Document:

<PAGE>

                                                                   EXHIBIT 10.22

                                  May 19, 2000
                                      --

Mr. J. Donald Nichols
416 Jackson Blvd.
Nashville, TN  37205

Dear Mr. Nichols:

     This letter agreement memorializes the agreement that you have reached with
JDN Realty Corporation ("JDN Realty") and JDN Development Company, Inc.
("Development Company") (the "Agreement") regarding the termination of your
relationship, and resignation from all employment, offices and directorships
heretofore held, with JDN Realty, Development Company, and the related and
affiliated entities of each, (collectively, the "Companies").  The purpose of
the Agreement is to establish mutually agreeable arrangements for the
termination of the Employment Agreement by and between you and JDN Realty dated
as of December 1, 1996 (the "Employment Agreement") and for otherwise
terminating your relationship with the Companies.

     With those understandings and in exchange for the promises set forth below,
you and the Companies agree as follows:

     1.  Separation. You hereby confirm your resignation from the office of
         ----------
Chairman of JDN Realty effective as of April 12, 2000 (the "Separation Date"),
and your resignation from any and all other employment, offices and board of
director seats that you have previously held with any of the Companies.  Said
resignations have been accepted by the Companies. (Your separation as an
employee and your resignation from your offices and directorships shall be
referred to hereinafter as the "Separation").

     2.  Obligations and Rights of the Companies.  The Companies hereby agree to
         ---------------------------------------
the following terms:

          (a) Payment. In consideration for your resignation from the Companies
              -------
and the relinquishment of your rights under the Employment Agreement, JDN Realty
agrees to transfer to you title to the automobile utilized by you as a company
vehicle prior to your resignation.  You understand and agree that JDN Realty is
not making this conveyance to you as compensation to you for any past or future
services provided to the companies, and you assume all obligation to pay, and
are solely liable for, all applicable taxes, including, without limitation, all
federal and state income tax.
<PAGE>

          (b) Payment for Consulting Services to be Provided to Development
              -------------------------------------------------------------
Company.  Development Company agrees to pay to you one hundred seventy-five
-------
thousand dollars ($175,000) upon the execution hereof in remuneration for
consulting services to be performed by you as an independent contractor as set
forth in Paragraph 5 hereof.

          (c) Payment of Dividends. JDN Realty acknowledges your entitlement to
              --------------------
a dividend declared to record holders of JDN Realty Common Stock as of March 17,
2000 in the amount of one hundred twenty-five thousand ninety-five dollars and
forty-one cents ($125,095.41), less applicable withholding, based on your stock
ownership as of the record date.

          (d) Health Insurance and COBRA Coverage.  As of the Separation Date,
              -----------------------------------
you will no longer be entitled to participate in or receive benefits available
to employees of the Companies; provided, however, that nothing herein shall be
construed to affect your or your dependents' rights thereafter to receive
continuous coverage to the extent authorized by and consistent with the
Consolidated Omnibus Budget Reconciliation Act ("COBRA") or any other benefits
the continuation of which is required by law, entirely at your own cost after
your right to benefit continuation ends under this paragraph.

          (d) Exclusivity.  This Agreement sets forth all of the consideration
              -----------
to which you are entitled by reason of your past employment and relationship
with the Companies and the Separation, and you shall not be entitled to or
eligible for any payments or benefits under any other severance, equity, bonus,
retention or incentive policy, arrangement or plan of the Companies.

     3.   Employee Obligations.  You hereby agree to the following terms:
          --------------------

          Cooperation in Legal Matters.
          ----------------------------
      (i) Subject to and in accordance with the terms of this subparagraph 3(a),
          you agree to continue to cooperate fully with any and all of the
          Companies (as applicable), in (1) the defense or prosecution of any
          claims or actions which have been brought or which are hereafter
          brought against or on behalf of any or all of the Companies (as
          applicable); and (2) responding to any governmental audit, inspection,
          inquiry, proceeding or investigation, which relates to events that
          transpired during your employment with any of the Companies. "Full
          cooperation" shall include, without limitation: (1) promptly notifying
          JDN Realty in writing of any subpoena, interview, investigation, or
          inquiry concerning events that transpired during your employment with
          the Companies; (2) meeting with counsel for, or other designated
          representatives of, one or more of the Companies (as applicable) upon
          reasonable notice and with the opportunity to be accompanied by
          counsel, to prepare for discovery or trial and to discuss relevant

                                       2
<PAGE>

          issues and provide relevant information to the fullest extent possible
          without waiving the attorney client privilege, but only to the extent
          you do not have an interest in the lawsuit, proceeding or action at
          issue which is adverse to the interests of the one or more Companies
          involved in such lawsuit, action or proceeding; and (3) testifying
          truthfully as a witness at reasonable times upon the request of one or
          more of the Companies (as applicable) without being in any way
          required to waive your privilege against self incrimination.

