<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to (S) 240.14a-11(c) or (S) 240.14a-12
CABOT INDUSTRIAL TRUST
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE>
CABOT INDUSTRIAL TRUST
TWO CENTER PLAZA, SUITE 200
BOSTON, MASSACHUSETTS 02108
----------------
NOTICE OF 1998 ANNUAL MEETING OF SHAREHOLDERS
AND
PROXY STATEMENT
----------------
May 12, 1998
Dear Shareholder:
You are cordially invited to attend our 1998 Annual Meeting of Shareholders,
which will be held at Fleet Bank, 75 State Street, 8th Floor, Boston
Massachusetts, on Thursday, June 11, 1998 at 10:00 a.m., local time.
The Notice of Annual Meeting and the Proxy Statement that follow describe
the business to be conducted at the Annual Meeting. We will also report on
matters of current interest to our shareholders, and there will be an
opportunity following the formal meeting for questions and answers.
Please sign and return the enclosed proxy card in the envelope provided as
soon as possible so that your shares will be represented at the meeting. This
will not prevent you from attending the meeting and voting in person or from
changing your vote by executing a subsequent proxy. You are encouraged to
specify your choices on the matters indicated. However, it is not necessary to
specify your choice on a matter if you wish to vote in accordance with the
recommendations of the Company's Board of Trustees, in which case merely
executing and returning the proxy card will be sufficient.
On behalf of the Board of Trustees and management of Cabot Industrial Trust,
I would like to express our appreciation for your interest in the Company. We
look forward to seeing you at the Annual Meeting.
Sincerely,
/s/ Ferdinand Colloredo-Mansfeld
Ferdinand Colloredo-Mansfeld
Chairman and Chief Executive Officer
<PAGE>
CABOT INDUSTRIAL TRUST
TWO CENTER PLAZA, SUITE 200
BOSTON, MASSACHUSETTS 02108
----------------
NOTICE OF 1998 ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JUNE 11, 1998
----------------
TO THE SHAREHOLDERS OF CABOT INDUSTRIAL TRUST:
NOTICE IS HEREBY GIVEN that the 1998 Annual Meeting of Shareholders (the
"Annual Meeting") of Cabot Industrial Trust, a Maryland real estate investment
trust (the "Company"), will be held at Fleet Bank, 75 State Street, 8th Floor,
Boston, Massachusetts, on Thursday, June 11, 1998 at 10:00 a.m., local time,
for the following purposes:
1. To elect two Class I Trustees to the Board of Trustees of the Company
to serve for a three-year term;
2. To ratify the appointment of Arthur Andersen LLP as the Company's
independent public accountants for the fiscal year ending December 31,
1998; and
3. To transact such other business as may properly come before the Annual
Meeting or any adjournments or postponements thereof.
Shareholders of record as of the close of business on May 1, 1998 (the
"Record Date") are entitled to notice of and to vote at the Annual Meeting or
any adjournments or postponements thereof. The Annual Report of the Company
for the fiscal year ended December 31, 1997 is being mailed to all
shareholders of record on the Record Date and accompanies this Notice and
Proxy Statement.
By Order of the Board of Trustees,
/s/ Neil E. Waisnor
Neil E. Waisnor
Senior Vice President--Finance,
Treasurer
and Secretary
Boston, Massachusetts
May 12, 1998
ALL SHAREHOLDERS ARE INVITED TO ATTEND THE MEETING IN PERSON. SHAREHOLDERS
WHO DO NOT INTEND TO BE PRESENT AT THE MEETING IN PERSON ARE REQUESTED TO
SIGN AND DATE THE ENCLOSED PROXY AND TO RETURN IT PROMPTLY IN THE
ACCOMPANYING ENVELOPE IN ORDER THAT THE NECESSARY QUORUM MAY BE ASSURED. ANY
PROXY MAY BE REVOKED IN THE MANNER DESCRIBED IN THE ACCOMPANYING PROXY
STATEMENT AT ANY TIME BEFORE IT HAS BEEN VOTED AT THE MEETING.
<PAGE>
CABOT INDUSTRIAL TRUST
TWO CENTER PLAZA, SUITE 200
BOSTON, MASSACHUSETTS 02108
----------------
PROXY STATEMENT
FOR
1998 ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JUNE 11, 1998
----------------
GENERAL INFORMATION
TIME AND LOCATION
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Trustees of Cabot Industrial Trust, a Maryland real
estate investment trust (the "Company"), for use at the Company's 1998 Annual
Meeting of Shareholders to be held at Fleet Bank, 75 State Street, 8th Floor,
Boston, Massachusetts, on Thursday, June 11, 1998 at 10:00 a.m., local time,
and any adjournments or postponements thereof (the "Annual Meeting"), for the
purposes set forth in the accompanying Notice of Annual Meeting. This Proxy
Statement and the enclosed form of proxy are first being sent to shareholders
on or about May 12, 1998.
VOTING RIGHTS AND SOLICITATION
Only shareholders of record of the Company's common shares of beneficial
interest, par value $0.01 per share (the "Common Shares"), at the close of
business on May 1, 1998 (the "Record Date") are entitled to notice of and to
vote at the Annual Meeting. Each Common Share is entitled to one vote on all
matters to be voted upon by shareholders at the meeting. There were 18,586,764
Common Shares outstanding as of the Record Date.
The presence in person or by proxy of a majority of the outstanding shares
entitled to vote at the Annual Meeting will constitute a quorum for the
transaction of business. Each valid proxy returned to the Company will be
voted at the Annual Meeting as indicated on the proxy. If no indication is
made with respect to a proposal, the proxy will be voted for election of the
Trustees named in this Proxy Statement and for the ratification of Arthur
Andersen LLP as the Company's independent public accountants for 1998.
