<PAGE>   1
                                                                      EXHIBIT 99

                       FIRST INDUSTRIAL REALTY TRUST, INC.
                             311 South Wacker Drive
                                   Suite 4000
                             Chicago, Illinois 60606

                                ----------------

                    NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

                                ----------------

                           TO BE HELD ON MAY 12, 1999


         NOTICE IS HEREBY GIVEN that the 1999 Annual Meeting of Stockholders
(the "Annual Meeting") of First Industrial Realty Trust, Inc. (the "Company")
will be held on Wednesday, May 12, 1999 at 9:00 a.m. at the Sears Tower
Conference Center, Lincoln Room, 233 South Wacker Drive, 33rd Floor, Chicago,
Illinois 60606 for the following purposes:

         1. To elect three Class II directors of the Company to serve until the
2002 Annual Meeting of Stockholders and until their respective successors are
duly elected and qualified;

         2. To ratify the Board of Directors' selection of
PricewaterhouseCoopers LLP as the Company's independent auditors for the fiscal
year ending December 31, 1999; and

         3. To consider and act upon any other matters that may properly be
brought before the Annual Meeting and at any adjournments or postponements
thereof.

         Any action may be taken on the foregoing matters at the Annual Meeting
on the date specified above, or on any date or dates to which, by original or
later adjournment, the Annual Meeting may be adjourned, or to which the Annual
Meeting may be postponed.

         The Board of Directors has fixed the close of business on March 12,
1999 as the record date for the Annual Meeting. Only stockholders of record of
the Company's common stock, $.01 par value per share, at the close of business
on that date will be entitled to notice of and to vote at the Annual Meeting and
at any adjournments or postponements thereof.

         You are requested to fill in and sign the enclosed Proxy Card, which is
being solicited by the Board of Directors, and to mail it promptly in the
enclosed postage-prepaid envelope. Any proxy may be revoked by delivery of a
later dated proxy. Stockholders of record who attend the Annual Meeting may vote
in person, even if they have previously delivered a signed proxy.

                                      By Order of the Board of Directors

Chicago, Illinois                     Michael J. Havala
April ___, 1999                       Secretary

         WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE COMPLETE, SIGN,
DATE AND PROMPTLY RETURN THE ENCLOSED PROXY CARD IN THE POSTAGE-PREPAID ENVELOPE
PROVIDED. IF YOU ATTEND THE ANNUAL MEETING, YOU MAY VOTE IN PERSON IF YOU WISH,
EVEN IF YOU HAVE PREVIOUSLY RETURNED YOUR PROXY CARD.


<PAGE>   2





                       FIRST INDUSTRIAL REALTY TRUST, INC.
                             311 South Wacker Drive
                                   Suite 4000
                             Chicago, Illinois 60606
                                ----------------

                                 PROXY STATEMENT

                                ----------------

                   FOR THE 1999 ANNUAL MEETING OF STOCKHOLDERS

                           TO BE HELD ON MAY 12, 1999

         This Proxy Statement is furnished in connection with the solicitation
of proxies by the Board of Directors of First Industrial Realty Trust, Inc. (the
"Company") for use at the 1999 Annual Meeting of Stockholders of the Company to
be held on Wednesday, May 12, 1999, and at any adjournments or postponements
thereof (the "Annual Meeting"). At the Annual Meeting, stockholders will be
asked to vote on the election of three Class II directors of the Company, to
ratify the Board of Directors' selection of PricewaterhouseCoopers LLP as the
Company's independent auditors for the current fiscal year and to act on any
other matters properly brought before them.

         This Proxy Statement and the accompanying Notice of Annual Meeting and
Proxy Card are first being sent to stockholders on or about April ___, 1999. The
Board of Directors has fixed the close of business on March 12, 1999 as the
record date for the Annual Meeting (the "Record Date"). Only stockholders of
record of the Company's common stock, par value $.01 per share (the "Common
Stock"), at the close of business on the Record Date will be entitled to notice
of and to vote at the Annual Meeting. As of the Record Date, there were
38,019,898 shares of Common Stock outstanding and entitled to vote at the Annual
Meeting. Holders of Common Stock outstanding as of the close of business on the
Record Date will be entitled to one vote for each share held by them on each
matter presented to the Stockholders at the Annual Meeting.