     (ii) Nothing contained in this Paragraph 3(a) shall be construed to require
          you to divulge information which is covered by the attorney client
          privilege absent a written joint defense agreement agreed to and
          signed by the  one or more Companies requesting the information.

          (b) Return of Company Property.  Except as specifically set forth in
              --------------------------
Paragraph 2(a) above, all documents, records and material and all copies of any
of the foregoing pertaining to confidential information (as described in Section
8 of the Employment Agreement), and all software, equipment (including, for
example, without implication of limitation any cellular telephone or computer
owned by any of the Companies and currently in your possession), and other
supplies, whether or not pertaining to confidential information, that have come
into your possession or been produced by you in connection with your employment
(the "Property") have been and remain the sole property of the Companies.  You
hereby confirm you have returned all Property to the Companies.  In no event
should this provision be construed to require you to return to the Company any
document or other materials concerning your remuneration and benefits during
your employment with the Companies.  JDN Realty and Development Company
acknowledge that Schedule 3(b) attached hereto is list of property belonging to
you that remains at the Nashville office  of the Companies, and you agree to
remove such property from the premises promptly following the execution of this
Agreement at a reasonable time and upon reasonable notice to  a duly authorized
officer of one or more of the Companies.

          (c) Cancellation of Stock Options. The parties acknowledge and agree
              -----------------------------
that you have heretofore been granted options to purchase 569,049 shares of
Common Stock at an exercise price of $14.67 per share, 267,000 shares of Common
Stock at an exercise price of $13.50 per share, and 450,000 shares of Common
Stock at an exercise price of $20.75 per share, all of which are vested and
exercisable as of the date hereof (such vested and exercisable options,
collectively, the "Vested Options"). You hereby acknowledge that the Vested
Options are forfeited and cancelled as of the date hereof, and you shall have no
further right or claim to such Vested Options from this date forward.

          (d) Deferred Bonus Plan; Long-Term Incentive Plan.  The parties agree
              ---------------------------------------------
to the following with respect to: (i) the shares (comprised of 11,131.50 shares

                                       3
<PAGE>

awarded that are vested and 11,131.50 shares awarded that are not yet vested) of
JDN Realty's Common Stock awarded to you pursuant to JDN Realty's 1998 Deferred
Bonus Plan (the "Bonus Plan Shares"); and (ii) the 300,000 shares (all of which
are not yet vested) of JDN Realty's Common Stock awarded to you pursuant to JDN
Realty's 1999 Long-Term Incentive Plan (the "LTIP Shares," which, together with
the Bonus Plan Shares, are referred to herein as the "Award Shares"):

          (i)  You acknowledge that the 300,000 LTIP Shares and the 11,131.5
     Bonus Plan Shares which were not vested as of the Separation Date and any
     cash bonuses deferred under the 1998 Deferred Bonus Plan are forfeited.

          (ii) You will retain ownership of the 11,131.5 vested Award Shares,
     and shall remain liable for any tax obligation associated with the vesting
     and/or issuance of such shares.

     4.  Limited Release.  JDN Realty and Development Company do hereby  release
         ---------------
you, your successors  and assigns  from any and all claims, demands, damages,
actions, causes of action or suits of any kind or nature,  brought by JDN Realty
or Development Company to recover:

          (a)  the costs or expenses of the investigation by a Special Committee
of the Board of Directors of JDN Realty into certain payments made by or on
behalf of Development Company to Jeb L. Hughes, C. Sheldon Whittelsey, IV and
their affiliate, ALA Associates, Inc., in the form of outparcels, cash fees and
site work (collectively, the "Payments"), certain related party transactions
(the "Related Party Transactions"), and other matters involving JDN Realty and
Development Co. (the "Investigation"), or any costs and expenses incurred in the
course of the Investigation subsequent to the date of this Agreement;

          (b)  reimbursement of the Payments , whether or not such Payments were
approved by you; or

          (c) a refund or return of any salary, bonuses or other approved
compensation paid to you.

     5.  Consulting Services for Development Company.  You hereby agree to
         -------------------------------------------
provide non-exclusive consulting services to Development Company on an as needed
basis for a period of 3 months from the Separation Date (the "Consulting
Period") on the following terms.

          (a)  In your capacity as a consultant to Development Company, you
agree upon reasonable request by Development Company during the Consulting
Period to assist the company with respect to transitional matters that may arise
following the Separation Date, and to respond to requests for assistance or

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<PAGE>

information concerning the development or sale of properties, relationships with
tenants of Development Company, or other business matters ( but not with respect
to legal matters except pursuant to section 2(b)) with which you became familiar
while employed and serving as an officer of the Companies.

          (b)  It is intended and agreed by and between the parties that in
providing consulting services during the Consulting Period, you are, and shall
at all times serve as an independent contractor, and you understand and agree
that during the Consulting Period, you are not an employee of any of the
Companies and shall not be treated as an employee for any purpose.  You
understand and agree that as an independent contractor, you are required to pay
and are solely liable for, all applicable taxes, including, without limitation,
federal income tax, self-employment tax and state income tax on remuneration you
receive in exchange for the Consulting Services and you may be required to pay
quarterly estimated income taxes.