The two nominees receiving the highest number of affirmative votes will be
elected Trustees of the Company. Shareholders do not have the right to
cumulate their vote in the election of Trustees. Ratification of the
independent public accountants requires the affirmative vote of a majority of
the votes cast on that proposal at the Annual Meeting. Abstentions and broker
non-votes will be counted as present at the meeting for determining the
presence of a quorum, but will have no effect on the outcome of the votes on
the two proposals described in this Proxy Statement.
Any person submitting a proxy may revoke it at any time before it is
exercised by filing with the Secretary of the Company an instrument of
revocation or a duly executed proxy bearing a later date. In addition, persons
submitting proxies may elect to attend the Annual Meeting and vote in person,
although mere attendance at the meeting will not serve to revoke a proxy.
ANNUAL REPORT
The Annual Report of the Company for the year ended December 31, 1997, which
includes the Company's Annual Report on Form 10-K filed with the Securities
and Exchange Commission, is being mailed together with this Proxy Statement to
each shareholder of record on the Record Date. The Annual Report includes
financial
<PAGE>
statements of the Company and of Cabot Partners Limited Partnership, the
sponsor and organizer of the Company ("Cabot Partners"), audited by Arthur
Andersen LLP, independent public accountants, and their reports thereon dated
March 27, 1998. The Annual Report does not constitute part of the proxy
solicitation material.
COST OF SOLICITATION
The cost of soliciting proxies will be borne by the Company. In addition to
solicitation by mail, Trustees, officers and employees of the Company (who
will not receive additional compensation for such services) may solicit
proxies in person or by telephone. Brokers, nominees, fiduciaries and other
custodians will be requested to forward soliciting materials to the beneficial
owners of the Common Shares held of record by those persons and, upon request,
will be reimbursed by the Company for their reasonable expenses in forwarding
such materials.
PROPOSAL 1. ELECTION OF TRUSTEES
The Board of Trustees presently consists of seven Trustees and is divided
into three classes. Under the Company's Declaration of Trust, a majority of
the Board must be persons other than officers or employees of the Company
("Independent Trustees"). One class of Trustees is elected annually, and each
Trustee in the class serves a three-year term. The Board has nominated Noah T.
Herndon and Maurice Segall for election to the Board at the Annual Meeting as
Class I Trustees to serve until the annual meeting of shareholders in 2001.
Each of the nominees presently serves as a Trustee of the Company and has
indicated his willingness to serve if elected at the Annual Meeting. In the
event that a nominee should become unwilling or unable to serve, all duly
executed proxies will be voted for the election of such other person as may be
designated by the Board of Trustees. Unless authority to vote for a nominee is
withheld, all votes represented by a properly executed proxy will be cast in
favor of Messrs. Herndon and Segall.
The Board of Trustees recommends a vote FOR the nominees for Trustee.
The table below contains a brief description of the business experience and
positions held by each of the Trustees of the Company.
<TABLE>
<CAPTION>
POSITIONS WITH COMPANY, BUSINESS
NAME AGE EXPERIENCE AND OTHER POSITIONS
---- --- --------------------------------
<C> <C> <S>
NOMINEES FOR ELECTION AS CLASS I
TRUSTEES:
Noah T. Herndon(1)(2)............ 66 Mr. Herndon has been a Trustee of
the Company since February 1998. Mr.
Herndon is a Partner of Brown
Brothers Harriman & Co., where he
has worked since 1958. Mr. Herndon
is a Director of Scully Signal
Company, Standard Mutual Insurance
Company, Watts Industries, Inc., and
Zoll Medical Corporation. He is
Trustee and Treasurer of Dumaines
Trust, and Trustee of The Carroll
School.
Maurice Segall(1)(2)............. 68 Mr. Segall has been a Trustee of the
Company since February 1998. Mr.
Segall has been a senior lecturer at
the MIT-Sloan School of Management
and a senior advisor to the Boston
Consulting Group since 1989. Until
1989, he was Chairman, President and
Chief Executive Corporate Officer of
Zayre Corporation, which he joined
as President and Chief Executive
Officer in 1978. Mr. Segall is a
Director of AMR Corporation and
Harcourt General, Inc. He is a
Trustee of Massachusetts General
Hospital, Beth Israel Hospital and
the Boston Museum of Fine Arts.
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
POSITIONS WITH COMPANY, BUSINESS
NAME AGE EXPERIENCE AND OTHER POSITIONS
---- --- --------------------------------
<C> <C> <S>
CLASS II TRUSTEES WITH TERMS
EXPIRING IN 1999:
Ronald L. Skates(1).............. 56 Mr. Skates has been a Trustee of the
Company since February 1998. Mr.
Skates has been President, Chief
Executive Officer and a Director of
Data General Corporation since 1989.
Prior to joining Data General
Corporation in 1986, Mr. Skates was
a Partner of Price Waterhouse LLP,
certified public accountants. He is
a member of the American Institute
of Certified Public Accountants and
the Massachusetts Society of
Certified Public Accountants. He is
also a Trustee of Massachusetts
General Hospital, an Overseer of the
Boston Museum of Fine Arts, and Vice
Chairman and a Director of the
Massachusetts High Technology
Council.
W. Nicholas Thorndike(1)(2)...... 65 Mr. Thorndike has served as a
Trustee of the Company since
February 1998. Mr. Thorndike retired
in 1988 from Wellington Management
Company/Thorndike, Doran, Paine and
Lewis where he was Chairman of the
Board and Managing Partner. Mr.
