business or similar event relating to the Company. This Agreement shall not be
terminated by reason of any merger, consolidation or reorganization of the
Company, but shall be binding upon and inure to the benefit of the surviving or
resulting entity.
14. MODIFICATION.
------------
No waiver or modification of this Agreement or of any covenant,
condition, or limitation herein contained shall be valid unless in writing and
duly executed by the party to be charged therewith and no evidence of any waiver
or modification shall be offered or received in evidence of any proceeding,
arbitration, or litigation between the parties hereto arising out of or
affecting this Agreement, or the rights or obligations of the parties
thereunder, unless such waiver or modification is in writing, duly executed as
aforesaid.
15. SEVERABILITY.
------------
All agreements and covenants contained herein are severable, and in
the event any of them shall be held to be invalid or unenforceable by any court
of competent jurisdiction, this Agreement shall be interpreted as if such
invalid agreements or covenants were not contained herein.
16. MANNER OF GIVING NOTICE.
-----------------------
All notices, requests and demands to or upon the respective parties
hereto shall be sent by hand, certified mail, overnight air courier service, or
telecopier (if within a reasonable time a permanent copy is given by any of the
other methods described above), in each case with all applicable charges paid or
otherwise provided for, addressed as follows, or to such other address as may
hereafter be designated in writing by the respective parties hereto:
12
<PAGE>
To Company:
----------
JDN Realty Corporation
3340 Peachtree Road, NE
Suite 1530
Atlanta, Georgia 30326
Telephone: (404) 262-3252
Facsimile: (404) 364-6446
To Employee:
-----------
Ms. Elizabeth L. Nichols
416 Jackson Boulevard
Nashville, Tennessee 37205
Telephone: (615) 269-7444
Facsimile: (615) 269-7491
Such notices, requests and demands shall be deemed to have been given or made on
the date of delivery if delivered by hand or by telecopy and on the next
following date if sent by mail or by air courier service.
17. REMEDIES.
--------
In the event of a breach of this Agreement, the non-breaching party
shall be entitled to such legal and equitable relief as may be provided by law,
and shall further be entitled to recover all costs and expenses, including
reasonable attorneys' fees, incurred in enforcing the non-breaching party's
rights hereunder.
18. HEADINGS.
--------
The headings have been inserted for convenience only and shall not be
deemed to limit or otherwise affect any of the provisions of this Agreement.
19. CHOICE OF LAW.
-------------
It is the intention of the parties hereto that this Agreement and the
performance hereunder be construed in accordance with, under and pursuant to the
laws of the State of Maryland without regard to the jurisdiction in which any
action or special proceeding may be instituted.
13
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date first stated above.
JDN REALTY CORPORATION
By: /s/ J. Donald Nichols
--------------------------
J. Donald Nichols
Chief Executive Officer
/s/ Elizabeth L. Nichols
--------------------------
ELIZABETH L. NICHOLS
14
<PAGE>
EXHIBIT 10.15
JDN REALTY CORPORATION
EMPLOYMENT AGREEMENT
THIS AGREEMENT, dated as of December 1, 1996 (the "Effective Date"),
is by and between WILLIAM J. KERLEY (the "Employee") and JDN REALTY CORPORATION,
a Maryland corporation (the "Company").
WITNESSETH:
WHEREAS, the Employee and the Company entered into an Employment
Agreement dated as of May 1, 1996, and the Employee and the Company desire to
amend the terms and conditions of that Employment Agreement effective the date
hereof by entering into this Agreement, which is intended to supersede and
replace in all respects all previous employment agreements between the parties
hereto; and
WHEREAS, the Employee desires to be employed by the Company, and the
Company desires to employ the Employee, on the terms, covenants and conditions
hereinafter set forth in this Agreement.
NOW, THEREFORE, for the reasons set forth above, and in consideration
of the mutual promises and agreements herein set forth, the Company and the
Employee agree as follows:
1. EMPLOYMENT.
----------
Subject to the terms and conditions set forth in this Agreement, on
and as of the Effective Date the Company hereby employs and engages the Employee
to hold the titles of Chief Financial Officer, Secretary and Treasurer of the
Company and perform the duties of such positions as set forth in the Company's
Bylaws and as designated by the board of directors of the Company (the "Board of
Directors"). In such capacities, and subject to review by the Board of
Directors, the Employee shall also perform such duties and responsibilities as
may be assigned to him from time to time by the Board of Directors. The
Employee hereby accepts such employment and agrees to serve the Company as an
officer for the term of this Agreement.
2. TERM OF EMPLOYMENT.
------------------
Except as otherwise provided herein, the term of this Agreement shall
be for two (2) years commencing on the Effective Date and ending on the second
anniversary of the Effective Date (the "Employment Term"). While the Employee
is employed hereunder, the Employment Term shall automatically be extended for
one (1) year upon the occurrence of an anniversary of the Effective Date, unless
either party has given notice of intention to terminate ninety (90) days prior
<PAGE>
to such anniversary of the Effective Date, or unless the Employee's employment
has otherwise terminated as hereinafter provided.
3. DEVOTION TO DUTIES.
------------------
The Employee agrees that during the period that he is employed
hereunder, he shall devote substantially all his business time and attention to
the business and affairs of the Company, shall use his best efforts to promote
the interests of the Company and shall not enter into any other business
affiliations or arrangements without the prior written consent of the Company.
4. COMPENSATION OF EMPLOYEE.
------------------------
4.1. BASE SALARY. During the term of this Agreement, the Company
-----------
shall pay to the Employee as compensation for the services to be performed by
the Employee a base salary of One Hundred Forty Thousand Dollars ($140,000) per
year (the "Base Salary"). The Base Salary shall be payable in installments in
accordance with the Company's normal payroll practice. Commencing on January 1,
1997 and on January 1 of each year thereafter, or as soon as practicable
thereafter, the Compensation Committee of the Board of Directors (the
"Compensation Committee"), or the Board of Directors if the Compensation
Committee is not then in existence, shall review the Base Salary, and shall
authorize, in its discretion, an appropriate increase in the Base Salary;
provided, however, that such increase shall at a minimum be equal to the
cumulative cost-of-living increment on the Base Salary as reported in the
Consumer Price Index, Atlanta, Georgia, All Items, All Urban Consumers,
published by the United States Department of Labor, with January 1, 1996 being
the base date for computing such increment.
4.2. BONUS. In addition to the compensation set forth elsewhere in
-----
this section 4, for each year or portion thereof during the term of this
Agreement and any extensions thereof, the Employee shall be entitled to receive
a bonus in an amount to be determined by the Compensation Committee, or the
Board of Directors if the Compensation Committee is not then in existence, in
its discretion, based upon its evaluation of the Employee's performance during
such year or portion thereof.
4.3. BENEFITS. The Employee shall be entitled to participate, during
--------
the period of actual employment, in all regular employee benefit and deferred
compensation plans established by the Company, including, without limitation,
any savings and profit sharing plan, incentive stock plan, dental and medical
plans, life insurance, and personal catastrophe and disability insurance, such
participation to be as provided in said employee benefit plans. The Employee
shall also be entitled during the period of actual employment to such paid
vacation as is provided in the policy adopted by the Board of Directors. For
purposes of this Agreement, the term "period of actual employment" means the
portion of the Employment Term during which the Employee is employed, but not
the portion following the Employee's termination of employment.
2
<PAGE>
4.4. OFFICE AND SECRETARY. The Employee shall have a private office,
--------------------
secretarial assistance and such other facilities and services as are suitable to
his position and appropriate for the performance of his duties.
4.5. AUTOMOBILE. The Employee shall be provided with an automobile
----------
suitable to his position and appropriate for the performance of his duties. The
Company shall pay the operating expenses of such automobile.
4.6. REIMBURSEMENT OF EXPENSES. The Company shall provide for the
-------------------------
payment or reimbursement of all reasonable and necessary expenses incurred by
the Employee in connection with the performance of his duties under this
Agreement in accordance with the Company's expense reimbursement policy, as such
may change from time to time.
5. TERMINATION OF EMPLOYMENT.
-------------------------
5.1. TERMINATION FOR CAUSE. "Termination For Cause", as hereinafter
---------------------
defined, may be effected by the Company at any time during the term of this
Agreement by written notification to the Employee. Upon Termination For Cause,
the Employee shall immediately be paid all accrued salary, bonus compensation to
the extent earned, vested deferred compensation (other than pension plan or
profit sharing plan benefits which will be paid in accordance with the
applicable plan), any benefits under any plans of the Company in which the
Employee is a participant to the full extent of the Employee's rights under such
plans, accrued vacation pay and any appropriate business expenses incurred by
the Employee in connection with his duties hereunder, all to the date of
termination, but the Employee shall not be paid any other compensation or
reimbursement of any kind, including without limitation, severance compensation.