          (c)  During the Consulting Period, you will not, except on behalf of
or with the prior written consent of the Companies, contact or solicit, directly
or indirectly, any customer, client, tenant or account whose identity you
obtained through association with the Companies; provided, however, that this
restriction shall apply only to customers with whom you have had an actual
material contact while performing your duties for the Companies.

          (d)  During the Consulting Period, you will not directly or
indirectly, entice or induce, or attempt to entice or induce, any employee of
the Companies employed as of the Separation Date to leave such employ, or employ
any such person in any business similar to or in competition with that of the
Companies.

     6.  Employment Agreement.
         --------------------

         This Agreement supersedes all provisions of the Employment Agreement
other than Section 11 (dealing with Indemnification), which is incorporated
herein by reference and which shall continue to bind the parties in accordance
with its terms.

     7.  Confidentiality.
         ----------------

         Except pursuant to a subpoena, or in testimony in any case,
proceeding, investigation or inquiry, or in any audit, inspection or interview
with any state or federal governmental agency,  you will not disclose to any
person or entity or use, at any time, any information not in the public domain
or generally known in the industry, in any form, acquired by you while employed
by the Companies or any predecessor to the Companies' business, and relating to
the Companies, including but not limited to information regarding customers,
vendors, suppliers, trade secrets, training programs, manuals or materials,
technical information, contracts, systems, procedures, mailing lists, know-how,

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<PAGE>

trade names, improvements, price lists, financial or other data (including the
revenues, costs or profits associated with any of the Companies' services),
business plans, code books, invoices and other financial statements, computer
programs, software systems, databases, discs and printouts, plans (business,
technical or otherwise), customer and industry lists, correspondence, internal
reports, personnel files, sales and advertising material, telephone numbers,
names, addresses or any other compilation of information, written or unwritten,
which is or was used in the business of the Companies.  You agree and
acknowledge that all of such information, in any form, and copies and extracts
thereof, are and shall remain the sole and exclusive property of the Companies,
and that you have or will promptly upon the execution of this Agreement return
to the Companies the originals and all copies of any such information provided
to or acquired by you in connection with the performance of your duties for the
Companies, and shall return to the Companies all files, correspondence and/or
other communications received, maintained and/or originated by you during the
course of your employment.

     8.  Indemnification.  JDN Realty and Development Company agree to indemnify
         ---------------
and advance to you reasonable expenses incurred in connection with any
litigation or other legal or regulatory proceeding of any kind filed or
initiated against the Companies or you by reason of your status as an officer or
employee of the Companies, in accordance with the terms of the Articles of
Incorporation and Bylaws of the Companies, Section 11 of the Employment
Agreement (dealing with Indemnification) and your Indemnification Agreement with
JDN Realty, or as might otherwise exist under applicable law (collectively, the
"Governing Documents and Law").  JDN Realty and Development Company agree to
advance to you your reasonable expenses incurred to date pursuant to the
Governing Documents and Law, upon the receipt of an undertaking by you to repay
the amounts advanced should it ultimately be determined that you are not
entitled to indemnification in those amounts. All future advances and any
indemnification sought by you in the future shall be controlled by the Governing
Documents and Law.

                                       6
<PAGE>

     9.  Representation of Full Disclosure.  You hereby represent and warrant to
         ---------------------------------
JDN Realty and Development Company that you have fully and accurately disclosed
to the Special Committee of JDN Realty's Board of Directors your knowledge
regarding the Payments and Related Party Transactions.  You understand and
acknowledge that JDN Realty and Development Company are entering into this
Agreement in reliance upon the representations contained in this paragraph, and
that a breach of such representations would constitute a material breach of this
Agreement.

     10.  No Other Representations.  You represent and acknowledge that in
          ------------------------
executing this Agreement, you do not rely and have not relied upon any
representations or statements made by the Companies or by any of the Companies'
agents, representatives or attorneys with regard to the subject matter, basis or
effect of this Agreement or otherwise, except as set out herein.

     11.  Voluntary Agreement.  The parties represent and agree that they have
          -------------------
consulted with attorneys of their choosing, have had a full and fair opportunity
to consult with such attorneys, and that they have carefully read and considered
all aspects of this Agreement, and enter into it voluntarily and in exchange for
the consideration recited herein.

     12.  Successors.  This Agreement shall be binding upon you and the
          ----------
Companies and upon their respective heirs, administrators, representatives,
executors, successors and assigns, and shall inure to the benefit of you, the
Companies, and your and their respective heirs, administrators, representatives,
executors, successors and assigns. This Agreement is personal to you, and you
may not assign or transfer any interests in, or rights or benefits under, this
Agreement.

