<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended December 31, 1997
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to .
------------------- -------------------
Commission file number 1-12844
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JDN REALTY CORPORATION
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(Exact name of registrant as specified in its charter)
Maryland 58-1468053
------------------------- ------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
359 East Paces Ferry Road, Suite 400, Atlanta, GA 30305
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (404) 262-3252
---------------------------
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
------------------- -----------------------------------------
Common Stock, $.01 Par Value New York Stock Exchange
---------------------------- -----------------------
Securities registered pursuant to Section 12(g) of the Act:
None (Title of Class)
-----------------------------------------------------
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
----- -----
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of the Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]
The aggregate market value of the shares of common stock of the Registrant
(based on the closing price of these shares on the New York Stock Exchange on
March 2, 1998) held by non-affiliates was approximately $639,069,030.
The number of shares outstanding of the Registrant's common stock, $0.01 par
value, was 20,131,658 on March 2, 1998.
DOCUMENTS INCORPORATED BY REFERENCE
-----------------------------------
Documents incorporated by reference and the part of Form 10-K into which the
document is incorporated:
Portions of the Registrant's definitive Proxy Statement relating to the
Annual Meeting of Shareholders to be held on May 14, 1998 are incorporated
into Part III of this report.
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
Form 10-K
Item No. Report Page
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<S> <C>
PART I
1. Business......................................................... 1
2. Properties....................................................... 8
3. Legal Proceedings................................................ 11
4. Submission of Matters to a Vote of Security Holders.............. 11
PART II
5. Market for Registrant's Common Equity and
Related Shareholder Matters..................................... 12
6. Selected Financial Data.......................................... 13
7. Management's Discussion and Analysis of Financial
Condition and Results of Operations............................. 14
7A. Quantitative and Qualitative Disclosures About Market Risk....... 22
8. Financial Statements and Supplementary Data...................... 22
9. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure.......................... 22
PART III
10. Directors and Executive Officers of the Registrant............... 23
11. Executive Compensation........................................... 23
12. Security Ownership of Certain Beneficial Owners and
Management...................................................... 23
13. Certain Relationships and Related Transactions................... 23
PART IV
14. Exhibits, Financial Statement Schedules and
Reports on Form 8-K............................................. 24
</TABLE>
<PAGE>
PART I
Item 1. Business
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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 December 31, 1997, the Company owned and operated,
either directly or indirectly through affiliated entities or joint ventures, 68
shopping center properties containing approximately 8.3 million square feet of
gross leasable area ("Company GLA") located in 12 states, primarily in the
southeastern United States, with the highest concentrations in Georgia, North
Carolina, and Tennessee. As of December 31, 1997, the Company, either directly
or indirectly through affiliated entities or joint ventures, had 29 retail
projects under construction. The principal tenants of the Company's properties
include Wal-Mart, Lowe's, and Kroger. As of December 31, 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 has
elected to be treated as a real estate investment trust ("REIT") for federal
income tax purposes.
The Company's business objective is to increase its funds from operations
and funds from operations per share by (i) development of new shopping centers
anchored by strong shopping center retailers, (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.
DESCRIPTION OF BUSINESS
Development
Management believes that development of new shopping center properties
represents the best opportunity for increasing funds from operations and
enhancing shareholder value. The Company generally develops shopping centers on
assignment from major retailers 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
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 has historically concentrated its development activities in the
Southeast as a result of attractive shopping center development opportunities
with its major anchor tenants in this region. The Company continues to actively
pursue development opportunities within the Southeast based on assignments from
major retailers. The Company is also pursuing development opportunities outside
the Southeast in areas such as the Midwest and Southwest as the result of (i)
increased tenant interest in developments in these areas and (ii) opportunities
in these new areas with local developers in the form of strategic alliance
relationships. These strategic alliance relationships evolve through
relationships the Company has developed with local developers who in turn have
development opportunities in their local markets. The Company typically owns
these projects and compensates the strategic alliance partners on a fee basis.
The Company holds 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
1
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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, 1997, the Company had invested $8.3
million in Development Company in the form of equity capital, $51.6 million in
the form of secured notes receivable and $11.3 million in unsecured advances.
During 1997, the Company, either directly or indirectly through Development
Company and joint ventures, completed all or portions of 16 development
projects. These projects added approximately 1.7 million square feet of gross
leasable area to the Company's operating portfolio of shopping center properties
and cost approximately $129.5 million. As of December 31, 1997, the Company,
either directly or indirectly through Development Company and joint ventures,
had begun construction of a total of 25 projects which when completed are
expected to add approximately 3.4 million square feet of gross leasable area to
the Company's 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.
During 1997, the Company partially completed two redevelopments and began
redevelopment activities on three other shopping centers. In the Company's
Lexington, Virginia and South Boston, Virginia shopping centers, Wal-Mart is
expanding discount stores of approximately 65,000 square feet to Supercenters of
approximately 175,000 square feet. In conjunction with these expansions, the
Company relocated 25,800 square feet in shop space and expanded the shop space
at these centers by an aggregate of 22,600 square feet. The Supercenters are
scheduled to open in the first quarter of 1998. In Canton, Georgia and
Cartersville, Georgia, the Company has begun the process of replacing vacant
Wal-Mart stores with 60,000 square foot Ingles supermarkets. These
redevelopments are scheduled for completion in the fourth quarter 1998. In
Topeka, Kansas, the Company has begun the relocation of Bauerfeld's Grocery to a
47,860 square foot space. This redevelopment is scheduled for completion in the
first quarter 1999.
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 Company's strong
relationships with national and regional non-anchor tenants have contributed to
a majority of the non-anchor retail space of each development project being
leased prior to completion. The leasing staff seeks a complementary mix of
financially qualified tenants. The Company's leasing professionals analyze the
financial condition of each retail prospect, evaluate its business plan and
suitability as a tenant in a particular center and recommend the prospect to
management. This process increases long-term occupancy and reduces tenant
turnover. Successful initial leasing and tenant retention enables the Company to
reduce the cost of re-leasing and to maintain occupancy levels. With respect to
the 40 properties owned by the Company for all of 1997 and 1996:
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. Net operating income increased 1.2% for the year ended December 31, 1997 as
compared to the year ended December 31, 1996, primarily as a result of
leasing of vacant space, rental increases from existing tenants and higher
percentage rent payments.
. At December 31, 1997, the occupancy rate was 98.0%.
. Annualized base rent per square foot increased to $6.59 for the year ended
December 31, 1997 from $6.52 for the year ended December 31, 1996.
As of December 31, 1997, the Company's operating portfolio of 68 shopping
centers properties was 97.1% leased.
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
development, leasing and property management teams can add value through
redevelopment or expansion, leasing of vacant space or increasing rental rates
over time. During 1997, the Company acquired the following shopping center
properties:
Acquisition Company Purchase
Location Date GLA Price
- -------- ----------- ------- --------
Jackson, MS 2/26/97 107,980 $9,100,000
South Boston, VA 3/25/97 77,530 3,350,000
Murfreesboro, TN 7/21/97 71,028 3,488,000
Midlothian, VA 9/09/97 79,407 5,485,000
Ocala, FL 9/11/97 151,338 5,590,000
Stone Mountain, GA 9/10/97 50,922 2,000,000
Chester, VA 9/16/97 116,310 8,683,000
Topeka, KS 10/21/97 125,657 1,850,000
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780,172 $39,546,000
======= ===========
As of December 31, 1997, the Company had executed two contracts to purchase
a total of six shopping center projects. In February 1998, the Company purchased
these six shopping centers for an aggregate purchase price of $71.3 million.
Five of these properties are located in Milwaukee, Wisconsin and one is located
in Fayetteville, North Carolina. These six shopping centers contain a total of
1,296,480 square feet. 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.
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Major Tenants
As of December 31, 1997, approximately 47.9% of gross leasable area owned
directly by the Company and Development Company was leased to Wal-Mart, Lowe's,
and Kroger, and approximately 41.0% of total annualized base rents was
attributable to these tenants. At December 31, 1997, Wal-Mart occupied
approximately 27.3% of gross leasable area owned directly by the Company and
Development Company and accounted for approximately 19.2% of the annualized base
rent. At December 31, 1997, Lowe's occupied approximately 14.9% of gross
leasable area owned by the Company and Development Company and accounted for
15.8% of annualized base rent. No other tenants account for more than 10% of
gross leasable area or annualized base rent in 1997. 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.
On February 2, 1998, Bruno's Inc. ("Bruno's") filed for Chapter 11
bankruptcy protection in federal bankruptcy court in Delaware. At February 28,
1998, Bruno's was a tenant in seven of the Company's shopping centers and owned
space that is part of an eighth shopping center owned by the Company. As of
February 28, 1998, Bruno's represented 3.2% of the Company's annualized base
rent. Management of the Company does not believe that the bankruptcy of Bruno's
will have a material adverse effect on the results of operations or financial
condition of the Company. There can be no assurance, however, that such an
adverse effect will not occur.
Competition
The Company competes with commercial developers, real estate companies and
other real estate owners for development and acquisition opportunities in all of
its market areas. 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 numerous federal, state and local environmental
regulations that apply to the development, ownership and operation of real
property. In developing shopping centers, the Company engages environmental
consultants to determine whether flood plains, wetlands or environmentally
sensitive areas 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.
Four shopping centers acquired in February 1998 are known to contain
friable asbestos elbow fitting insulation on mechanical systems throughout the
shopping centers and may contain other asbestos containing materials. These
materials will be inspected for damage or disturbance periodically and adequate
mediation will be performed in the event of any repairs or renovations on the
affected area. Some of the buildings on the Company's properties were built when
low concentrations of non-friable asbestos were commonly used in building
materials such as roof flashings and vinyl floor tile and may contain non-
friable asbestos building materials. Management believes buildings that contain
limited amounts of friable asbestos which is subject to monitoring by the
Company and materials that contain
4
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low concentrations of non-friable asbestos, when properly managed and maintained
generally do not impose any environmental hazard. The Company's properties may
also be affected by materials that contain polychlorinated bipheynis ("PCBs")
such as electrical transformers owned by other parties located on the Company's
properties. 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 major repairs or renovation activities.
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 five of
the Company's shopping center properties at one time contained underground
storage tanks that were used to store petroleum products, and soil and
groundwater contamination which has been the subject of remediation efforts has
been documented at one of these sites.
The Company's general policy is to obtain a new or updated environmental
assessment each time it develops or acquires a property. The Company had Phase I
environmental assessments conducted on each property on which it began
construction during 1997 and on each property it acquired during 1997.
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. Generally, sellers
do not assume responsibility for any liability relating to existing adverse
environmental conditions that are not known to 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 1, 1998, the Company and Development Company employed 72 full-
time persons and one part-time person including executive, administrative and
field personnel.
5
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Executive Officers
<TABLE>
<CAPTION>
Name Age Positions with the Company
---- --- --------------------------
<S> <C> <C>
J. Donald Nichols 57 Chairman and Chief Executive Officer
Elizabeth L. Nichols 44 President and Director
William J. Kerley 42 Chief Financial Officer, Secretary, Treasurer
Jeb L. Hughes 46 Vice President, Development of JDN Development
Company, Inc.
Leilani L. Jones 36 Vice President and Director of Property
Management and Assistant Secretary
David L. Henzlik 35 Vice President, Leasing
C. Sheldon Whittelsey IV 36 Vice President, Development
John D. Harris, Jr. 38 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"),
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. Mr. Nichols
and Ms. Nichols are husband and wife.
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 and as
Assistant Secretary since May 1997. Ms. Jones joined Enterprises in 1985 and
served as Vice President and Director of Property Management
6
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from 1990 until December 1993. Ms. Jones is a Certified Property Manager and a
Certified Commercial Investment Member.
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.
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Financial Information About Industry Segments
The Company is in the business of development, redevelopment, asset
management and acquisition of 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
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The Company's corporate headquarters are located in a building it owns at
359 East Paces Ferry Road, Suite 400, Atlanta, Georgia 30305. The Company
coordinates most of its corporate activities from its headquarters, although the
Company also maintains offices in Nashville, Tennessee; Charlotte, North
Carolina; Birmingham, Alabama and Los Angeles, California.
As of December 31, 1997, the Company owned and operated, either directly or
indirectly through affiliated entities or joint ventures 68 shopping center
properties totaling approximately 8.3 million square feet of gross leasable
area. The following table sets forth information on these properties as of
December 31, 1997:
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<TABLE>
<CAPTION>
Year Built/
Renovated Total Company Percent
Location or Expanded GLA (1) GLA Leased
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ALABAMA
Decatur 1965/1996 122,956 122,956 99.6%
Gadsden 1979 131,044 85,341 95.4%
Opelika 1993/1995 306,225 306,225 100.0%
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Sub Total 560,225 514,522
% of Portfolio Total 5.2% 6.2%
FLORIDA
Brandon 1997 127,255 0 0.0%
Fort Walton Beach 1986 124,852 21,901 65.8%
Ocala 1984/1991 183,818 151,338 92.9%
Tallahassee 1990/1994 265,301 109,052 98.9%
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Sub Total 701,226 282,291
% of Portfolio Total 6.6% 3.4%
GEORGIA
Canton 1983 131,128 65,252 89.7%
Canton (5) 1996 238,026 238,026 99.4%
Cartersville 1984 135,813 135,813 95.9%
Cartersville 1995 375,828 375,828 100.0%
Conyers (4) 1996 428,116 126,998 98.6%
Cordele 1997 176,054 176,054 94.7%
Cumming 1997 387,748 256,648 99.5%
Eastman 1990 82,907 41,603 100.0%
Fayetteville 1990 156,063 156,063 89.2%
Fort Oglethorpe 1973/1992 176,903 176,903 97.7%
Griffin 1986 172,546 64,771 95.1%
LaFayette 1990 70,849 70,849 85.0%
LaGrange 1984 62,990 62,990 100.0%
Lawrenceville - LTC 1989/1995 322,349 277,079 98.2%
Lawrenceville - FFV 1990 89,064 89,064 97.2%
Lilburn 1990 73,951 73,951 95.8%
Lilburn 1997 132,847 132,847 100.0%
Loganville 1995 95,277 91,197 100.0%
Madison 1989 106,100 106,100 92.3%
Marietta 1997 132,847 132,847 100.0%
Newnan 1995 426,725 360,669 99.3%
Peachtree City 1997 10,800 10,800 100.0%
Riverdale 1989 80,186 22,401 94.6%
Stockbridge 1988 162,779 162,779 97.9%
Stockbridge 1997 10,800 10,800 100.0%
Stone Mountain 1975 50,922 50,922 92.2%
Suwanee 1997 10,800 10,800 100.0%
Union City 1986 181,957 100,005 97.2%
Warner Robins (3) 1997 145,939 145,939 96.5%
Woodstock 1995 164,453 164,453 100.0%
Woodstock 1997 132,847 132,847 100.0%
Woodstock 1997 11,020 11,020 100.0%
----------------------------------
Sub Total 4,936,634 4,034,318
% of Portfolio Total 46.2% 48.5%
KANSAS
Topeka 1976 125,657 125,657 52.4%
----------------------------------
Sub Total 125,657 125,657
% of Portfolio Total 1.2% 1.5%
KENTUCKY
Richmond 1992 229,314 158,042 100.0%
----------------------------------
Sub Total 229,314 158,042
% of Portfolio Total 2.1% 1.9%
<CAPTION>
Annualized
Base Rent
Annualized Per
Location Base Rent Leased SF Anchor Stores
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ALABAMA
Decatur $ 803,068 $ 6.56 Food World
Gadsden 304,262 3.74 Public Wholesale, Food World(2), Eckerd
Opelika 1,826,603 5.96 Wal-Mart, Lowe's, Winn-Dixie, Goody's, CVS
-------------
Sub Total 2,933,933
% of Portfolio Total 5.0%
FLORIDA
Brandon 0 0.00 Lowe's(2)
Fort Walton Beach 178,626 12.40 Wal-Mart(2)
Ocala 660,606 4.70 Wal-Mart, Winn Dixie
Tallahassee 734,060 6.81 Wal-Mart(2), Lowe's
-------------
Sub Total 1,573,292
% of Portfolio Total 2.7%
GEORGIA
Canton 367,079 6.27 Ingles, Revco
Canton (5) 1,693,125 7.16 Wal-Mart
Cartersville 514,933 3.95 Wal-Mart, Ingles, Eckerd
Cartersville 2,332,014 6.21 Wal-Mart, Lowe's
Conyers (4) 1,239,975 9.90 Wal-Mart(2), Home Depot(2), Rhodes,
Sport Shoe Expo, Goody's, PetsMart
Cordele 1,008,045 6.05 Wal-Mart
Cumming 1,615,084 6.32 Wal-Mart, Home Depot(2), Goody's, OfficeMax
Eastman 280,378 6.74 Wal-Mart(2), Food Lion
Fayetteville 1,255,572 9.02 Bruno's, Cinemark Movies, Revco
Fort Oglethorpe 779,307 4.51 Kmart, FoodMax, Revco
Griffin 413,911 6.72 Wal-Mart(2), Winn-Dixie
LaFayette 369,214 6.13 Food Lion, Goody's, Revco
LaGrange 233,063 3.70 Wal-Mart
Lawrenceville - LTC 2,174,588 7.99 Wal-Mart, Kroger, Regal Cinemas
Lawrenceville - FFV 875,154 10.11 Winn-Dixie, Eckerd
Lilburn 620,846 8.76 Kroger
Lilburn N/A N/A Lowe's
Loganville 926,318 10.16 Kroger
Madison 471,267 4.81 Wal-Mart, Ingles, Revco
Marietta N/A N/A Lowe's
Newnan 2,412,555 6.73 Wal-Mart, Lowe's, Uptons(2)
Peachtree City 221,950 20.55 Pike Nurseries
Riverdale 289,028 13.63 Kroger(2)
Stockbridge 785,971 4.93 Kmart, Bruno's
Stockbridge 221,950 20.55 Pike Nurseries
Stone Mountain 274,918 5.85 -
Suwanee 201,250 18.63 Pike Nurseries
Union City 804,288 8.27 Wal-Mart(2), Ingles, Drug Emporium
Warner Robins (3) 1,031,632 7.32 Lowe's
Woodstock 1,450,740 8.82 Wal-Mart
Woodstock N/A N/A Lowe's
Woodstock 270,250 24.52 Pike Nurseries
-------------
Sub Total 28,945,093
% of Portfolio Total 49.6%
KANSAS
Topeka 248,820 3.78 Bauersfeld's Grocery
-------------
Sub Total 248,820
% of Portfolio Total 0.4%
KENTUCKY
Richmond 1,007,748 6.38 Kmart, Lowe's(2), Food Lion
-------------
Sub Total 1,007,748
% of Portfolio Total 1.7%
</TABLE>
9
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<TABLE>
<CAPTION>
Year Built/
Renovated Total Company Percent
Location or Expanded GLA (1) GLA Leased
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
MISSISSIPPI
Jackson 1996 328,239 107,980 95.6%
----------------------------------
Sub Total 328,239 107,980
% of Portfolio Total 3.1% 1.3%
NORTH CAROLINA
Asheville 1996 186,970 186,970 99.1%
Greensboro 1997 370,480 247,939 88.2%
Greenville 1996 323,822 226,822 100.0%
Hendersonville 1988/1995 170,792 133,052 100.0%
Rockingham 1988 168,776 168,776 100.0%
Wallace 1989 118,991 118,991 100.0%
Wilmington 1991 169,432 169,432 100.0%
----------------------------------
Sub Total 1,509,263 1,251,982
% of Portfolio Total 14.1% 15.0%
OHIO
Burlington 1991/1995 356,181 159,359 100.0%
----------------------------------
Sub Total 356,181 159,359
% of Portfolio Total 3.3% 1.9%
PENNSYLVANIA
Monaca 1997 142,514 142,514 94.6%
----------------------------------
Sub Total 142,514 142,514
% of Portfolio Total 1.3% 1.7%
SOUTH CAROLINA
Charleston 1991 188,886 188,886 98.9%
Cheraw 1990 111,029 45,099 97.6%
Lake City 1991 135,962 135,962 100.0%
Sumter 1987 158,293 19,143 100.0%
----------------------------------
Sub Total 594,170 389,090
% of Portfolio Total 5.6% 4.7%
TENNESSEE
Chattanooga 1992 214,579 214,579 98.1%
Columbia 1993 68,948 68,948 100.0%
Farragut 1991 71,311 71,311 100.0%
Franklin 1983 186,000 18,000 100.0%
Goodlettsville 1987 84,945 84,945 100.0%
Memphis 1993 64,223 64,223 100.0%
Murfreesboro 1972/1993 117,750 117,750 100.0%
Murfreesboro 1972/1994 71,028 71,028 100.0%
Tullahoma 1989 70,766 70,766 95.0%
----------------------------------
Sub Total 949,550 781,550
% of Portfolio Total 8.9% 9.4%
VIRGINIA
Chester 1977/1978 116,310 116,310 100.0%
Lexington 1989/1997 93,370 93,370 96.8%
Midlothian 1985 79,408 79,408 97.0%
South Boston 1989/1997 90,330 90,330 95.4%
----------------------------------
Sub Total 379,418 379,418
% of Portfolio Total 3.6% 4.6%
TOTAL 10,686,734 8,326,723 97.1%
=============================================================================================================
<CAPTION>
Annualized
Base Rent
Annualized Per
Location Base Rent Leased SF Anchor Stores
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
MISSISSIPPI
Jackson 998,283 9.67 Target(2), Home Depot(2), Office Depot,
PetsMart, Fred's
----------------
Sub Total 998,283
% of Portfolio Total 1.7%
NORTH CAROLINA
Asheville 1,749,011 9.44 Food Lion, Circuit City, Carmike Cinemas,
Office Max, Michaels
Greensboro 2,036,310 9.31 Target(2), Kroger, Homeplace, Babies 'R Us,
PetsMart
Greenville 2,477,198 10.92 Target(2), Kroger, T.J. Maxx, Circuit City,
Barnes & Noble, Reading China
Hendersonville 720,848 5.42 Wal-Mart, Ingles
Rockingham 940,647 5.57 Wal-Mart, Lowe's, Harris Teeter
Wallace 540,966 4.55 Wal-Mart, Wilson's
Wilmington 1,103,327 6.51 Wal-Mart, Winn-Dixie
----------------
Sub Total 9,568,310
% of Portfolio Total 16.4%
OHIO
Burlington 1,039,609 6.52 Lowe's, Sam's Club(2), Wal-Mart(2)
----------------
Sub Total 1,039,609
% of Portfolio Total 1.8%
PENNSYLVANIA
Monaca 1,102,253 8.18 Lowe's
----------------
Sub Total 1,102,253
% of Portfolio Total 1.9%
SOUTH CAROLINA
Charleston 1,506,280 8.06 Wal-Mart, Food Lion
Cheraw 307,834 7.00 Wal-Mart(2), Food Lion
Lake City 724,231 5.33 Wal-Mart, Food Lion
Sumter 143,591 7.50 Wal-Mart(2), Kroger(2)
----------------
Sub Total 2,681,936
% of Portfolio Total 4.6%
TENNESSEE
Chattanooga 1,529,025 7.26 Kmart, FoodMax
Columbia 516,214 7.49 FoodMax
Farragut 519,015 7.28 BI-LO
Franklin 135,377 7.52 Big Lots(2)
Goodlettsville 700,243 8.24 Kroger
Memphis 540,808 8.42 Kroger
Murfreesboro 796,133 6.76 FoodMax
Murfreesboro 512,570 7.22 FoodMax
Tullahoma 420,160 6.25 BI-LO
----------------
Sub Total 5,669,545
% of Portfolio Total 9.7%
VIRGINIA
Chester 1,004,512 8.64 Ukrop's, Rite-Aid
Lexington 510,066 5.64 Wal-Mart
Midlothian 668,698 8.68 Food Lion, CVS
South Boston 452,784 5.26 Wal-Mart
----------------
Sub Total 2,636,060
% of Portfolio Total 4.5%
TOTAL $58,404,881 $ 7.23
==============================================================================================
</TABLE>
(1) Total GLA includes anchor stores that are not owned.