"Termination For Cause" shall mean termination by the Company of the Employee's
employment by the Company by reason of the Employee's willful dishonesty
towards, fraud upon, or deliberate injury or attempted injury to the Company or
by reason of the Employee's willful material breach of this Agreement which has
resulted in material injury to the Company.
5.2. TERMINATION OTHER THAN FOR CAUSE. Notwithstanding any other
--------------------------------
provisions of this Agreement, the Company may effect a "Termination Other Than
For Cause", as hereinafter defined, at any time upon giving written notice to
the Employee of such termination. Upon any Termination Other Than for Cause,
the Employee shall immediately be paid all accrued salary, bonus compensation to
the extent earned, vested deferred compensation (other than pension plan or
profit sharing plan benefits which will be paid in accordance with the
applicable plan), any benefits under any plans of the Company in which the
Employee is a participant to the full extent of the Employee's rights under such
plans, accrued vacation pay and any appropriate business expenses incurred by
the Employee in connection with his duties hereunder, all to the date of
termination, and all severance compensation provided in subsection 6.2.
"Termination Other Than for Cause" shall mean termination by the Company of the
3
<PAGE>
Employee's employment by the Company other than a termination pursuant to
subsection 5.1, 5.3, 5.4, 5.5 or 5.6, and shall include constructive termination
of the Employee's employment by reason of material breach of this Agreement by
the Company, such constructive termination to be effective upon notice from the
Employee to the Company of such constructive termination.
5.3. TERMINATION BY REASON OF DISABILITY. If, during the term of
-----------------------------------
this Agreement, the Employee, in the reasonable judgment of the Board of
Directors, has failed to perform his duties under this Agreement on account of
illness or physical or mental incapacity, and such illness or incapacity
continues for a period of more than twelve (12) consecutive months, the Company
shall have the right to terminate the Employee's employment hereunder by written
notification to the Employee and payment to the Employee of all accrued salary,
bonus compensation to the extent earned, vested deferred compensation (other
than pension plan or profit sharing plan benefits which will be paid in
accordance with the applicable plans), any benefits under any plans of the
Company in which the Employee is a participant to the full extent of the
Employee's rights under such plans, accrued vacation pay and any appropriate
business expenses incurred by the Employee in connection with his duties
hereunder, all to the date of termination, with the exception of medical and
dental benefits which shall continue through the expiration of this Agreement,
but the Employee shall not be paid any other compensation or reimbursement of
any kind, including without limitation, severance compensation.
5.4. DEATH. In the event of the Employee's death during the term of
-----
this Agreement, the Employee's employment shall be deemed to have terminated as
of the last day of the month during which his death occurs and the Company shall
pay to his estate or such beneficiaries as the Employee may from time to time
designate all accrued salary, bonus compensation to the extent earned, vested
deferred compensation (other than pension plan or profit sharing plan benefits
which will be paid in accordance with the applicable plan), any benefits under
any plans of the Company in which the Employee is a participant to the full
extent of Employee's rights under such plans, accrued vacation pay and any
appropriate business expenses incurred by the Employee in connection with his
duties hereunder, all to the date of termination, but the Employee's estate
shall not be paid any other compensation or reimbursement of any kind, including
without limitation, severance compensation.
5.5. VOLUNTARY TERMINATION. In the event of a "Voluntary
---------------------
Termination," as hereinafter defined, the Company shall immediately pay all
accrued salary, bonus compensation to the extent earned, vested deferred
compensation (other than pension plan or profit sharing plan benefits which will
be paid in accordance with the applicable plans), any benefits under any plans
of the Company in which the Employee is a participant to the full extent of the
Employee's rights under such plans, accrued vacation pay and any appropriate
business expenses incurred by the Employee in connection with his duties
hereunder, all to the date of termination, but no other compensation or
reimbursement of any kind, including without limitation, severance compensation.
"Voluntary Termination" shall mean termination by the Employee of Employee's
employment by the Company other than (i) constructive termination as described
4
<PAGE>
in subsection 5.2, (ii) termination by reason of the Employee's disability as
described in subsection 5.3, (iii) termination by reason of the Employee's death
as described in subsection 5.4, and (iv) Termination Upon a Change in Control as
described in subsection 5.6.
5.6. TERMINATION UPON A CHANGE IN CONTROL. In the event of a
------------------------------------
"Termination Upon a Change in Control," as hereinafter defined, the Employee
shall immediately be paid all accrued salary, bonus compensation to the extent
earned, vested deferred compensation (other than pension plan or profit sharing
plan benefits which will be paid in accordance with the applicable plans), any
benefits under any plans of the Company in which Employee is a participant to
the full extent of the Employee's rights under such plans, accrued vacation pay
and any appropriate business expenses incurred by the Employee in connection
with his duties hereunder, all to the date of termination, and all severance
compensation provided in subsection 6.1. "Termination Upon a Change in Control"
shall mean a termination by the Employee of the Employee's employment with the
Company following a "Change in Control," as hereinafter defined. "Change in
Control" shall mean (i) the date on which the Company first determines that any
person and all other persons which constitute a group, within the meaning of
Section 13(d)(3) of the Exchange Act, have acquired direct or indirect
beneficial ownership, within the meaning of Rule 13d-3 under the Exchange Act,
of twenty percent (20%) or more of the Company's outstanding securities, unless
a majority of the "Continuing Directors", as hereinafter defined, approves the
acquisition not later than ten (10) business days after the Company makes that
determination, or (ii) the first day on which a majority of the members of the
Board of Directors are not Continuing Directors. "Continuing Directors" shall
mean, as of any date of determination, any member of the Board of Directors who
(i) was a member of the Board of Directors on December 31, 1993, (ii) has been a
member of the Board of Directors for the two years immediately preceding such
date of determination, or (iii) was nominated for election or elected to the
Board of Directors with the affirmative vote of the greater of (A) a majority of
the Continuing Directors who were members of the Board of Directors at the time
of such nomination or election or (B) at least four Continuing Directors.
5.7. NOTICE OF TERMINATION. The Company or the Employee may effect a
---------------------
termination of the Employee's employment by the Company pursuant to the
provisions of this section 5 upon giving thirty (30) days' written notice to the
other party of such termination.
6. SEVERANCE COMPENSATION
----------------------
6.1. TERMINATION UPON CHANGE IN CONTROL. In the event the Employee's
----------------------------------
employment is terminated in a Termination Upon a Change in Control, the Employee
shall be paid the following as severance compensation:
(a) For each of the three (3) years following such termination of
employment, an amount (payable on the dates specified in subsection
4.1 except as otherwise provided herein) equal to the sum of (i) the
Base Salary at the rate payable at the time of such termination and
(ii) the average of the annual bonus earned by the Employee in the two
(2) years immediately preceding the date of termination. If, however,
5
<PAGE>
the Employee obtains other employment during such period, the amount
payable under this paragraph (a) shall be reduced by the amount of
compensation that the Employee is receiving from such other
employment; provided, however, the Employee is under no obligation to
mitigate the amount due to the Employee pursuant to this paragraph (a)
by seeking other employment or otherwise. Notwithstanding any
provision in this paragraph (a) to the contrary, the Employee may, in
the Employee's sole discretion, by delivery of a notice to the Company
within thirty (30) days following a Termination Upon a Change in
Control, elect to receive from the Company a lump sum severance
payment by bank cashier's check equal to the present value of the flow
of cash payments that would otherwise be paid to the Employee pursuant
to this paragraph (a). Such present value shall be determined as of
the date of delivery of the notice of election by the Employee and
shall be based on a discount rate equal to the interest rate on 90-day
United States Treasury bills, as reported in the Wall Street Journal,
or similar publication, on the date of delivery of the election
notice. If the Employee elects to receive a lump sum severance
payment, the Company shall make such payment to the Employee within
ten (10) days following the date on which the Employee notifies the
Company of the Employee's election.
(b) In the event that the Employee is not otherwise entitled to
fully exercise all awards granted to the Employee under the Company's
Incentive Stock Plan, and the Incentive Stock Plan does not otherwise
provide for acceleration of exerciseability upon the occurrence of the
Change in Control described herein, such awards shall become
immediately exercisable upon a Change in Control.