     13.  Notices. Any notice required or permitted to be given under this
          -------
Agreement shall be sufficient if in writing and if delivered by hand or by
certified or registered mail or by a nationally recognized overnight delivery
service, postage or other charges pre-paid, and addressed to: you, at the
address set forth above (if such notice is addressed to you), with a copy to
Edward J. Hardin, Rogers & Hardin, 2700 International Tower, Peachtree Center,
229 Peachtree Street, N.E., Atlanta, Georgia 30303-1601; or to JDN Realty
Corporation, 359 East Paces Ferry Road, N.E., Fourth Floor, Atlanta, Georgia
30305, Attention: President, with a copy to E. Marlee Mitchell, Waller Lansden
Dortch & Davis, PLLC, 511 Union Street, Suite 2100, Nashville, Tennessee 37219
(if such notice is addressed to the Companies), or such other address as may be
designated by a party hereto in written notice to the other party hereto.  Such
notice shall be deemed to have been given or made on the date of delivery, if
delivered by hand, or on the next following date if sent by mail or overnight
delivery service.

     14.  Choice of Law; Attorneys' Fees.   This Agreement is made and entered
          ------------------------------
into in the State of Georgia and shall, in all respects, be interpreted,
enforced and

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<PAGE>

governed under the laws of said State, without regard for the principles of
conflicts of laws thereof. Any action or proceedings brought by a party seeking
to enforce any provisions of, or based upon any right arising out of, this
Agreement may be brought against any of the parties hereto in the courts of the
State of Georgia for Fulton County or, if it has or can acquire jurisdiction, in
a United States District Court for the State of Georgia sitting in Fulton
County, and each of the parties consents to the jurisdiction of such courts (and
of the appropriate appellate courts) in any such action or proceeding and waives
any objection to venue laid therein. If legal action is commenced by either
party to enforce or defend its rights under this Agreement, the prevailing party
in such action shall be entitled to recover its costs and reasonable attorneys'
fees in addition to any other relief granted.

     15.  Miscellaneous.  The language of all parts of this Agreement shall, in
          -------------
all cases, be construed as a whole, according to its plain meaning, and not
strictly for or against any of the parties, and rules of interpretation or
construction of contracts that would construe any ambiguity against the
draftsman shall not apply.  Should any provision of this Agreement be declared
or be determined by any court to be illegal or invalid, the validity of the
remaining parts, terms or provisions shall not be affected thereby and said
illegal or invalid part, term or provision shall be deemed not to be part of
this Agreement. As used in this Agreement, the singular or plural number shall
be deemed to include the other whenever the context so indicates or requires.
This Agreement may be executed in any number of counterparts, each of which
shall for all purposes be deemed to be an original but each of which, when so
executed, shall constitute but one and the same instrument.  In making proof of
this Agreement, it shall not be necessary to produce or account for more than
one such counterpart executed by the party against whom enforcement of this
Agreement is sought.  This Agreement sets forth the final and entire agreement
between the parties hereto and fully supersedes any and all prior agreements or
understandings between the parties hereto pertaining to the subject matter
hereof. This Agreement may not be changed orally, but only by an instrument in
writing signed by the party against whom enforcement of any waiver, change,
modification, extension or discharge is sought.  The section and paragraph
headings contained in this Agreement are for convenience of reference, and shall
not limit or control, or be used to construe, the meaning of any provision
herein.  Any delay or omission by any party hereto in exercising any right
hereunder shall not operate as a waiver of such right.

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<PAGE>

     If you agree that the terms set forth herein constitute the complete and
final agreement of the parties with regard to your separation from the
Companies, please sign and date below and return this Agreement to JDN Realty
Corporation.

                                                  Sincerely,
                                                  JDN Realty Corporation

                                                  By:  /s/ John D. Harris, Jr.
                                                       ------------------------

                                                  Title:  Vice President
                                                          ---------------------

                                                  JDN Development Company, Inc.

                                                  By:  /s/ Fred Williams
                                                       ------------------------

                                                  Title:  President
                                                          ---------------------
Accepted and agreed to:

/s/ J. Donald Nichols
---------------------------
J. Donald Nichols

5/19/00
---------------------------
Date

                                       9<PAGE>

                                                                   EXHIBIT 10.25

                                 April 15, 2000

Mr. William J. Kerley
7615 Wolf Brook Drive
Atlanta, Georgia  30350

Dear Bill:

     This letter agreement (the "Agreement") confirms the agreement that we have
reached regarding your departure from your employment and all offices you hold
with JDN Realty Corporation, JDN Development Company, Inc. ("Development
Company") and their related and affiliated entities (collectively, the
"Companies").

     The purpose of this Agreement is to establish mutually agreeable
arrangements for termination of the Employment Agreement dated as of December 1,
1996 by and between you and JDN Realty Corporation (the "Employment Agreement")
and for otherwise modifying your relationship with the Companies. This Agreement
does not constitute and should not be construed as an admission by you or the
Companies that you or they have in any way violated any legal obligation owed to
each other or to any other person.  To the contrary, the parties' willingness to
enter into this Agreement demonstrates that they are continuing to deal with
each other fairly and in good faith.