(2) Anchor store that is not owned.
(3) Lowe's store owned by Development Company. Remainder of center owned by the
Company.
(4) Property is owned by a joint venture which is 60% owned by Development
Company and 40% owned by two unaffiliated third parties.
(5) Wal-Mart store owned by Development Company. Remainder of center owned by
the Company.
N/A Information not disclosed by the Company.
<PAGE>
Item 3. Legal Proceedings
- --------------------------
The Company is, from time to time, a party to legal proceedings which
arise in the ordinary course of its business. The Company is not currently
involved in any litigation nor, to management's knowledge, is any litigation
threatened against the Company, the outcome of which would, in management's
judgement based on information currently available, have a material adverse
effect on the financial position or results of operations of the Company.
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 1997.
11
<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 Declared
----------------------
High Low Per Share
---- --- ---------
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
1997
First Quarter 29.1250 25.2500 0.4750
Second Quarter 31.3750 26.2500 0.5000
Third Quarter 34.0625 30.3750 0.5000
Fourth Quarter 35.0000 30.0000 0.5000
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, as amended, and such other factors as the Board of Directors deems
relevant.
The Company anticipates that for the foreseeable future 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 and
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 return of capital. Such
distributions have the effect of deferring taxation until the sale of a
shareholder's 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 maintains 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 3, 1998, there were 435 holders of record of the Company's
common stock and approximately 19,300 beneficial holders.
12
<PAGE>
Item 6. Selected Financial Data
- --------------------------------
<TABLE>
<CAPTION>
Years Ended December 31,
-----------------------------------------------------------------------
Pro Forma
(dollars in thousands, except per share data) 1997 1996 1995 1994(1) 1994 1993
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Operating Data
Minimum and percentage rents $ 43,346 $ 32,933 $ 27,466 $ 21,889 $ 19,013 $ 8,313
Recoveries from tenants 4,512 3,475 3,245 2,806 2,500 1,070
Other revenue 147 215 651 515 512 1,177
--------- --------------------------------------------------------------
Total revenues 48,005 36,623 31,362 25,210 22,025 10,560
Operating and maintenance expenses 3,201 2,586 2,231 1,878 1,618 893
Real estate taxes 2,540 1,817 1,970 1,504 1,321 545
General and administrative expenses 4,265 3,367 2,818 2,359 2,236 1,954
Depreciation and amortization 10,130 7,786 6,558 5,493 4,768 1,964
--------- --------------------------------------------------------------
Total expenses 20,136 15,556 13,577 11,234 9,943 5,356
Income from operations 27,869 21,067 17,785 13,976 12,082 5,204
Interest expense 4,856 5,598 6,977 6,882 6,919 6,444
Income before extraordinary items and cumulative
effect of change in accounting principle 27,585 16,697 11,268 7,024 5,093 4,216
Net income 21,293 16,682 10,737 7,024 3,001 4,398
Funds From Operations (2)
Funds from operations $ 37,701 $ 24,683 $ 17,234 $ 12,492 $ 9,836 $ 855
Per Share Data (3)
Net income per share
Basic $ 1.38 $ 1.50 $ 1.22 $ 0.93 $ - (4) $ - (4)
Diluted $ 1.36 $ 1.50 $ 1.22 $ 0.93 $ - (4) $ - (4)
Dividends per share $ 1.98 $ 1.88 $ 1.80 $ - $ 1.33 $ -
<CAPTION>
December 31,
---------------------------------------------------------
1997 1996 1995 1994 1993
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Supplemental Data
Shopping center properties 68 48 42 38 25
Gross leasable area (square feet in thousands) 8,327 6,135 4,953 3,971 2,240
Percent of gross leasable area leased 97.1% 98.2% 98.9% 97.9% 96.9%
<CAPTION>
December 31,
------------------------------------------------------------
(dollars in thousands) 1997 1996 1995 1994 1993
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balance Sheet Data
Shopping center properties before accumulated
depreciation $ 535,303 $ 332,669 $ 276,818 $ 229,522 $ 71,818
Total assets 599,753 371,986 295,868 237,008 67,393
Total liabilities 228,165 145,447 135,882 118,837 72,371
Shareholders' equity (owners' deficit) 371,588 226,539 159,986 118,171 (4,978)
</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 ("GAAP"), 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 provided by
operating activities, as defined by GAAP, should not be considered as an
alternative to net income (determined in accordance with GAAP) as an indication
of operating performance and is not indicative of cash available to fund all
cash flow needs, including the Company's ability to make cash distributions.
(3) The earnings per share amounts prior to 1997 have been restated as required
to comply with Statement of Financial Accounting Standards No. 128, Earnings per
Share. For further discussion of earnings per share and the impact of Statement
No. 128, see the notes to the consolidated financial statements.
(4) Earnings per share data for 1994 and 1993 are not relevant because the
results of operations include the period prior to the Company's initial public
offering, which represents combined operations of partnerships and corporations.
Net income per share-basic and net income per share-diluted for the period
subsequent to the Company's initial public offering, March 29, 1994 to December
31, 1994 were each $.42.
13
<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, 1997, the
Company owned and operated, either directly or through affiliated entities or
joint ventures, a total of 68 shopping center properties and had 29 retail
projects under construction. The Company has elected to be taxed as a real
estate investment trust ("REIT") for federal income tax purposes.
The Company holds 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,
1997, the Company had invested $8.3 million in Development Company in the form
of equity capital, $51.6 million in the form of secured notes receivable and
$11.3 million in unsecured advances.
Results of Operations
Comparison of the Year Ended December 31, 1997 to the Year Ended December 31,
1996
Minimum and percentage rents increased $10.4 million or 31.6% to $43.3
million for the year ended December 31, 1997 from $32.9 million for the same
period in 1996. During 1997 and 1996, the Company began operations of 1.9
million square feet from 15 properties which it developed (the "97/96
Development Properties"). Minimum and percentage rents increased $5.6 million
for the year ended December 31, 1997 over the same period in 1996 due to the
97/96 Development Properties. During 1997 and 1996, the Company acquired nine
shopping center properties from unrelated third parties totaling 916,000 million
square feet of gross leasable area. In addition, during 1997, the Company
acquired unaffiliated joint venture partners' interests in the limited liability
companies which owned the Asheville, North Carolina and Loganville, Georgia
properties (the "Joint Ventures") and changed its accounting for these two
properties from the equity method to the consolidated method. Minimum and
percentage rents increased $4.5 million for the year ended December 31, 1997
over the same period in 1996 due to the operations of the 11 properties noted
above (collectively, the "97/96 Acquisition Properties"). The remaining increase
relates to higher rental revenues at the existing properties.
Recoveries from tenants increased $1.0 million or 29.8% to $4.5 million for
the year ended December 31, 1997 from $3.5 million for the same period in 1996.
Of this increase, $346,000 relates to the 97/96 Development Properties and
$716,000 relates to the 97/96 Acquisition Properties. The increases are offset
by a decrease in recoveries at the remaining properties
Other revenue decreased $68,000 or 31.6% to $147,000 for the year ended
December 31, 1997 from $215,000 for the same period in 1996. This decrease is
the result of a reduction in revenues associated with managing and leasing fewer
properties for third-party owners.
Operating and maintenance expenses increased $615,000 or 23.8% to $3.2
million for the year ended December 31, 1997 from $2.6 million for the same
period in 1996. Of this increase, $236,000
14
<PAGE>
relates to the 97/96 Development Properties and $387,000 relates to the 97/96
Acquisition Properties. The increases are offset by a decrease in operating
expenses at the existing properties.
Real estate taxes increased $723,000 or 39.8% to $2.5 million for the year
ended December 31, 1997 from $1.8 million for the same period in 1996. Of this
increase, $171,000 relates to the 97/96 Development Properties and $454,000
relates to the 97/96 Acquisition Properties. The remaining increase relates to
increased taxes at the existing properties.
General and administrative expenses increased $898,000 or 26.7% to $4.3
million for the year ended December 31, 1997 from $3.4 million for the same
period in 1996. General and administrative expenses as a percentage of minimum
and percentage rents decreased to 9.8% for the year ended December 31, 1997 from
10.2% for the year ended December 31, 1996. The increase in absolute dollars
primarily reflects the cost of additional employees and other expenses
associated with an increase in the number of properties owned and operated by
the Company.
Depreciation and amortization expense increased $2.3 million or 30.1% to
$10.1 million for the year ended December 31, 1997 from $7.8 million for the
same period in 1996. Of this increase, $1.2 million relates to the 97/96
Development Properties and $1.0 million relates to the 97/96 Acquisition
Properties. The remaining increase relates primarily to amortization of tenant
improvements, tenant allowances and leasing commissions for new tenants at
existing properties.
Interest expense, net of capitalized amounts, decreased $1.0 million or
17.2% to $4.9 million for the year ended December 31, 1997 from $5.9 million for
the same period in 1996. This decrease is primarily attributable to the
repayment of debt with proceeds from equity offerings in 1996 and 1997.
Other income increased $1.1 million to $1.2 million for the year ended
December 31, 1997 from $68,000 for the same period in 1996. This increase is due
primarily to interest income earned on a $10.5 million mortgage note receivable
purchased in December 1996.
Equity in net income of unconsolidated entities increased $2.0 million to
$3.4 million for the year ended December 31, 1997 from $1.4 million for the same
period in 1996. This increase is due to the operations of the Joint Ventures and
to the operations of the properties operated by Development Company in Canton,
Georgia; Conyers, Georgia; Warner Robins, Georgia; and Steubenville, Ohio. In
addition, Development Company recognized gains due to its increased land sales
activity and the sale of shopping centers in Steubenville, Ohio and Winston-
Salem, North Carolina.
Net loss on real estate sales was $352,000 for the year ended December 31,
1997 compared to $15,000 for the year ended December 31, 1996. The 1997 loss
resulted from the sale of two outparcels located in Wilmington, North Carolina.
The 1996 loss resulted from additional expenses associated with the fourth
quarter 1995 sale of a shopping center located in Hickory, North Carolina.
Extraordinary items of $5.9 million for the year ended December 31, 1997
represent charges to earnings of unamortized deferred financing costs and
prepayment penalties associated with termination of a secured line of credit in
May 1997 and the prepayment of the Term Debt in August 1997. There were no
extraordinary items for the year ended December 31, 1996.
Comparison of the Year Ended December 31, 1996 to the Year Ended December 31,
1995
Minimum and percentage rents increased $5.5 million or 19.9% to $32.9
million for the year ended December 31, 1996 from $27.5 million for the same
period in 1995. During 1996 and 1995, the Company began operations of 1.8
million square feet of 12 properties which it developed (the "96/95 Development
Properties"). Minimum and percentage rents increased $4.8 million for the year
ended December 31, 1996 over the same period in 1995 due to the 1996 Development
Properties. During 1996 and 1995, the Company acquired properties in
Goodlettsville, Tennessee and Decatur, Alabama (the "96/95 Acquisition
Properties"). Minimum and percentage rents increased $700,000 for the year ended
December 31, 1996 over the same period in 1995 due to the 96/95 Acquisition
Properties.
15
<PAGE>
Recoveries from tenants increased $230,000 or 7.1% to $3.5 million for the
year ended December 31, 1996 from $3.2 million for the same period in 1995. Of
this increase, $176,000 relates to the 96/95 Development Properties and $116,000
relates to the 96/95 Acquisition Properties. The increases are offset by a
decrease in recoveries at the remaining properties due to a decrease in
recoverable expenses.
Other revenue decreased $436,000 or 67.0% to $215,000 for the year ended
December 31, 1996 from $651,000 for the same period in 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 15.9% to $2.6
million for the year ended December 31, 1996 from $2.2 million for the same
period in 1995. Of this increase, $169,000 relates to the 96/95 Development
Properties, and $79,000 relates to the 96/95 Acquisition Properties. 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 7.8% 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 the 96/95
Development Properties and a $57,000 increase in property taxes associated with
the 96/95 Acquisition Properties.
General and administrative expenses increased $549,000 or 19.5% to $3.4
million for the year ended December 31, 1996 from $2.8 million for the same
period in 1995. General and administrative expenses as a percentage of minimum
and percentage rents decreased to 10.2% for the year ended December 31, 1996
from 10.3% for the year ended December 31, 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 18.7% to
$7.8 million for the year ended December 31, 1996 from $6.6 million for the same
period in 1995. Of this increase, $1.0 million relates to the 96/95 Development
Properties and $139,000 relates to the 96/95 Acquisition Properties. The
remaining increase relates primarily to amortization of tenant improvements,
tenant allowances and leasing commissions for new tenants.
Interest expense decreased $1.3 million or 18.4% to $5.9 million for the
year ended December 31, 1996 from $7.2 million for the same period in 1995. 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.
Equity in net income of unconsolidated entities represents the Company's
share of the net income of Development Company and the Joint Ventures. 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 a loss of $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
16
<PAGE>
credit with a bank and $128,000 in unamortized deferred financing costs related
to an unscheduled principal payment on a loan.
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 ("GAAP"), 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 provided by
operating activities as defined by GAAP should not be considered an alternative
to net income (determined in accordance with GAAP) as an indication of operating
performance and is not indicative of cash available to fund all cash flow needs,
including the Company's ability to make cash distributions. The Company has
presented below the calculation of FFO for the periods indicated:
<TABLE>
<CAPTION>
Years Ended December 31,
1997 1996 1995
----------------------------------------------------
(in thousands)
<S> <C> <C> <C>
Net income $ 21,293 $ 16,682 $ 10,737
Depreciation of real estate assets 9,497 7,303 6,149
Amortization of tenant allowances and tenant improvements 144 104 106
Amortization of deferred leasing commissions 291 255 197
Net (gain) loss on real estate sales 352 15 (486)
Extraordinary items 5,940 - 531
Depreciation of real estate assets held in unconsolidated entities 184 324 -
----------------------------------------------------
FFO $ 37,701 $ 24,683 $ 17,234
====================================================
</TABLE>
Leasing
The Company's properties were 97.1% leased as of December 31, 1997, 98.2%
leased as of December 31, 1996 and 98.9% leased as of December 31, 1995.
Forward-Looking Statements
Management has included herein 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
17
<PAGE>
corporate strategy of the Company's primary retail tenants and in particular
Wal-Mart and Lowe's; ability to complete and lease existing development and
redevelopment 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 from 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
Historically, the Company's primary sources of funds have been cash
generated from operating activities and proceeds from construction loans, lines
of credit, debt offerings and equity offerings. The Company's primary uses of
funds have been 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 has used funds provided by operations to fund its distributions to
shareholders, capital improvements to existing properties and scheduled
amortization of its indebtedness. The Company has used proceeds from
construction loans and its line of credit to finance its development,
redevelopment and acquisition activities. The Company has used proceeds from
debt and equity offerings to repay construction loans, amounts outstanding under
its line of credit and to fund its ongoing development, redevelopment and
acquisition activities.
During 1997, the Company restructured its balance sheet by issuing
additional common stock and changing the character of its debt instruments (as
described below) with the goal of reducing its cost of capital. During 1997, the
Company issued an aggregate of 5,400,000 shares of common stock in two public
offerings, which netted proceeds of approximately $154.9 million to the Company.
The Company used the proceeds from these offerings to repay construction loans
and amounts outstanding under its lines of credit. The effect of these offerings
was to allow the Company to maintain its debt to total market capitalization
ratio within limits acceptable to management. As of December 31, 1997 and 1996,
the Company's debt to total market capitalization ratio was 26.6% and 28.2%,
respectively.
In May 1997, the Company terminated its $40.0 million secured line of
credit and replaced the secured line with a $150.0 million unsecured line of
credit (the "Unsecured Line of Credit"). This replacement of the secured line of
credit with the Unsecured Line of Credit unencumbered 17 of the Company's
shopping center properties and reduced the rate on this debt from the 30-day
Eurodollar plus 1.50% to LIBOR plus 1.25%. In August 1997, the Company issued
$75.0 million of 6.80% seven-year senior unsecured notes (the "Seven Year
Notes") and $85.0 million of 6.95% ten-year senior unsecured notes (the "Ten
Year Notes") in a public offering. The Seven Year Notes were sold at 99.670% of
par to yield 6.860%. The Ten Year Notes were sold at 99.686% of par to yield
6.994%. The Company used the proceeds of this offering to prepay a mortgage loan
with an outstanding principal balance of $71.2 million and reduce amounts
outstanding under the Unsecured Line of Credit. This offering had the effect of
unencumbering 20 of the Company's shopping center properties, reducing the
effective rate on $71.2 million of outstanding debt from 8.64% to an average
effective rate of 7.16%, and extending the average maturity date on the
Company's debt. As a result of these transactions, the weighted average cost of
the Company's debt decreased from 8.42% as of December 31, 1996 to 7.48% as of
December 31, 1997.
The Unsecured Line of Credit, the Seven Year Notes and the Ten Year Notes
contain covenants customary for debt instruments of these types including
limitations on secured debt, maintenance of minimum interest coverage ratios and
maintenance of minimum ratios of unencumbered assets to unsecured debt.
18
<PAGE>
As of December 31, 1997, the Company's indebtedness consisted of the
following:
<TABLE>
<CAPTION>
Percent
Principal Interest Maturity of Total Months to
Balance Rate Date Indebtedness Maturity
---------------- ------------ ------------- ----------------------------
(in thousands)
<S> <C> <C> <C> <C>
Fixed Rate
Seven Year Notes $ 74,767 7.09%(1) 4-Aug-04 34.5% 79
Ten Year Notes 84,744 7.22%(1) 4-Aug-07 39.2% 115
Mortgage note payable- Richmond, KY 6,429 7.00%(5) 01-Dec-03 3.0% 71
Mortgage note payable- Jackson, Mississippi 7,162 9.25% 01-Mar-17 3.3% 230
---------------- --------- -------------------------
173,102 7.24% 80.0% 103
Floating Rate
Unsecured Line of Credit 43,500 7.99%(2) 22-May-00 20.00% 29
---------------- --------- -------------------------
43,500 7.99% 20.00% 29
---------------- --------- -------------------------
$ 216,602 7.39% 100.00% 88
================ ========= =========================
</TABLE>
WEIGHTED AVERAGE INTEREST RATES:
<TABLE>
Weighted Weighted
Principal Average Average
Balance Interest Rate (3) Interest Rate (4)
------------------ ----------------- ------------------
<S> <C> <C> <C>
Fixed Rate Debt $ 173,102 7.24% 6.98%
Hedged Floating Rate Debt 43,500 8.43% 7.88%
Floating Rate Debt - 7.99% 7.43%
------------------ ----------------- --------------
Total Debt $ 216,602 7.48% 7.16%
================== ================= ==============
</TABLE>
(1) Represents stated rate plus amortization of deferred loan costs.
(2) Stated rate of LIBOR plus 1.25% plus amortization of deferred loan costs.
(3) Interest when the amortization of deferred loan costs is included.
(4) Interest when the amortization of deferred loan costs is not included.
(5) The interest rate on this note is adjusted on December 1 of each year.
As of December 31, 1997, the Company had $106.5 million available
under the Unsecured Line of Credit.
The Company maintains an interest rate swap agreement with a bank in
order to hedge its exposure to 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 February 12, 1997, the Company
amended the terms of the swap transaction by reducing the notional amount from
$80.0 million to $50.0 million, increasing the fixed rate the Company pays to
6.48% and extending the maturity date to January 1, 2001.
As of December 31, 1997, the Company, Development Company and
affiliated entities had 29 projects under construction which when completed are
expected to add approximately 3.4 million square feet of gross leasable area
which the Company expects to own. Of these projects under construction, 11 are
located in Georgia, six are located in North Carolina, three are located in
Florida, and two are located in Tennessee. Of the total square feet under
construction, 78.9% is either leased by tenants or committed
19
<PAGE>
to be leased by tenants. Additional funding needed to complete the construction
of these projects is estimated to be $184.6 million.
In February 1998, the Company acquired a portfolio of five shopping
center properties aggregating approximately 1.1 million square feet in
Milwaukee, Wisconsin for approximately $58.4 million. The Company funded this
acquisition with an advance on the Unsecured Line of Credit in the amount of
$50.0 million, assumption of indebtedness in the amount of $5.4 million, and the
issuance of limited partnership units valued at $3.0 million in a limited
partnership formed to own and operate one of the shopping center properties.
Subject to certain conditions, the limited partnership units are exchangeable
for cash or 93,023 shares of the Company's common stock beginning in February
1999. In February 1998, the Company also acquired a 204,291 square foot shopping
center in Fayetteville, North Carolina for $12.9 million. The Company funded the
purchase of this shopping center with an advance on its Unsecured Line of Credit
in the amount of $2.4 million and by canceling a $10.5 million mortgage loan
receivable from the seller in consideration for a credit at closing. The Company
is pursuing other acquisition opportunities in the ordinary course of business
which may close in 1998. However, there can be no assurance that additional
properties will be acquired in 1998.
In February 1998, the Company issued 1,633,131 shares of its common
stock in two public offerings which netted proceeds to the Company of
approximately $52.1 million. The net proceeds from these offerings were used to
reduce amounts outstanding on the Unsecured Line of Credit. As of February 28,
1998, the Company had $80.0 million available under the Unsecured Line of
Credit, and the Company's debt to total market capitalization ratio was 27.1%.
In addition, in February 1998, the Company entered into a Distribution Agreement
with a group of agents led by Merrill Lynch, Pierce, Fenner and Smith
Incorporated relating to the proposed issue and sale from time to time of up to
$505.5 million of the Company's Medium-Term Notes Due Nine Months or More From
the Date of Issue (the "Medium-Term Notes Program"). The aggregate offering
price under the Medium-Term Notes Program is subject to reduction as a result of
the sale by the Company of other securities described in the Prospectus dated
October 30, 1997. The Medium-Term Notes Program provides an additional facility
for funding the Company's acquisition and development activities. As of February
28, 1998, the Company had not issued any securities under the Medium-Term Notes
Program and had $451.9 million registered and available for issue under the
Medium-Term Notes Program.
Management expects to fund the remaining costs of its development
projects and the cost of any future development projects or shopping center
acquisitions with additional advances on the Unsecured Line of Credit, proceeds
from issuances under the Medium-Term Notes Program, proceeds from public
preferred or common stock offerings, proceeds from issuances of additional debt
securities, or issuances of limited partnership units in a DownREIT structure.
However, there can be no assurance that these sources will be available and the
inability to obtain this capital could have a material adverse effect on the
Company's ability to fund its development, redevelopment, and acquisition
activities.