(c) The Employee shall continue to accrue retirement benefits and
shall continue to enjoy any benefits under any plans of the Company in
which the Employee is a participant to the full extent of the
Employee's rights under such plans, including any perquisites provided
under this Agreement, through the remainder of the Employment Term;
provided, however, that the benefits under any such plans of the
Company in which the Employee is a participant, including any such
perquisites, shall cease upon the Employee's obtaining other
employment. If necessary to provide such benefits to the Employee,
the Company shall, at its election, either: (i) amend its employee
benefit plans to provide the benefits described in this paragraph (c),
to the extent that such is permissible under the nondiscrimination
requirements and other provisions of the Internal Revenue Code of 1986
(the "Code") and the provisions of the Employee Retirement Income
Security Act of 1974, or (ii) provide separate benefit arrangements or
cash payments so that the Employee receives amounts equivalent
thereto, net of tax consequences.
6.2. TERMINATION OTHER THAN FOR CAUSE. In the event the Employee's
--------------------------------
employment is terminated in a Termination Other Than for Cause, the Employee
6
<PAGE>
shall be paid as severance compensation his Base Salary, at the rate payable at
the time of such termination, through the remainder of the Employment Term and
for an additional one (1) year period thereafter, on the dates specified in
subsection 4.1; provided, however, that if the Employee obtains other employment
during such period, the severance compensation payable to the Employee during
such period will be reduced by the amount of compensation that the Employee is
receiving from such other employment. Notwithstanding any provision in this
subsection 6.2 to the contrary, the Employee may, in the Employee's sole
discretion, by delivery of a notice to the Company within thirty (30) days
following a Termination Other Than for Cause, elect to receive from the Company
a lump sum severance payment by bank cashier's check equal to the present value
of the flow of cash payments that would otherwise be paid to the Employee
pursuant to this subsection 6.2. Such present value shall be determined as of
the date of delivery of the notice of election by the Employee and shall be
based on a discount rate equal to the interest rate on 90-day United States
Treasury bills, as reported in the Wall Street Journal, or similar publication,
on the date of delivery of the election notice. If the Employee elects to
receive a lump sum severance payment, the Company shall make such payment to the
Employee within ten (10) days following the date on which the Employee notifies
the Company of the Employee's election. In addition to the severance payment
payable under this subsection 6.2, the Employee shall be paid an amount equal to
the average annual bonus earned by Employee in the two (2) years immediately
preceding the date of termination and, notwithstanding any provision to the
contrary under the Company's Incentive Stock Plan or any option agreements with
the Employee thereunder, the Employee shall be entitled to an accelerated
vesting of any awards granted to the Employee under the Company's Incentive
Stock Plan.
6.3. TERMINATION UPON ANY OTHER EVENT. In the event of a Voluntary
--------------------------------
Termination, Termination For Cause, termination by reason of the Employee's
disability pursuant to subsection 5.5 or termination by reason of the Employee's
death pursuant to subsection 5.6, the Employee or his estate shall not be paid
any severance compensation.
6.4. PARACHUTE PAYMENT REDUCTION. Notwithstanding any other
---------------------------
provisions of this Agreement, any amounts payable under this Agreement
(including but not limited to severance payments) shall be limited to the
maximum amount that may be paid so that no such payment will, when combined with
all other amounts to be received by the Employee upon a change in control
(described in Section 280G(b)(2)(A) of the Code), constitute a "parachute
payment" (defined in Section 280G(b)(2) of the Code) and so that no "excess
parachute payments" (defined in Section 280G(b)(1) of the Code) made to the
Employee are taxable to the Employee pursuant to Section 4999 of the Code. The
parties intend that the Employee shall receive the maximum payments permissible
that are not subject to the taxes described in Sections 280G and 4999 of the
Code and shall interpret this provision in accordance with such intention. In
further accord with such intention, nothing herein shall be construed to limit
the Employee's right to receive payments that do not exceed reasonable
compensation for services or to receive payments that are otherwise not taken
into account in calculating "parachute payments" under Section 280G of the Code.
7
<PAGE>
7. OBLIGATIONS CONTINGENT ON PERFORMANCE.
-------------------------------------
The obligations of the Company under this Agreement, including its
obligation to pay the compensation provided for herein, shall be contingent upon
the Employee's performance of his obligations under this Agreement.
8. CONFIDENTIALITY.
---------------
The Employee agrees to hold in strict confidence all information
concerning any matters affecting or relating to the business of the Company,
including without limiting the generality of the foregoing its manner of
operation, plans, protocols, processes, computer programs, tenant lists, client
lists, marketing information and analyses, or other data, without regard to
whether all of the foregoing matters will be deemed confidential or material.
The Employee agrees that he will not, directly or indirectly, use any such
information for the benefit of others than the Company or disclose or
communicate any of such information in any manner whatsoever other than to the
directors, officers, employees, agents and representatives of the Company who
need to know such information, who shall be informed by the Employee of the
confidential nature of such information and directed by the Employee to treat
such information confidentially. Upon the Company's request, the Employee shall
return all information furnished to him related to the business of the Company.
The above limitations on use and disclosure shall not apply to information which
the Employee can demonstrate: (a) was known to the Employee before receipt
thereof from the Company; (b) is learned by the Employee from a third party
entitled to disclose it; or (c) becomes known publicly other than through the
Employee. The parties hereto stipulate that all such information is material
and confidential and gravely affects the effective and successful conduct of the
business of the Company and the Company's goodwill, and that any breach of the
terms of this section 8 shall be a material breach of this Agreement. The terms
of this section 8 shall remain in effect following the termination of this
Agreement.
9. USE OF PROPRIETARY INFORMATION.
------------------------------
The Employee recognizes that the Company possesses a proprietary
interest in all of the information described in section 8 and has the exclusive
right and privilege to use, protect by copyright, patent or trademark,
manufacture or otherwise exploit the processes, ideas and concepts described
therein to the exclusion of the Employee, except as otherwise agreed between the
Company and the Employee in writing. The Employee expressly agrees that any
products, inventions, discoveries or improvements made by the Employee, his
agents or affiliates, during the term of this Agreement, based on or arising out
of the information described in section 8 shall be the property of and inure to
the exclusive benefit of the Company. The Employee further agrees that any and
all products, inventions, discoveries or improvements developed by the Employee
(whether or not able to be protected by copyright, patent or trademark) during
the course of his employment, or involving the use of the Company's time,
materials or other resources, shall be promptly disclosed to the Company and
shall become the exclusive property of the Company.
8
<PAGE>
10. NON-COMPETITION AGREEMENT.
-------------------------
10.1. NON-COMPETITION.
---------------
(a) The Employee agrees that, during the period of actual
employment and, in addition, the period, if applicable, described in
subsection (b) or (c) below, the Employee shall not, without the prior
written consent of the Company, directly or indirectly, own, manage,
operate, control, be connected with as an officer, employee, partner,
consultant or otherwise, or otherwise engage or participate in, except
as an employee of the Company, or any corporation directly or
indirectly controlled by it, any corporation or other business entity
engaged in any activity competitive with the Company, including the
business of owning, developing, leasing or managing shopping center
properties. Notwithstanding the foregoing, the ownership by the
Employee of less than 2% of any class of the outstanding capital stock
of any corporation conducting such a competitive business which is
regularly traded on a national securities exchange or in the over-the-
counter market shall not be a violation of the foregoing covenant.
(b) The Employee agrees that if the Employee's employment is
terminated in a Termination Upon a Change in Control pursuant to
section 5.6 hereof, the non-compete restrictions of subsection 10.1(a)
shall apply to Employee for one year from the date of termination.
(c) The Employee agrees that if the Employee's employment is
terminated in a Termination Other Than for Cause pursuant to section
5.2 hereof, the non-compete restrictions of subsection 10.1(a) shall
apply to Employee for the entire period during which the Employee is
entitled to severance compensation pursuant to subsection 6.2
(notwithstanding an election by the Employee to receive a lump sum
severance payment for such period).
10.2. NON-SOLICITATION. During the period of actual employment and,
----------------
in addition, the period, if any, during which the Employee shall be entitled to
severance compensation pursuant to section 6 (notwithstanding an election by the
Employee to receive a lump sum severance payment for such period), the Employee
shall not, except on behalf of or with the prior written consent of the Company,
(a) contact or solicit, directly or indirectly, any customer, client, tenant or
account whose identity the Employee obtained through association with the
Company, regardless of the geographical location of such customer, client,
tenant or account, or (b) directly or indirectly, entice or induce, or attempt
to entice or induce, any employee of the Company to leave such employ, or employ
any such person in any business similar to or in competition with that of the
Company. The Employee hereby acknowledges and agrees that the provisions set
forth in this subsection 10.2 constitute a reasonable restriction on his ability
to compete with the Company.