     With those understandings and in exchange for the promises set forth below,
and other good and valuable consideration, the sufficiency of which is hereby
acknowledged, you and the Companies agree as follows:

     1.  Separation. You hereby confirm your separation from JDN Realty
         ----------
Corporation as an employee as of  11:59 p.m. Eastern Time on April 11, 2000 (the
"Separation Date"). You also confirm your resignation as of the Separation Date
from the offices of Chief Financial Officer, Senior Vice President, Secretary
and Treasurer of JDN Realty Corporation, and any and all other employment,
offices and board of director seats that you hold with any of the Companies,
including without limitation your positions as an officer or director of all
subsidiaries of JDN Realty Corporation, as Chief Financial Officer, Senior Vice
President and Secretary of Development Company and as an officer or director of
all subsidiaries of Development Company.  Said resignations are hereby accepted
by the Companies (your separation as an employee and your resignation from your
offices and directorships shall be referred to hereinafter as the "Separation").
<PAGE>

     2.  Compensation and Benefits.  The Companies hereby agree to the following
         -------------------------
terms:

          (a) Severance Payment.  JDN Realty Corporation shall make a severance
              -----------------
payment to you as follows:  (i) Two Hundred Thousand Dollars ($200,000) in cash
or other immediately available funds on or before 2:30 p.m. E.D.T. on Friday,
April 14, 2000; and (ii) One Hundred Thirty Five Thousand Dollars ($135,000) in
cash or other immediately available funds on or before 2:00 p.m. E.S.T. on
Friday, December 29, 2000. These severance payments shall each be reduced by
applicable withholding.

          (b) Health Insurance and COBRA Coverage.  As of the Separation Date,
              -----------------------------------
you will no longer be entitled to participate in or receive benefits available
to employees of the Companies; provided, however, that nothing herein shall be
construed to affect your or your dependents' rights thereafter to receive
continuous coverage to the extent authorized by and consistent with the
Consolidated Omnibus Budget Reconciliation Act ("COBRA") or any other benefits
the continuation of which is required by law, entirely at your own cost after
your right to benefit continuation ends under this paragraph.

          (c) Exclusivity.  This Agreement sets forth all of the consideration
              -----------
to which you are entitled by reason of the Separation, and you shall not be
entitled to or eligible for any payments or benefits under any other severance,
equity, bonus, retention or incentive policy, arrangement or plan of the
Companies.

     3.  Employee Obligations.  You hereby agree to the following terms:
         --------------------

          (a) Cooperation.  You agree to continue to cooperate fully with the
              -----------
Companies in (i) the defense or prosecution of any claims or actions which
already have been brought or which may be brought in the future against or on
behalf of the Companies and (ii) responding to any governmental audit,
inspection, inquiry, proceeding or investigation, which relate to events or
occurrences that transpired during your employment with any of the Companies.
Your full cooperation in connection with such claims or actions shall include,
without implication of limitation: promptly notifying JDN Realty Corporation or
Development Company, as applicable, in writing of any subpoena, interview,
investigation, request for information, or other contact concerning events or
occurrences that transpired during your employment with any of the Companies; to
the extent joint defenses exist and the parties' interests are not adverse,
being available to meet with counsel for, or other designated representatives
of, any of the Companies upon reasonable notice and with the opportunity to be
accompanied by counsel, to prepare for discovery or trial; and testifying
truthfully as a witness when reasonably requested and at reasonable times
designated by the Companies.  The Companies will in good faith exercise their
rights under this Section so as not to interfere unreasonably with your personal
schedule or ability to engage in gainful employment.

                                       2
<PAGE>

          Without limiting the foregoing, you also agree to give the Companies
your reasonable cooperation on business matters relating to your previous
employment with the Companies, which cooperation will specifically include:  (a)
assistance with information about, and relationships with, lenders to the
Companies; (b) communication and sharing of information, to the extent of joint
defenses, in the class action suits including preparation for depositions and
other legal proceedings; (c) communication and cooperation in transition to new
officers and employees of the Companies who may succeed to the positions
formerly held by you; and (d) cooperation with JDN Realty Corporation in
providing requested information in connection with its filings with the
Securities and Exchange Commission.

          In furtherance of your obligations under this Agreement, you agree you
shall not disclose, provide or reveal, directly or indirectly, any information
concerning the Companies, including without implication of limitation, their
respective operations, plans, strategies or administration, to any other person
or entity unless compelled to do so (a) pursuant to a valid subpoena or (b) as
otherwise required by law, but in either case only after providing the
Companies, through JDN Realty Corporation's or Development Company's counsel,
with prior written notice and opportunity to contest such subpoena or other
requirement.  Written notice shall be provided to JDN Realty Corporation or
Development Company as applicable, as soon as practicable, but in no event less
than five (5) business days before any such disclosure is compelled, or, if
later, one (1) business day after you receive notice compelling such disclosure.