Thorndike serves as a Director of
Courier Corporation, Data General
Corporation, The Providence Journal
(where he is Chairman of the
Executive Committee), and Bradley
Real Estate Inc. He also serves as a
Trustee of Massachusetts General
Hospital, having served as Chairman
of the Board from 1987 to 1992 and
President from 1992 to 1994, and
serves as Trustee of Eastern
Utilities Associates, Northeastern
University and The Putnam Funds.
CLASS III TRUSTEES WITH TERMS
EXPIRING IN 2000:
Ferdinand Colloredo-Mansfeld..... 58 Ferdinand Colloredo-Mansfeld has
served as Chairman of the Board of
Trustees and Chief Executive Officer
of the Company since its formation
in October 1997. Mr. Colloredo-
Mansfeld also serves as the Chairman
and Chief Executive Officer of Cabot
Advisors, Inc. (the "Management
Company"). Mr. Colloredo-Mansfeld
served as Chairman, Chief Executive
Officer and Chief Investment Officer
of Cabot Partners from 1990 to 1997,
and of Cabot, Cabot & Forbes Realty
Advisors, Inc. from 1986 to 1990. He
is a limited partner of Brown
Brothers Harriman & Co. and is a
Director of Data General Corporation
and Raytheon Company. He is Chairman
of the Board of Trustees of
Massachusetts General Hospital and a
Trustee of Partners HealthCare
System, Inc. He is the father of
Franz Colloredo-Mansfeld, the
Company's Chief Financial Officer.
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
POSITIONS WITH COMPANY, BUSINESS
NAME AGE EXPERIENCE AND OTHER POSITIONS
---- --- --------------------------------
<C> <C> <S>
Robert E. Patterson.............. 53 Mr. Patterson has served as
President and a Trustee of the
Company since October 1997. Mr.
Patterson served as Executive Vice
President, Director of Acquisitions
and a member of the Investment
Committee of Cabot, Cabot & Forbes
Realty Advisors, Inc. and Cabot
Partners from 1987 to 1997. He is a
Trustee of the Putnam Group of
Mutual Funds, Chairman of the Board
of Trustees of the Joslin Diabetes
Center, and a member of numerous
industry associations, including the
National Association of Real Estate
Investment Trusts, the Society of
Industrial and Office Realtors, the
Urban Land Institute and the
National Association of Real Estate
Investment Managers.
Christopher C. Milliken(1)(2).... 52 Mr. Milliken has been a Trustee of
the Company since February 1998. He
has been the President of the Boise
Cascade Office Products Corporation
since April 1998, previously having
served as Senior Vice President,
Operations from 1995 to April 1998
and Eastern Region Manager from 1990
to 1995. Prior to beginning his
career at Boise Cascade Office
Products Corporation in 1977, Mr.
Milliken served in various
merchandise management positions at
Marshall Field & Company from 1970
to 1977.
</TABLE>
- --------
(1) Member of Audit Committee
(2) Member of Executive Compensation Committee
MEETINGS OF THE BOARD AND COMMITTEES
The Board of Trustees has two standing committees, the Audit Committee and
the Executive Compensation Committee. The Company does not have a nominating
committee. Shareholder nominations must comply with the advance notice and
other requirements set forth in the Company's Bylaws. The Company was formed
in October 1997 with one shareholder and consummated its initial public
offering in February 1998. During 1997, the Board consisted of Messrs.
Colloredo-Mansfeld and Patterson and met on two occasions, with both Trustees
attending each meeting. The Audit Committee and the Executive Compensation
Committee were established in February 1998 and therefore did not meet during
1997.
The Audit Committee makes recommendations concerning the engagement of
independent public accountants, reviews with the independent public
accountants the plans and results of the audit engagement, approves
professional services provided by the independent public accountants, reviews
the independence of the independent public accountants, considers the range of
audit and non-audit fees and reviews the adequacy of the Company's internal
accounting controls. The Audit Committee consists solely of the Independent
Trustees, with Mr. Skates as Chairman.
The Executive Compensation Committee determines compensation levels and
policies for the Company's executive officers and implements the Company's
Long Term Incentive Plan. The Executive Compensation Committee consists of
Messrs. Thorndike (Chairman), Herndon, Segall and Milliken, each of whom is an
Independent Trustee.
4
<PAGE>
COMPENSATION OF TRUSTEES
Independent Trustees receive an annual retainer of $18,000 and per meeting
compensation of $1,000. The Chairmen of the Audit Committee and the Executive
Compensation Committee each receive an additional $1,000 annually for their
services in such capacities, and each Trustee is reimbursed for out-of-town
travel expenses incurred in connection with attendance at Board and committee
meetings. Each Independent Trustee also receives, under the Company's Long
Term Incentive Plan, an initial grant of options to purchase 10,000 Common
Shares on the date they become a Trustee, and an additional grant of options
to purchase 4,000 Common Shares each year on the date of the Company's annual
meeting of shareholders provided they have been reelected or are continuing to
serve as Trustees following the meeting. The exercise price per share for
options granted to Independent Trustees is the market price of a Common Share,
as defined in the Long Term Incentive Plan, on the date of grant. Options
granted to Independent Trustees become exercisable on the first anniversary of
the date of grant.