In order for the Company to continue to qualify as a REIT, it must
annually distribute to shareholders at least 95% of its taxable income.
Management believes that the Company will meet this requirement in 1998 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 1998.
In order to meet the Company's long term liquidity requirements,
management anticipates that the Company's cash from operating activities will
continue to increase as a result of new developments, redevelopments,
acquisitions and improved operations at existing centers. These activities
should enable the Company to make distributions to shareholders, maintain and
improve its properties, make scheduled debt payments, and obtain debt or equity
financing for its development, redevelopment and acquisition properties. All but
$7.2 million of the Company's debt requires balloon payments in the future. The
20
<PAGE>
Unsecured Line of Credit matures in 2000; a note payable of $6.4 million matures
in 2003; the Seven Year Notes mature in 2004; and the Ten Year Notes mature in
2007. Management intends to refinance or repay these maturing debt instruments
with proceeds from other sources of capital at or prior to their respective
maturities. Management will evaluate various alternatives and select the best
options based on market conditions at the time. Management expects to seek
additional equity financing when market conditions are favorable in order to
maintain its debt to total market capitalization ratio within limits acceptable
to management. There can be no assurance that debt or equity markets will be
favorable in the future and unfavorable markets could limit the Company's
ability to expand its business or repay or refinance maturing debt.
Federal Income Tax Proposals
On February 2, 1998, the Clinton Administration announced its revenue
proposals for the 1998/1999 Federal budget. These proposals contain certain
provisions that, if enacted, would significantly modify the REIT-related
provisions of the Internal Revenue Code of 1986, as amended (the "Code"). The
major changes that have been proposed are as follows: (i) limit the
grandfathered status of existing stapled, or paired-share, REITs by treating the
stapled entities as one entity with respect to properties acquired and
activities or services performed relating to such properties after the effective
date; (ii) restrict impermissible businesses indirectly conducted by REITs by
prohibiting REITs from acquiring stock that represents more than 10% of the vote
or 10% of the value of all classes of stock of a corporation after the effective
date (subject to certain grandfather provisions); and (iii) modify the treatment
of closely held REITs by imposing as an additional requirement for initial REIT
qualification that no person can own stock of a REIT possessing more than 50% of
the total combined voting power of all classes of voting stock or more than 50%
of the total value of shares of all classes of stock. The proposal would also
repeal Code Section 1374, thereby effectively eliminating the tax-free
conversions of large C corporations to REITs; any such conversion would be
treated as a liquidation of the C corporation followed by a contribution of the
assets to a REIT. If enacted, the effective date of each of these provisions
will generally be the first date of committee action.
Of these proposed changes, only the restriction on holding stock of
entities conducting impermissible businesses could directly affect the Company.
If such provision is enacted, there could be a material change in the way the
Company conducts its business. These provisions represent only the Clinton
Administration's proposals; no action has been initiated in Congress. At this
time, it is uncertain whether any or all of these provisions, or additional
provisions, will be enacted.
Year 2000
Based on a recent assessment, management believes that the arrival of
the year 2000 and the potential related computer problems should not have a
material adverse impact on the Company and that its current software is year
2000 compliant.
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
the leases. In
21
<PAGE>
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 7A. Quantitative and Qualitative Disclosures About
-------------------------------------------------------
Market Risk
- -----------
Not applicable.
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.
22
<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 14, 1998 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."
The information relating to Section 16(a) beneficial ownership
reporting compliance set forth in the Company's Proxy Statement relating to the
Annual Meeting of Shareholders to be held on May 14, 1998 under the caption
"Security Ownership of Certain Beneficial Owners and Management" is incorporated
herein by reference.
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 14, 1998 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 14, 1998 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 14, 1998 under the caption
"Certain Relationships and Related Transactions" is incorporated herein by
reference.
23
<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>
<S> <C>
Consolidated balance sheets - December 31, 1997 and 1996............................ F-1
Consolidated statements of income - Years ended
December 31, 1997, 1996, and 1995 ........................................ F-2
Consolidated statements of shareholders' equity - Years ended
December 31, 1997, 1996, and 1995......................................... F-3
Consolidated statements of cash flows - Years ended
December 31, 1997, 1996, and 1995......................................... F-4
Notes to consolidated financial statements.......................................... F-5
Report of Ernst & Young LLP, Independent Auditors................................... F-17
</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:
<TABLE>
<S> <C>
Schedule II - Valuation and Qualifying Accounts...................................... F-18
Schedule III - Real Estate and Accumulated Depreciation.............................. F-19
</TABLE>
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
Exhibit Number Description
-------------- -----------
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 Amended and Restated Bylaws of the Company
4 Specimen stock certificate (3)
10.1 JDN Realty Corporation 1993 Incentive Stock Plan, as
amended
10.2 JDN Realty Corporation 1993 Non-Employee Director
Stock Option Plan (2)
10.3 Indemnification Agreement by and between J. Donald
Nichols and JDN Realty Corporation, dated February
23, 1994 (2)
10.4 Indemnification Agreement by and between Elizabeth
L. Nichols and JDN Realty Corporation, dated
February 23, 1994 (2)
10.5 Indemnification Agreement by and between William J.
Kerley and JDN Realty Corporation, dated February
23, 1994 (2)
24
<PAGE>
10.6 $150,000,000 Credit Agreement dated as of May 23,
1997 among JDN Realty Corporation and Wachovia Bank
of Georgia, N.A., as Agent (5)
10.7 Indenture, dated as of July 15, 1997, by the Company
to First Union National Bank as Trustee (6)
10.8 First Supplemental Indenture, dated as of July 31,
1997, by the Company to First Union National Bank,
as Trustee (6)
10.9 Second Supplemental Indenture, dated as of February
5, 1998, by the Company to First Union National
Bank, as Trustee (7)
10.10 JDN Realty Corporation Dividend Reinvestment and
Stock Purchase Plan (8)
10.11 JDN Realty Corporation 1995 Employee Stock Purchase
Plan (4)
10.12 Employment Agreement by and between J. Donald
Nichols and the Company, dated as of December 1,
1996 (9)
10.13 Employment Agreement by and between Elizabeth L.
Nichols and the Company, dated as of December 1,
1996 (9)
10.14 Employment Agreement by and between William J.
Kerley and the Company, dated as of December 1,
1996 (9)
10.15 Employment Agreement by and between David L.
Henzlik and the Company, dated as of December 1,
1996 (9)
10.16 Employment Agreement by and between John D. Harris,
Jr. and the Company dated as of May 1, 1997.
10.17 Employment Agreement by and between Leilani L.
Jones and the Company, dated as of May 1, 1997.
12 Ratio of Earnings to Fixed Charges
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)
(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.
25
<PAGE>
(5) Filed as an exhibit to the Company's quarterly report on Form 10-
Q for the quarter ended June 30, 1997, previously filed pursuant
to the Securities Exchange Act of 1934 and hereby incorporated by
reference.
(6) Filed as an exhibit to the Company's filing on Form 8-K dated
August 1, 1997, previously filed pursuant to the Securities
Exchange Act of 1934 and hereby incorporated by reference.
(7) Filed as an exhibit to the Company's filing on Form 8-K dated
February 13, 1998, previously filed pursuant to the Securities
Exchange Act of 1934 and hereby incorporated by reference.
(8) 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.
(9) Filed as an exhibit to the Company's annual report on Form 10-K
for the year ended December 31, 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.
26
<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 10.12)
4. Employment Agreement, dated as of December 1, 1996, by and
between Elizabeth L. Nichols and the Company (Exhibit 10.13)
5. Employment Agreement, dated as of December 1, 1996, by and
between William J. Kerley and the Company (Exhibit 10.14)
6. Employment Agreement, dated as of December 1, 1996, by and
between David L. Henzlik and the Company (Exhibit 10.15)
7. Employment Agreement, dated as of May 1, 1997, by and
between John D. Harris, Jr. and the Company (Exhibit 10.16)
8. Employment Agreement, dated as of May 1, 1997, by and
between Leilani L. Jones and the Company (Exhibit 10.17)
9. Indemnification Agreement, dated as of February 23, 1994, by
and between J. Donald Nichols and the Company (Exhibit 10.3)
10. Indemnification Agreement, dated as of February 23, 1994, by
and between Elizabeth L. Nichols and the Company (Exhibit
10.4)
11. Indemnification Agreement, dated as of February 23, 1994, by
and between William J. Kerley and the Company (Exhibit 10.5)
12. JDN Realty Corporation 1995 Employee Stock Purchase Plan
(Exhibit 10.10)
(b) Reports on Form 8-K
During the three months ended December 31, 1997, the Company filed the
following reports on Form 8-K:
Form 8-K dated November 18, 1997 related to the Company's execution of
a terms agreement dated November 12, 1997 with Merrill Lynch Pierce,
Fenner & Smith incorporated, BT Alex. Brown Incorporated, A.G. Edwards
& Sons, Inc., Smith Barney Inc., and The Robinson Humphrey Company, LLC
(the Underwriters") in connection with the sale by the Company to the
Underwriters of 3,000,000 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.
27
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Number Description
- -------------- -----------
<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 Amended and Restated Bylaws of the Company
4 Specimen stock certificate (3)
10.1 JDN Realty Corporation 1993 Incentive Stock Plan, as amended
10.2 JDN Realty Corporation 1993 Non-Employee Director Stock Option Plan (2)
10.3 Indemnification Agreement by and between J. Donald Nichols and JDN Realty
Corporation, dated February 23, 1994 (2)
10.4 Indemnification Agreement by and between Elizabeth L. Nichols and JDN
Realty Corporation, dated February 23, 1994 (2)
10.7 Indemnification Agreement by and between William J. Kerley and JDN Realty
Corporation, dated February 23, 1994 (2)
10.8 $150,000,000 Credit Agreement dated as of May 23, 1997 among JDN Realty
Corporation and Wachovia Bank of Georgia, N.A., as Agent (5)
10.10 Indenture, dated as of July 15, 1997, by the Company to First Union National
Bank as Trustee (6)
10.11 First Supplemental Indenture, dated as of July 31, 1997, by the Company to First
Union National Bank, as Trustee (6)
10.12 Second Supplemental Indenture, dated as of February 5, 1998, by the Company
to First Union National Bank, as Trustee (7)
10.10 JDN Realty Corporation Dividend Reinvestment and Stock Purchase Plan (8)
10.11 JDN Realty Corporation 1995 Employee Stock Purchase Plan (4)
10.12 Employment Agreement by and between J. Donald Nichols and the Company,
dated as of December 1, 1996 (9)
10.13 Employment Agreement by and between Elizabeth L. Nichols and the Company,
dated as of December 1, 1996 (9)
10.15 Employment Agreement by and between William J. Kerley and the Company,
dated as of December 1, 1996 (9)
10.15 Employment Agreement by and between David L. Henzlik and the Company,
dated as of December 1, 1996 (9)
10.18 Employment Agreement by and between John D. Harris, Jr. and the Company
dated as of May 1, 1997.
10.19 Employment Agreement by and between Leilani L. Jones and the Company,
dated as of May 1, 1997.
12 Ratio of Earnings to Fixed Charges
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)
99.3 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 June 30, 1997, previously filed pursuant to the Securities
Exchange Act of 1934 and hereby incorporated by reference.
(6) Filed as an exhibit to the Company's filing on Form 8-K dated August 1,
1997, previously filed pursuant to the Securities Exchange Act of 1934 and
hereby incorporated by reference.
(7) Filed as an exhibit to the Company's filing on Form 8-K dated February 13,
1998, previously filed pursuant to the Securities Exchange Act of 1934 and
hereby incorporated by reference.
(8) 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.
(9) Filed as an exhibit to the Company's annual report on Form 10-K for the
year ended December 31, 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>
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 16, 1998 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.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ J. Donald Nichols Chairman and Chief Executive Officer March 16, 1998
- ------------------------------------
J. Donald Nichols
/s/ Elizabeth L. Nichols President and Director March 16, 1998
- ------------------------------------
Elizabeth L. Nichols
/s/ William J. Kerley Chief Financial Officer March 16, 1998
- ------------------------------------
William J. Kerley
/s/ John D. Harris, Jr. Controller March 16, 1998
- ------------------------------------
John D. Harris, Jr.
/s/ Haywood D. Cochrane, Jr. Director March 16, 1998
- ------------------------------------
Haywood D. Cochrane, Jr.
/s/ William B. Greene Director March 16, 1998
- ------------------------------------
William B. Greene
/s/ Craig Macnab Director March 16, 1998
- ------------------------------------
Craig Macnab
/s/ Robert P. Corker, Jr. Director March 16, 1998
- ------------------------------------
Robert P. Corker, Jr.
/s/ William G. Byrnes Director March 16, 1998
- ------------------------------------
William G. Byrnes
</TABLE>
<PAGE>
Item 8
------
FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA
------------------------------------------
Item 14(d)
----------
FINANCIAL STATEMENT SCHEDULES
-----------------------------
<PAGE>
JDN REALTY CORPORATION
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
December 31,
-------------------------------
(dollars in thousands, except per share data) 1997 1996
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Shopping center properties, at cost:
Land $ 85,837 $ 50,455
Buildings and improvements 397,110 262,568
Property under development 52,356 19,646
-------------------------------
535,303 332,669
Less: accumulated depreciation and amortization (38,306) (27,973)
-------------------------------
Shopping center properties, net 496,997 304,696
Cash and cash equivalents 11,439 2,709
Restricted cash - escrow 186 3,659
Rents receivable, net of allowance for doubtful accounts of $719 and $410
in 1997 and 1996, respectively 2,745 2,208
Investments in and advances to unconsolidated entities:
JDN Development Company, Inc. 71,221 36,517
Other - 4,736
Deferred costs, net of amortization 4,189 6,181
Other assets 12,976 11,280
-------------------------------
$ 599,753 $ 371,986
===============================
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Unsecured notes payable $ 159,511 $ -
Unsecured line of credit 43,500 -
Mortgage notes payable 13,591 141,882
Accounts payable and accrued expenses 6,719 1,999
Other liabilities 4,844 1,566
-------------------------------
Total liabilities 228,165 145,447
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 18,497,227 and 13,056,054 shares
in 1997 and 1996, respectively 185 131
Paid-in capital 378,492 233,497
Accumulated deficit (7,089) (7,089)
-------------------------------
371,588 226,539
-------------------------------
$ 599,753 $ 371,986
===============================
</TABLE>
See accompanying notes.
F-1
<PAGE>
JDN REALTY CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
Years Ended December 31,
-----------------------------------------------
(in thousands, except per share data) 1997 1996 1995
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Revenues:
Minimum and percentage rents $ 43,346 $ 32,933 $ 27,466
Recoveries from tenants 4,512 3,475 3,245
Other revenue 147 215 651
-----------------------------------------------
Total revenues 48,005 36,623 31,362
Operating expenses:
Operating and maintenance 3,201 2,586 2,231
Real estate taxes 2,540 1,817 1,970
General and administrative 4,265 3,367 2,818
Depreciation and amortization 10,130 7,786 6,558
-----------------------------------------------
Total operating expenses 20,136 15,556 13,577
-----------------------------------------------
Income from operations 27,869 21,067 17,785
Other income (expense):
Interest expense, net (4,856) (5,868) (7,195)
Other income (expense), net 1,205 83 67
Equity in net income of unconsolidated entities 3,367 1,415 125
-----------------------------------------------
Income before net gain (loss) on real estate sales and
extraordinary items 27,585 16,697 10,782
Net gain (loss) on real estate sales (352) (15) 486
-----------------------------------------------
Income before extraordinary items 27,233 16,682 11,268
Extraordinary items (5,940) - (531)
-----------------------------------------------
Net income $ 21,293 $ 16,682 $ 10,737
===============================================
Income per share--basic
Income before extraordinary items $ 1.77 $ 1.50 $ 1.28
Extraordinary items (0.39) - (0.06)
-----------------------------------------------
Net income $ 1.38 $ 1.50 $ 1.22
===============================================
Income per share--diluted
Income before extraordinary items $ 1.74 $ 1.50 $ 1.28
Extraordinary items (0.38) - (0.06)
-----------------------------------------------
Net income $ 1.36 $ 1.50 $ 1.22
===============================================
</TABLE>
See accompanying notes.
F-2
<PAGE>
JDN REALTY CORPORATION
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
Common Paid-in Accumulated
(in thousands, except per share data) Stock Capital Deficit Total
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Balance, January 1, 1995 $ 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
Proceeds from offerings of common stock 54 155,734 - 155,788
Distributions ($1.98 per share) - (10,739) (21,293) (32,032)
Net Income - - 21,293 21,293
=====================================================================
Balance, December 31, 1997 $ 185 $ 378,492 $ (7,089) $ 371,588
=====================================================================
</TABLE>
See accompanying notes.
F-3
<PAGE>
JDN REALTY CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Years Ended December 31,
--------------------------------------------
(in thousands) 1997 1996 1995
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash flows from operating activities
Net income $ 21,293 $ 16,682 $ 10,737
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation 9,641 7,516 6,250
Amortization 1,540 1,774 1,670
Equity in net income of unconsolidated entities (3,367) (1,415) (125)
Net (gain) loss on real estate sales 352 15 (486)
Extraordinary items 5,940 - 531
Changes in assets and liabilities:
Rents receivable (537) 420 (802)
Other assets (174) - -
Accounts payable and accrued expenses 4,721 834 223
Other liabilities 2,168 244 54
--------------------------------------------
Net cash provided by operating activities 41,577 26,070 18,052
Cash flows from investing activities
Purchases of shopping center properties (29,222) (6,815) (5,053)
Improvements to shopping center properties (1,714) (772) (964)
Development of shopping center properties (139,026) (48,264) (43,021)
Change in restricted cash for land purchase escrow - - 3,662
Proceeds from real estate sales 100 - 1,671
Investments in and advances to JDN Development Company, Inc. (33,031) (16,495) (13,364)
Investments in and advances to joint ventures - (772) (3,767)
Other (1,685) (10,865) (282)
--------------------------------------------
Net cash used in investing activities (204,578) (83,983) (61,118)
Cash flows from financing activities
Proceeds from mortgages and notes payable 48,508 82,251 54,227
Principal payments on mortgages and notes payable (201,821) (69,208) (38,720)
Proceeds from unsecured line of credit 248,715 - -
Principal payments of unsecured line of credit (205,215) - -
Distributions paid (32,032) (26,229) (14,571)
Net proceeds from issuance of common stock 155,788 71,544 46,877
Proceeds from issuance on unsecured notes payable 159,486 - -
Deferred financing costs (4,564) (246) (328)
Change in restricted cash for debt escrows 3,473 (599) (1,780)
Other (607) - 33
--------------------------------------------
Net cash provided by financing activities 171,731 57,513 45,738
--------------------------------------------
Increase (decrease) in cash and cash equivalents 8,730 (400) 2,672
Cash and cash equivalents at beginning of year 2,709 3,109 437
--------------------------------------------
Cash and cash equivalents at end of year $ 11,439 $ 2,709 $ 3,109
============================================
</TABLE>
F-4
<PAGE>
JDN Realty Corporation
Notes to Consolidated Financial Statements
December 31, 1997
(dollars in thousands, except per share data)
1. Description of Business and Summary of Significant Accounting Policies
Description of Business
JDN Realty Corporation (the "Company") is a real estate company
specializing in the development and asset management of retail shopping centers
anchored by value-oriented retailers. The Company's shopping centers are located
in 13 states, primarily in the Southeast. The Company has elected to be taxed as
a real estate investment trust ("REIT").
Basis of Presentation
The financial statements represent the consolidated financial statements of
the Company and its wholly-owned subsidiaries. All significant intercompany
balances and transactions have been eliminated.
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 where the Company has the ability to exercise significant influence over
operating and financial policies.
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
until such time as projects become 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 $329 and $3,948 at
December 31, 1997 and 1996, 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
F-5
<PAGE>
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. 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 projects are
capitalized and depreciated over the life of the building. Interest costs
capitalized were $4,650, $1,993, and $1,538 for the years ended December 31,
1997, 1996, and 1995, respectively. Interest payments totaled $11,407, $10,293
and $8,542 during the years ended December 31, 1997, 1996, and 1995,
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 10 for
pro forma disclosures using the fair value method as described in Financial
Accounting Standards Board Statement No. 123, Accounting for Stock-Based
Compensation ("Statement 123").
Income Taxes
The Company elected to be taxed as a REIT under the Internal Revenue Code
of 1986, as amended (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.
The Company declared distributions per share of $1.98, $1.88, and $1.80
during the years ended December 31, 1997, 1996, and 1995, respectively, and
these distributions are summarized as follows:
Years ended December 31,
1997 1996 1995
--------------------------------------------
Ordinary income $ 1.45 $ 1.58 $ 1.43
Return of capital 0.53 0.30 0.34
Long-term capital gains - - 0.03
--------------------------------------------
$ 1.98 $ 1.88 $ 1.80
============================================
F-6
<PAGE>
Per Share Data
In 1997, the Financial Accounting Standards Board issued Statement No. 128,
Earnings per Share ("Statement 128"). Statement 128 replaced the calculation of
primary and fully diluted earnings per share with basic and diluted earnings per
share. Unlike primary earnings per share, basic earnings per share excludes any
dilutive effects of options, warrants and convertible securities. Diluted
earnings per share is similar to the previously reported fully diluted earnings
per share. Earnings per share amounts for all periods have been presented and,
where appropriate, restated to conform to the Statement 128 requirements.
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.
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
and assumptions that affect the amounts reported in the consolidated financial
statements and accompanying notes. Actual results could differ from those
estimates.
New Accounting Standard
In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 131, Disclosures about Segments of an
Enterprise and Related Information ("Statement 131"), which is effective for
years beginning after December 15, 1997. Statement 131 establishes standards for
the way that public business enterprises report information about operating
segments in annual financial statements and requires that those enterprises
report selected information about operating segments in interim financial
reports. It also establishes standards for related disclosures about products
and services, geographic areas, and major customers. Statement 131 is effective
for financial statements for fiscal years beginning after December 15, 1997, and
the Company will adopt the new requirements retroactively in 1998. Management
has not completed its review of Statement 131 but does not anticipate that the
adoption of this statement will have a significant effect on the Company's
disclosures in its financial statements.
Reclassifications
Certain amounts as previously reported have been reclassified to conform to
the current year's presentation.
F-7
<PAGE>
2. Unsecured Notes Payable
Unsecured Notes Payable consisted of the following:
Years ended December 31,
1997 1996
--------------------------
Seven Year Notes, net of $233 unamortized discount $ 74,767 $ -
Ten Year Notes, net of $256 unamortized discount 84,744 -
--------------------------
$ 159,511 $ -
==========================
The Company issued the Seven Year Notes and the Ten Year Notes
(collectively, the "Unsecured Notes Payable") on August 4, 1997 in a public
offering. The Seven Year Notes carry a face amount of $75,000, a stated rate of
6.80% and were sold at 99.670% of par to yield 6.860% and mature August 1, 2004.
The Ten Year Notes carry a face amount of $85,000, a stated rate of 6.95% and
were sold at 99.686% of par to yield 6.994% and mature August 1, 2007. Interest
on the Unsecured Notes Payable is payable semi-annually in arrears on each
August 1 and February 1, commencing February 1, 1998. The Unsecured Notes
Payable were issued under a Supplemental Indenture and Indenture which contain
covenants customary for notes of this type including limitations on total
indebtedness of the Company, limitations on secured debt, maintenance of minimum
interest coverage ratios and maintenance of minimum ratios of unencumbered
assets to unsecured debt.