          (b) Return of Company Property.  All documents, records and material
              --------------------------
and all copies of any of the foregoing pertaining to confidential information
(as described in Section 8 of the Employment Agreement), and all software,
equipment (including, for example, without implication of limitation any
cellular telephone or computer owned by any of the Companies and currently in
your possession), and other supplies, whether or not pertaining to confidential
information, that have come into your possession or been produced by you in
connection with your employment (the "Property") have been and remain the sole
property of the Companies.  You hereby confirm you have returned all Property to
the Companies.  In no event should this provision be construed to require you to
return to the Company any document or other materials concerning your
remuneration and benefits during your employment with the Companies.

          (c) Stock Options.  The parties acknowledge and agree that you have
              -------------
heretofore been granted options to purchase 67,962 shares of Common  Stock at an
exercise price of $14.67 per share, 33,000 shares of Common Stock at an exercise
price of $13.50 per share, and 150,000 shares of Common Stock at an exercise
price of $20.75 per share, all of which are vested and exercisable as of the
date hereof (such vested and exercisable options, collectively, the "Vested
Options"). The parties further acknowledge and agree that the Vested Options
will continue to be governed by those certain agreements between you and JDN
Realty

                                       3
<PAGE>

Corporation dated as of March 21, 1994, December 5, 1995 and July 23, 1997
pertaining to the Vested Options.

          (d) Deferred Bonus Plan; Long-Term Incentive Plan.  The parties agree
              ---------------------------------------------
to the following with respect to: (i) the shares (comprised of  4,106 shares
awarded that are vested, net of shares withheld to satisfy withholding
obligations, and 6,360.75 shares awarded that are not yet vested) of JDN Realty
Corporation's Common Stock awarded to you pursuant to JDN Realty Corporation's
1998 Deferred Bonus Plan (the "Bonus Plan Shares"); and (ii) the 85,714 shares
(comprised of 3,143 vested shares and 82,571 shares that are not yet vested) of
JDN Realty Corporation's Common Stock awarded to you pursuant to JDN Realty
Corporation's 1999 Long-Term Incentive Plan (the "LTIP Shares," which, together
with the Bonus Plan Shares, are referred to herein as the "Award Shares"):

              (i)  You acknowledge that 88,931.75 Award Shares that are not
          vested as of the Separation Date and any cash bonuses deferred under
          the 1998 Deferred Bonus Plan are forfeited in consideration of the
          cash severance payments provided for in Paragraph 2(a) hereof.

              (ii) You will retain ownership of the 7,249 vested Award Shares.

     4.  Employment Agreement.
         --------------------
         This Agreement supersedes all provisions of the Employment Agreement
other than Section 11 which is incorporated herein by reference and which shall
continue to bind the parties in accordance with its terms.

     5.  No Derogatory Statements.
         ------------------------
         (a) The parties mutually agree that, as part of the consideration for
this Agreement, they will not, directly or indirectly, in any capacity or
manner, take any action or cause any action to be taken which would be
detrimental to the interests of the other party or parties, or in the case of
the Companies, their respective officers, directors, agents and employees,
including, without limitation, making, causing, encouraging or assisting to be
made any statements, comments or remarks, whether verbal, in writing or
electronically transmitted, which might reasonably be considered to be
derogatory, defamatory or critical of, or to malign, harm, defame, disparage or
damage the reputation and good name of, the other party or parties, or in the
case of the Companies,  their respective officers, directors, agents and
employees.

          The provisions of this Subsection shall not apply to any truthful
statement required to be made by the parties in any legal proceeding, required

                                       4
<PAGE>

filings under the securities laws, or pursuant to any governmental or regulatory
investigation.

          (b) A breach by either you or the Companies of any obligations under
this Section shall not be deemed a material breach of this Agreement and shall
not excuse you or the Companies from performing each of your respective
obligations under this Agreement.  The sole remedies for a violation of this
Section shall be an action for damages caused by any such violation and/or to
enjoin any further breach of the obligations of this Section.

     6.  Nondisclosure.  You represent, covenant and agree that you will keep
         -------------
the terms and facts of this Agreement, and negotiations and discussions related
hereto, completely and strictly confidential, and that you will not, directly or
indirectly, in any capacity or manner, discuss with, or disclose to, anyone,
including, without limitation, reporters and securities analysts, any
information concerning this Agreement, the matters contemplated herein or
matters related to you employment with or Separation from the Companies, or any
negotiations and discussions related hereto or thereto until the Companies make
public disclosure of the fact and the terms of this Agreement; provided,
however, that you may disclose information regarding this Agreement in
confidence to your accountant, tax advisor and legal counsel, after obtaining
the agreement of any such person to also maintain the confidentiality of such
information in accordance herewith, and to those persons or entities as directed
by the Companies.  You agree that if you are compelled as a matter of law to
disclose such information, you will promptly notify JDN Realty Corporation or
Development Company, as is appropriate, in order to permit it to seek a
protective order or take other appropriate action with respect to such
disclosure, and you will cooperate in JDN Realty Corporation's or Development
Company's  efforts to obtain such protective order or other reasonable assurance
that confidential treatment will be accorded such information, and if such
protective order is not obtained, you may disclose to the party or authority
compelling such disclosure such part of such information as is required by law
to be disclosed.  You will immediately refer to  JDN Realty Corporation's Chief
Executive Officer or President (without further comments or response) all
contacts, questions and requests for information, from analysts, reporters or
otherwise, regarding the Companies or your Separation from the Companies.