5
<PAGE>
PRINCIPAL AND MANAGEMENT SHAREHOLDERS
The following table sets forth, as of May 1, 1998, the beneficial ownership
of Common Shares of (i) each person known by the Company to own more than 5%
of the Common Shares, (ii) each Trustee and nominee, (iii) each person named
in the Summary Compensation Table below, and (iv) all Trustees and executive
officers of the Company as a group. The table also sets forth the number of
limited partnership units (the "Units") of Cabot Industrial Properties, L.P.,
the Company's operating partnership (the "Operating Partnership"), owned by
each beneficial owner of Units who, upon exchange of Units for Common Shares,
would own more than 5% of the Common Shares, and by the persons and group
specified in clauses (ii) through (iv) above. Pursuant to the Amended and
Restated Agreement of Limited Partnership of the Operating Partnership (the
"Operating Partnership Agreement"), the Units are exchangeable for Common
Shares on a one-for-one basis or the cash equivalent thereof (as determined by
the Company) beginning February 4, 1999, or such earlier date as the Company
may authorize. Unless otherwise indicated, the persons and entities named
below have sole voting and investment power with respect to all Common Shares
and Units shown as beneficially owned by them.
<TABLE>
<CAPTION>
PERCENT OF ALL PERCENT OF ALL
COMMON COMMON SHARES COMMON
BENEFICIAL OWNER(1) SHARES UNITS AND UNITS(2) SHARES(3)
- ------------------- --------- ---------- -------------- --------------
<S> <C> <C> <C> <C>
Ferdinand Colloredo-
Mansfeld................... 1,050 1,331,657 3.1% 6.7%
Robert E. Patterson(4)...... 14,000 128,590 * *
Franz Colloredo-Mansfeld.... 4,000 25,991 * *
Andrew D. Ebbott............ 1,000 36,499 * *
Howard B. Hodgson, Jr. ..... 1,000 36,499 * *
Eugene F. Reilly............ -- 30,416 * *
Neil E. Waisnor............. -- 36,499 * *
Noah T. Herndon............. 5,000 -- * *
Christopher C. Milliken..... 100 -- * *
Maurice Segall.............. 2,500 -- * *
W. Nicholas Thorndike....... 5,000 -- * *
Ronald L. Skates............ 10,000 -- * *
IBM Retirement Plan
Trust(5)................... -- 10,246,244 23.5 35.5
Pennsylvania Public School
Employes' Retirement
System(6).................. -- 5,502,973 12.6 22.8
New York State Teachers'
Retirement System(7)....... 2,186,947 3,764,579 13.7 26.6
State of Wisconsin
Investment Board(8)........ 2,959,534 -- 6.8 15.9
Leland Stanford Jr.
Endowment Fund(9).......... -- 2,367,923 5.4 11.3
The Prudential Insurance
Company of America(10)..... 2,504,699 -- 5.8 13.5
Argo Partnership II,
L.P.(11)................... 1,586,484 -- 3.6 8.5
Morgan Stanley Asset
Management Inc.(12)........ 1,000,000 -- 2.3 5.4
All Trustees and executive
officers as a group
(12 persons)............... 43,650 1,626,151 3.8 8.3
</TABLE>
- --------
* Less than 1%.
(1) Unless otherwise indicated, the address of each named person or title
holding entity is c/o Cabot Industrial Trust, Two Center Plaza, Suite
200, Boston, Massachusetts 02108.
(2) Assumes that all Units are exchanged for Common Shares on a one-for-one
basis (without regard to the prohibition on exchange of 22,699,884 and
2,228,719 Units until February 4, 1999 and 2000, respectively).
(3) Assumes that all Units beneficially owned by the identified person or
group (and no other person) are exchanged for Common Shares on a one-for-
one basis (without regard to the prohibition on exchange of 22,699,884
and 2,228,719 Units until February 4, 1999 and 2000, respectively).
(4) Includes 2,000 Common Shares held by Mr. Patterson's children and 12,000
Common Shares held by trusts with respect to which he has shared voting
and investment power. Mr. Patterson disclaims beneficial ownership of
these Common Shares.
(5) Information based on a Schedule 13G dated April 22, 1998 filed with the
Securities and Exchange Commission. The address of IBM Retirement Plan
Trust is 3001 Summer Street, Stamford, Connecticut 06905.
6
<PAGE>
(6) Units held of record by Keystone-Illinois Property Holding Corp.,
Keystone-New Jersey Property Holding Corp. and Keystone-Ohio Property
Holding Corp. which are each owned by Pennsylvania Public School
Employes' Retirement System. The business address of these Unitholders is
875 North Michigan Avenue, Suite 4114, Chicago, Illinois 60611.
(7) Common Shares and Units held of record by three title holding entities
and six title holding entities, respectively, which are each wholly owned
by New York State Teachers' Retirement System. The business address of
these entities is c/o Bankers Trust Company, 14 Wall Street, New York,
New York 10005.
(8) Information based on a Schedule 13G dated March 10, 1998 filed with the
Securities and Exchange Commission. The address of State of Wisconsin
Investment Board is P.O. Box 7842, Madison, Wisconsin 53707.
(9) Units held of record by CP REPROP Corp. which is wholly owned by the
Leland Stanford Jr. Endowment Fund. The business address of these
entities is c/o Stanford Management Company, 2770 Sand Hill Road, Menlo
Park, California 94025.
(10) Includes 950 shares with respect to which The Prudential Insurance
Company of America ("Prudential") has shared voting and investment power.
Information based on a Schedule 13G dated March 9, 1998 filed with the
Securities and Exchange Commission. Prudential's address is 751 Broad
Street, Newark, New Jersey 07102-3777.
(11) Common Shares held of record by West Coast Industrial, L.L.C. which are
beneficially owned by its managing member, Argo Partnership II, L.P. The
business address of these entities is c/o The O'Connor Group, 399 Park
Avenue, New York, New York 10022.
(12) Common Shares held of record by Morgan Stanley Asset Management Inc.