9
<PAGE>
10.3. SAVING PROVISION. The parties hereto agree that, in the event a
----------------
court of competent jurisdiction shall determine that the geographical or
durational elements of this covenant are unenforceable, such determination shall
not render the entire covenant unenforceable. Rather, the excessive aspects of
the covenant shall be reduced to the threshold which is enforceable, and the
remaining aspects shall not be affected thereby.
10.4. EQUITABLE RELIEF. The Employee acknowledges that the extent of
----------------
damages to the Company from a breach of sections 8, 9 and 10 of this Agreement
would not be readily quantifiable or ascertainable, that monetary damages would
be inadequate to make the Company whole in case of such a breach, and that there
is not and would not be an adequate remedy at law for such a breach. Therefore,
the Employee specifically agrees that the Company is entitled to injunctive or
other equitable relief from a breach of sections 8, 9 and 10 of this Agreement,
and hereby waives and covenants not to assert against a prayer for such relief
that there exists an adequate remedy at law, in monetary damages or otherwise.
11. INDEMNIFICATION.
---------------
11.1. RIGHT TO INDEMNIFICATION. The Company shall indemnify, and on
------------------------
request shall advance funds to, the Employee for expenses (including attorneys'
fees), judgments, penalties, fines and amounts paid in settlement if the
Employee becomes a party to, or is threatened to be made a party to, any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative, investigative or otherwise, by reason of the fact that
the Employee (a) is or was an employee of the Company, or (b) is or was serving
at the request of the Company as a director, officer, partner, trustee, employee
or agent of another corporation, partnership, joint venture, trust, employee
benefit plan or other enterprise, in the manner and to the fullest extent
permitted by applicable law; provided, however, that the Company shall not
indemnify the Employee (a) in any proceeding by or in the right of the Company
against such Employee wherein the Employee shall have been adjudged to be liable
to the Company; (b) in any proceeding charging improper personal benefit to the
Employee, whether or not involving action in the Employee's official capacity,
in which the Employee was adjudged to be liable on the basis that personal
benefit was improperly received; or (c) it is established that (i) the act or
omission of the Employee was material to the matter giving rise to the
proceeding and the act or omission was committed in bad faith or was the result
of active and deliberate dishonesty, (ii) the indemnitee actually received an
improper personal benefit in money, property or services, or (iii) in the case
of any criminal proceeding, the Employee had reasonable cause to believe the act
or omission was unlawful. If applicable law is hereafter amended, any such
amendment shall apply to this Agreement only to the extent mandated by law and
only as to the activities of the Employee subject to indemnification pursuant to
this subsection 11.1 which occur subsequent to the effective date of such
amendment.
11.2. RIGHT OF CLAIMANT TO ENFORCE RIGHTS. Any indemnification or
-----------------------------------
advancement of funds required under this section 11 shall be made promptly, and
in any event within thirty (30) days of the written request of the Employee. If
a determination by the Company that the Employee is entitled to indemnification
pursuant to this section 11 is required, and the Company fails to respond within
10
<PAGE>
thirty (30) days to a written request for indemnity, the Company shall be deemed
to have approved such request. If the Company denies a written request for
indemnity or advancement of expenses, in whole or in part, or if payment in full
pursuant to such request is not made within thirty (30) days, the right to
indemnification and advancement of expenses as granted by this section 11 shall
be enforceable by the Employee in any court of competent jurisdiction. The
Employee's costs and expenses incurred in connection with successfully
establishing the Employee's right to indemnification, in whole or in part, in
any such action or proceeding shall also be indemnified by the Company. Neither
the failure of the Company (including the Board of Directors, independent legal
counsel or the stockholders of the Company) to have made a determination prior
to the commencement of such action that indemnification of the Employee is
proper in the circumstances because the Employee has met the applicable standard
of conduct set forth in the General Corporation Law of the State of Maryland,
nor the fact that there has been an actual determination by the Company
(including the Board of Directors, independent legal counsel or the shareholders
of the Company) that the Employee has not met such applicable standard of
conduct, shall be a defense to the action or create a presumption that the
Employee has not met the applicable standard of conduct.
11.3. NON-EXCLUSIVITY OF RIGHTS. The indemnification and advancement
-------------------------
of expenses provided by, or granted pursuant to, this section 11 shall not be
deemed exclusive of any other rights to which the Employee may be entitled by
law, the Company's Articles of Incorporation or Bylaws, an agreement with the
Company, or a resolution of the Board of Directors or of the Company's
shareholders. Any repeal or modification of the provisions of this section 11
shall be prospective only and shall not adversely affect any right or protection
set forth herein in favor of the Employee at the time of such repeal or
modification.
11.4. INSURANCE. The Company may, to the fullest extent permitted by
---------
law, purchase and maintain insurance, at its expense, to protect itself and the
Employee against any liability asserted against the Employee and incurred by the
Employee in any such capacity, or arising out of the Employee's duties
hereunder, whether or not the Company would have the power to indemnify the
Employee against such liability under the provisions of this section 11, the
General Corporation Law of the State of Maryland or otherwise.
11.5. SAVING PROVISION. If this section 11 or any portion thereof
----------------
shall be invalidated on any ground by any court of competent jurisdiction, then
the Company shall nevertheless indemnify the Employee as to expenses (including
attorneys' fees), judgments, fines, penalties and amounts paid in settlement
with respect to any actual or threatened action, suit or proceeding, whether
civil, criminal, administrative, investigative or otherwise, to the fullest
extent permitted by any applicable portion of this section 11 which shall not
have been invalidated, by the General Corporation Law of the State of Maryland
or by any other applicable law.
11
<PAGE>
12. ENTIRE AGREEMENT.
----------------
This Agreement contains the complete agreement concerning the
employment arrangement between the parties and shall, as of the Effective Date,
supersede all other agreements or arrangements between the parties with regard
to the subject matter hereof.
13. BINDING AGREEMENT.
-----------------
This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective heirs, legal representatives, successors and
assigns. The obligations of the Company under this Agreement shall not be
terminated by reason of any liquidation, dissolution, bankruptcy, cessation of
business or similar event relating to the Company. This Agreement shall not be
terminated by reason of any merger, consolidation or reorganization of the
Company, but shall be binding upon and inure to the benefit of the surviving or
resulting entity.
14. MODIFICATION.
------------
No waiver or modification of this Agreement or of any covenant,
condition, or limitation herein contained shall be valid unless in writing and
duly executed by the party to be charged therewith and no evidence of any waiver
or modification shall be offered or received in evidence of any proceeding,
arbitration, or litigation between the parties hereto arising out of or
affecting this Agreement, or the rights or obligations of the parties
thereunder, unless such waiver or modification is in writing, duly executed as
aforesaid.
15. SEVERABILITY.
------------
All agreements and covenants contained herein are severable, and in
the event any of them shall be held to be invalid or unenforceable by any court
of competent jurisdiction, this Agreement shall be interpreted as if such
invalid agreements or covenants were not contained herein.
16. MANNER OF GIVING NOTICE.
-----------------------
All notices, requests and demands to or upon the respective parties
hereto shall be sent by hand, certified mail, overnight air courier service, or
telecopier (if within a reasonable time a permanent copy is given by any of the
other methods described above), in each case with all applicable charges paid or
otherwise provided for, addressed as follows, or to such other address as may
hereafter be designated in writing by the respective parties hereto:
12
<PAGE>
To Company:
----------
JDN Realty Corporation
3340 Peachtree Road NE
Suite 1530
Atlanta, Georgia 30326
Telephone: (404) 262-3252
Facsimile: (404) 364-6446
To Employee:
-----------
William J. Kerley
3340 Peachtree Road NE
Suite 1530
Atlanta, Georgia 30326
Telephone: (404) 262-3252
Facsimile: (404) 364-6446
Such notices, requests and demands shall be deemed to have been given or made on
the date of delivery if delivered by hand or by telecopy and on the next
following date if sent by mail or by air courier service.
17. REMEDIES.
--------
In the event of a breach of this Agreement, the non-breaching party
shall be entitled to such legal and equitable relief as may be provided by law,
and shall further be entitled to recover all costs and expenses, including
reasonable attorneys' fees, incurred in enforcing the non-breaching party's
rights hereunder.