     7.  Non-Solicitation/Confidentiality. In partial exchange for the
         ---------------------------------
consideration recited herein, you hereby covenant and agree as follows:

         (a)  Non-Solicitation.
              ----------------
              (i)  You will not, except on behalf of or with the prior written
         consent of the Companies, contact or solicit, directly or indirectly,
         any customer, client, tenant or account whose identity you obtained
         through association with the

                                       5
<PAGE>

         Companies; provided, however, that this restriction shall apply only to
         customers with whom you have had an actual material contact while
         performing your duties for the Companies.

              (ii)  For a period of one year after the Separation Date, you will
         not directly or indirectly, entice or induce, or attempt to entice or
         induce, any employee of the Companies employed as of the Separation
         Date to leave such employ, or employ any such person in any business
         similar to or in competition with that of the Companies.

         (b)  Confidentiality.
              ----------------
          You will not disclose to any person or entity or use, at any time, any
information not in the public domain or generally known in the industry, in any
form, acquired by you while employed by the Companies or any predecessor to the
Companies' business, and relating to the Companies, including but not limited to
information regarding customers, vendors, suppliers, trade secrets, training
programs, manuals or materials, technical information, contracts, systems,
procedures, mailing lists, know-how, trade names, improvements, price lists,
financial or other data (including the revenues, costs or profits associated
with any of the Companies' services), business plans, code books, invoices and
other financial statements, computer programs, software systems, databases,
discs and printouts, plans (business, technical or otherwise), customer and
industry lists, correspondence, internal reports, personnel files, sales and
advertising material, telephone numbers, names, addresses or any other
compilation of information, written or unwritten, which is or was used in the
business of the Companies.  You agree and acknowledge that all of such
information, in any form, and copies and extracts thereof, are and shall remain
the sole and exclusive property of the Companies, and that you have or will
promptly upon the execution of this Agreement return to the Companies the
originals and all copies of any such information provided to or acquired by you
in connection with the performance of your duties for the Companies, and shall
return to the Companies all files, correspondence and/or other communications
received, maintained and/or originated by you during the course of your
employment.

          (c)  Equitable Relief.
               -----------------
          You acknowledge that the rights and privileges granted to the
Companies in this Section are of special and unique character, which gives them
a peculiar value, the loss of which may not be reasonably or adequately
compensated for by damages in an action of law, and that a breach thereof by you
of this Section will cause the Companies great and irreparable injury and
damage. Accordingly, you hereby agree that the Companies shall be entitled to
remedies of injunction, specific performance or other equitable relief to
prevent a breach of this

                                       6
<PAGE>

Section by you, without any requirement on the part of the Companies to prove
actual damages or to post or secure any bond (which requirements are hereby
waived). This provision shall not be construed as a waiver of, and shall be in
addition to, any other rights or remedies the Companies may have for damages or
otherwise.

     8.  Indemnification.
         ---------------

         (a) Indemnification by You.  As a further material inducement to the
             ----------------------
Companies to enter into this Agreement, you hereby agree to indemnify and hold
the Companies harmless from and against all loss, cost, damage or expense,
including, without limitation, attorneys' fees, incurred by the Companies,
arising out of any breach of this Agreement by you.

         (b) Indemnification by the Companies. The Companies agree to
             --------------------------------
reimburse, and upon request, advance to you your reasonable attorney's fees and
expenses incurred in connection with the negotiation and execution of this
Agreement, and to indemnify and advance to you reasonable expenses incurred in
connection with any litigation or other legal or regulatory proceeding of any
kind filed or  initiated against the Companies or you because of your status as
an officer or employee of the Companies, in accordance with the terms of the
Articles of Incorporation and Bylaws of the Companies, Section 11 of the
Employment Agreement and your Indemnification Agreement with JDN Realty
Corporation, or as might otherwise exist under applicable law; provided,
however, that the term "established" in Section 11.1(c) of the Employment
Agreement and in Section 5 of the Indemnification Agreement is amended to read
"adjudged" and all prior disclosed compensation to you from the Companies shall
not constitute an "improper personal benefit" as described in Section 11.1 of
the Employment Agreement and Section 5(d) of the Indemnification Agreement.