("MSAM") as advisor to Stichting Bedrijspensioenfonds Voor De
Metaalnijhverheid, Stichting Pensioenfonds ABP, MS Real Estate Special
Situations Inc., The Morgan Stanley Real Estate Special Situations Funds
I, L.P., The Morgan Stanley Real Estate Special Situations Fund II, L.P.
and Morgan Stanley Real Estate Special Situations Real Estate Investors,
L.P. MSAM and Morgan Stanley, Dean Witter, Discover & Co., as the owner
of all of the common stock of MSAM, are deemed beneficially to own the
Common Shares beneficially owned by these entities. MSAM maintains its
principal office at 1221 Avenue of the Americas, New York, New York 10020
and Morgan Stanley, Dean Witter, Discover & Co. maintains its principal
office at 1585 Broadway, New York, New York 10036. MSAM and Morgan
Stanley, Dean Witter, Discover & Co. disclaim beneficial ownership of
such Common Shares.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires Trustees,
executive officers and beneficial owners of more than ten percent of the
Common Shares to file initial reports of ownership and reports of changes in
ownership with the Securities and Exchange Commission and to provide the
Company with copies of such reports. The Company was not subject to Section
16(a) during 1997.
7
<PAGE>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The Company was organized in October 1997 and did not pay any compensation
to its executive officers during 1997. The following table sets forth
information concerning the base compensation to be paid, and the initial
amounts of options to purchase Units granted, to Ferdinand Colloredo-Mansfeld,
Robert E. Patterson, Franz Colloredo-Mansfeld, Andrew D. Ebbott, Howard B.
Hodgson, Jr., Eugene F. Reilly and Neil E. Waisnor (collectively, the "Named
Executive Officers") during the fiscal year ending December 31, 1998.
<TABLE>
<CAPTION>
ANNUAL LONG-TERM
COMPENSATION COMPENSATION AWARDS
------------ ---------------------
FISCAL SECURITIES
NAME AND PRINCIPAL POSITION YEAR SALARY UNDERLYING OPTIONS(#)
--------------------------- ------ ------------ ---------------------
<S> <C> <C> <C>
Ferdinand Colloredo-Mansfeld ....... 1998 $265,000 350,000
Chairman of the Board and Chief
Executive Officer
Robert E. Patterson................. 1998 245,000 275,000
President
Franz Colloredo-Mansfeld............ 1998 175,000 250,000
Chief Financial Officer
Andrew D. Ebbott.................... 1998 175,000 200,000
Senior Vice President--Director of
Acquisitions
Howard B. Hodgson, Jr............... 1998 175,000 200,000
Senior Vice President--Director of
Real Estate Operations
Eugene F. Reilly.................... 1998 175,000 200,000
Senior Vice President--Director of
Leasing, Marketing and Development
Neil E. Waisnor .................... 1998 175,000 200,000
Senior Vice President--Finance,
Treasurer and Secretary
</TABLE>
8
<PAGE>
OPTION GRANTS
The following table sets forth certain information concerning grants of
options to purchase Units to the Named Executive Officers made in February
1998.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS(1) POTENTIAL REALIZABLE
--------------------------------------------- VALUE AT ANNUAL RATES
NUMBER OF OF STOCK PRICE
SECURITIES PERCENT OF EXERCISE APPRECIATION FOR
UNDERLYING TOTAL OPTIONS OR BASE OPTION TERM(2)
OPTIONS GRANTED TO PRICE PER EXPIRATION ----------------------
NAME GRANTED EMPLOYEES(3) SHARE DATE 5% 10%
- ---- ---------- ------------- --------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
Ferdinand Colloredo-
Mansfeld............... 350,000 17.1% $20.00 2/4/08 $4,402,262 $11,156,197
Robert E. Patterson..... 275,000 13.4 20.00 2/4/08 3,458,920 8,765,584
Franz Colloredo-
Mansfeld............... 250,000 12.2 20.00 2/4/08 3,144,473 7,968,712
Andrew D. Ebbott........ 200,000 9.8 20.00 2/4/08 2,515,579 6,374,971
Howard B. Hodgson, Jr... 200,000 9.8 20.00 2/4/08 2,515,579 6,374,971
Eugene F. Reilly........ 200,000 9.8 20.00 2/4/08 2,515,579 6,374,971
Neil E. Waisnor......... 200,000 9.8 20.00 2/4/08 2,515,579 6,374,971
</TABLE>
- --------
(1) Options granted under the Company's Long Term Incentive Plan upon the
closing of the Company's initial public offering in February 1998. Options
vest in four equal annual installments beginning on the first anniversary
of the date of grant.
(2) Hypothetical gains based on assumed rates of annual compounded share price
appreciation of 5% and 10% from the date of grant over the full option
term. The 5% and 10% assumed rates of appreciation are mandated by the
rules of the Securities and Exchange Commission and do not represent the
Company's estimate or projection of future increases in the price of its
Common Shares or the Units.
(3) Based on an aggregate of options to purchase 2,045,600 Units granted to
employees upon the closing of the Company's initial public offering.
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL
ARRANGEMENTS
Employment Agreements
Messrs. Ferdinand Colloredo-Mansfeld, Robert E. Patterson and Franz
Colloredo-Mansfeld and each of the other Named Executive Officers have entered
into employment agreements with the Company and the Operating Partnership.
Each of the agreements with Messrs. Ferdinand Colloredo-Mansfeld, Robert E.
Patterson and Franz Colloredo-Mansfeld is for an initial term of three years,
which will be automatically extended for successive one-year periods unless
otherwise terminated. The agreements with each of the other Named Executive
Officers are for initial terms of two years, which will be automatically
extended for successive one-year periods unless otherwise terminated. The
agreements each provide for base annual compensation in the amounts set forth
in the Summary Compensation Table above and a cash bonus to be determined by
the Board of Trustees or the Executive Compensation Committee thereof. The
base annual compensation may be increased in subsequent years by action of the
Board of Trustees or the Executive Compensation Committee. Each of the
employment agreements provides for severance payments equal to three times
current base salary, plus the amount of any bonus paid for the preceding year
and certain tax reimbursements, in the event of termination by the Company
without cause or by the employee after a change in control of the Company.