18. HEADINGS.
--------
The headings have been inserted for convenience only and shall not be
deemed to limit or otherwise affect any of the provisions of this Agreement.
19. CHOICE OF LAW.
-------------
It is the intention of the parties hereto that this Agreement and the
performance hereunder be construed in accordance with, under and pursuant to the
laws of the State of Maryland without regard to the jurisdiction in which any
action or special proceeding may be instituted.
13
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date first stated above.
JDN REALTY CORPORATION
By: /s/ J. Donald Nichols
-----------------------
J. Donald Nichols
Chief Executive Officer
/s/ William J. Kerley
-----------------------
WILLIAM J. KERLEY
14
<PAGE>
EXHIBIT 10.16
JDN REALTY CORPORATION
EMPLOYMENT AGREEMENT
THIS AGREEMENT, dated as of December 1, 1996 (the "Effective Date"),
is by and between DAVID L. HENZLIK (the "Employee") and JDN REALTY CORPORATION,
a Maryland corporation (the "Company").
WITNESSETH:
WHEREAS, the Employee desires to be employed by the Company, and the
Company desires to employ the Employee, on the terms, covenants and conditions
hereinafter set forth in this Agreement.
NOW, THEREFORE, for the reasons set forth above, and in consideration
of the mutual promises and agreements herein set forth, the Company and the
Employee agree as follows:
1. EMPLOYMENT.
----------
Subject to the terms and conditions set forth in this Agreement, on
and as of the Effective Date the Company hereby employs and engages the Employee
to hold the title of Vice President, Leasing of the Company and perform the
duties of such position as set forth in the Company's Bylaws and as designated
by the board of directors of the Company (the "Board of Directors"). In such
capacity, and subject to review by the Board of Directors, the Employee shall
also perform such duties and responsibilities as may be assigned to him from
time to time by the Board of Directors. The Employee hereby accepts such
employment and agrees to serve the Company as an officer for the term of this
Agreement.
2. TERM OF EMPLOYMENT.
------------------
Except as otherwise provided herein, the term of this Agreement shall
be for one (1) year commencing on the Effective Date and ending on the first
anniversary of the Effective Date (the "Employment Term"). While the Employee
is employed hereunder, the Employment Term shall automatically be extended for
one (1) year upon the occurrence of an anniversary of the Effective Date, unless
either party has given notice of intention to terminate ninety (90) days prior
to such anniversary of the Effective Date, or unless the Employee's employment
has otherwise terminated as hereinafter provided.
3. DEVOTION TO DUTIES.
------------------
The Employee agrees that during the period that he is employed
hereunder, he shall devote substantially all his business time and attention to
the business and affairs of the Company, shall use his best efforts to promote
<PAGE>
the interests of the Company and shall not enter into any other business
affiliations or arrangements without the prior written consent of the Company.
4. COMPENSATION OF EMPLOYEE.
------------------------
4.1. BASE SALARY. During the term of this Agreement, the Company
-----------
shall pay to the Employee as compensation for the services to be performed by
the Employee a base salary of One Hundred Seventeen Thousand Dollars ($117,000)
per year (the "Base Salary"). The Base Salary shall be payable in installments
in accordance with the Company's normal payroll practice. Commencing on January
1, 1997 and on January 1 of each year thereafter, or as soon as practicable
thereafter, the Compensation Committee of the Board of Directors (the
"Compensation Committee"), or the Board of Directors if the Compensation
Committee is not then in existence, shall review the Base Salary, and shall
authorize, in its discretion, an appropriate increase in the Base Salary.
4.2. BONUS. In addition to the compensation set forth elsewhere in
-----
this section 4, for each year or portion thereof during the term of this
Agreement and any extensions thereof, the Employee shall be entitled to receive
a bonus in an amount to be determined by the Compensation Committee, or the
Board of Directors if the Compensation Committee is not then in existence, in
its discretion, based upon its evaluation of the Employee's performance during
such year or portion thereof.
4.3. BENEFITS. The Employee shall be entitled to participate, during
--------
the period of actual employment, in all regular employee benefit and deferred
compensation plans established by the Company, including, without limitation,
any savings and profit sharing plan, dental and medical plans, life insurance,
and personal catastrophe and disability insurance, such participation to be as
provided in said employee benefit plans. The Employee shall also be entitled
during the period of actual employment to such paid vacation as is provided in
the policy adopted by the Board of Directors. For purposes of this Agreement,
the term "period of actual employment" means the portion of the Employment Term
during which the Employee is employed, but not the portion following the
Employee's termination of employment.
4.4. OFFICE AND SECRETARY. The Employee shall be provided office
--------------------
space, secretarial assistance and such other facilities and services as are
suitable to his position and appropriate for the performance of his duties.
4.5.REIMBURSEMENT OF EXPENSES. The Company shall provide for the
-------------------------
payment or reimbursement of all reasonable and necessary expenses incurred by
the Employee in connection with the performance of his duties under this
Agreement in accordance with the Company's expense reimbursement policy, as such
may change from time to time.
<PAGE>
5. TERMINATION OF EMPLOYMENT.
-------------------------
5.1. TERMINATION FOR CAUSE. "Termination For Cause", as hereinafter
---------------------
defined, may be effected by the Company at any time during the term of this
Agreement by written notification to the Employee. Upon Termination For Cause,
the Employee shall immediately be paid all accrued salary, bonus compensation to
the extent earned, vested deferred compensation (other than pension plan or
profit sharing plan benefits which will be paid in accordance with the
applicable plan), any benefits under any plans of the Company in which the
Employee is a participant to the full extent of the Employee's rights under such
plans, accrued vacation pay and any appropriate business expenses incurred by
the Employee in connection with his duties hereunder, all to the date of
termination, but the Employee shall not be paid any other compensation or
reimbursement of any kind, including without limitation, severance compensation.
"Termination For Cause" shall mean termination by the Company of the Employee's
employment by the Company by reason of the Employee's willful dishonesty
towards, fraud upon, or deliberate injury or attempted injury to the Company or
by reason of the Employee's willful material breach of this Agreement which has
resulted in material injury to the Company.
5.2. TERMINATION OTHER THAN FOR CAUSE. Notwithstanding any other
--------------------------------
provisions of this Agreement, the Company may effect a "Termination Other Than
For Cause", as hereinafter defined, at any time upon giving written notice to
the Employee of such termination. Upon any Termination Other Than for Cause,
the Employee shall immediately be paid all accrued salary, bonus compensation to
the extent earned, vested deferred compensation (other than pension plan or
profit sharing plan benefits which will be paid in accordance with the
applicable plan), any benefits under any plans of the Company in which the
Employee is a participant to the full extent of the Employee's rights under such
plans, accrued vacation pay and any appropriate business expenses incurred by
the Employee in connection with his duties hereunder, all to the date of
termination, and all severance compensation provided in subsection 6.2.
"Termination Other Than for Cause" shall mean termination by the Company of the
Employee's employment by the Company other than a termination pursuant to
subsection 5.1, 5.3, 5.4, 5.5 or 5.6, and shall include constructive termination
of the Employee's employment by reason of material breach of this Agreement by
the Company, such constructive termination to be effective upon notice from the
Employee to the Company of such constructive termination.
5.3. TERMINATION BY REASON OF DISABILITY. If, during the term of
-----------------------------------
this Agreement, the Employee, in the reasonable judgment of the Board of
Directors, has failed to perform his duties under this Agreement on account of
illness or physical or mental incapacity, and such illness or incapacity
continues for a period of more than twelve (12) consecutive months, the Company
shall have the right to terminate the Employee's employment hereunder by written
notification to the Employee and payment to the Employee of all accrued salary,
bonus compensation to the extent earned, vested deferred compensation (other
than pension plan or profit sharing plan benefits which will be paid in
accordance with the applicable plans), any benefits under any plans of the
<PAGE>
Company in which the Employee is a participant to the full extent of the
Employee's rights under such plans, accrued vacation pay and any appropriate
business expenses incurred by the Employee in connection with his duties
hereunder, all to the date of termination, with the exception of medical and
dental benefits which shall continue through the expiration of this Agreement,
but the Employee shall not be paid any other compensation or reimbursement of
any kind, including without limitation, severance compensation.