3. Unsecured Line of Credit
The Unsecured Line of Credit represents a $150,000 unsecured line of credit
with a bank group, which closed in May 1997. The Company may borrow amounts
under the Unsecured Line of Credit up to an amount equal to 60% of the value of
all Eligible Unencumbered Stabilized Properties, as defined, plus 50% of the
cost of all Construction in Progress, as defined. The Unsecured Line of Credit
contains covenants customary for credit facilities with similar terms and
maturities, including limitations on secured debt, maintenance of minimum
interest coverage ratios and maintenance of minimum ratios of unencumbered
assets to unsecured debt. Interest on the Unsecured Line of Credit is LIBOR plus
1.25% and is payable monthly. At December 31, 1997, the Company had the ability
to draw an additional $106,500 and the interest rate on amounts outstanding
under the Unsecured Line of Credit was 7.21%. The Unsecured Line of Credit
matures in May 2000.
4. Mortgage Notes Payable
The Company's mortgage notes payable consisted of the following:
December 31,
1997 1996
- --------------------------------------------------------------------------------
Term Debt $ - $ 71,771
Bank Credit Facility - 28,800
Mortgage Notes Payable 13,591 6,553
Construction Loans - 34,758
-----------------------------
$ 13,591 $ 141,882
=============================
F-8
<PAGE>
The Term Debt represented a 6.75% fixed rate loan secured by 20 of the
Company's properties and was scheduled to mature in March 2001. On July 31,
1997, the Company prepaid all outstanding principal on the Term Debt and
satisfied this loan in full.
The Bank Credit Facility represented a $40,000 line of credit with a bank
secured by 17 of the Company's properties. Interest on the Bank Credit Facility
was 1.50% above the rate for 30-day Eurodollar deposits. The Bank Credit
Facility was scheduled to mature in June 1998; in May 1997, the Company
terminated the Bank Credit Facility and satisfied this loan in full.
Mortgage Notes Payable represent two notes secured by shopping center
properties owned by the Company. One of these notes carries a principal balance
of $6,429, an interest rate of 7.00% and matures in December 2003. The interest
rate on this note is adjusted in December each year the note remains
outstanding. The other note, which was assumed in 1997 in conjunction with the
acquisition of a shopping center, carries a principal balance of $7,162, with an
interest rate of 9.25% and matures in March 2017.
The Construction Loans represented various loans to fund construction of
shopping center developments. These loans were secured by the land and
improvements on the shopping center developments. Interest on the Construction
Loans ranged from LIBOR plus 1.50% to LIBOR plus 1.75%, and the Construction
Loans were scheduled to mature in 1997, 1998, and 1999. During 1997, the Company
repaid all amounts outstanding under the Construction Loans and satisfied them
in full.
5. Debt Maturities
As of December 31, 1997, principal payments on the Company's Unsecured
Notes Payable, Unsecured Line of Credit and Mortgage Notes Payable are due as
follows:
- --------------------------------------------------------------------------------
1998 $ 281
1999 304
2000 43,830
2001 358
2002 389
Thereafter 171,440
------------
$ 216,602
============
6. Fair Value of Financial Instruments
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. Based
upon amounts that the Company would pay to terminate the swap transaction on
December 31, 1997, the fair value of the swap transaction is estimated to be
$848 at December 31, 1997.
Based upon borrowing rates management believes are available to the Company
for loans with similar terms and average maturities, the fair value of the
Company's Unsecured Notes Payable,
F-9
<PAGE>
Unsecured Line of Credit and Mortgage Notes Payable was estimated to be $219,860
at December 31, 1997.
7. 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. In 1996, the Company also owned 50% economic interests in two joint
ventures formed for the purpose of developing shopping centers in Loganville,
Georgia, and Asheville, North Carolina (the "Joint Ventures"). During 1997, the
Company purchased all the interests of its third party joint venture partners in
the Joint Ventures. Combined summarized financial information on Development
Company and the Joint Ventures is as follows:
December 31,
1997 1996
--------------------------
Assets
Operating properties $ 47,837 $ 47,972
Property under development 46,333 38,546
--------------------------
Total real estate 94,170 86,518
Other assets 12,322 6,636
--------------------------
$ 106,492 $ 93,154
==========================
Liabilities
Mortgage notes payable $ 28,980 $ 48,474
Notes and advances payable to JDN Realty Corporation 62,858 30,977
Other liabilities 6,010 3,599
--------------------------
97,848 83,050
Equity 8,644 10,104
--------------------------
$ 106,492 $ 93,154
==========================
Years Ended December 31,
1997 1996 1995
-------------------------------------------
Rental revenues $ 4,619 $ 2,969 $ 88
Operating expenses (1,689) (654) (13)
-------------------------------------------
Income from operations 2,930 2,315 75
Interest expense (3,791) (1,313) (178)
Net gain on real estate sales 7,579 2,358 1,042
Other expense, net (725) (795) (728)
Income tax expense (2,220) (549) (78)
-------------------------------------------
Net income $ 3,773 $ 2,016 $ 133
===========================================
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 1996
net income of unconsolidated entities in the accompanying statements of income.
F-10
<PAGE>
8. Operating Leases
Shopping center properties are leased to tenants under operating leases
with expiration dates extending to the year 2021. As of December 31, 1997,
approximate future minimum rentals due under noncancellable operating leases,
excluding tenant reimbursements of operating expenses and additional rentals
based on tenants' sales volume, and were as follows:
- --------------------------------------------------------------------------------
1998 $ 59,842
1999 53,837
2000 50,409
2001 46,841
2002 43,195
Thereafter 447,086
------------
$ 701,210
============
As of December 31, 1997, Wal-Mart Stores, Inc., a national retailer, was an
anchor in 31 of the Company's shopping centers. Wal-Mart was a tenant of the
Company in 21 of the shopping centers and an unrelated party owned Wal-Mart's
portion of the center in the remaining 10 shopping centers. Rentals from this
significant tenant were approximately 19%, 22%, and 20% of total minimum and
percentage rents for the years ended December 31, 1997, 1996, and 1995,
respectively. As of December 31, 1997, Lowe's Companies, Inc., a national
retailer, was an anchor in 13 of the Company's shopping centers. Lowe's was a
tenant of the Company in 11 of the shopping centers and an unrelated party owned
Lowe's portion of the center in the remaining two shopping centers. Rentals from
this significant tenant were 10%, 11%, and 8% of total minimum and percentage
rent for the years ended December 31, 1997, 1996, and 1995, respectively. There
were no other tenants which represented more than 10% of the Company's total
minimum and percentage rent in any year presented.
9. Extraordinary Items
In 1997, the Company terminated and satisfied in full the Term Debt which
was scheduled to mature in 2001. The Company charged unamortized deferred
financing costs and prepayment penalties related to the Term Debt of $5,539 to
earnings as a component of extraordinary items. Also in 1997, the Company
terminated the Bank Credit Facility which was scheduled to mature in June 1998.
The Company charged unamortized deferred financing costs related to the Bank
Credit Facility of $401 to earnings as a component of 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.
10. Stock Option Plans
The Company maintains the JDN Realty Corporation 1993 Incentive Stock Plan
which provides for issuance of options to purchase shares of the Company's
common stock and restricted shares of common stock 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 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
F-11
<PAGE>
grant for non-qualified stock options. The options expire 10 years from the date
of grant. Options granted prior to 1995 and during 1997 vest one-third after six
months and one-third after 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, 1997, 1,080 options were available for grant and 579,813
of the options granted were exercisable.
The following is a summary of plan activity since inception:
<TABLE>
<CAPTION>
Weighted Average
Number of Shares Option Price Option Price
1993 Incentive Stock Plan Underlying Options Per Share Per Share
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Options outstanding, January 1, 1995 633,813 $22.00 to $23.25 $22.136
Granted 300,000 $20.25 20.25
Exercised - - -
Forfeited (13,000) $23.25 23.25
----------------------------------------------------------
Options outstanding, December 31, 1995 920,813 $20.25 to $23.25 21.506
Granted - - -
Exercised - - -
Forfeited (8,000) $23.25 23.25
----------------------------------------------------------
Options outstanding, December 31, 1996 912,813 $20.25 to $23.25 21.491
Granted 942,500 $28.875 to $31.125 31.119
Exercised (33,000) $22.00 to $23.25 22.114
Forfeited - - -
----------------------------------------------------------
Options outstanding, December 31, 1997 1,822,313 $20.25 to $31.125 $26.459
==========================================================
</TABLE>
During 1993, the Company adopted the JDN Realty Corporation 1993 Non-
Employee Directors Stock Option Plan reserving 300,000 shares of common stock.
The plan provides that 3,000 options shall be granted each Non-Employee Director
serving the Company 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, 1997, 261,000 options were available for grant and 9,000 of the
F-12
<PAGE>
options granted were exercisable. The following is a summary of plan activity:
<TABLE>
<CAPTION>
Weighted Average
Number of Shares Option Price Option Price
1993 Non-Employee Directors Stock Option Plan Underlying Options Per Share Per Share
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Options outstanding, January 1, 1995 12,000 $22.00 $22.00
Granted 12,000 $20.00 20.00
Exercised - - -
Forfeited (6,000) $20.00 to $22.00 21.00
------------------------------------------------------------
Options outstanding, December 31, 1995 18,000 $20.00 to $22.00 21.00
Granted 9,000 $22.375 22.375
Exercised - - -
Forfeited - - -
------------------------------------------------------------
Options outstanding, December 31, 1996 27,000 $20.00 to $22.375 21.458
Granted 12,000 $27.625 27.625
Exercised - - -
Forfeited - - -
------------------------------------------------------------
Options outstanding, December 31, 1997 39,000 $20.00 to $27.625 $23.356
============================================================
</TABLE>
Pro forma information regarding net income and earnings per share is
required by Statement 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 for 1997,
1996 and 1995: risk-free interest rate of 6.18%, 6.39%, and 6.39%, respectively;
dividend yield of 6.43%, 6.80% and 6.80%, respectively; volatility factor of the
expected market price of the Company's common stock of 0.16, 0.15, and 0.15,
respectively, and a weighted-average expected life of the options of 5, 9 and 9
years, respectively.
For purposes of pro forma disclosures, the estimated fair value of the
options is amortized to expense over the options' vesting periods. On a pro
forma basis, assuming that the Company utilized the fair value method of
accounting for stock options, net income, net income per share-basic and net
income per share-diluted for 1997 were $20,505, $1.33, and $1.31, respectively.
The effect on net income and net income per share for pro forma disclosure
purposes was not material for 1996 or 1995.
11. Profit Sharing Plan
The Company offers to employees the JDN Realty Corporation Savings and
Profit Sharing Plan, a defined contribution plan, which is intended 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, 1997, 1996 and 1995, the
Company contributed $36, $25 and $-0- respectively, to the plan.
F-13
<PAGE>
12. Employee Stock Purchase Plan
During 1995, the Company adopted the JDN Realty Corporation 1995 Employee
Stock Purchase Plan which is intended 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 1997, 1996 and 1995, the Company issued 832, -0-, and -0- shares
under the plan.
13. 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, 1997, 8,951 shares had
been issued under the plan and 491,049 were reserved for issuance.
14. Commitments and Contingencies
As of December 31, 1997, the Company guaranteed all or portions of three
loans of Development Company or its subsidiaries in the amount of $21,869. The
loans are secured by property owned by Development Company or its subsidiaries
and are due in 1998 and 1999.
As of December 31, 1997, the Company had executed construction contracts on
nine of its development sites and had approximately $14,015 in costs remaining
to be incurred under these contracts.
As of December 31, 1997, the Company had executed two contracts to purchase
a total of six shopping center projects. In February 1998, the Company purchased
these six shopping centers for an aggregate purchase price of approximately
$71,300. In conjunction with the purchase of one of these shopping centers,
limited partnership units valued at $3,000 were issued by a limited partnership
for which the Company serves as general partner which are exchangeable into cash
or 93,023 shares of the Company's common stock beginning in February 1999. In
conjunction with the purchase of another of these shopping centers, the Company
cancelled a $10,500 mortgage loan receivable from the seller as a credit at
closing. This note receivable was included in other assets on the balance sheets
at December 31, 1997 and 1996. 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 is, from time to time, a party to legal proceedings, which
arise in the ordinary course of its business. The Company is not currently
involved in any litigation, nor, to management's knowledge, is any litigation
threatened against the Company, the outcome of which would, in management's
judgment based on information currently available, have a material adverse
effect on the results of operations or financial condition of the Company.
F-14
<PAGE>
15. Earnings Per Share
The following table sets forth the computation of basic and diluted
earnings per share:
<TABLE>
<CAPTION>
Years Ended December 31,
1997 1996 1995
---------------------------------------
<S> <C> <C> <C>
Numerator:
Income before extraordinary items $ 27,233 $ 16,682 $ 11,268
Extraordinary items (5,940) - (531)
---------------------------------------
Net income $ 21,293 $ 16,682 $ 10,737
=======================================
Denominator:
Denominator for basic earnings per share-
weighted-average shares (in thousands) 15,377 11,086 8,819
Effect of dilutive securities:
Stock options (in thousands) 268 57 1
---------------------------------------
Denominator for diluted earnings per share-
adjusted weighted-average shares 15,645 11,143 8,820
=======================================
Income per share--basic:
Income before extraordinary items $ 1.77 $ 1.50 $ 1.28
Extraordinary items (0.39) - (0.06)
---------------------------------------
Net income $ 1.38 $ 1.50 $ 1.22
=======================================
Income per share--diluted:
Income before extraordinary items $ 1.74 $ 1.50 $ 1.28
Extraordinary items (0.38) - (0.06)
---------------------------------------
Net income $ 1.36 $ 1.50 $ 1.22
=======================================
</TABLE>
Options to purchase 940,000, 48,000 and 629,813 shares of common stock for
the years ended December 31, 1997, 1996 and 1995, respectively, were outstanding
but were not included in the computation of diluted earnings per share because
the exercise prices of these options were greater than the average market price
of the common shares and, therefore, the effect would be antidilutive.
16. Subsequent Events
During February 1998, the Company issued 1,633,131 shares of its common
stock in two public offerings which netted proceeds of $52,080 to the Company.
F-15
<PAGE>
17. Quarterly Financial Information (Unaudited)
The following is a summary of the unaudited quarterly financial information
for the years ended December 31, 1997 and 1996:
Quarters
First Second Third Fourth
- --------------------------------------------------------------------------------
1997
Revenues $ 10,279 $ 10,916 $ 12,338 $ 14,473
Income before extraordinary item $ 5,503 $ 6,726 $ 7,078 $ 7,926
Net income $ 5,503 $ 6,325 $ 1,539 $ 7,926
Income per share--basic
Income before extraordinary item $ 0.40 $ 0.44 $ 0.46 $ 0.47
Net income $ 0.40 $ 0.41 $ 0.10 $ 0.47
Income per share--diluted
Income before extraordinary item $ 0.40 $ 0.43 $ 0.45 $ 0.46
Net income $ 0.40 $ 0.40 $ 0.10 $ 0.46
1996:
Revenues $ 8,688 $ 8,910 $ 9,159 $ 9,866
Net income $ 3,618 $ 4,155 $ 4,311 $ 4,598
Net income per share:
Basic $ 0.35 $ 0.38 $ 0.39 $ 0.39
Diluted $ 0.35 $ 0.38 $ 0.39 $ 0.38
Earnings per share amounts for the first three quarters of 1997 and for all
of 1996 have been restated to comply with Statement 128.
F-16
<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 as of December 31, 1997 and 1996 and the related consolidated
statements of income, shareholders' equity, and cash flows for each of the three
years in the period ended December 31, 1997. 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 at December 31, 1997 and 1996 and the consolidated results of its
operations and cash flows for each of the three years in the period ended
December 31, 1997 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 27, 1998
F-17
<PAGE>
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
JDN REALTY CORPORATION
(In thousands)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
COL. A COL. B COL. C
- -------------------------------------------------------------------------------------------------------------
Additions
---------------------------------------
Balance at Beginning Charged to Costs Charged to Other
Description of Period and Expenses Accounts - Describe
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Year ended December 31, 1997:
Deduct from asset accounts:
Allowance for Doubtful Accounts $410 $619
====================== ==================
Year ended December 31, 1996:
Deduct from asset accounts:
Allowance for Doubtful Accounts $277 $350
====================== ==================
Year ended December 31, 1995:
Deduct from asset accounts:
Allowance for Doubtful Accounts $265 $132
====================== ==================
<CAPTION>
- -----------------------------------------------------------------------------------------------
COL. A COL. D COL. E
- -----------------------------------------------------------------------------------------------
Balance at End
Description Deductions - Describe of Period
- -----------------------------------------------------------------------------------------------
<S> <C> <C>
Year ended December 31, 1997:
Deduct from asset accounts:
Allowance for Doubtful Accounts $310 (1) $719
========================= ======================
Year ended December 31, 1996:
Deduct from asset accounts:
Allowance for Doubtful Accounts $217 (1) $410
========================= ======================
Year ended December 31, 1995:
Deduct from asset accounts:
Allowance for Doubtful Accounts $120 (1) $277
========================= ======================
</TABLE>
(1) Write-off of uncollectible rents receivable.