Each executive is required under the terms of his employment agreement to
devote substantially all of his business time to the affairs of the Company.
The agreements also prohibit each executive from engaging, directly or
indirectly, during the term of his employment in activities that compete with
those of the Company or the Operating Partnership.
Long Term Incentive Plan
The Board of Trustees has adopted the Cabot Industrial Trust Long Term
Incentive Plan (the "Long Term Incentive Plan") for the purpose of attracting
and retaining highly qualified executive officers, Trustees and employees. The
Long Term Incentive Plan is administered by the Executive Compensation
Committee of the
9
<PAGE>
Board of Trustees, except that the Board of Directors of the Management
Company or a committee thereof selects those employees of the Management
Company who are eligible for awards under the Long Term Incentive Plan. As
used in this summary, the term "Administrator" means the applicable Board or
committee or its delegate, as appropriate. Officers and other employees of the
Company, the Operating Partnership and designated subsidiaries, including the
Management Company, and members of the Board of Trustees who are not employees
of the Company ("Non-employee Trustees") are eligible to participate in the
Long Term Incentive Plan. Certain awards are made to the Non-employee Trustees
automatically and the applicable Administrator selects other individuals for
participation in the Long Term Incentive Plan ("Participants"). No option or
other incentive award may be granted under the Long Term Incentive Plan after
the tenth anniversary of the date of its adoption.
Options awarded to Participants in the Long Term Incentive Plan who are Non-
employee Trustees or employees of the Company relate to Common Shares. Options
awarded to Participants in the plan who are employees of the Operating
Partnership or the Management Company relate to Units. The Long Term Incentive
Plan authorizes the issuance of up to 4,347,500 Common Shares and Units. The
number of Common Shares and Units available may increase on each January 1 to
an amount equal to 10% of the aggregate number of outstanding Common Shares
and Units on such date. The number of Common Shares or Units underlying awards
made to any one individual in any one-year period may not exceed 500,000
Common Shares or 500,000 Units or any combination thereof. The Long Term
Incentive Plan provides for the grant of (i) Common Share options intended to
qualify as incentive options under Section 422 of the Internal Revenue Code of
1986, as amended (the "Code"), (ii) Common Share options and Unit options not
intended to qualify as incentive options under Section 422 of the Code and
(iii) dividend equivalent rights and distribution equivalent rights which
entitle a Participant to be credited with additional Common Share or Unit
rights.
In connection with the grant of options under the Long Term Incentive Plan
other than options to Non-employee Trustees, the Administrator determines the
terms of the option, including the option exercise price and any vesting
requirements and whether a dividend equivalent right or a distribution
equivalent right shall be awarded in conjunction, respectively, with a Common
Share option or a Unit option. The Administrator has authority to award
options at less than fair market value (as defined in the Long Term Incentive
Plan) but at this time has no intention of doing so. At the time of a Non-
employee Trustee's initial election or appointment as a Trustee, such Trustee
automatically receives an option to purchase 10,000 Common Shares. Thereafter,
at the closing of the annual meeting of the Company's shareholders, each
continuing Non-employee Trustee shall receive an option to purchase an
additional 4,000 Common Shares. Upon the closing of the Company's initial
public offering in February 1998, options for a total of 2,095,600 Common
Shares and Units were granted to employees, officers and Non-employee
Trustees, including the officers named in the Summary Compensation Table
above, with an exercise price equal to the offering price of $20.00. The
initial options granted to officers and employees under the Long Term
Incentive Plan have ten-year terms and become exercisable in four equal annual
installments commencing on the first anniversary of the date of grant, subject
to acceleration of vesting upon a change in control of the Company (as defined
in the Long Term Incentive Plan).
A Common Share option granted under the Long Term Incentive Plan may be
exercised for any number of whole Common Shares up to the full number of
Common Shares for which the option could be exercised. A Unit option may be
exercised for any number of whole Units up to the full number of Units for
which the option could be exercised. A holder of any option has no rights as
an owner with respect to the Common Shares or Units, as applicable, subject to
his or her option until the option is exercised. To the extent an option has
not become exercisable at the time of the holder's termination of employment,
it will be forfeited unless the Administrator has previously exercised its
reasonable discretion to make such option exercisable, and all vested options
which are not exercised by the expiration date described in the Long Term
Incentive Plan will be forfeited. Any Common Shares or Units subject to an
option which is forfeited (or which expires without exercise) will again be
available for grant under the Long Term Incentive Plan. Payment of the
exercise price of an option granted under the Long Term Incentive Plan may be
made in cash or by exchanging Common Shares, in the case of Common Share
options, or Units, in the case of Unit options, that have, in either case,
been held by the Participant for at least six months, or in any combination
thereof, as determined by the Administrator.
10
<PAGE>
Savings Plan
The Company has assumed, and the Operating Partnership and certain
subsidiaries, including the Management Company (each a "Participating
Employer"), have adopted, the Cabot Partners Employee Savings Plan (the
"401(k) Plan"). Prior service with Cabot Partners will be credited in full as
service with the Company or a Participating Employer for all purposes under
the 401(k) Plan, including eligibility and vesting.