5.4. DEATH. In the event of the Employee's death during the term of
-----
this Agreement, the Employee's employment shall be deemed to have terminated as
of the last day of the month during which his death occurs and the Company shall
pay to his estate or such beneficiaries as the Employee may from time to time
designate all accrued salary, bonus compensation to the extent earned, vested
deferred compensation (other than pension plan or profit sharing plan benefits
which will be paid in accordance with the applicable plan), any benefits under
any plans of the Company in which the Employee is a participant to the full
extent of Employee's rights under such plans, accrued vacation pay and any
appropriate business expenses incurred by the Employee in connection with his
duties hereunder, all to the date of termination, but the Employee's estate
shall not be paid any other compensation or reimbursement of any kind, including
without limitation, severance compensation.
5.5. VOLUNTARY TERMINATION. In the event of a "Voluntary
---------------------
Termination," as hereinafter defined, the Company shall immediately pay all
accrued salary, bonus compensation to the extent earned, vested deferred
compensation (other than pension plan or profit sharing plan benefits which will
be paid in accordance with the applicable plans), any benefits under any plans
of the Company in which the Employee is a participant to the full extent of the
Employee's rights under such plans, accrued vacation pay and any appropriate
business expenses incurred by the Employee in connection with his duties
hereunder, all to the date of termination, but no other compensation or
reimbursement of any kind, including without limitation, severance compensation.
"Voluntary Termination" shall mean termination by the Employee of Employee's
employment other than (i) constructive termination as described in subsection
5.2, (ii) termination by reason of the Employee's disability as described in
subsection 5.3, (iii) termination by reason of the Employee's death as described
in subsection 5.4, and (iv) Termination Upon a Change in Control as described in
subsection 5.6.
5.6. TERMINATION UPON A CHANGE IN CONTROL. In the event of a
------------------------------------
"Termination Upon a Change in Control," as hereinafter defined, the Employee
shall immediately be paid all accrued salary, bonus compensation to the extent
earned, vested deferred compensation (other than pension plan or profit sharing
plan benefits which will be paid in accordance with the applicable plans), any
benefits under any plans of the Company in which Employee is a participant to
the full extent of the Employee's rights under such plans, accrued vacation pay
and any appropriate business expenses incurred by the Employee in connection
with his duties hereunder, all to the date of termination, and all severance
compensation provided in subsection 6.1. "Termination Upon a Change in Control"
shall mean a termination by the Employee of the Employee's employment with the
Company following a "Change in Control," as hereinafter defined. "Change in
<PAGE>
Control" shall mean (i) the date on which the Company first determines that any
person and all other persons which constitute a group, within the meaning of
Section 13(d)(3) of the Exchange Act, have acquired direct or indirect
beneficial ownership, within the meaning of Rule 13d-3 under the Exchange Act,
of twenty percent (20%) or more of the Company's outstanding securities, unless
a majority of the "Continuing Directors", as hereinafter defined, approves the
acquisition not later than ten (10) business days after the Company makes that
determination, or (ii) the first day on which a majority of the members of the
Board of Directors are not Continuing Directors. "Continuing Directors" shall
mean, as of any date of determination, any member of the Board of Directors who
(i) was a member of the Board of Directors on December 31, 1993, (ii) has been a
member of the Board of Directors for the two years immediately preceding such
date of determination, or (iii) was nominated for election or elected to the
Board of Directors with the affirmative vote of the greater of (A) a majority of
the Continuing Directors who were members of the Board of Directors at the time
of such nomination or election or (B) at least four Continuing Directors.
5.7. NOTICE OF TERMINATION. The Company or the Employee may effect a
---------------------
termination of the Employee's employment by the Company pursuant to the
provisions of this section 5 upon giving thirty (30) days' written notice to the
other party of such termination.
6. SEVERANCE COMPENSATION
----------------------
6.1. TERMINATION UPON CHANGE IN CONTROL. In the event the Employee's
----------------------------------
employment is terminated in a Termination Upon a Change in Control, the Employee
shall be paid the following as severance compensation:
(a) For one (1) year following such termination of employment, an
amount (payable on the dates specified in subsection 4.1 except as
otherwise provided herein) equal to the sum of (i) the Base Salary at
the rate payable at the time of such termination and (ii) the average
of the annual bonus earned by the Employee in the two (2) years
immediately preceding the date of termination. If, however, the
Employee obtains other employment during such period, the amount
payable under this paragraph (a) shall be reduced by the amount of
compensation that the Employee is receiving from such other
employment; provided, however, the Employee is under no obligation to
mitigate the amount due to the Employee pursuant to this paragraph (a)
by seeking other employment or otherwise. Notwithstanding any
provision in this paragraph (a) to the contrary, the Employee may, in
the Employee's sole discretion, by delivery of a notice to the Company
within thirty (30) days following a Termination Upon a Change in
Control, elect to receive from the Company a lump sum severance
payment by bank cashier's check equal to the present value of the flow
of cash payments that would otherwise be paid to the Employee pursuant
to this paragraph (a). Such present value shall be determined as of
the date of delivery of the notice of election by the Employee and
shall be based on a discount rate equal to the interest rate on 90-day
United States Treasury bills, as reported in the Wall Street Journal,
or similar publication, on the date of delivery of the election
<PAGE>
notice. If the Employee elects to receive a lump sum severance
payment, the Company shall make such payment to the Employee within
ten (10) days following the date on which the Employee notifies the
Company of the Employee's election.
(b) In the event that the Employee is not otherwise entitled to
fully exercise all awards granted to him under the Company's Incentive
Stock Plan, and the Incentive Stock Plan does not otherwise provide
for acceleration of exerciseability upon the occurrence of the Change
in Control described herein, such awards shall become immediately
exercisable upon a Change in Control.
(c) The Employee shall continue to accrue retirement benefits and
shall continue to enjoy any benefits under any plans of the Company in
which the Employee is a participant to the full extent of the
Employee's rights under such plans, including any perquisites provided
under this Agreement, through the remainder of the Employment Term;
provided, however, that the benefits under any such plans of the
Company in which the Employee is a participant, including any such
perquisites, shall cease upon the Employee's obtaining other
employment. If necessary to provide such benefits to the Employee,
the Company shall, at its election, either: (i) amend its employee
benefit plans to provide the benefits described in this paragraph (c),
to the extent that such is permissible under the nondiscrimination
requirements and other provisions of the Internal Revenue Code of 1986
(the "Code") and the provisions of the Employee Retirement Income
Security Act of 1974, or (ii) provide separate benefit arrangements or
cash payments so that the Employee receives amounts equivalent
thereto, net of tax consequences.
6.2. TERMINATION OTHER THAN FOR CAUSE. In the event the Employee's
--------------------------------
employment is terminated in a Termination Other Than for Cause, the Employee
shall be paid as severance compensation his Base Salary, at the rate payable at
the time of such termination, through the remainder of the Employment Term, on
the dates specified in subsection 4.1; provided, however, that if the Employee
obtains other employment during such period, the severance compensation payable
to the Employee during such period will be reduced by the amount of compensation
that the Employee is receiving from such other employment. Notwithstanding any
provision in this subsection 6.2 to the contrary, the Employee may, in the
Employee's sole discretion, by delivery of a notice to the Company within thirty
(30) days following a Termination Other Than for Cause, elect to receive from
the Company a lump sum severance payment by bank cashier's check equal to the
present value of the flow of cash payments that would otherwise be paid to the
Employee pursuant to this subsection 6.2. Such present value shall be
determined as of the date of delivery of the notice of election by the Employee
and shall be based on a discount rate equal to the interest rate on 90-day
United States Treasury bills, as reported in the Wall Street Journal, or similar
publication, on the date of delivery of the election notice. If the Employee
elects to receive a lump sum severance payment, the Company shall make such
<PAGE>
payment to the Employee within ten (10) days following the date on which the
Employee notifies the Company of the Employee's election.
6.3. TERMINATION UPON ANY OTHER EVENT. In the event of a Voluntary
--------------------------------
Termination, Termination For Cause, termination by reason of the Employee's
disability pursuant to subsection 5.5 or termination by reason of the Employee's
death pursuant to subsection 5.6, the Employee or his estate shall not be paid
any severance compensation.