F-18
<PAGE>
Schedule III - Real Estate and Accumulated Depreciation
JDN Realty Corporation
December 31, 1997
(In thousands)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
COL. A COL. B COL. C COL. D
- ---------------------------------------------------------------------------------------------------------------------
Cost Capitalized Subsequent to
-------------------------------
Initial Cost to Company Acquisition
----------------------- -----------
Buildings and Carrying
Description Encumbrances Land Improvements Improvements Costs
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Operating Property:
- ------------------
Pepperell Corners (Opelika, AL) $ - $ 2,062 $ 11,705 $ 67 $ -
White Sands (Fort Walton, FL) - 452 - 1,040 -
Capital West (Tallahassee, FL) - 2,040 - 4,856 -
Felton's Crossing (Cartersville, GA) - 177 - 3,253 -
Banks Station (Fayetteville, GA) - 1,522 9,604 223 -
Five Forks Village (Lawrenceville, GA) - 1,245 7,065 84 -
Ellis Crossing (Griffin, GA) - 302 - 2,477 -
Town Center (Lawrenceville, GA) - 2,962 17,037 415 -
Five Forks Crossing (Lilburn, GA) - 930 5,287 27 -
Merchant Square (Riverdale, GA) - 191 - 1,366 -
Shannon Square (Union City, GA) - 195 - 4,168 -
East Ridge Crossing (Hendersonville, NC) - - - 4,282 -
Pineridge Crossing (Rockingham, NC) - 203 - 7,089 -
Wallace Crossing (Wallace, NC) - 665 3,843 48 -
Myrtle Grove (Wilmington, NC) - 1,877 - 8,848 -
Ashley Crossing (Charleston, SC) - 2,182 10,354 156 -
Overlook at Hamilton Place (Chattanooga, TN) - 1,595 12,725 125 -
Farragut Pointe (Farragut, TN) - 731 4,165 21 -
Country Bridge (Memphis, TN) - 750 4,294 32 -
Lexington Commons (Lexington, VA) - 882 - 5,374 -
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
COL. A COL. E COL. F COL. G COL. H
- -----------------------------------------------------------------------------------------------------------------------------------
Gross Amount at which Carried at close of Period
------------------------------------------------
Buildings and Accumulated Date of Date
Description Land Improvements Total Depreciation Construction Acquired
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Operating Property:
- ------------------
Pepperell Corners (Opelika, AL) $ 2,062 $ 11,772 $ 13,834 $ 1,408 1993 1994
White Sands (Fort Walton, FL) 452 1,040 1,492 338 1986 1985
Capital West (Tallahassee, FL) 2,040 4,856 6,896 1,154 1990 1989
Felton's Crossing (Cartersville, GA) 177 3,253 3,430 1,285 1984 1983
Banks Station (Fayetteville, GA) 1,522 9,827 11,349 1,190 1990 1994
Five Forks Village (Lawrenceville, GA) 1,245 7,149 8,394 856 1990 1994
Ellis Crossing (Griffin, GA) 302 2,477 2,779 922 1986 1985
Town Center (Lawrenceville, GA) 2,962 17,452 20,414 2,117 1989 1994
Five Forks Crossing (Lilburn, GA) 930 5,314 6,244 635 1990 1994
Merchant Square (Riverdale, GA) 191 1,366 1,557 347 1989 1989
Shannon Square (Union City, GA) 195 4,168 4,363 1,367 1986 1984
East Ridge Crossing (Hendersonville, NC) - 4,282 4,282 1,193 1988 1988
Pineridge Crossing (Rockingham, NC) 203 7,089 7,292 1,820 1988 1986
Wallace Crossing (Wallace, NC) 665 3,891 4,556 462 1989 1994
Myrtle Grove (Wilmington, NC) 1,877 8,848 10,725 1,832 1991 1988
Ashley Crossing (Charleston, SC) 2,182 10,510 12,692 1,256 1991 1994
Overlook at Hamilton Place (Chattanooga, TN) 1,595 12,850 14,445 1,506 1992 1994
Farragut Pointe (Farragut, TN) 731 4,186 4,917 502 1991 1994
Country Bridge (Memphis, TN) 750 4,326 5,076 518 1993 1994
Lexington Commons (Lexington, VA) 882 5,374 6,256 886 1989 1988
</TABLE>
F-19
<PAGE>
Schedule III - Real Estate and Accumulated Depreciation
JDN Realty Corporation
December 31, 1997
(In thousands)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
COL. A COL. B COL. C COL. D
- --------------------------------------------------------------------------------------------------------------------------
Cost Capitalized Subsequent to
------------------------------
Initial Cost to Company Acquisition
----------------------- -----------
Buildings and Carrying
Description Encumbrances Land Improvements Improvements Costs
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Operating Property:
- -------------------
The Junction (Jackson, MS) 7,162 1,361 7,858 - -
Southland Plaza (Decatur, AL) - 1,013 5,802 146 -
East Side Plaza (Gadsden, AL) - 130 - 2,322 -
Pepperell Corners, Phase II (Opelika, AL) - 744 1,628 (35) -
Ocala West (Ocala, FL) - 839 4,920 - -
Riverplace (Canton, GA) - 66 - 2,211 -
River Pointe (Canton, GA) - 370 2,301 206 -
Bartow Marketplace (Cartersville, GA) - 3,513 16,688 140 -
Cordele Marketplace (Cordele, GA) - 603 8,164 - -
Cumming Marketplace (Cumming, GA) - 3,210 13,526 2 -
Dodge County (Eastman, GA) - 172 - 2,316 -
Foodmax Plaza (Fort Oglethorpe, GA) - 1,092 6,204 79 -
North Main Street (LaFayette, GA) - 123 - 3,137 -
LaGrange Wal-Mart (LaGrange, GA) - 183 - 1,420 -
Lowe's (Lilburn, GA) - 3,642 6,413 - -
Midway Shopping Center (Loganville, GA) - 1,356 6,490 - -
Beacon Heights (Madison, GA) - 550 - 4,113 -
Lowe's (Marietta, GA) - 3,154 6,384 - -
Newnan Crossing (Newnan, GA) - 3,750 17,745 204 -
Pike Nursery (Peachtree City, GA) - 1,008 1 1,002 -
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
COL. A COL. E COL. F COL. G COL. H
- ---------------------------------------------------------------------------------------------------------------------------------
Gross Amount at which Carried
-----------------------------
at close of Period
------------------
Buildings and Accumulated Date of
Description Land Improvements Total Depreciation Construction Date Acquired
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Operating Property:
- -------------------
The Junction (Jackson, MS) 1,361 7,858 9,219 205 1996 1997
Southland Plaza (Decatur, AL) 1,013 5,948 6,961 187 1965 1996
East Side Plaza (Gadsden, AL) 130 2,322 2,452 1,033 1979 1980
Pepperell Corners, Phase II (Opelika, AL) 744 1,593 2,337 141 1995 1995
Ocala West (Ocala, FL) 839 4,920 5,759 39 1984 1997
Riverplace (Canton, GA) 66 2,211 2,277 1,072 1983 1983
River Pointe (Canton, GA) 370 2,507 2,877 81 1996 1996
Bartow Marketplace (Cartersville, GA) 3,513 16,828 20,341 1,142 1995 1995
Cordele Marketplace (Cordele, GA) 603 8,164 8,767 28 1997 1997
Cumming Marketplace (Cumming, GA) 3,210 13,528 16,738 104 1997 1997
Dodge County (Eastman, GA) 172 2,316 2,488 567 1990 1986
Foodmax Plaza (Fort Oglethorpe, GA) 1,092 6,283 7,375 679 1973 1994
North Main Street (LaFayette, GA) 123 3,137 3,260 756 1990 1988
LaGrange Wal-Mart (LaGrange, GA) 183 1,420 1,603 603 1984 1983
Lowe's (Lilburn, GA) 3,642 6,413 10,055 - 1997 1997
Midway Shopping Center (Loganville, GA) 1,356 6,490 7,846 375 1995 1997
Beacon Heights (Madison, GA) 550 4,113 4,663 1,126 1989 1987
Lowe's (Marietta, GA) 3,154 6,384 9,538 25 1997 1997
Newnan Crossing (Newnan, GA) 3,750 17,949 21,699 940 1995 1995
Pike Nursery (Peachtree City, GA) 1,008 1,003 2,011 16 1996 1996
</TABLE>
F-20
<PAGE>
Schedule III - Real Estate and Accumulated Depreciation
JDN Realty Corporation
December 31, 1997
(In thousands)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
COL. A COL. B COL. C COL. D
- -------------------------------------------------------------------------------------------------------------------------
Initial Cost to Company Cost Capitalized Subsequent to
Acquisition
Buildings and Carrying
Description Encumbrances Land Improvements Improvements Costs
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Operating Property:
Freeway Junction (Stockbridge, GA) - 980 5,550 91 -
Pike's Nursery (Stockbridge, GA) - 963 1,039 - -
Rivercliff Village (Stone Mountain, GA) - 300 1,701 - -
Pike's Nursery (Suwanee, GA) - 614 1,294 - -
Warner Robins Place (Warner Robins, GA) - 203 907 - -
Woodstock Place (Woodstock, GA) - 1,692 - 7,651 -
Lowe's (Woodstock, GA) - 3,619 6,790 - -
River Hills Shopping Center (Asheville, NC) - 3,125 13,376 -
Wendover Place (Greensboro, NC) - 5,266 15,136 27 -
Pike Nursery (Woodstock, GA) - 1,323 1 1,101 -
University Commons (Greenville, NC) - 3,557 15,865 1,842 -
Chesterfield Commons (Cheraw, SC) - 127 - 2,160 -
Kelley Corners (Lake City, SC) - 415 5,385 28 -
Merchants Walk (Sumter, SC) - 130 - 797 -
Foodmax Plaza (Columbia, TN) - 673 3,836 38 -
Alexander Plaza (Franklin, TN) - 24 - 473 -
Northcreek Commons (Goodlettsville, TN) - 742 4,311 146 -
Memorial Village (Murfreesboro, TN) - 991 5,636 132 -
Plaza South (Murfreesboro, TN) - 523 3,088 1 -
Cherokee Square (Tullahoma, TN) - 502 2,868 32 -
<CAPTION>
- --------------------------------------------------------------------------------------------------
COL. A COL. E
- --------------------------------------------------------------------------------------------------
Gross Amount at which Carried at close of Period
------------------------------------------------
Buildings and
Description Land Improvements Total
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Operating Property:
Freeway Junction (Stockbridge, GA) 980 5,641 6,621
Pike's Nursery (Stockbridge, GA) 963 1,039 2,002
Rivercliff Village (Stone Mountain, GA) 300 1,701 2,001
Pike's Nursery (Suwanee, GA) 614 1,294 1,908
Warner Robins Place (Warner Robins, GA) 203 907 1,110
Woodstock Place (Woodstock, GA) 1,692 7,651 9,343
Lowe's (Woodstock, GA) 3,619 6,790 10,409
River Hills Shopping Center (Asheville, NC) 3,125 13,376 16,501
Wendover Place (Greensboro, NC) 5,266 15,163 20,429
Pike Nursery (Woodstock, GA) 1,323 1,102 2,425
University Commons (Greenville, NC) 3,557 17,707 21,264
Chesterfield Commons (Cheraw, SC) 127 2,160 2,287
Kelley Corners (Lake City, SC) 415 5,413 5,828
Merchants Walk (Sumter, SC) 130 797 927
Foodmax Plaza (Columbia, TN) 673 3,874 4,547
Alexander Plaza (Franklin, TN) 24 473 497
Northcreek Commons (Goodlettsville, TN) 742 4,457 5,199
Memorial Village (Murfreesboro, TN) 991 5,768 6,759
Plaza South (Murfreesboro, TN) 523 3,089 3,612
Cherokee Square (Tullahoma, TN) 502 2,900 3,402
<CAPTION>
- -------------------------------------------------------------------------------------------------
COL. A COL. F COL. G COL. H
- -------------------------------------------------------------------------------------------------
Accumulated Date of
Description Depreciation Construction Date Acquired
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Operating Property:
Freeway Junction (Stockbridge, GA) 549 1988 1994
Pike's Nursery (Stockbridge, GA) 16 1997 1997
Rivercliff Village (Stone Mountain, GA) 13 1978 1997
Pike's Nursery (Suwanee, GA) 6 1997 1997
Warner Robins Place (Warner Robins, GA) 12 1997 1997
Woodstock Place (Woodstock, GA) 847 1985 1982
Lowe's (Woodstock, GA) - 1997 1997
River Hills Shopping Center (Asheville, NC) 359 1996 1997
Wendover Place (Greensboro, NC) 48 1997 1997
Pike Nursery (Woodstock, GA) 37 1996 1996
University Commons (Greenville, NC) 610 1996 1996
Chesterfield Commons (Cheraw, SC) 577 1990 1986
Kelley Corners (Lake City, SC) 688 1991 1994
Merchants Walk (Sumter, SC) 316 1987 1986
Foodmax Plaza (Columbia, TN) 421 1993 1994
Alexander Plaza (Franklin, TN) 71 1983 1983
Northcreek Commons (Goodlettsville, TN) 280 1987 1995
Memorial Village (Murfreesboro, TN) 621 1972 1994
Plaza South (Murfreesboro, TN) 40 1990 1997
Cherokee Square (Tullahoma, TN) 350 1989 1994
</TABLE>
F-21
<PAGE>
Schedule III - Real Estate and Accumulated Depreciation
JDN Realty Corporation
December 31, 1997
(In thousands)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
COL. A COL. B COL. C COL. D
- ----------------------------------------------------------------------------------------------------------------
Cost Capitalized Subsequent to
------------------------------
Initial Cost to Company Acquisition
----------------------- -----------
Buildings and Carrying
Description Encumbrances Land Improvements Improvements Costs
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Operating Property:
- ------------------
Township Marketplace (Monaca, PA) - 1,340 10,105 - -
Bermuda Square (Chester, VA) - 1,302 7,534 - -
Genito Crossing (Midlothian, VA) - 823 4,812 - -
Tri-Rivers (South Boston, VA) - 502 4,431 - -
Tri-State Plaza (Burlington, OH) - 1,563 6,419 - -
Carriage Gate (Richmond, KY) 6,429 1,398 7,944 45 -
Suttons North Plaza (Topeka, KS) - 271 1,660 - -
Atlanta Headquarters - 248 - 1,441 -
----------------------------------------------------------------------
Total Operating Property 13,591 81,058 320,061 77,049 -
- -----------------------------------------------------------------------------------------------------------------
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
COL. A COL. E COL. F COL. G COL. H
- ---------------------------------------------------------------------------------------------------------------------------
Gross Amount at which Carried at close of Period
------------------------------------------------
Buildings and Accumulated Date of Date
Description Land Improvements Total Depreciation Construction Acquired
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Operating Property:
- ------------------
Township Marketplace (Monaca, PA) 1,340 10,105 11,445 83 1997 1997
Bermuda Square (Chester, VA) 1,302 7,534 8,836 59 1977 1997
Genito Crossing (Midlothian, VA) 823 4,812 5,635 38 1985 1997
Tri-Rivers (South Boston, VA) 502 4,431 4,933 81 1989 1997
Tri-State Plaza (Burlington, OH) 1,563 6,419 7,982 564 1995 1995
Carriage Gate (Richmond, KY) 1,398 7,989 9,387 868 1992 1994
Suttons North Plaza (Topeka, KS) 271 1,660 1,931 7 1976 1997
Atlanta Headquarters 248 1,441 1,689 32 1955 1997
--------------------------------------------------------------------------------
Total Operating Property 81,058 397,110 478,168 38,306
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
COL. A COL. B COL. C COL. D
- ----------------------------------------------------------------------------------------------------------------
Cost Capitalized Subsequent to
------------------------------
Initial Cost to Company Acquisition
----------------------- -----------
Buildings and Carrying
Description Encumbrances Land Improvements Improvements Costs
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Undeveloped Land
- ----------------
Charleston - 179 - - -
Lexington - 202 - - -
Hickory, NC - 300 - - -
Rockingham, NC - 300 - - -
Wallace - 251 - - -
Warner Robins, GA - 234 - - -
Cumming - 2,332 - - -
Lawrenceville TC - 601 - - -
Gadsden, AL - 55 - - -
Eastman, Ga - 69 - - -
LaFayette, GA - 84 - - -
Madison, GA - 22 - - -
Fayetteville, Ga - 150 - - -
-----------------------------------------------------------------------
Total Undeveloped Land - 4,779 - - -
-----------------------------------------------------------------------
-----------------------------------------------------------------------
Subtotal $ 13,591 $ 85,837 $ 320,061 77,049 $ -
- -----------------------------------------------------------------------------------------------------------------
<CAPTION>
- ----------------------------------------------------------------------------------------------------
COL. A COL. E COL. F
- ----------------------------------------------------------------------------------------------------
Gross Amount at which Carried at close of Period
------------------------------------------------
Buildings and Accumulated
Description Land Improvements Total Depreciation
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Undeveloped Land
- ----------------
Charleston 179 - 179 -
Lexington 202 - 202 -
Hickory, NC 300 - 300 -
Rockingham, NC 300 - 300 -
Wallace 251 - 251 -
Warner Robins, GA 234 - 234 -
Cumming 2,332 - 2,332 -
Lawrenceville TC 601 - 601 -
Gadsden, AL 55 - 55 -
Eastman, Ga 69 - 69 -
LaFayette, GA 84 - 84 -
Madison, GA 22 - 22 -
Fayetteville, Ga 150 - 150 -
----------------------------------------------------------
Total Undeveloped Land 4,779 - 4,779 -
----------------------------------------------------------
----------------------------------------------------------
Subtotal $ 85,837 $ 397,110 $ 482,947 $ 38,306
----------------------------------------------------------
</TABLE>
F-22
<PAGE>
Schedule III - Real Estate and Accumulated Depreciation
JDN Realty Corporation
December 31, 1997
(In thousands)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
COL. A COL. B COL. C COL. D
- ----------------------------------------------------------------------------------------------------------------
Cost Capitalized Subsequent to
------------------------------
Initial Cost to Company Acquisition
----------------------- -----------
Buildings and Carrying
Description Encumbrances Land Improvements Improvements Costs
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Property under Development
- --------------------------
Acquisitions-Early Stage - - 119 - -
Alpharetta, GA - 5,859 587 - -
Beaver Valley, PA - 2,430 2,900 - -
Bettendorf, IA - - 100 - -
Brandon (Publix), FL - 2,603 857 - -
Brandon, FL - 2,865 1,584 - -
Buford, GA - - 775 - -
Canton (Redev), GA - - 157 - -
Cary, NC - - 49 - -
Cartersville (Redev.) - - 53 - -
Cobb Co. - - 2,419 - -
Cumming, GA - 108 625 - -
Cumming, GA Phase II - - 8 - -
CVS Deals - - 16 - -
Fayetteville - - 489 - -
Forsyth Co. Pike - - 5 - -
Fort Oglethorpe - - - - -
Gallipolis, OH - 1,196 5,188 - -
Greensboro, NC - 3,248 3,447 - -
Greensboro, North - - 3 - -
Gulf Breeze, FL - 471 1,277 - -
Headquarters Acquisition - - 1,838 - -
Jackson MS - 521 451 - -
Lousville, KY - - 1 - -
Milwaukee WI - - 101 - -
Murfreesboro, TN - - 37 - -
Stockbridge Pike - - 44 - -
Stone Mtn, GA - 1,234 596 - -
Suwanee, GA- Pike - 582 478 - -
Topeka, KS - - 1 - -
Wilmington, NC - 2,649 3,768 - -
Winston-Salem, NC - 521 96 - -
-------------------------------------------------------------------
Total Property under Development - 24,287 28,069 - -
-------------------------------------------------------------------
-------------------------------------------------------------------
Total 13,591 110,124 348,130 77,049 -
-------------------------------------------------------------------
<CAPTION>
- --------------------------------------------------------------------------------------------------------
COL. A COL. E COL. F
- --------------------------------------------------------------------------------------------------------
Gross Amount at which Carried at close of Period
------------------------------------------------
Buildings and Accumulated
Description Land Improvements Total Depreciation
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Property under Development
- --------------------------
Acquisitions-Early Stage - 119 119 -
Alpharetta, GA 5,859 587 6,446 -
Beaver Valley, PA 2,430 2,900 5,330 -
Bettendorf, IA - 100 100 -
Brandon (Publix), FL 2,603 857 3,460 -
Brandon, FL 2,865 1,584 4,449 -
Buford, GA - 775 775 -
Canton (Redev), GA - 157 157 -
Cary, NC - 49 49 -
Cartersville (Redev.) - 53 53 -
Cobb Co. - 2,419 2,419 -
Cumming, GA 108 625 733 -
Cumming, GA Phase II - 8 8 -
CVS Deals - 16 16 -
Fayetteville - 489 489 -
Forsyth Co. Pike - 5 5 -
Fort Oglethorpe - - - -
Gallipolis, OH 1,196 5,188 6,384 -
Greensboro, NC 3,248 3,447 6,695 -
Greensboro, North - 3 3 -
Gulf Breeze, FL 471 1,277 1,748 -
Headquarters Acquisition - 1,838 1,838 -
Jackson MS 521 451 972 -
Lousville, KY - 1 1 -
Milwaukee WI - 101 101 -
Murfreesboro, TN - 37 37 -
Stockbridge Pike - 44 44 -
Stone Mtn, GA 1,234 596 1,830 -
Suwanee, GA- Pike 582 478 1,060 -
Topeka, KS - 1 1 -
Wilmington, NC 2,649 3,768 6,417 -
Winston-Salem, NC 521 96 617 -
---------------------------------------------------------------
Total Property under Development 24,287 28,069 52,356 -
---------------------------------------------------------------
---------------------------------------------------------------
Total 110,124 425,179 535,303 (3) 38,306
---------------------------------------------------------------
</TABLE>
F-23
<PAGE>
Schedule III - Real Estate and Accumulated Depreciation
JDN Realty Corporation
December 31, 1997
(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":
Years Ended December 31,
1997 1996 1995
-----------------------------------
Investment in Real Estate
Balance at beginning of year $ 332,669 $ 276,818 $ 229,986
Additions/Improvements 203,086 56,538 49,187
Deductions (452) (687) (2,355)
-----------------------------------
Balance at end of year $ 535,303 $ 332,669 $ 276,818
===================================
Accumulated Depreciation
Balance of beginning of year $ 27,973 $ 20,312 $ 14,034
Additions charged to costs
and expenses 9,932 7,739 6,511
Other Additions 401
Deductions - (78) (233)
-----------------------------------
Balance at end of year $ 38,306 $ 27,973 $ 20,312
===================================
F-24
<PAGE>
EXHIBIT 3.3
AMENDED AND RESTATED
BYLAWS
OF
JDN REALTY CORPORATION
ARTICLE I
OFFICES
SECTION 1.1. PRINCIPAL OFFICE. The principal office of the Corporation in
----------------
the State of Maryland shall be CSC-Lawyers Incorporating Service Company, 100
Light Street, Sixth Floor, Baltimore, Maryland 21202. The original or a
certified copy of these Bylaws, including any and all amendments, shall be kept
at the Corporation's principal office.
SECTION 1.2. OTHER OFFICES. The Corporation may also have offices at such
-------------
other places within or without the State of Maryland as the Board of Directors
may from time to time determine or as the business of the Corporation may
require.
ARTICLE II
MEETINGS OF THE SHAREHOLDERS
SECTION 2.1. PLACE OF MEETINGS. Meetings of the shareholders shall be
-----------------
held at such place within or without the State of Maryland as shall be specified
in the notice of the meeting or in a waiver thereof.
SECTION 2.2. ANNUAL MEETING. An annual meeting of the shareholders,
--------------
commencing in the year 1994, shall be held on a date and time designated by the
Board of Directors and as set forth in the notice of the meeting, for the
purpose of electing directors and transacting such other business as may
properly be brought before the meeting.
SECTION 2.3. SPECIAL MEETINGS. Special meetings of the shareholders may
----------------
be called by the President, by a majority of the Board of Directors, or by such
person or persons as may be authorized by the Articles of Incorporation or by
these Bylaws. The Secretary of the Corporation shall call a special meeting of
the shareholders on the written request of shareholders entitled to cast at
least twenty-five percent (25%) of all the votes entitled to be cast at the
meeting. A request for a special meeting shall state the purpose of the meeting
and the matters proposed to be acted on at it. The Secretary shall: (a) inform
the shareholders who make the request for a special meeting of the reasonably
estimated cost of preparing and mailing a notice of that meeting; and (b) on
payment of these costs to the Corporation, notify each shareholder entitled to
notice of the meeting. Unless requested by shareholders entitled to cast a
majority of all the votes entitled to be cast at the meeting, a special meeting
need not be called to consider any matter which is substantially the same as a
matter voted on at any special meeting of the shareholders held during the
preceding twelve (12) months.
SECTION 2.4. NOTICE. Not less than ten (10) nor more than ninety (90)
------
days before each meeting of the shareholders, the Secretary of the Corporation
shall give written notice of the meeting to: (a) each shareholder of record
entitled to vote at
<PAGE>
the meeting; and (b) each other shareholder entitled by applicable law to notice
of the meeting. The notice shall state the date, time and place of the meeting
and the purpose of the meeting, if the meeting is a special meeting or notice of
the purpose is required by the General Corporation Law of the State of Maryland.
Notice is given to a shareholder when it is: (a) personally delivered to the
shareholder; (b) left at the shareholder's residence or usual place of business;
or (c) mailed to the shareholder at the shareholder's address as it appears on
the records of the Corporation. If mailed, notice is given when deposited in the
United States mail, postage prepaid and directed to the shareholder at the
shareholder's address as it appears on the records of the Corporation.
SECTION 2.5. QUORUM. The holders of shares entitled to vote as a separate
------
voting group may take action on a matter at a meeting only if a quorum exists
with respect to that matter. The presence in person or by proxy of shareholders
entitled to cast a majority of all the votes entitled to be cast on a matter by
a voting group, shall constitute a quorum at meetings of shareholders except as
otherwise provided by statute or by the Articles of Incorporation. Once a share
is represented for any purpose at a meeting, the holder is deemed present for
quorum purposes for the remainder of the meeting and for any adjournment of that
meeting, unless a new record date is or must be set for that adjourned meeting.
SECTION 2.6. ADJOURNMENT. If a quorum shall not be present or represented
-----------
at any meeting of the shareholders, the shareholders present in person, or
represented by proxy, shall have the power to adjourn the meeting from time to
time, without further notice, to a date not more than one hundred twenty (120)
days after the original record date. At such adjourned meeting at which a
quorum shall be present or represented, any business may be transacted which
might have been transacted at the original meeting.
SECTION 2.7. MAJORITY RULE. A majority of all the votes cast at a meeting
-------------
of shareholders at which a quorum is present is sufficient to approve any matter
which properly comes before the meeting, unless the vote of a greater number is
required by the General Corporation Law of the State of Maryland, the Articles
of Incorporation or these Bylaws.
SECTION 2.8. ELECTION OF DIRECTORS. Directors shall be elected by a
---------------------
majority of all the votes cast at a meeting of shareholders at which a quorum is
present.
SECTION 2.9. VOTING. Each outstanding share of stock, regardless of
------
class, is entitled to one vote on each matter submitted to a vote at a meeting
of shareholders, unless otherwise provided pursuant to the Articles of
Incorporation or by the General Corporation Law of the State of Maryland.
SECTION 2.10. PROXIES. Each shareholder entitled to vote at a meeting of
-------
the shareholders or to express consent or dissent to corporate action in writing
without a meeting may authorize another person or persons to act for him by
proxy by signing an appointment form, either personally or by his attorney-in-
fact, but no such proxy shall be voted or acted upon after eleven (11) months
from its date, unless the proxy provides for a longer period. A duly executed
proxy shall be
2
<PAGE>
irrevocable if it conspicuously states that it is irrevocable and if, and only
as long as, it is coupled with an interest sufficient in law to support an
irrevocable power. A proxy may be irrevocable regardless of whether the interest
with which it is coupled is an interest in the stock itself or an interest in
the Corporation generally.
SECTION 2.11. LIST OF SHAREHOLDERS. The officer who has charge of the
--------------------
stock ledger books of the Corporation shall prepare and make, at least ten (10)
days before each meeting of the shareholders, a complete list of the
shareholders entitled to vote at such meeting, arranged in alphabetical order,
showing the address of each shareholder and the number of shares registered in
the name of each shareholder. Such list shall be open to the examination of any
shareholder, for any purpose germane to the meeting, during ordinary business
hours for a period of at least ten (10) days prior to the meeting, either at a
place within the city where the meeting is to be held, which place shall be
specified in the notice of the meeting, or, if not so specified, at the place
where the meeting is to be held. Such list shall also be produced and kept at
the time and place of the meeting during the whole time thereof, and may be
inspected by any shareholder who is present. The stock ledger shall be the only
evidence as to who are the shareholders entitled to examine the stock ledger, to
be included in the list required by this Section 2.11 or to vote in person or by
proxy at any meeting of shareholders.