The 401(k) Plan permits each participating employee to defer up to 15% of
compensation, subject to the annual statutory limitation prescribed by Section
402(g) of the Code, on a pre-tax basis. The Company and the Participating
Employers make matching contributions equal to 100% of the amount deferred, up
to the lesser of 6% of compensation or $1,800. The Company and the
Participating Employers may also make annual contributions if the Company
achieves certain performance objectives determined on an annual basis by the
Executive Compensation Committee. Matching and discretionary contributions are
made in cash or Common Shares.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
FORMATION TRANSACTIONS
In connection with the formation of the Company and the Operating
Partnership in October 1997, certain Trustees and executive officers, members
of their family and certain other persons (collectively, the "Cabot Group
Participants") received a total of 1,705,506 Units in exchange for their
interests in C-M Holdings L.P. and its affiliated partnerships ("C-M Property
Partnerships") and/or Cabot Partners, respectively. These Units (representing
approximately 3.9% of the common equity of the Company on a fully diluted
basis) had a total value of approximately $34.1 million, based on the initial
public offering price of the Company's Common Shares of $20.00 per share (the
"Offering Price"). The Cabot Group Participants' partnership interests for the
C-M Property Partnerships and Cabot Partners had an aggregate net book value
of $5.1 million as of September 30, 1997. The aggregate cost to the Cabot
Group Participants for these partnership interests was $8.8 million, resulting
in an unrealized gain of approximately $25.3 million. The C-M Property
Partnerships are owned by Ferdinand Colloredo-Mansfeld, the Company's Chairman
and Chief Executive Officer, and members of his immediate family, including
Franz Colloredo-Mansfeld, the Company's Chief Financial Officer, with
Ferdinand Colloredo-Mansfeld owning a 97% partnership interest therein and
Franz Colloredo-Mansfeld and other family members holding 1% and 2%
partnership interests therein, respectively. Of the total number of Units
received by the Cabot Group Participants in connection with the formation of
the Company and the Operating Partnership, (i) Ferdinand Colloredo-Mansfeld
received 1,331,657 Units having a value, based on the Offering Price, of
approximately $26.6 million in exchange for his partnership interests in the
C-M Property Partnerships and Cabot Partners, which had an aggregate cost of
approximately $4.7 million and $3.9 million, respectively, (ii) Robert E.
Patterson, President of the Company, received 128,590 Units having a value, on
such basis, of approximately $2.6 million in exchange for his partnership
interests in Cabot Partners, which had an aggregate cost of $59,000, and (iii)
the other executive officers of the Company received 165,904 Units having a
value, on such basis, of approximately $3.3 million in exchange for
partnership interests in the C-M Property Partnerships and Cabot Partners,
which had an aggregate cost of $62,000. In addition, the Company reimbursed or
will reimburse Cabot Partners for approximately $1.2 million of out-of-pocket
expenses incurred by Cabot Partners in connection with the formation of the
Company pursuant to the terms of the Contribution Agreement, dated October 10,
1997, entered into in connection with the formation of the Company.
In addition, the Contributing Investors (as defined below) received a total
of 22,598,735 Units and 8,961,714 Common Shares in exchange for their
interests in the properties that were contributed to the Company and/or the
Operating Partnership in connection with their formation. These Units and
Common Shares (representing approximately 72.6% of the common equity of the
Company on a fully diluted basis) had a total value of approximately $631.2
million based on the Offering Price, compared to the aggregate cost of such
properties of approximately $655.9 million. The Contributing Investors include
CP Investment Properties, Inc. (the title holding entity of IBM Retirement
Plan Trust), nine title holding entities of New York Teachers' Retirement
System, State of Wisconsin Investment Board, CP REPROP Corp. (the title
holding entity of the
11
<PAGE>
Leland Stanford Jr. Endowment Fund), West Coast Industrial, L.L.C. (the title
holding entity of Argo Partnership II, L.P.), Keystone-New Jersey Property
Holding Corp., Keystone-Ohio Property Holding Corp. and Keystone-Illinois
Property Holding Corp. (the title holding entities of Pennsylvania Public
School Employes' Retirement System), Herrod Associates and The Prudential
Insurance Company of America.
The Units received by the Cabot Group Participants and the Contributing
Investors in connection with the formation of the Company and the Operating
Partnership may, in accordance with the Operating Partnership Agreement, be
exchanged in whole or in part for Common Shares on a one-for-one basis or, at
the election of the Company, the cash equivalent thereof, at any time
commencing February 4, 1999 in the case of the Contributing Investors or
February 4, 2000 in the case of the Cabot Group Participants. The Company
currently expects that it will not elect to pay cash for Units in connection
with any such exchange request, but instead will issue Common Shares in
exchange for such Units. The receipt and retention of the Units in exchange
for contributed assets may provide the Cabot Group Participants and certain of
the Contributing Investors with continued deferral of the taxable gain
associated with dispositions of those assets.
In connection with the formation of the Management Company in December 1997,
Cabot Partners contributed to the Management Company certain advisory
contracts and other assets relating to properties that were not contributed to
the Company or the Operating Partnership. The Operating Partnership owns all
of the non-voting preferred stock of the Management Company, is entitled to
receive quarterly cash dividends equal to 95% of the Management Company's net
operating cash flow and is senior in liquidation or dissolution to the extent
of the liquidation preference of the preferred stock to the Management
Company's common equity. Ferdinand Colloredo-Mansfeld acquired all of the
voting common stock of the Management Company for a cash purchase price of
$100,000 and is entitled to receive quarterly cash dividends equal to 5% of
the Management Company's net operating cash flow.
REPAYMENT OF DEBT
Approximately $18.3 million of indebtedness secured by the properties
contributed by the C-M Property Partnerships was assumed by the Operating
Partnership, and approximately $13.1 million of such indebtedness was repaid
from the proceeds of the Company's initial public offering.