6.4. PARACHUTE PAYMENT REDUCTION. Notwithstanding any other
---------------------------
provisions of this Agreement, any amounts payable under this Agreement
(including but not limited to severance payments) shall be limited to the
maximum amount that may be paid so that no such payment will, when combined with
all other amounts to be received by the Employee upon a change in control
(described in Section 280G(b)(2)(A) of the Code), constitute a "parachute
payment" (defined in Section 280G(b)(2) of the Code) and so that no "excess
parachute payments" (defined in Section 280G(b)(1) of the Code) made to the
Employee are taxable to the Employee pursuant to Section 4999 of the Code. The
parties intend that the Employee shall receive the maximum payments permissible
that are not subject to the taxes described in Sections 280G and 4999 of the
Code and shall interpret this provision in accordance with such intention. In
further accord with such intention, nothing herein shall be construed to limit
the Employee's right to receive payments that do not exceed reasonable
compensation for services or to receive payments that are otherwise not taken
into account in calculating "parachute payments" under Section 280G of the Code.
7. OBLIGATIONS CONTINGENT ON PERFORMANCE.
-------------------------------------
The obligations of the Company under this Agreement, including its
obligation to pay the compensation provided for herein, shall be contingent upon
the Employee's performance of his obligations under this Agreement.
8. CONFIDENTIALITY.
---------------
The Employee agrees to hold in strict confidence all information
concerning any matters affecting or relating to the business of the Company,
including without limiting the generality of the foregoing its manner of
operation, plans, protocols, processes, computer programs, tenant lists, client
lists, marketing information and analyses, or other data, without regard to
whether all of the foregoing matters will be deemed confidential or material.
The Employee agrees that he will not, directly or indirectly, use any such
information for the benefit of others than the Company or disclose or
communicate any of such information in any manner whatsoever other than to the
directors, officers, employees, agents and representatives of the Company who
need to know such information, who shall be informed by the Employee of the
confidential nature of such information and directed by the Employee to treat
such information confidentially. Upon the Company's request, the Employee shall
return all information furnished to him related to the business of the Company.
The above limitations on use and disclosure shall not apply to information which
the Employee can demonstrate: (a) was known to the Employee before receipt
<PAGE>
thereof from the Company; (b) is learned by the Employee from a third party
entitled to disclose it; or (c) becomes known publicly other than through the
Employee. The parties hereto stipulate that all such information is material
and confidential and gravely affects the effective and successful conduct of the
business of the Company and the Company's goodwill, and that any breach of the
terms of this section 8 shall be a material breach of this Agreement. The terms
of this section 8 shall remain in effect following the termination of this
Agreement.
9. USE OF PROPRIETARY INFORMATION.
------------------------------
The Employee recognizes that the Company possesses a proprietary
interest in all of the information described in section 8 and has the exclusive
right and privilege to use, protect by copyright, patent or trademark,
manufacture or otherwise exploit the processes, ideas and concepts described
therein to the exclusion of the Employee, except as otherwise agreed between the
Company and the Employee in writing. The Employee expressly agrees that any
products, inventions, discoveries or improvements made by the Employee, his
agents or affiliates, during the term of this Agreement, based on or arising out
of the information described in section 8 shall be the property of and inure to
the exclusive benefit of the Company. The Employee further agrees that any and
all products, inventions, discoveries or improvements developed by the Employee
(whether or not able to be protected by copyright, patent or trademark) during
the course of his employment, or involving the use of the Company's time,
materials or other resources, shall be promptly disclosed to the Company and
shall become the exclusive property of the Company.
10. NON-COMPETITION AGREEMENT.
-------------------------
10.1. NON-COMPETITION. The Employee agrees that, during the period
---------------
of actual employment, the Employee shall not, without the prior written consent
of the Company, directly or indirectly, own, manage, operate, control, be
connected with as an officer, employee, partner, consultant or otherwise, or
otherwise engage or participate in, except as an employee of the Company, or any
corporation directly or indirectly controlled by it, any corporation or other
business entity engaged in any activity competitive with the Company, including
the business of owning, developing, leasing or managing shopping center
properties. Notwithstanding the foregoing, the ownership by the Employee of
less than 2% of any class of the outstanding capital stock of any corporation
conducting such a competitive business which is regularly traded on a national
securities exchange or in the over-the-counter market shall not be a violation
of the foregoing covenant.
10.2. NON-SOLICITATION. During the period of actual employment, the
----------------
Employee shall not, except on behalf of or with the prior written consent of the
Company, (a) contact or solicit, directly or indirectly, any customer, client,
tenant or account whose identity the Employee obtained through association with
the Company, regardless of the geographical location of such customer, client,
tenant or account, or (b) directly or indirectly, entice or induce, or attempt
to entice or induce, any employee of the Company to leave such employ, or employ
<PAGE>
any such person in any business similar to or in competition with that of the
Company. The Employee hereby acknowledges and agrees that the provisions set
forth in this subsection 10.2 constitute a reasonable restriction on his ability
to compete with the Company.
10.3. SAVING PROVISION. The parties hereto agree that, in the event a
----------------
court of competent jurisdiction shall determine that the geographical or
durational elements of this covenant are unenforceable, such determination shall
not render the entire covenant unenforceable. Rather, the excessive aspects of
the covenant shall be reduced to the threshold which is enforceable, and the
remaining aspects shall not be affected thereby.
10.4. EQUITABLE RELIEF. The Employee acknowledges that the extent of
----------------
damages to the Company from a breach of sections 8, 9 and 10 of this Agreement
would not be readily quantifiable or ascertainable, that monetary damages would
be inadequate to make the Company whole in case of such a breach, and that there
is not and would not be an adequate remedy at law for such a breach. Therefore,
the Employee specifically agrees that the Company is entitled to injunctive or
other equitable relief from a breach of sections 8, 9 and 10 of this Agreement,
and hereby waives and covenants not to assert against a prayer for such relief
that there exists an adequate remedy at law, in monetary damages or otherwise.
11. INDEMNIFICATION.
---------------
11.1. RIGHT TO INDEMNIFICATION. The Company shall indemnify, and on
------------------------
request shall advance funds to, the Employee for expenses (including attorneys'
fees), judgments, penalties, fines and amounts paid in settlement if the
Employee becomes a party to, or is threatened to be made a party to, any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative, investigative or otherwise, by reason of the fact that
the Employee (a) is or was an employee of the Company, or (b) is or was serving
at the request of the Company as a director, officer, partner, trustee, employee
or agent of another corporation, partnership, joint venture, trust, employee
benefit plan or other enterprise, in the manner and to the fullest extent
permitted by applicable law; provided, however, that the Company shall not
indemnify the Employee (a) in any proceeding by or in the right of the Company
against such Employee wherein the Employee shall have been adjudged to be liable
to the Company; (b) in any proceeding charging improper personal benefit to the
Employee, whether or not involving action in the Employee's official capacity,
in which the Employee was adjudged to be liable on the basis that personal
benefit was improperly received; or (c) it is established that (i) the act or
omission of the Employee was material to the matter giving rise to the
proceeding and the act or omission was committed in bad faith or was the result
of active and deliberate dishonesty, (ii) the indemnitee actually received an
improper personal benefit in money, property or services, or (iii) in the case
of any criminal proceeding, the Employee had reasonable cause to believe the act
or omission was unlawful. If applicable law is hereafter amended, any such
amendment shall apply to this Agreement only to the extent mandated by law and
only as to the activities of the Employee subject to indemnification pursuant to
this subsection 11.1 which occur subsequent to the effective date of such
amendment.
<PAGE>
11.2. RIGHT OF CLAIMANT TO ENFORCE RIGHTS. Any indemnification or
-----------------------------------
advancement of funds required under this section 11 shall be made promptly, and
in any event within thirty (30) days of the written request of the Employee. If
a determination by the Company that the Employee is entitled to indemnification
pursuant to this section 11 is required, and the Company fails to respond within
thirty (30) days to a written request for indemnity, the Company shall be deemed
to have approved such request. If the Company denies a written request for
indemnity or advancement of expenses, in whole or in part, or if payment in full
pursuant to such request is not made within thirty (30) days, the right to
indemnification and advancement of expenses as granted by this section 11 shall
be enforceable by the Employee in any court of competent jurisdiction. The
Employee's costs and expenses incurred in connection with successfully
establishing the Employee's right to indemnification, in whole or in part, in
any such action or proceeding shall also be indemnified by the Company. Neither
the failure of the Company (including the Board of Directors, independent legal
counsel or the stockholders of the Company) to have made a determination prior
to the commencement of such action that indemnification of the Employee is
proper in the circumstances because the Employee has met the applicable standard
of conduct set forth in the General Corporation Law of the State of Maryland,
nor the fact that there has been an actual determination by the Company
(including the Board of Directors, independent legal counsel or the shareholders
of the Company) that the Employee has not met such applicable standard of
conduct, shall be a defense to the action or create a presumption that the
Employee has not met the applicable standard of conduct.