SECTION 2.12. INSPECTORS. The Board of Directors may, in advance of any
----------
meeting of the shareholders, appoint one or more inspectors to act at such
meeting or any adjournment thereof. If the inspectors shall not be so appointed
or if any of them shall fail to appear or act, the chairman of the meeting may,
and on the request of any shareholder entitled to vote thereat shall, appoint
inspectors. Each inspector, before entering upon the discharge of his duties,
shall take and sign an oath to execute faithfully the duties of inspector at
such meeting with strict impartiality and according to the best of his ability.
The inspectors shall determine the number of shares represented at the meeting,
the existence of a quorum, the validity and effect of proxies, and shall receive
votes, ballots or consents, hear and determine all challenges and questions
arising in connection with the right to vote, count and tabulate all votes,
ballots or consents, determine the result, and do such acts as are proper to
conduct the election or vote with fairness to all shareholders. On request of
the chairman of the meeting or any shareholder entitled to vote thereat, the
inspectors shall make a report in writing of any challenge, request or matter
determined by them and shall execute a certificate of any fact found by them.
No director or candidate for the office of director shall act as inspector of an
election of directors. Inspectors need not be shareholders.
SECTION 2.13. ACTION WITHOUT MEETING. Any action required or permitted to
----------------------
be taken at a meeting of the shareholders may be taken without a meeting if the
following are filed with the records of meetings of the shareholders: (a) a
unanimous written consent which sets forth the action and is signed by each
shareholder entitled to vote on the matter; and (b) a written waiver of any
right to dissent signed by each shareholder entitled to notice of the meeting
but not entitled to vote at it. The affirmative vote of the number of shares
which would be necessary to authorize or take action at a meeting of
shareholders, pursuant to Section 2.7, is the act of the shareholders without a
meeting. Action taken by written consent is
3
<PAGE>
effective when the last shareholder signs the consent, unless the consent
specifies a different effective date.
SECTION 2.14. ORGANIZATION. At every meeting of the stockholders, the
------------
Chairman of the Board, or in the case of a vacancy in the office or absence of
the Chairman of the Board, one of the following persons present in the order
stated: the President, the Vice Presidents in their order of rank, a chairman
designated by the Board of Directors, or a chairman chosen by the stockholders
entitled to cast a majority of the votes which all stockholders present in
person or by proxy are entitled to cast, shall act as chairman of the meeting,
and the Secretary, or, in his absence, an Assistant Secretary, if any, or any
person appointed by the chairman of the meeting, shall act as secretary of the
meeting.
ARTICLE III
DIRECTORS
SECTION 3.1. NUMBER. Except as set forth below, the number of directors
------
of the Corporation shall be not less than three nor more than nine, as
determined from time to time by the Board of Directors of the Corporation, who
shall be elected at the annual meeting of shareholders, except in the case of
initial directors named in the Articles of Incorporation and except as provided
below. If at any time the Corporation has less than three shareholders, the
number of directors of the Corporation may be less than three but not less than
the number of shareholders. Any action by the Board of Directors or
shareholders to reduce the number of directors shall not affect the tenure of
office of any director.
The Board of Directors of this Corporation shall be classified into three
classes, equal or approximately equal in number. If the number of directors is
not divisible evenly by three, the Board of Directors shall determine the number
of directors to be in each class, with each class to be approximately equal in
number. Initial directors shall be placed into classes by a vote of a majority
of the shares of capital stock entitled to vote, except as otherwise provided in
the Articles of Incorporation. Each director in Class 1 shall serve for an
initial term ending at the annual meeting of shareholders in 1995 and until his
or her successor is elected and qualified; each director in Class 2 shall serve
for an initial term ending at the annual meeting of the shareholders in 1996 and
until his or her successor is elected and qualified; and each director in Class
3 shall serve for an initial term ending at the annual meeting of shareholders
in 1997 and until his or her successor is elected and qualified. After the
respective initial terms of the classes indicated, each such class of directors
shall be elected for successive terms ending at the annual meeting of
shareholders the third year after election and until his or her successor is
elected and qualified. In the event of an increase or decrease in the number of
directors, and the number of directors is not divisible evenly by three, the
remaining directors by majority vote shall determine the number of directors to
be in each class of directors, with each class to be approximately equal in
number, to be effective after expiration of the remaining terms of any class
which have a reduction in number due to a decrease in the number of directors.
4
<PAGE>
SECTION 3.2. INDEPENDENT DIRECTORS. At least a majority of the entire
---------------------
Board of Directors shall be Independent Directors, as hereinafter defined. An
Independent Director shall mean a director who is not, directly or indirectly,
an Affiliate of the Corporation, as hereinafter defined. An Affiliate of the
Corporation shall mean a person who: (a) is an officer or employee of the
Corporation; (b) beneficially owns five percent (5%) or more of any class of
equity securities of the Corporation, or of any entity that controls, is
controlled by or is under common control with the Corporation; or (c) has a
member of his or her immediate family who has one of the foregoing relationships
with the Corporation.
SECTION 3.3. ELECTION AND TENURE. Until the first annual meeting of
-------------------
shareholders and until successors are elected and qualify, the Board of
Directors consists of the individuals named as initial directors in the Articles
of Incorporation. Unless the Articles of Incorporation or these Bylaws provide
otherwise, a majority of all the votes cast at a meeting of shareholders at
which a quorum is present is sufficient to elect a director, and each director
elected shall hold office until the end of his term as provided herein, and
until his successor is elected and qualified or until his earlier resignation or
removal. Each share of stock may be voted for as many individuals as there are
directors to be elected and for whose election the share is entitled to be
voted. Shareholders shall not have any cumulative voting rights.
SECTION 3.4. QUALIFICATIONS. Each director of the Corporation shall have
--------------
the qualifications required by the Articles of Incorporation or these Bylaws.
Directors need not be residents of the State of Maryland or shareholders in the
Corporation.
SECTION 3.5. REMOVAL. Any director may be removed only for cause (a) by
-------
vote of the holders of seventy-five percent (75%) of the shares of capital stock
of the Corporation entitled to vote; or (b) by the unanimous vote of all of the
other members of the Board of Directors. Cause shall mean the director's
willful dishonesty towards, fraud upon, or deliberate injury or attempted injury
to the Corporation.
SECTION 3.6. VACANCIES. Any vacancy occurring in the Board of Directors
---------
which results from the removal of a director shall be filled by the shareholders
of the Corporation in accordance with Section 2.8. A director elected by the
shareholders to fill a vacancy which results from the removal of a director
shall serve for the balance of the term of the removed director. Any other
vacancy occurring in the Board of Directors which results from any cause except
an increase in the authorized number of directors may be filled by the
affirmative vote of a majority of the remaining directors, whether or not
sufficient to constitute a quorum. A majority of the entire Board of Directors
may fill a vacancy which results from an increase in the number of directors
and, subject to Section 3.1, determine the class of such additional director or
directors. A director elected by the Board of Directors to fill a vacancy
serves until the next annual meeting of the shareholders and until such
director's successor is elected and qualifies.
SECTION 3.7. LACK OF DIRECTORS. If at any time, by reason of death or
-----------------
resignation or other cause, the Corporation should have no directors in office,
then
5
<PAGE>
any officer or any shareholder or an executor, administrator, trustee or
guardian of a shareholder, or other fiduciary entrusted with like responsibility
for the person or estate of a shareholder may call a special meeting of
shareholders in accordance with the provisions of the Articles of Incorporation
or these Bylaws, and an election of directors may be held in the manner provided
by the Articles of Incorporation, these Bylaws or applicable law.
SECTION 3.8. RESIGNATION. A director may resign at any time by delivering
-----------
written notice to the Corporation, the Board of Directors, the Chairman of the
Board or the President. A resignation is effective when notice is delivered,
unless the notice specifies a later effective date.
SECTION 3.9. POWERS. The business and affairs of the Corporation shall be
------
managed under the direction of its Board of Directors which may exercise all
such powers of the Corporation and do all such lawful acts and things as are not
by applicable law, the Articles of Incorporation or by these Bylaws conferred on
or reserved to the shareholders. In the event the public offering of the
Corporation's shares are registered in accordance with applicable securities
laws, the Board of Directors shall cause the Corporation's investment policies
and activities to be in compliance with the investment activities set forth in
the prospectus prepared in connection with such registration.
SECTION 3.10. QUORUM. A majority of the entire Board of Directors shall
------
constitute a quorum for the transaction of business. If a quorum shall not be
present at any meeting of the Board of Directors, the directors present thereat
may adjourn the meeting from time to time, without notice other than
announcement at the meeting, until a quorum shall be present.
SECTION 3.11. ANNUAL MEETING. The annual meeting of the Board of
--------------
Directors for the purpose of electing officers and transacting such other
business as may be brought before the meeting shall be held each year
immediately following the annual meeting of shareholders. No notice of such
meeting shall be necessary in order to legally constitute the meeting, providing
a quorum be present.
SECTION 3.12. REGULAR MEETINGS. Regular meetings of the Board of
----------------
Directors may be held without notice at such places, within or without the State
of Maryland, on such dates and at such times as may from time to time be
determined by the Board.
SECTION 3.13. SPECIAL MEETINGS. Special meetings of the Board of
----------------
Directors may be called by the Chairman of the Board or the President and shall
be called by the Secretary on the written request of two directors. Written
notice of special meetings of the Board of Directors shall be given to each
director at least three days before the date of the meeting. Neither the
business to be transacted at, nor the purpose of, any regular or special meeting
of the Board of Directors need be specified in the notice or waiver of notice of
such meeting. Such meetings shall be held at such places, within or without the
State of Maryland, on such dates and at such times as may be stated in the
notice.
6
<PAGE>
SECTION 3.14. ACTION WITHOUT MEETING. Any action required or permitted to
----------------------
be taken at a meeting of the Board of Directors or of a committee of the Board
of Directors may be taken without a meeting, if a unanimous written consent
which sets forth the action is: (a) signed by each member of the Board of
Directors or committee; and (b) filed with the minutes of proceedings of the
Board of Directors or committee. The affirmative vote of the number of
directors that would be necessary to authorize or take action at a meeting,
pursuant to Section 3.16, is the act of the Board of Directors without a
meeting. Action taken by written consent is effective when the last director
signs the consent unless the consent specifies a different effective date.
SECTION 3.15. MEETINGS BY TELEPHONE. Members of the Board of Directors or
---------------------
any committee may participate in a meeting by means of a conference telephone or
similar communications equipment provided all persons participating in the
meeting can hear each other at the same time. A director participating in such
a meeting is deemed to be present in person at the meeting.
SECTION 3.16. MAJORITY RULE. The action of a majority of the directors
-------------
present at a meeting at which a quorum is present is the action of the Board of
Directors unless the Articles of Incorporation or these Bylaws shall require a
greater proportion.
SECTION 3.17. INTERESTED DIRECTOR TRANSACTIONS. Any transaction
--------------------------------
(including, without limitation, a property acquisition) between the Corporation
and any of its officers or directors, or their affiliates, shall require
approval by a majority of the Board of Directors (including a majority of
Independent Directors) not otherwise interested in such transaction as being
fair and reasonable to the Corporation on terms and conditions not less
favorable to the Corporation than those available from unaffiliated third
parties. No contract or transaction between the Corporation and any of its
directors, or between the Corporation and any other corporation, firm or entity
in which any of its directors is a director, or has a material financial
interest, shall be void or voidable solely for this reason, or solely because
the director is present at the meeting of the Board of Directors or committee
which authorizes, approves or ratifies the contract or transaction, or solely
because his or their votes are counted for such purpose, if such interested
director complies with statutory disclosure requirements or the contract or
transaction is fair and reasonable to the Corporation. Common or interested
directors or the stock owned by them or by an interested corporation, firm or
other entity may be counted in determining the presence of a quorum at a meeting
of the Board of Directors or of a committee or at a meeting of shareholders, as
the case may be, which authorizes, approves or ratifies the contract or
transaction.
SECTION 3.18. COMPENSATION. The Board of Directors shall have the
------------
authority to fix the compensation of directors. The Board of Directors may
delegate this authority to its Compensation Committee as set forth in Section
4.5. Such compensation may include stock options under a plan approved by the
Board of Directors and the shareholders of the Corporation. Directors shall be
entitled to reimbursement for any reasonable expenses incurred in attending
meetings and otherwise carrying out their duties.
7
<PAGE>
SECTION 3.19. ORGANIZATION. At every meeting of the Board of Directors,
------------
the Chairman of the Board, or in the case of a vacancy in the office or absence
of the Chairman of the Board, one of the following officers present in the order
stated: the President, the Vice Presidents in their order of rank, or a chairman
chosen by a majority of the directors present, shall act as chairman of the
meeting, and the Secretary, or, in the absence of the Secretary, an Assistant
Secretary, if any, or any other person appointed by the chairman of the meeting,
shall act as secretary of the meeting.
ARTICLE IV
COMMITTEES
SECTION 4.1. APPOINTMENTS AND POWERS. The Corporation shall have an
-----------------------
Executive Committee, Audit Committee and a Compensation Committee. In addition,
the Board of Directors may, by resolution or resolutions passed by a majority of
the whole Board of Directors, designate one or more other committees composed of
two or more directors. The Board of Directors may designate one or more
directors as alternative members of a committee who may replace any absent or
disqualified member at any meeting of the committee. Such alternate members
shall not be counted for purposes of determining a quorum unless acting for an
absent or disqualified member, in which case they shall be counted in the place
of the absent or disqualified member. The committee, to the extent provided in
said resolution or resolutions or in these Bylaws, shall have and may exercise
the powers of the Board of Directors in the management of the business and
affairs of the Corporation and may have power to authorize the seal of the
Corporation to be affixed to all papers which may require it, except that a
committee may not: (i) declare dividends or distributions on shares; (ii) amend
the Bylaws; (iii) approve any merger or share exchange which does not require
shareholder approval; or (iv) authorize or approve the issuance or sale or
contract for sale of shares except that such committee may fix the terms and
conditions of shares in accordance with a general formula or method specified by
the Board of Directors. Such committee or committees shall have such name or
names as may be stated in these Bylaws or as may be determined from time to time
by resolution adopted by the Board of Directors. Sections 3.11 through 3.16
applicable to the Board of Directors shall also apply to all committees.
SECTION 4.2. MINUTES. Committees shall keep regular minutes of their
-------
proceedings and report the same to the Board of Directors when required.
SECTION 4.3. EXECUTIVE COMMITTEE. The Executive Committee shall have the
-------------------
special duties described below:
(a) The Executive Committee shall act in the absence of the Board of
Directors and shall be delegated all of the powers of the Board of Directors
except as limited by the General Corporation Law of the State of Maryland.
(b) The Executive Committee shall review the Corporation's investment
policies at least annually to determine that the policies are being followed by
the Corporation and are in the best interest of its shareholders. The findings
of the
8
<PAGE>
Executive Committee shall be set forth in the minutes of meetings of the
Board of Directors.
SECTION 4.4. AUDIT COMMITTEE. The Audit Committee shall have the special
---------------
duties described below:
(a) The Audit Committee shall select and engage on behalf of the
Corporation, subject to the consent of the shareholders, and fix the
compensation of, a firm of independent certified public accountants whose duty
it shall be to audit the books and accounts of the Corporation and its
subsidiaries for the fiscal year in which they are appointed, and who shall
report to such Audit Committee.
(b) The Audit Committee shall confer with the independent certified public
accountants and shall determine, and from time to time shall report to the Board
of Directors upon, the plans and results of the auditing of the books and
accounts of the Corporation.
(c) The Audit Committee shall review the services provided by, the
independence of, and the fees charged by the independent certified public
accountant, and from time to time shall report upon the same to the Board of
Directors.
(d) The Audit Committee shall review the adequacy of the Corporation's
internal accounting controls, and from time to time shall report upon the same
to the Board of Directors.
(e) The Audit Committee shall have such other powers as may be delegated by
the Board of Directors from time to time.
None of the members of the Audit Committee shall be officers or employees of the
Corporation.
SECTION 4.5. COMPENSATION COMMITTEE. The Compensation Committee shall
----------------------
establish a general compensation policy for the Corporation and shall approve
increases in directors' fees and salaries paid to officers and senior employees
earning in excess of an annual base salary of one-hundred fifty thousand dollars
($150,000.00). The Compensation Committee shall have all the powers of
administration under all of the Corporation's employee benefit plans, including
any stock option plans, bonus plans, retirement plans, stock purchase plans and
medical, dental and insurance plans. In connection therewith, the Compensation
Committee shall determine, subject to the provision of the Corporation's plans,
the directors, officers and employees of the Corporation eligible to participate
in any of the plans, the extent of such participation and terms and conditions
under which benefits may be vested, received or exercised.
9
<PAGE>
ARTICLE V
NOTICES
SECTION 5.1. NOTICE. Notices to directors and shareholders shall be in
------
writing, shall specify the date, time and place of the meeting and shall be
delivered personally, left at his or her residence or usual place of business,
or mailed to the directors or shareholders at their addresses appearing on the
records of the Corporation. Notice by mail shall be deemed to be given at the
time when deposited in the United States mail, postage prepaid, and directed to
the directors or shareholders at their addresses appearing on the records of the
Corporation. Notice to directors may also be given by telegram, facsimile or
overnight courier, and shall be deemed to be given upon receipt at their
addresses appearing on the records of the Corporation.
SECTION 5.2. WAIVER OF NOTICE. Whenever any notice of the time, place or
----------------
purpose of a meeting is required to be given to any shareholder or director
under the General Corporation Law of the State of Maryland or the Articles of
Incorporation or these Bylaws, a written waiver, signed by the person entitled
to notice and delivered to the Corporation and filed with the Corporation's
minutes or records, whether before or after the time stated therein, shall be
deemed equivalent to notice. Neither the business to be transacted at, nor the
purpose of, any regular or special meeting of the shareholders, Board of
Directors or members of a committee of the Board of Directors need be specified
in any written waiver of notice unless required by the Articles of Incorporation
or these Bylaws.
SECTION 5.3. ATTENDANCE CONSTITUTES WAIVER. Attendance of a person at a
-----------------------------
meeting in person or by proxy shall constitute a waiver of notice of such
meeting, except when the person attends a meeting for the express purpose of
objecting at the beginning of the meeting to the transaction of any business
because the meeting is not lawfully called or convened.
ARTICLE VI
OFFICERS
SECTION 6.1. OFFICERS. The officers of the Corporation shall consist of a
--------
President, Secretary and Treasurer, and may include a Chairman of the Board,
Vice Chairman of the Board and one or more Vice Presidents (any one or more of
which may be designated as a senior or executive vice president), Chief
Financial Officer and one or more assistant vice presidents, assistant
treasurers, assistant controller and assistant secretaries, each of whom shall
be elected by the Board of Directors. Any number of offices may be held by the
same person except the offices of President and Vice President shall not be held
by the same person concurrently.
SECTION 6.2. ELECTION. At the first meeting of the Board of Directors
--------
following the annual meeting of shareholders, or as soon thereafter as is
conveniently possible, the Board of Directors shall elect a president, secretary
and a treasurer and such other additional officers, assistant officers and
agents as may be deemed necessary may be elected and appointed by the Board of
Directors. The
10
<PAGE>
Board of Directors may elect officers at such additional times as it deems
advisable. The election or appointment of an officer shall not by itself create
contract rights.
SECTION 6.3. REMOVAL. If the Board of Directors in its judgment finds
-------
that the best interests of the Corporation will be served, it may remove any
officer or agent of the Corporation. The removal of an officer or agent does
not prejudice any of his or her contract rights, if any.
SECTION 6.4. COMPENSATION. The salaries of all officers and agents of the
------------
Corporation shall be fixed by the Compensation Committee or by the Board of
Directors, subject to the provisions of Section 4.5.
SECTION 6.5. TERM OF OFFICE; RESIGNATION. An officer of the Corporation
---------------------------
shall serve for the term provided within any applicable contract for employment,
or absent such contract shall serve for one year and until his or her successor
is elected and qualified or until his or her earlier resignation or removal.
Any officer may resign at any time upon written notice to the Corporation. A
resignation is effective when the notice is delivered, unless the notice
specifies a later effective date. If a resignation is made effective at a later
date and the Corporation accepts such later date, the Board of Directors may
fill the pending vacancy before the effective date if it provides that the
successor does not take office until the effective date. An officer's
resignation does not affect the Corporation's contract rights, if any, with the
officer. Any vacancy occurring in any office of the Corporation by death,
resignation, removal or otherwise shall be filled by the Board of Directors or
by such officer or agent of the Corporation to whom the Board of Directors may
expressly delegate such authority.
SECTION 6.6. CHAIRMAN OF THE BOARD. The Chairman of the Board shall be
---------------------
chosen from among the members of the Board of Directors, shall be the Chief
Executive Officer of the Corporation, shall perform such duties as may be
delegated by the Board of Directors and shall preside at all meetings of the
shareholders and the Board of Directors. The Chairman of the Board shall have
general powers and duties of supervision and management usually vested in the
office of chairman of the board and chief executive officer of a corporation,
including the authority to make contracts on behalf of Corporation in the
ordinary course of the Corporation's business. The Chairman of the Board shall
have general supervision, direction and control of the business of the
Corporation, and shall see that all orders and resolutions of the Board of
Directors are carried into effect. The Chairman of the Board shall execute
bonds, mortgages and other contracts of the Corporation, except where required
or permitted by law to be otherwise signed and executed, and except where the
signing and execution thereof shall be expressly delegated by the Board of
Directors to some other officer or agent of the Corporation. The Chairman of
the Board shall have such powers and duties as usually pertain to such office,
except as the same may be modified by the Board of Directors.
SECTION 6.8. PRESIDENT. The President shall have general powers and
---------
duties of supervision and management usually vested in the office of president
of a corporation, including the authority to make contracts on behalf of the
Corporation in the ordinary course of the Corporation's business. The President
shall have general supervision, direction and control of the business of the
Corporation, and
11
<PAGE>
shall see that all orders and resolutions of the Board of Directors are carried
into effect. In the absence of the Chairman of the Board, the President shall
preside at all meetings of the shareholders and the Board of Directors. The
President shall execute bonds, mortgages and other contracts, except where
required or permitted by law to be otherwise signed and executed, and except
where the signing and execution thereof shall be expressly delegated by the
Board of Directors to some other officer or agent of the Corporation. The
President shall have the power to appoint, remove and suspend subordinate
officers, agents and factors upon such terms and conditions as he deems
reasonable and appropriate. The President shall have such powers and duties as
usually pertain to such office, except as the same may be modified by the Board
of Directors.
SECTION 6.9. VICE PRESIDENTS. The Vice Presidents, in the order of their
---------------
seniority, unless otherwise determined by the Board of Directors, shall, in the
absence or disability of the President, perform the duties and exercise the
powers of the President. They shall perform such other duties and have such
other powers as the Board of Directors may from time to time prescribe or as the
President may from time to time delegate.
SECTION 6.10. SECRETARY. The Secretary shall attend meetings of the Board
---------
of Directors and shareholders, and record all the proceedings of such meetings
in a book to be kept for that purpose. The Secretary shall give, or cause to be
given, notice of all meetings of the shareholders and special meetings of the
Board of Directors, and shall perform such other duties as may be prescribed by
the Board of Directors or President, under whose supervision the Secretary shall
be.
SECTION 6.11. ASSISTANT SECRETARIES. The Assistant Secretaries, in the
---------------------
order of their seniority, unless otherwise determined by the Board of Directors,
shall, in the absence or disability of the Secretary, perform the duties and
exercise the power of the Secretary. They shall perform such other duties and
have such other powers as the Board of Directors may from time to time prescribe
or as the President may from time to time delegate.