INDEMNIFICATION
The Company has entered into indemnification agreements with each of its
executive officers and Trustees that require that the Company indemnify such
persons to the fullest extent permitted by Maryland law and reimburse them for
legal and related expenses as incurred in connection with litigation to which
they may become subject as a result of their positions with the Company,
subject to an obligation to reimburse the Company if it is ultimately
determined that indemnification is not permitted in the circumstances.
Although the indemnification agreements provide substantially the same scope
of indemnification as that to which the Company's officers and Trustees are
entitled under the Company's Bylaws and applicable Maryland law, such
agreements may provide greater assurance to Trustees and executive officers
that indemnification will be available because, as contracts, they cannot be
modified unilaterally in the future by the Board of Trustees or the
shareholders to eliminate the rights they provide.
PRIVATE PLACEMENT
Concurrently with the Company's initial public offering, the Company sold
$20 million of Common Shares at the Offering Price in a private offering to
the following investors, for whom Morgan Stanley Asset Management Inc. acted
as advisor: Stichting Bedrijspensioenfonds Voor De Metaalnijhverheid,
Stichting Pensioenfonds ABP, MS Real Estate Special Situations Inc., The
Morgan Stanley Real Estate Special Situations Funds I, L.P., The Morgan
Stanley Real Estate Special Situations Fund II, L.P. and Morgan Stanley Real
Estate Special Situations Real Estate Investors, L.P. Under the agreements
relating to the sale of such shares, the Company has agreed to file a
registration statement with the Securities and Exchange Commission 180 days
after
12
<PAGE>
the closing of the Company's initial public offering for the purpose of
registering resales, subject to certain exceptions, of such Common Shares and
to reimburse such parties for up to $25,000 in related legal expenses.
PROPOSAL 2. RATIFICATION OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board has appointed the firm of Arthur Andersen LLP as the Company's
independent public accountants for 1998. A proposal to ratify this appointment
will be presented at the Annual Meeting. The affirmative vote of a majority of
the votes cast at the Annual Meeting will be necessary to adopt this proposal.
Even if the selection is ratified, the Board may, in its discretion, direct
the appointment of a different independent accounting firm at any time if the
Board determines that such a change would be in the best interests of the
Company and its shareholders.
Each valid proxy returned to the Company will be voted for the ratification
of the appointment of Arthur Andersen LLP as the Company's independent public
accountants for 1998 unless the proxy specifies otherwise. The Company expects
that representatives of Arthur Andersen LLP will attend the Annual Meeting,
will have the opportunity to make a statement and will be available to respond
to questions from shareholders.
The Board of Trustees recommends a vote FOR the ratification of Arthur
Andersen LLP as the Company's independent public accountants.
OTHER MATTERS
The Board of Trustees is not aware of any matters to be presented at the
Annual Meeting other than those listed in the notice of the meeting. If any
other matters do come before the Annual Meeting, it is intended that the
holders of proxies solicited by the Board of Trustees will vote on such other
matters in their discretion in accordance with their best judgment.
SHAREHOLDER PROPOSALS
In the event any shareholder intends to present a proposal at the annual
meeting of shareholders to be held in 1999, such proposal must be received by
the Secretary of the Company, in writing, on or before January 12, 1999 to be
considered for inclusion in the Company's proxy materials relating to that
meeting. Shareholder proposals also must comply with the advance notice and
other requirements set forth in the Company's Bylaws.
By Order of the Board of Trustees,
/s/ Neil E. Waisnor
Neil E. Waisnor
Senior Vice President--Finance,
Treasurer and Secretary
Boston, Massachusetts
May 12, 1998
13
<PAGE>
1719-PS-98
<PAGE>
DETACH HERE
PROXY
CABOT INDUSTRIAL TRUST
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES
The undersigned hereby appoints Ferdinand Colloredo-Mansfeld, Robert E
Patterson, Franz Colloredo-Mansfeld and Neil E. Waisnor, jointly and
individually, as proxies, each with full power of substitution, and hereby
authorizes them to represent and to vote, as directed below, all common shares
of beneficial interest, par value $0.01 per share, of Cabot Industrial Trust, a
Maryland real estate investment trust (the "Company"), that the undersigned
would be entitled to vote if personally present at the Annual Meeting of
Shareholders of the Company to be held on Thursday, June 11, 1998, or any
adjournments thereof, as follows on the reverse side.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
SEE REVERSE SIDE SEE REVERSE SIDE
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S>
DETACH HERE
<C>
[X] Please mark
votes as in this example
For Against Abstain
1. Election of Trustees 2. Proposal to ratify Arthur Andersen [ ] [ ] [ ]
Nominees: Noah T. Herndon and Maurice Segall LLP as the Company's independent
public accountants for the 1998
[ ]FOR [ ]WITHHELD fiscal year.
BOTH FROM BOTH
NOMINEES NOMINEES 3. In accordance with their discretion upon such other matters
as may properly come before the meeting and any
[ ]--------------------------------------- adjournments thereof.
For all nominees except as noted above.
</TABLE>
WHEN PROPERLY EXECUTED, THIS PROXY WILL BE VOTED IN
THE MANNER DIRECTED BY THE UNDERSIGNED SHAREHOLDER.
IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR
THE PROPOSALS SET FORTH HEREIN.
(Please sign exactly as name appears on share certificate.
When shares are registered jointly, all owners must sign.
Corporate owners should sign full corporate name by an
authorized person. Executors, administrators, trustees or
guardians should indicate their status when signing.)
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY
USING THE ENCLOSED ENVELOPE.
Signature:----------------Date:------ Signature:----------------Date:------