11.3. NON-EXCLUSIVITY OF RIGHTS. The indemnification and advancement
-------------------------
of expenses provided by, or granted pursuant to, this section 11 shall not be
deemed exclusive of any other rights to which the Employee may be entitled by
law, the Company's Articles of Incorporation or Bylaws, an agreement with the
Company, or a resolution of the Board of Directors or of the Company's
shareholders. Any repeal or modification of the provisions of this section 11
shall be prospective only and shall not adversely affect any right or protection
set forth herein in favor of the Employee at the time of such repeal or
modification.
11.4. INSURANCE. The Company may, to the fullest extent permitted by
---------
law, purchase and maintain insurance, at its expense, to protect itself and the
Employee against any liability asserted against the Employee and incurred by the
Employee in any such capacity, or arising out of the Employee's duties
hereunder, whether or not the Company would have the power to indemnify the
Employee against such liability under the provisions of this section 11, the
General Corporation Law of the State of Maryland or otherwise.
11.5. SAVING PROVISION. If this section 11 or any portion thereof
----------------
shall be invalidated on any ground by any court of competent jurisdiction, then
the Company shall nevertheless indemnify the Employee as to expenses (including
attorneys' fees), judgments, fines, penalties and amounts paid in settlement
with respect to any actual or threatened action, suit or proceeding, whether
civil, criminal, administrative, investigative or otherwise, to the fullest
extent permitted by any applicable portion of this section 11 which shall not
have been invalidated, by the General Corporation Law of the State of Maryland
or by any other applicable law.
<PAGE>
12. ENTIRE AGREEMENT.
----------------
This Agreement contains the complete agreement concerning the
employment arrangement between the parties and shall, as of the Effective Date,
supersede all other agreements or arrangements between the parties with regard
to the subject matter hereof.
13. BINDING AGREEMENT.
-----------------
This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective heirs, legal representatives, successors and
assigns. The obligations of the Company under this Agreement shall not be
terminated by reason of any liquidation, dissolution, bankruptcy, cessation of
business or similar event relating to the Company. This Agreement shall not be
terminated by reason of any merger, consolidation or reorganization of the
Company, but shall be binding upon and inure to the benefit of the surviving or
resulting entity.
14. MODIFICATION.
------------
No waiver or modification of this Agreement or of any covenant,
condition, or limitation herein contained shall be valid unless in writing and
duly executed by the party to be charged therewith and no evidence of any waiver
or modification shall be offered or received in evidence of any proceeding,
arbitration, or litigation between the parties hereto arising out of or
affecting this Agreement, or the rights or obligations of the parties
thereunder, unless such waiver or modification is in writing, duly executed as
aforesaid.
15. SEVERABILITY.
------------
All agreements and covenants contained herein are severable, and in
the event any of them shall be held to be invalid or unenforceable by any court
of competent jurisdiction, this Agreement shall be interpreted as if such
invalid agreements or covenants were not contained herein.
16. MANNER OF GIVING NOTICE.
-----------------------
All notices, requests and demands to or upon the respective parties
hereto shall be sent by hand, certified mail, overnight air courier service, or
telecopier (if within a reasonable time a permanent copy is given by any of the
other methods described above), in each case with all applicable charges paid or
otherwise provided for, addressed as follows, or to such other address as may
hereafter be designated in writing by the respective parties hereto:
<PAGE>
To Company:
----------
JDN Realty Corporation
3340 Peachtree Road NE
Suite 1530
Atlanta, Georgia 30326
Telephone: (404) 262-3252
Facsimile: (404) 364-6446
To Employee:
-----------
David L. Henzlik
3340 Peachtree Road NE
Suite 1530
Atlanta, Georgia 30326
Telephone: (404) 262-3252
Facsimile: (404) 364-6446
Such notices, requests and demands shall be deemed to have been given or made on
the date of delivery if delivered by hand or by telecopy and on the next
following date if sent by mail or by air courier service.
17. REMEDIES.
--------
In the event of a breach of this Agreement, the non-breaching party
shall be entitled to such legal and equitable relief as may be provided by law,
and shall further be entitled to recover all costs and expenses, including
reasonable attorneys' fees, incurred in enforcing the non-breaching party's
rights hereunder.
18. HEADINGS.
--------
The headings have been inserted for convenience only and shall not be
deemed to limit or otherwise affect any of the provisions of this Agreement.
19. CHOICE OF LAW.
-------------
It is the intention of the parties hereto that this Agreement and the
performance hereunder be construed in accordance with, under and pursuant to the
laws of the State of Maryland without regard to the jurisdiction in which any
action or special proceeding may be instituted.
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date first stated above.
JDN REALTY CORPORATION
By: /s/ J. Donald Nichols
------------------------
J. Donald Nichols
Chief Executive Officer
/s/ David L. Henzlik
-------------------------
DAVID L. HENZLIK
<PAGE>
EXHIBIT 11
Statements Regarding Computation of Per Share Earnings
<TABLE>
<CAPTION>
Period from
March 29, 1994 to
Year Ended December 31, December 31,
1996 1995 1994 (1)
---------------------------------------------------------
<S> <C> <C> <C>
Net income $16,682,000 $10,737,000 $3,198,000
Weighted average shares outstanding 11,085,835 8,819,303 7,530,844
Net income per share $ 1.50 $ 1.22 $ 0.45
</TABLE>
(1) Prior to March 29, 1994, the Company's results of operations represented
combined operations of partnerships and corporations. Therefore, earnings
per share information was not relevant. On March 29, 1994, the Company
completed an initial public offering of its common stock (the "1994
Offering"). The information in this exhibit represents earnings per share
data for the period from March 29, 1994, to December 31, 1994.
<PAGE>
EXHIBIT 21
SUBSIDIARIES OF THE REGISTRANT
Name State of Incorporation
---- ----------------------
JDN Structured Finance 1, Inc. Delaware
JDN Development Company, Inc. Delaware
JDN of Pennsylvania Realty
Corporation Delaware
<PAGE>
EXHIBIT 23
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statement
(Form S-3 No. 33-91222) of JDN Realty Corporation and the related Prospectus,
the Registration Statement (Form S-3 No. 333-22339) of JDN Realty Corporation
and the related Prospectus, the Registration Statement (Form S-3 No. 33-90868)
pertaining to the JDN Realty Corporation Dividend Reinvestment and Stock
Purchase Plan and in the related Prospectus, the Registration Statement (Form
S-8 No. 333-1848) pertaining to the JDN Realty Corporation 1993 Incentive Stock
Plan, the JDN Realty Corporation 1993 Non-Employee Director Stock Option Plan,
and the JDN Realty Corporation 1995 Employee Stock Purchase Plan and in the
related Prospectus of our report dated February 21, 1997, with respect to the
consolidated financial statements and schedules of JDN Realty Corporation
included in the Annual Report (Form 10-K) for the year ended December 31, 1996.
ERNST & YOUNG LLP
Atlanta, Georgia
March 28, 1997
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> YEAR YEAR
<FISCAL-YEAR-END> DEC-31-1996 DEC-31-1995
<PERIOD-START> JAN-01-1996 JAN-01-1995
<PERIOD-END> DEC-31-1996 DEC-31-1995
<CASH> 2,709 3,109
<SECURITIES> 0 0
<RECEIVABLES> 2,208 2,628
<ALLOWANCES> 0 0
<INVENTORY> 0 0
<CURRENT-ASSETS> 0 0
<PP&E> 332,669 276,818
<DEPRECIATION> 27,973 20,312
<TOTAL-ASSETS> 371,986 295,868
<CURRENT-LIABILITIES> 0 0
<BONDS> 0 0
0 0
0 0
<COMMON> 131 100
<OTHER-SE> 226,408 159,886
<TOTAL-LIABILITY-AND-EQUITY> 371,986 295,868
<SALES> 0 0
<TOTAL-REVENUES> 36,623 31,362
<CGS> 0 0
<TOTAL-COSTS> 0 0
<OTHER-EXPENSES> 15,556 13,577
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 5,598 6,977
<INCOME-PRETAX> 16,697 10,782
<INCOME-TAX> 0 0
<INCOME-CONTINUING> 16,697 10,782
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 531
<CHANGES> 0 0
<NET-INCOME> 16,682 10,737
<EPS-PRIMARY> 1.50 1.22
<EPS-DILUTED> 0 0
</TABLE>