SECTION 6.12. TREASURER. The Treasurer shall have custody of the
---------
corporate funds and securities, and shall keep full and accurate accounts of
receipts and disbursements in books belonging to the Corporation, and shall
deposit all moneys and other valuable effects in the name and to the credit of
the Corporation in such depositories as may be designated by the Board of
Directors. The Treasurer shall disburse the funds of the Corporation as may be
ordered by the Board of Directors, taking proper vouchers for such
disbursements, and shall render to the President and the Board of Directors at
its regular meetings, or when the Board of Directors so requires, an account of
all his transactions as Treasurer and of the financial condition of the
Corporation. The Treasurer shall perform such other duties and have such other
authority and powers as the Board of Directors may from time to time prescribe
or as the President may from time to time delegate.
SECTION 6.13. ASSISTANT TREASURERS. The Assistant Treasurers, in the
--------------------
order of their seniority, unless otherwise determined by the Board of Directors,
shall, in the absence or disability of the Treasurer, perform the duties and
exercise the powers of the Treasurer. They shall perform such other duties and
have such
12
<PAGE>
other powers as the Board of Directors may from time to time prescribe or the
President may from time to time delegate.
ARTICLE VII
CERTIFICATE FOR SHARES
SECTION 7.1. CERTIFICATES FOR SHARES. The shares of the Corporation shall
-----------------------
be represented by certificates which shall be in a form approved by the Board of
Directors and contain such information as may be required by the General
Corporation Law of the State of Maryland or any securities exchanges on which
any shares of the Corporation may be listed.
SECTION 7.2. FACSIMILE SIGNATURES. Any or all the signatures on the
--------------------
certificate may be a facsimile. In case any officer who has signed or whose
facsimile signature has been placed upon a certificate shall have ceased to be
such officer before such certificate is issued, it may be issued by the
Corporation with the same effect as if he were such officer at the date of
issue.
SECTION 7.3. LOST CERTIFICATES. The Board of Directors may determine the
-----------------
conditions for issuing a new stock certificate in place of any certificate
issued by it, alleged to have been lost, stolen or destroyed. The Board of
Directors may require the owner of the lost, stolen or destroyed certificate to
give to the Corporation a bond with sufficient surety to indemnify the
Corporation against any loss or claim arising as a result of the issuance of a
new certificate. The issuance of a new certificate under this Section 7.3 does
not constitute an overissue of the shares it represents.
SECTION 7.4. TRANSFER OF SHARES. Upon surrender to the Corporation or the
------------------
transfer agent of the Corporation of a certificate for shares duly endorsed or
accompanied by proper evidence of succession, assignment or authority to
transfer, it shall be the duty of the Corporation to issue a new certificate to
the person entitled thereto, cancel the old certificate and record the
transaction upon its books.
SECTION 7.5. RECORD DATE FOR NOTICE AND VOTING. For the purpose of
---------------------------------
determining shareholders entitled to notice of or to vote at any meeting of
shareholders or any adjournment thereof, the Board of Directors may set a record
date or direct that the stock transfer books be closed for a stated period for
the purpose of making any proper determination with respect to shareholders.
The record date shall be not more than ninety (90) days nor less than ten (10)
days before the date on which the action requiring the determination will be
taken. The transfer books may not be closed for a period longer than twenty
(20) days. If no record date is fixed by the Board of Directors, the record
date for determining shareholders entitled to notice of or to vote at a meeting
of shareholders shall be the later of: (a) the close of business on the day on
which notice of the meeting is mailed; or (b) the thirtieth (30th) day before
the meeting. A determination of shareholders of record entitled to notice of or
to vote at a meeting of shareholder shall apply to any adjournment of the
meeting not more than one hundred twenty (120) days after the original record
date; providing, however, that the Board of Directors may fix a new record date
of the adjourned meeting.
13
<PAGE>
SECTION 7.6. RECORD DATE FOR DIVIDENDS. For the purpose of determining
-------------------------
shareholders entitled to receive payment of any dividend or an allotment of any
rights, the record date is such date as is determined by the Board of Directors.
SECTION 7.7. SHAREHOLDERS OF RECORD. The Corporation shall be entitled to
----------------------
recognize the exclusive rights of a person registered on its books as the owner
of shares to receive dividends, and to vote as such owner, and shall not be
bound to recognize any equitable or other claim to or interest in such share or
shares on the part of any other person, whether or not it shall have express or
other notice thereof, except as otherwise provided by the laws of the State of
Maryland.
SECTION 7.8. DENIAL OF PREEMPTIVE RIGHTS. No shareholder shall have any
---------------------------
preemptive right to subscribe to an additional issue of stock or to any security
convertible into such stock unless, and except to the extent that, such right is
expressly granted pursuant to the Articles of Incorporation.
ARTICLE VIII
GENERAL PROVISIONS
SECTION 8.1. DIVIDENDS. Subject to the provisions of the Articles of
---------
Incorporation and the General Corporation Law of the State of Maryland, the
Board of Directors of the Corporation may, at any regular or special meeting,
declare dividends upon the capital stock of the Corporation, as and when the
Board of Directors may deem expedient.
SECTION 8.2. CHECKS; DRAFTS. All checks or demands for money and notes of
--------------
the Corporation shall be signed by such officer or officers or such other person
or persons as the Board of Directors may from time to time designate.
SECTION 8.3. FISCAL YEAR. The fiscal year of the Corporation shall be the
-----------
calendar year, unless otherwise fixed by the Board of Directors.
SECTION 8.4. ANNUAL STATEMENT OF AFFAIRS. The President, or any other
---------------------------
officer of the Corporation designated by the Board of Directors, shall prepare
annually a full and correct statement of the affairs of the Corporation, to
include a balance sheet and a financial statement of operations for the
preceding fiscal year. The statement of affairs shall be submitted at the
annual meeting of shareholders and, within twenty (20) days after such meeting,
placed on file at the principal office of the Corporation.
SECTION 8.5. STATEMENTS FROM SHAREHOLDERS. In order to maintain its
----------------------------
status as a real estate investment trust under the Internal Revenue Code of
1986, as amended (the "Code"), the Corporation shall demand annual written
statements from those shareholders of record to the extent required by Treasury
Regulation Section 1.857-8(d) disclosing the actual owners of the shares of the
Corporation. Such written statements from shareholders of record shall be
demanded by the Corporation within thirty (30) days after the close of the
Corporation's taxable year. A list of the persons failing or refusing to comply
in whole or in part with the
14
<PAGE>
Corporation's demand for statements must be maintained as part of the
Corporation's records. The Corporation shall also maintain, within the Internal
Revenue District in which it is required to file its federal income tax return,
permanent records showing the information it has received as to actual ownership
of those shares and a list of those persons failing or refusing to comply with
that demand. Shareholders of the Corporation shall comply with the Corporation's
demand for statements pursuant to Section 857 of the Code.
ARTICLE IX
AMENDMENTS
Notwithstanding any of the provisions of these Bylaws (and notwithstanding
the fact that a lesser percentage may be specified by law, or these Bylaws) the
affirmative vote of the holders of at least eighty percent (80%) of the Common
Stock and, if any, Preferred Stock entitled to vote, voting together as a single
class, shall be required to repeal or amend any provision of these Bylaws. The
Board of Directors may amend or repeal these Bylaws, unless (i) the Articles of
Incorporation or the General Corporation Law of the State of Maryland reserves
this power exclusively to the shareholders; or (ii) the shareholders, in
amending or repealing a particular Bylaw, provide expressly that the Board of
Directors may not amend or repeal that particular Bylaw.
ARTICLE X
EMERGENCY BYLAW
In the event that a quorum of directors cannot be readily assembled because
of a catastrophic event, the Board of Directors may take action by the
affirmative vote of a majority of those directors present at a meeting and may
exercise any emergency power granted to a board of directors under the General
Corporation Law of the State of Maryland not inconsistent with this Bylaw. If
less than three regularly elected directors are present, the director present
having the greatest seniority as a director may appoint one or more persons (not
to exceed the number most recently fixed by the Board pursuant to Section 3.1)
from among the officers or other executive employees of the Corporation to serve
as substitute directors. If no regularly elected director is present, the
officer present having the greatest seniority as an officer shall serve as a
substitute director, shall appoint up to four additional persons from among the
officers or other executive employees of the Corporation to serve as substitute
directors. Special meetings of the Board of Directors may be called in an
emergency by the director or, if no director is present at the Corporation's
principal offices, by the officer present having the greatest seniority as an
officer.
15
<PAGE>
EXHIBIT 10.1
JDN REALTY CORPORATION
1993 INCENTIVE STOCK PLAN
EFFECTIVE DECEMBER 17, 1993;
AMENDED AND RESTATED JULY 23, 1997 AND
FEBRUARY 27, 1998
<PAGE>
JDN REALTY CORPORATION 1993 INCENTIVE STOCK PLAN
TABLE OF CONTENTS
Page
ARTICLE I. DEFINITIONS.................................................... 1
1.1 Affiliate....................................................... 1
1.2 Agreement....................................................... 1
1.3 Award........................................................... 1
1.4 Board........................................................... 1
1.5 Code............................................................ 1
1.6 Committee....................................................... 2
1.7 Company......................................................... 2
1.8 Date of Exercise................................................ 2
1.9 Exchange Act.................................................... 2
1.10 Fair Market Value............................................... 2
1.11 Incentive Option................................................ 3
1.12 Nonqualified Option............................................. 3
1.13 Option.......................................................... 3
1.14 Participant..................................................... 3
1.15 Plan............................................................ 3
1.16 Restricted Stock................................................ 3
1.17 SAR............................................................. 3
1.18 Stock........................................................... 4
1.19 Ten Percent Shareholder......................................... 4
ARTICLE II. PURPOSE OF PLAN............................................... 4
ARTICLE III. ADMINISTRATION.............................................. 4
3.1 Administration of Plan.......................................... 4
3.2 Authority to Grant Awards....................................... 5
3.3 Persons Subject to Section 16(b)................................ 5
ARTICLE IV. ELIGIBILITY AND LIMITATIONS ON GRANTS........................ 5
4.1 Participation................................................... 5
4.2 Grant of Awards................................................. 5
4.3 Limitations on Grants........................................... 5
4.4 Limitation on Incentive Options................................. 6
4.5 Stock Appreciation Rights....................................... 6
4.6 Restricted Stock................................................ 6
i
<PAGE>
ARTICLE V. STOCK SUBJECT TO PLAN......................................... 7
5.1 Source of Shares................................................ 7
5.2 Maximum Number of Shares........................................ 7
5.3 Forfeitures..................................................... 7
ARTICLE VI. EXERCISE OF AWARDS........................................... 7
6.1 Exercise Price.................................................. 7
6.2 Right to Exercise............................................... 7
6.3 Maximum Exercise Period......................................... 8
6.4 Transferability................................................. 8
6.5 Employee Status................................................. 8
ARTICLE VII. METHOD OF EXERCISE.......................................... 8
7.1 Exercise........................................................ 8
7.2 Payment......................................................... 8
7.3 Federal Withholding Tax Requirements............................ 8
7.4 Shareholder Rights.............................................. 9
7.5 Issuance and Delivery of Shares................................. 9
ARTICLE VIII. ADJUSTMENT UPON CORPORATE CHANGES.......................... 9
8.1 Adjustments to Shares........................................... 9
8.2 Substitution of Awards on Merger or Acquisition................. 10
8.3 Effect of Certain Transactions.................................. 10
8.4 No Adjustment Upon Certain Transactions......................... 10
8.5 Fractional Shares............................................... 11
ARTICLE IX. COMPLIANCE WITH LAW AND REGULATORY APPROVAL.................. 11
9.1 General......................................................... 11
9.2 Representations by Participants................................. 11
ARTICLE X. GENERAL PROVISIONS............................................ 12
10.1 Effect on Employment............................................ 12
10.2 Unfunded Plan................................................... 12
10.3 Rules of Construction........................................... 12
10.4 Governing Law................................................... 12
10.5 Compliance With Section 16 of the Exchange Act.................. 12
10.6 Amendment....................................................... 12
10.7 Duration of Incentive Options................................... 13
10.8 Effective Date of Plan.......................................... 13
ii
<PAGE>
JDN REALTY CORPORATION 1993 INCENTIVE STOCK PLAN
PREAMBLE
WHEREAS, effective December 17, 1993, JDN Realty Corporation (the
"Company") has established the JDN Realty Corporation 1993 Incentive Stock Plan
(the "Plan") through which the Company may award options to purchase the common
stock of the Company ("Stock") that qualify as "incentive stock options" within
the meaning of section 422 of the Internal Revenue Code, as well as options that
are not so qualified;
WHEREAS, the Company desires to amend the Plan to permit the Company to
also award restricted shares of Stock and Stock appreciation rights to certain
directors, officers, employees, and consultants of the Company and its
affiliates; and
WHEREAS, the Company intends that this Plan as amended and restated and the
awards granted hereunder will (i) qualify as "performance-based compensation"
described in section 162(m)(4)(C) of the Internal Revenue Code, and (ii) conform
to the provisions of Securities and Exchange Commission Rule 16b-3;
NOW, THEREFORE, the Company hereby amends and restates the JDN Realty
Corporation 1993 Incentive Stock Plan (the "Plan"), effective February 27, 1998:
ARTICLE I. DEFINITIONS
1.1 Affiliate. A "parent corporation," as defined in section 424(e) of the
---------
Code, or "subsidiary corporation," as defined in section 424(f) of the Code, of
the Company.
1.2 Agreement. A written agreement (including any amendment or supplement
---------
thereto) between the Company or Affiliate and a Participant specifying the terms
and conditions of an Award granted to such Participant.
1.3 Award. A right that is granted under the Plan to a Participant by the
-----
Company, including Options, Restricted Stock, and SARs.
1.4 Board. The board of directors of the Company.
-----
1.5 Code. The Internal Revenue Code of 1986, as amended.
----
1.6 Committee. A committee composed of at least two individuals (or such
---------
number that satisfies section 162(m)(4)(C) of the Code and Rule 16b-3 of the
Exchange Act) who are members of the Board and are not employees of the Company
or an Affiliate, and who are designated by the Board as the "compensation
committee" or are otherwise designated to administer the Plan. In
<PAGE>
the absence of a designation of a Committee by the Board, the Board shall be the
Committee.
1.7 Company. JDN Realty Corporation and its successors.
-------
1.8 Date of Exercise. The date that the Company accepts tender of the
----------------
exercise price of an Award, if any, or accepts an election to exercise rights
under an SAR.
1.9 Exchange Act. The Securities Exchange Act of 1934, as amended.
------------
1.10 Fair Market Value. On any given date, Fair Market Value shall be the
-----------------
applicable description below (unless, where appropriate, the Committee
determines in good faith the fair market value of the Stock to be otherwise):
(a) If the Stock is traded on the New York Stock Exchange or the
American Stock Exchange, the closing price of the Stock on such
exchange on which such Stock is traded on the trading day
immediately preceding the date as of which Fair Market Value is
being determined, or on the next preceding day on which such
Stock is traded if no Stock was traded on such trading day.
(b) If the Stock is not traded on the New York Stock Exchange or the
American Stock Exchange, but is reported on the Nasdaq National
Market System or another Nasdaq automated quotation system, and
market information is published on a regular basis, then Fair
Market Value shall be the closing price of the Stock, as so
published, on the trading day immediately preceding the date as
of which Fair Market Value is being determined, or the closing
price on the next preceding trading day on which such prices were
published if no Stock was traded on such trading day.
(c) If market information is not so published on a regular basis,
then Fair Market Value shall be the average of the high bid and
low asked prices of the Stock in the over-the-counter market over
a period of trading days that is reasonably representative of the
normal trading of the Stock immediately preceding the date on
which Fair Market Value is being determined, as reported by a
generally accepted reporting service.
(d) If the Stock is not publicly traded, Fair Market Value shall be
the value determined in good faith by the Committee or the Board.
However, such determination shall not take into account any
restriction on the stock, except for a restriction which by its
terms will never lapse.
2
<PAGE>
1.11 Incentive Option. An Option that is intended to qualify as an
----------------
"incentive stock option" within the meaning of section 422 of the Code. An
Incentive Option, or a portion thereof, shall not be invalid for failure to
qualify under section 422 of the Code, but shall be treated as a Nonqualified
Option.
1.12 Nonqualified Option. An Option that is not an Incentive Option.
-------------------
1.13 Option. The right that is granted hereunder to a Participant to
------
purchase from the Company a stated number of shares of Stock at the price set
forth in an Agreement. As used herein, an Option includes both Incentive Options
and Nonqualified Options.
1.14 Participant. A Board member, employee, consultant or advisor of the
-----------
Company or of an Affiliate who either satisfies the requirements of Article IV
and is selected by the Committee to receive an Award, or receives an Award
pursuant to grant specified in this Plan.
1.15 Plan. The JDN Realty Corporation 1993 Incentive Stock Plan.
----
1.16 Restricted Stock. A grant of Stock that is subject to restrictions on
----------------
transfer and/or a risk of forfeiture by and to the Participant, as described in
Section 4.6. Shares of Stock that are subject to any such restrictions or risks
of forfeiture shall cease to be Restricted Stock at the time that such
restrictions and risks of forfeiture lapse in accordance with the terms of the
Agreement or the Plan.
1.17 SAR. A right to receive compensation hereunder calculated by
---
reference to the increase in the value of a certain number of shares of Stock
from the date of an award, as described in Section 4.5. An SAR is an unfunded,
unsecured promise of the Company to the Participant. Unless otherwise stated in
an Agreement, or unless the Committee in its discretion honors the exercise of
an SAR by issuing Stock, the holder of an SAR has no beneficial rights of Stock
ownership or to receive shares of stock.
1.18 Stock. The common stock of the Company.
-----
1.19 Ten Percent Shareholder. An individual who owns more than 10% of the
-----------------------
total combined voting power of all classes of stock of the Company or an
Affiliate at the time he is granted an Incentive Option. For the purpose of
determining if an individual is a Ten Percent Shareholder, he shall be deemed to
own any voting stock owned (directly or indirectly) by or for his brothers and
sisters (whether by whole or half blood), spouse, ancestors or lineal
descendants and shall be considered to own proportionately any voting stock
owned (directly or indirectly) by or for a corporation, partnership, estate or
trust of which such individual is a shareholder, partner or beneficiary.
3
<PAGE>
ARTICLE II. PURPOSE OF PLAN
The purpose of the Plan is to provide a performance incentive and to
encourage Stock ownership by officers, directors, consultants and advisors of
the Company and its Affiliates, and to align the interests of such individuals
with those of the Company, its Affiliates and its shareholders. It is intended
that Participants may acquire or increase their proprietary interests in the
Company and be encouraged to remain in the employ or directorship of the Company
or of its Affiliates. The proceeds received by the Company from the sale of
Stock pursuant to this Plan may be used for general corporate purposes.
ARTICLE III. ADMINISTRATION
3.1 Administration of Plan. The Plan shall be administered by the
----------------------
Committee. The express grant in the Plan of any specific power to the Committee
shall not be construed as limiting any power or authority of the Committee. Any
decision made or action taken by the Committee to administer the Plan shall be
final and conclusive. No member of the Committee shall be liable for any act
done in good faith with respect to this Plan or any Agreement or Award. The
Company shall bear all expenses of Plan administration. In addition to all
other authority vested with the Committee under the Plan, the Committee shall
have complete authority to:
(a) Interpret all provisions of this Plan;
(b) Prescribe the form of any Agreement and notice and manner for
executing or giving the same;
(c) Make amendments to all Agreements;
(d) Adopt, amend, and rescind rules for Plan administration; and
(e) Make all determinations it deems advisable for the administration
of this Plan.
3.2 Authority to Grant Awards. The Committee shall have authority to
-------------------------
grant Awards upon such terms the Committee deems appropriate and that are not
inconsistent with the provisions of this Plan. Such terms may include
conditions on the exercise of all or any part of an Award.
3.3 Persons Subject to Section 16(b). Notwithstanding anything in the
--------------------------------
Plan to the contrary, the Committee, in its absolute discretion, may bifurcate
the Plan so as to restrict, limit or condition the use of any provision of the
Plan to participants who are officers and directors subject to section 16(b) of
the Exchange Act, without so restricting, limiting or conditioning the Plan with
respect to other Participants.
4
<PAGE>
ARTICLE IV. ELIGIBILITY AND LIMITATIONS ON GRANTS
4.1 Participation. The Committee may from time to time designate
-------------
employees, consultants and advisors to whom Awards are to be granted and who are
eligible to become Participants. Such designation shall specify the number of
shares of Stock, if any, subject to each Award. All Awards granted under this
Plan shall be evidenced by Agreements which shall be subject to applicable
provisions of this Plan or such other provisions as the Committee may adopt that
are not inconsistent with the Plan. Such provisions may include, by way of
example and not limitation, provisions for cash bonuses to be paid in
combination with awards.
4.2 Grant of Awards. An Award may be granted in combination with or in
---------------
lieu of cash bonuses that are otherwise provided to Participants. An Award
shall be deemed to be granted to a Participant at the time that the Committee
designates in a writing that is adopted by the Committee as the grant of an
Award, and that makes reference to the Participant and the number of shares of
Stock that are subject to the Award. Accordingly, an Award may be deemed to be
granted prior to the approval of this Plan by the shareholders of the Company
and prior to the time that an Agreement is executed by the Participant and the
Company.
4.3 Limitations on Grants. A person who is not an employee of the
---------------------
Company or an Affiliate is not eligible to receive an Incentive Option. No
person may receive Awards with respect to more than 1,000,000 shares of Stock
(subject to increases and adjustments as provided in Article VIII) in any one-
year period.
4.4 Limitation on Incentive Options. To the extent that the aggregate
-------------------------------
Fair Market Value of Stock with respect to which Incentive Options are
exercisable for the first time by a Participant during any calendar year (under
all stock incentive plans of the Company and its Affiliates) exceeds $100,000
(or the amount specified in section 422 of the Code), determined as of the date
an Incentive Option is granted, such Options shall be treated as Nonqualified
Options. This provision shall be applied by taking Incentive Options into
account in the order in which they were granted.
4.5 Stock Appreciation Rights. The Committee may grant an SAR to a
-------------------------
Participant either in tandem with the grant of an Award, or as an award that is
separate from any Award granted under the Plan. Subject to the terms of an
Agreement, a Participant who receives an SAR shall have the right, upon written
request, to surrender any exercisable Award, or portion thereof, in exchange for
cash, whole shares of Stock, or a combination thereof, as determined by the
Committee, with a value equal to the excess of the Fair Market Value, as of the
date of such request, of one share of Stock over the Fair Market Value of the
Stock on the Date of Grant (or such other value specified in the Agreement),
multiplied by the number of shares covered by the SAR or portion thereof to be
surrendered. In the case of any SAR which is granted in connection with an
Incentive Option, such SAR
5
<PAGE>
shall be exercisable only when the Fair Market Value of the Common Stock exceeds
the price specified therefor in the SAR or portion thereof to be surrendered. In
the event of the exercise of any SAR granted hereunder, the number of shares
reserved for issuance under the Plan shall be reduced only to the extent that
shares of Stock are actually issued in connection with the exercise of such SAR.