     9.   No Other Representations. You represent and acknowledge that in
          ------------------------
executing this Agreement, you do not rely and have not relied upon any
representations or statements made by the Companies or by any of the Companies'
agents, representatives or attorneys with regard to the subject matter, basis or
effect of this Agreement or otherwise, except as set out herein.

     10.  Voluntary Agreement.  The parties represent and agree that they have
          -------------------
consulted with attorneys of their choosing, have had a full and fair opportunity
to consult with such attorneys, and that they have carefully read and considered
all aspects of this Agreement, and enter into it voluntarily and in exchange for
the consideration recited herein.

     11.  Successors.  This Agreement shall be binding upon you and the
          ----------
Companies and upon their respective heirs, administrators, representatives,
executors, successors and assigns, and shall inure to the benefit of you, the
Companies, and your and their respective heirs, administrators, representatives,

                                       7
<PAGE>

executors, successors and assigns. This Agreement is personal to you,
and you may not assign or transfer any interests in, or rights or
benefits under, this Agreement.

     12.  Notices. Any notice required or permitted to be given under this
          -------
Agreement shall be sufficient if in writing and if delivered by hand or by
certified or registered mail or by a nationally recognized overnight delivery
service, postage or other charges pre-paid, and addressed to: you, at the
address set forth above (if such notice is addressed to you), with a copy to
Lamar, Archer & Cofrin, LLP, 50 Hurt Plaza, Suite 900, Atlanta, Georgia 30303;
or to JDN Realty Corporation, 359 East Paces Ferry Road, N.E., Fourth Floor,
Atlanta, Georgia 30305, Attention: President, with a copy to E. Marlee Mitchell,
Waller Lansden Dortch & Davis, PLLC, 511 Union Street, Suite 2100, Nashville,
Tennessee 37219 (if such notice is addressed to the Companies), or such other
address as may be designated by a party hereto in written notice to the other
party hereto. Such notice shall be deemed to have been given or made on the date
of delivery, if delivered by hand, or on the next following date if sent by mail
or overnight delivery service.

     13.  Choice of Law; Attorneys' Fees.  This Agreement is made and entered
          ------------------------------
into in the State of Georgia and shall, in all respects, be interpreted,
enforced and governed under the laws of said State, without regard for the
principles of conflicts of laws thereof. Any action or proceedings brought by a
party seeking to enforce any provisions of, or based upon any right arising out
of, this Agreement may be brought against any of the parties hereto in the
courts of the State of Georgia for Fulton County or, if it has or can acquire
jurisdiction, in a United States District Court for the State of Georgia sitting
in Fulton County, and each of the parties consents to the jurisdiction of such
courts (and of the appropriate appellate courts) in any such action or
proceeding and waives any objection to venue laid therein.  If legal action is
commenced by either party to enforce or defend its rights under this Agreement,
the prevailing party in such action shall be entitled to recover its costs and
reasonable attorneys' fees in addition to any other relief granted.

     14.  Miscellaneous.  The language of all parts of this Agreement shall, in
          -------------
all cases, be construed as a whole, according to its plain meaning, and not
strictly for or against any of the parties, and rules of interpretation or
construction of contracts that would construe any ambiguity against the
draftsman shall not apply.  Should any provision of this Agreement be declared
or be determined by any court to be illegal or invalid, the validity of the
remaining parts, terms or provisions shall not be affected thereby and said
illegal or invalid part, term or provision shall be deemed not to be part of
this Agreement. As used in this Agreement, the singular or plural number shall
be deemed to include the other whenever the context so indicates or requires.
This Agreement may be executed in any number of counterparts, each of which
shall for all purposes be deemed to be an original but each of which, when so
executed, shall constitute but one and the same instrument.  In making proof of
this Agreement, it shall not be necessary to produce or account for more than
one such counterpart executed by the party

                                       8
<PAGE>

against whom enforcement of this Agreement is sought. This Agreement sets forth
the entire agreement between the parties hereto and fully supersedes any and all
prior agreements or understandings between the parties hereto pertaining to the
subject matter hereof. This Agreement may not be changed orally, but only by an
instrument in writing signed by the party against whom enforcement of any
waiver, change, modification, extension or discharge is sought. The section and
paragraph headings contained in this Agreement are for convenience of reference,
and shall not limit or control, or be used to construe, the meaning of any
provision herein. Any delay or omission by any party hereto in exercising any
right hereunder shall not operate as a waiver of such right.

                                       9
<PAGE>

     If you agree to these terms, please sign and date below and return this
Agreement to JDN Realty Corporation.

                                                Sincerely,
                                                JDN Realty Corporation

                                                By:  /s/ Craig Macnab
                                                     --------------------------

                                                Title:  Chief Executive Officer
                                                        -----------------------

                                                JDN Development Company

                                                By:  /s/ Fred Williams

                                                     --------------------------
                                                Title:  President
                                                        -----------------------
Accepted and agreed to:

/s/ William J. Kerley
-------------------------------
William J. Kerley

4/17/00
-------------------------------
Date

                                       10

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