4.6 Restricted Stock. An award of Restricted Stock to a Participant is
----------------
a grant of Stock that is subject to forfeiture and/or restrictions on transfer
that are identified in an Agreement. The Committee may grant Restricted Stock
to a Participant as a part of a "deposit share," "performance award" or any
other arrangement established by the Committee and specified in an Agreement. A
Participant who receives Restricted Stock shall be treated as a shareholder of
the Company for all purposes, except that the rights of the Participant may be
limited under the terms of the Agreement. Unless otherwise specified in an
Agreement, and until the date that restrictions on transfer and all risks of
forfeiture lapse: (i) to the extent that the Company maintains a dividend
reinvestment plan, or as determined in the discretion of the Committee, any
dividends paid on Restricted Stock shall be reinvested in whole shares of Stock
and shall be subject to the same restrictions and forfeiture provisions as the
shares of Stock with respect to which such dividends were paid; (ii) any cash
amounts paid as dividends on Restricted Stock that are not reinvested in Stock
shall be held by the Company to the credit of the Participant without interest
until the lapse of such restrictions and forfeiture provisions; and (iii) the
Participant agrees by accepting an Award of Restricted Stock to designate the
chief executive officer of the Company as his proxy with respect to such
Restricted Stock (and shares acquired with dividends thereon) on all matters
that are presented by the Company to shareholders for a vote.
ARTICLE V. STOCK SUBJECT TO PLAN
5.1 Source of Shares. Upon the exercise of an Option or the grant of
----------------
Restricted Stock, the Company shall deliver to the Participant authorized but
unissued Stock.
5.2 Maximum Number of Shares. The maximum aggregate number of shares of
------------------------
Stock that may be issued pursuant to the exercise of Awards is 2,415,799,
subject to increases and adjustments as provided in Article VIII. The aggregate
number of SARs that may be granted shall be determined by the Committee.
5.3 Forfeitures. If any Award granted hereunder expires or terminates
-----------
for any reason without having been exercised in full, the shares of Stock
subject thereto shall again be available for issuance of an Award under this
Plan.
ARTICLE VI. EXERCISE OF AWARDS
6.1 Exercise Price. The exercise price of an Incentive Option shall not
--------------
be less than 100% of the Fair Market Value of a share of Stock on the date the
6
<PAGE>
Incentive Option is granted. In the case of a Ten Percent Shareholder, however,
the exercise price of an Incentive Option shall not be less than 110% of the
Fair Market Value of a share of Stock on the date the Incentive Option is
granted. The exercise price of a Nonqualified Option, Restricted Stock or an
SAR shall be the price determined by the Committee at the time that such Award
is granted. If the exercise price of an Award is changed after the date it is
granted, such change shall be deemed to be a termination of the existing Award
and the issuance of a new Award.
6.2 Right to Exercise. An Award shall be exercisable on the date of
-----------------
grant or on any other date established by the Committee or provided for in an
Agreement, provided, however, that Awards granted to officers or directors
subject to section 16 of the Exchange Act shall not be exercisable, and
restrictions on Restricted Stock shall not lapse, until at least six months
after the Award is granted. A Participant must exercise an Incentive Option
while he is an employee of the Company or an Affiliate or within the periods
that may be specified in the Agreement after termination of employment, death,
disability or a "change of control" (as defined in any change of control
agreement to which the Company and any such Participant are parties).
6.3 Maximum Exercise Period. The maximum period in which an Award may
-----------------------
be exercised shall be determined by the Committee on the date of grant except
that no Incentive Option shall be exercisable after the expiration of 10 years
(five years in the case of Incentive Options granted to a Ten Percent
Shareholder) from the date it was granted. The terms of any Award may provide
that it is exercisable for a shorter period. All Incentive Options shall
terminate on the date the Participant's employment with the Company terminates,
except as otherwise provided in the Agreement with respect to termination of
employment, death, disability or a "change of control" (as defined in any change
of control agreement to which the Company and any such Participant are parties).
6.4 Transferability. Generally, any Award granted under this Plan shall
---------------
not be transferable except by will or by the laws of descent and distribution,
and shall be exercisable during the lifetime of the Participant only by the
Participant. However, a Nonqualified Option, an SAR, or Restricted Stock
granted under this Plan may be transferable to the extent provided in the
Agreement. Provided, further, that no right or interest of a Participant in any
Award shall be liable for, or subject to, any lien, obligation or liability of
such Participant.
6.5 Employee Status. The Committee shall determine the extent to which
---------------
a leave of absence for military or government service, illness, temporary
disability, or other reasons shall be treated as a termination or interruption
of employment for purposes of determining questions of forfeiture and exercise
of an Award after termination of employment; provided, however, that if the
period treated as
7
<PAGE>
employment with respect to an Incentive Option exceeds 90 days, such Option
shall be deemed a Nonqualified Option.
ARTICLE VII. METHOD OF EXERCISE
7.1 Exercise. An Award granted hereunder shall be deemed to have been
--------
exercised on the Date of Exercise. Subject to the provisions of Articles VI and
IX, an Award may be exercised in whole or in part at such times and in
compliance with such requirements as the Committee shall determine.
7.2 Payment. Unless otherwise provided by the Agreement, payment of the
-------
Award price shall be made in cash or, to the extent approved by the Committee,
Stock that was acquired prior to the exercise of the Award, other consideration
acceptable to the Committee, or a combination thereof.
7.3 Federal Withholding Tax Requirements. Upon exercise of a
------------------------------------
Nonqualified Option, Restricted Stock, or an SAR by a Participant who is an
employee of the Company or an Affiliate, the Participant shall, upon
notification of the amount due and prior to or concurrently with the delivery of
the certificates representing the shares, pay to the Company amounts necessary
to satisfy applicable federal, state and local withholding tax requirements or
shall otherwise make arrangements satisfactory to the Company for such
requirements. Such withholding requirements shall not apply to the exercise of
an Incentive Option, or to a disqualifying disposition of Stock that is acquired
with an Incentive Option, unless the Committee gives the Participant notice that
withholding described in this Section is required.
7.4 Shareholder Rights. No Participant shall have any rights as a
------------------
stockholder with respect to shares subject to Options or SARs prior to the Date
of Exercise of such Award. No Participant shall acquire rights as a stockholder
through the grant or exercise of an SAR, except to the extent which the
Committee, in its sole discretion, issues Stock to the Participant as payment
upon the exercise of the SAR. A Participant's rights as a shareholder with
respect to Restricted Stock shall be determined as provided in Section 4.6.
7.5 Issuance and Delivery of Shares. Shares of Stock issued pursuant to
-------------------------------
the exercise of Awards hereunder shall be delivered to Participants by the
Company (or its transfer agent) as soon as administratively feasible after a
Participant exercises an Award hereunder, or is granted Restricted Stock, and
executes any applicable shareholder agreement or agreement described in Section
9.2 that the Company requires at the time of exercise.
ARTICLE VIII. ADJUSTMENT UPON CORPORATE CHANGES
8.1 Adjustments to Shares. The maximum number of shares of stock with
---------------------
respect to which Awards hereunder may be granted and which are the subject of
8
<PAGE>
outstanding Awards, and the exercise price thereof, shall be adjusted as the
Committee determines in its sole discretion to be appropriate, in the event
that:
(a) the Company or an Affiliate effects one or more stock dividends,
stock splits, reverse stock splits, subdivisions, consolidations
or other similar events;
(b) the Company or an Affiliate engages in a transaction to which
section 424 of the Code applies; or
(c) there occurs any other event which in the judgment of the
Committee necessitates such action;
Provided, however, that if an event described in paragraph (a) or (b) occurs,
the Committee shall make adjustments to the limits on Awards specified in
Sections 4.3 and 5.2 that are proportionate to the modifications of the Stock
that are on account of such corporate changes. Notwithstanding the foregoing,
the Committee may not modify the Plan or the terms of any Awards then
outstanding or to be granted hereunder to provide for the issuance under the
Plan of a different class of stock or kind of securities.
8.2 Substitution of Awards on Merger or Acquisition. The Committee may
-----------------------------------------------
grant Awards in substitution for stock awards, stock options, stock appreciation
rights or similar awards held by an individual who becomes an employee of the
Company or an Affiliate in connection with a transaction to which section 424(a)
of the Code applies. The terms of such substituted Awards shall be determined
by the Committee in its sole discretion, subject only to the limitations of
Article V.
8.3 Effect of Certain Transactions. Upon a merger, consolidation,
------------------------------
acquisition of property or stock, separation, reorganization or liquidation of
the Company, as a result of which the shareholders of the Company receive cash,
stock or other property in exchange for their shares of Stock (but not a public
offering of Stock by the Company), and the Company is not the surviving entity
(even though it may survive as a subsidiary corporation), any Award granted
hereunder shall terminate, provided that the Participant shall have the right
immediately prior to any such merger, consolidation, acquisition of property or
stock, separation, reorganization or liquidation to exercise his Awards in whole
or in part, and all restrictions on Restricted Stock shall lapse, whether or not
the vesting requirements set forth in any Agreement have been satisfied, unless
the Committee elects to convert all Awards hereunder into stock incentive awards
of an acquiring corporation. Provided, however, that, notwithstanding the
foregoing, a portion of the acceleration of exercisability of Awards shall not
occur with respect to any holder to the extent that such portion of acceleration
would cause the Participant or holder of such Award to be liable for the payment
of taxes pursuant to section 4999 of the Code. If the Committee so elects to
convert the Awards, the amount and price of such converted options shall be
determined by adjusting the amount and price of
9
<PAGE>
the Awards granted hereunder in the same proportion as used for determining the
number of shares of stock of the acquiring corporation the holders of the Stock
receive in such merger, consolidation, acquisition of property or stock,
separation or reorganization, and the vesting schedule set forth in the
Agreement shall continue to apply to the converted options.
8.4 No Adjustment Upon Certain Transactions. The issuance by the
---------------------------------------
Company of shares of stock of any class, or securities convertible into shares
of stock of any class, for cash or property, or for labor or services rendered,
either upon direct sale or upon the exercise of rights or warrants to subscribe
therefor, or upon conversion of shares or obligations of the Company convertible
into such shares or other securities, shall not affect, and no adjustment by
reason thereof shall be made with respect to, outstanding Awards.
8.5 Fractional Shares. Only whole shares of Stock may be acquired
-----------------
through the exercise of an Award. Any amounts tendered in the exercise of an
Award remaining after the maximum number of whole shares have been purchased
will be returned to the Participant.
ARTICLE IX. COMPLIANCE WITH LAW AND REGULATORY APPROVAL
9.1 General. No Award shall be exercisable, no Stock shall be issued,
-------
no certificates for shares of Stock shall be delivered, and no payment shall be
made under this Plan except in compliance with all federal or state laws and
regulations (including, without limitation, withholding tax requirements),
federal and state securities laws and regulations and the rules of all
securities exchanges or self-regulatory organizations on which the Company's
shares may be listed. The Company shall have the right to rely on an opinion of
its counsel as to such compliance. Any certificate issued to evidence shares of
Stock for which an Award is exercised may bear such legends and statements as
the Committee upon advice of counsel may deem advisable to assure compliance
with federal or state laws and regulations. No Award shall be exercisable, no
Stock shall be issued, no certificate for shares shall be delivered and no
payment shall be made under this Plan until the Company has obtained such
consent or approval as the Committee may deem advisable from any regulatory
bodies having jurisdiction over such matters.
9.2 Representations by Participants. As a condition to the exercise of
-------------------------------
an Award, the Company may require a Participant to represent and warrant at the
time of any such exercise that the shares are being purchased only for
investment and without any present intention to sell or distribute such shares,
if, in the opinion of counsel for the Company, such representation is required
by any relevant provision of the laws referred to in Section 9.1. At the option
of the Company, a stop transfer order against any shares of stock may be placed
on the official stock books and records of the Company, and a legend indicating
that the stock may not be pledged, sold or otherwise transferred unless an
opinion of counsel was provided
10
<PAGE>
(concurred in by counsel for the Company) and stating that such transfer is not
in violation of any applicable law or regulation may be stamped on the stock
certificate in order to assure exemption from registration. The Committee may
also require such other action or agreement by the Participants as may from time
to time be necessary to comply with federal or state securities laws. This
provision shall not obligate the Company or any Affiliate to undertake
registration of options or stock hereunder.
ARTICLE X. GENERAL PROVISIONS
10.1 Effect on Employment. Neither the adoption of this Plan, its
--------------------
operation, nor any documents describing or referring to this Plan (or any part
thereof) shall confer upon any employee any right to continue in the employ of
the Company or an Affiliate or in any way affect any right and power of the
Company or an Affiliate to terminate the employment of any employee at any time
with or without assigning a reason therefor.
10.2 Unfunded Plan. The Plan, insofar as it provides for grants, shall
-------------
be unfunded, and the Company shall not be required to segregate any assets that
may at any time be represented by grants under this Plan. Any liability of the
Company to any person with respect to any grant under this Plan shall be based
solely upon contractual obligations that may be created hereunder. No such
obligation of the Company shall be deemed to be secured by any pledge of, or
other encumbrance on, any property of the Company.
10.3 Rules of Construction. Headings are given to the articles and
---------------------
sections of this Plan solely as a convenience to facilitate reference. The
masculine gender when used herein refers to both masculine and feminine. The
reference to any statute, regulation or other provision of law shall be
construed to refer to any amendment to or successor of such provision of law.
10.4 Governing Law. The internal laws of the State of Maryland shall
-------------
apply to all matters arising under this Plan, except to the extent that Maryland
law is preempted by federal law.
10.5 Compliance With Section 16 of the Exchange Act. With respect to
----------------------------------------------
persons subject to liability under section 16 of the Exchange Act, transactions
under this Plan are intended to comply with all applicable conditions of Rule
16b-3 (or successor provisions) under the Exchange Act. To the extent any
provision of this Plan or action by Committee fails to so comply, it shall be
deemed null and void to the extent permitted by law and deemed advisable by the
Committee.
10.6 Amendment. The Board may amend or terminate this Plan at any time;
---------
provided, however, an amendment that would have a material adverse effect on the
rights of a Participant under an outstanding Award is not valid with respect to
such Award without the Participant's consent, except as necessary for Incentive
11
<PAGE>
Options to maintain qualification under the Code; and provided, further, that
the shareholders of the Company must approve, in general meeting:
(a) 12 months before or after the date of adoption, any amendment
that increases the aggregate number of shares of Stock that may
be issued under Incentive Options or changes the employees (or
class of employees) eligible to receive Incentive Options;
(b) before the effective date thereof, any amendment that changes the
number of shares in the aggregate which may be issued pursuant to
Awards granted under the Plan or the maximum number of shares
with respect to which any individual may receive options in any
calendar year, except pursuant to Article VIII; and
(c) before the effective date thereof, any amendment that increases
the period during which Awards may be granted or exercised.
Generally, shareholder approval shall not be required for minor amendments to
the Plan pursuant to Section 3.1 hereof intended to benefit the administration
of the Plan, for amendments necessitated by changes in legislation or
administrative rules governing the Plan, or for amendments that the Board deems
necessary to obtain or maintain favorable tax, securities exchange or regulatory
treatment of the Plan for future Participants.
10.7 Duration of Incentive Options. No Incentive Option may be granted
-----------------------------
under this Plan more than 10 years after the earlier of the date that the Plan
was adopted by the Board or the date that the Plan was approved by shareholders
as provided in Section 10.8. Incentive Options granted before such date shall
remain valid in accordance with their terms.
10.8 Effective Date of Plan. This Plan was originally effective
----------------------
December 17, 1993, and was approved by the shareholders of the Company
thereafter. This amendment and restatement of the Plan shall be effective on
the date of its adoption by the Board, July 23, 1997, and shall generally apply
to all Awards granted hereunder.
12
<PAGE>
EXHIBIT 10.16
JDN REALTY CORPORATION
EMPLOYMENT AGREEMENT
THIS AGREEMENT, dated as of May 1, 1997 (the "Effective Date"), is by
and between JOHN D. HARRIS, JR. (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 titles of Controller and Assistant Secretary 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 duties the Employee is
to perform hereunder shall be conducted from the Atlanta, Georgia metropolitan
area, where the principal offices of the Company are located. The Employee may
be required from time to time to perform his duties hereunder on an occasional
basis at such other places as the Board of Directors shall reasonably designate
or as the interests or business opportunities of the Company may reasonably
require; provided, however, that without the Employee's consent, the Employee
shall not be required to relocate from the Atlanta, Georgia metropolitan area.
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
the interests of the Company and shall not enter
<PAGE>
into any other business affiliations or arrangements without the prior written
consent of the Company. Nothing in this Section 3, however, is intended to
prevent the Employee from engaging in additional activities in connection with
personal investments and community or professional affairs that are not
inconsistent with the Employee's duties and obligations under this Agreement,
including without limitation Section 10 hereof.
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 Ninety Thousand Dollars ($90,000) 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.
2
<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
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.
3
<PAGE>
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
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.
4
<PAGE>
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
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
5
<PAGE>
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
payment to the Employee within ten (10) days following the date on which the
Employee notifies the Company of the Employee's election. 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 a
Termination Other Than for Cause described herein, such awards shall become
immediately exercisable upon a Termination Other Than for Cause.
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.
6
<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.
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
7
<PAGE>
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
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
8
<PAGE>
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
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
9
<PAGE>
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.
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:
10
<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:
-----------
John D. Harris, Jr.
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.
11
<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/ John D. Harris, Jr.
-----------------------
JOHN D. HARRIS, JR.
12
<PAGE>
EXHIBIT 10.17
JDN REALTY CORPORATION
EMPLOYMENT AGREEMENT
THIS AGREEMENT, dated as of May 1, 1997 (the "Effective Date"), is by
and between LEILANI L. JONES (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 and Director of Property Management 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 duties the
Employee is to perform hereunder shall be conducted from Atlanta, Georgia
metropolitan area, where the principal offices of the Company are located. The
Employee may be required from time to time to perform her duties hereunder on an
occasional basis at such other places as the Board of Directors shall reasonably
designate or as the interests or business opportunities of the Company may
reasonably require; provided, however, that without the Employee's consent, the
Employee shall not be required to relocate from the Atlanta, Georgia
metropolitan area. 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 she is employed
hereunder, she shall devote substantially all her business time and attention to
the business and affairs of the
<PAGE>
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. Nothing in this Section 3, however, is
intended to prevent the Employee from engaging in additional activities in
connection with personal investments and community or professional affairs that
are not inconsistent with the Employee's duties and obligations under this
Agreement, including without limitation Section 10 hereof.
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 Seventy-Eight Thousand Seven Hundred Forty-Seven
Dollars ($78,747) 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 her position and appropriate for the performance of her 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 her duties under this
Agreement in accordance with the Company's expense reimbursement policy, as such
may change from time to time.
2
<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 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
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.
3
<PAGE>
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 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.
4
<PAGE>
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 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
5
<PAGE>
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 her 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 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,
6
<PAGE>
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 the event that the Employee is not otherwise entitled to fully
exercise all awards granted to her under the Company's Incentive Stock Plan, and
the Incentive Stock Plan does not otherwise provide for acceleration of
exerciseability upon the occurrence of a Termination Other Than for Cause
described herein, such awards shall become immediately exercisable upon a
Termination Other Than for Cause.
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. 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.
7
<PAGE>
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. 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 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 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.
9
<PAGE>
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 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
10
<PAGE>
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.
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.
11
<PAGE>
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:
To Company:
----------
JDN Realty Corporation
3340 Peachtree Road NE
Suite 1530
Atlanta, Georgia 30326
Telephone: (404) 262-3252
Facsimile: (404) 364-6446
To Employee:
-----------
Leilani L. Jones
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.
12
<PAGE>
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/ Leilani L. Jones
--------------------
LEILANI L. JONES
14
<PAGE>
Exhibit 12
RATIO OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
Years Ended December 31,
1997 1996 1995 1994 1993
-------------- ------------- ---------------- -------------- ---------------
<S> <C> <C> <C> <C> <C>
Fixed Charges:
Interest Expense (including
amortization of deferred debt cost) $ 9,525 $ 9,414 $ 8,747 $ 7,276 $ 6,444
Interest Capitalized 4,650 1,993 1,538 343 --
-------------- ------------- ---------------- -------------- ---------------
Total Fixed Charges $ 14,175 $ 11,407 $ 10,285 $ 7,619 $ 6,444
============== ============= ================ ============== ===============
Earnings:
Net (loss) before income tax benefit,
net gain (loss) on real estate sales
extraordinary items and
cumulative effect of change in
accounting principle $ 27,585 $ 16,682 $ 10,782 $ 5,227 $ (1,196)
Fixed Charges 14,175 11,407 10,285 7,619 6,444
Capitalized Interest (4,650) (1,993) (1,538) (343) --
-------------- ------------- ---------------- -------------- ---------------
Total Earnings $ 37,110 $ 26,096 $ 19,529 $ 12,503 $ 5,248
============== ============= ================ ============== ===============
Ratio of Earnings of Fixed Charges 2.62 2.29 1.90 1.64 *
</TABLE>
* The Company's earnings were inadequate to cover fixed charges for the year
ended December 31, 1993.
<PAGE>
Exhibit 21
SUBSIDIARIES OF THE REGISTRANT
Name State of Incorporation
---- ----------------------
JDN Development Company, Inc. Delaware
JDN of Pennsylvania Realty
Corporation Delaware
JDN Realty Corporation GP, Inc. Delaware
JDN Realty LP, Inc. Delaware
<PAGE>
Exhibit 23
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration
Statement (Form S-3 No. 333-38611) 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 the
related Prospectus, and 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 the related
Prospectus of our report dated February 27, 1998, 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, 1997.
ERNST & YOUNG LLP
Atlanta, Georgia
March 18, 1998
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> YEAR YEAR
<FISCAL-YEAR-END> DEC-31-1997 DEC-31-1996
<PERIOD-START> JAN-01-1997 JAN-01-1996
<PERIOD-END> DEC-31-1997 DEC-31-1996
<CASH> 11,439 2,709
<SECURITIES> 0 0
<RECEIVABLES> 2,745 2,208
<ALLOWANCES> 0 0
<INVENTORY> 0 0
<CURRENT-ASSETS> 0 0
<PP&E> 535,303 332,669
<DEPRECIATION> 38,306 27,973
<TOTAL-ASSETS> 599,753 371,986
<CURRENT-LIABILITIES> 0 0
<BONDS> 0 0
0 0
0 0
<COMMON> 185 131
<OTHER-SE> 371,403 226,408
<TOTAL-LIABILITY-AND-EQUITY> 599,753 371,986
<SALES> 0 0
<TOTAL-REVENUES> 48,005 36,623
<CGS> 0 0
<TOTAL-COSTS> 0 0
<OTHER-EXPENSES> 20,136 15,556
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 4,856 5,868
<INCOME-PRETAX> 27,585 16,682
<INCOME-TAX> 0 0
<INCOME-CONTINUING> 27,585 16,682
<DISCONTINUED> 0 0
<EXTRAORDINARY> 5,940 0
<CHANGES> 0 0
<NET-INCOME> 21,293 16,682
<EPS-PRIMARY> 1.38<F1> 1.50<F1>
<EPS-DILUTED> 1.36 1.50
<FN>
<F1>Primary earnings per share are Basic earnings per share.
</FN>
</TABLE>