         STOCKHOLDERS OF THE COMPANY ARE REQUESTED TO COMPLETE, SIGN, DATE AND
PROMPTLY RETURN THE ACCOMPANYING PROXY CARD IN THE ENCLOSED POSTAGE-PREPAID
ENVELOPE. SHARES REPRESENTED BY A PROPERLY EXECUTED PROXY CARD RECEIVED PRIOR TO
THE VOTE AT THE ANNUAL MEETING AND NOT REVOKED WILL BE VOTED AT THE ANNUAL
MEETING AS DIRECTED ON THE PROXY CARD. IF A PROPERLY EXECUTED PROXY CARD IS
SUBMITTED AND NO INSTRUCTIONS ARE GIVEN, THE PERSONS DESIGNATED AS PROXY HOLDERS
ON THE PROXY CARD WILL VOTE (I) FOR THE ELECTION OF THE THREE NOMINEES FOR CLASS
II DIRECTORS OF THE COMPANY NAMED IN THIS PROXY STATEMENT, (II) FOR THE
RATIFICATION OF THE BOARD OF DIRECTORS' SELECTION OF PRICEWATERHOUSECOOPERS LLP
AS THE COMPANY'S INDEPENDENT AUDITORS FOR THE CURRENT FISCAL YEAR AND (III) IN
THEIR OWN DISCRETION WITH RESPECT TO ANY OTHER BUSINESS THAT MAY PROPERLY COME
BEFORE THE STOCKHOLDERS AT THE ANNUAL MEETING OR AT ANY ADJOURNMENTS OR
POSTPONEMENTS THEREOF. IT IS NOT ANTICIPATED THAT ANY MATTERS OTHER THAN THOSE
SET FORTH IN THE PROXY STATEMENT WILL BE PRESENTED AT THE ANNUAL MEETING.

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         The presence, in person or by proxy, of holders of at least a majority
of the total number of outstanding shares of Common Stock entitled to vote is
necessary to constitute a quorum for the transaction of business at the Annual
Meeting. The affirmative vote of the holders of a majority of the votes cast
with a quorum present at the Annual Meeting is required for the election of
Class II directors and the ratification of the selection of the Company's
auditors. Abstentions and broker non-votes will not be counted as votes cast
and, accordingly, will have no effect on the majority vote required, although
they will be counted for quorum purposes.

         A stockholder of record may revoke a proxy at any time before it has
been exercised by filing a written revocation with the Secretary of the Company
at the address of the Company set forth above, by filing a duly executed proxy
bearing a later date, or by appearing in person and voting by ballot at the
Annual Meeting. Any stockholder of record as of the Record Date attending the
Annual Meeting may vote in person whether or not a proxy has been previously
given, but the presence (without further action) of a stockholder at the Annual
Meeting will not constitute revocation of a previously given proxy.

         The Company's 1998 Annual Report, including financial statements for
the fiscal year ended December 31, 1998, is being mailed to stockholders
concurrently with this Proxy Statement. The Annual Report, however, is not part
of the proxy solicitation material.

                                   PROPOSAL I

                        ELECTION OF A CLASS OF DIRECTORS

         Pursuant to the Articles of Amendment and Restatement of the Company,
as amended (the "Articles"), the maximum number of members allowed to serve on
the Company's Board of Directors is 12. The Board of Directors of the Company
currently consists of nine seats and is divided into three classes, with the
directors in each class serving for a term of three years and until their
successors are duly elected and qualified. The term of one class expires at each
Annual Meeting of Stockholders. Eight persons currently serve as directors of
the Company.

         At the Annual Meeting, three directors will be elected to serve until
the 2002 annual meeting of stockholders and until their successors are duly
elected and qualified. The Board of Directors has nominated Michael W. Brennan,
Michael G. Damone and Kevin W. Lynch to serve as Class II directors (the
"Nominees"). Each of the Nominees is currently serving as a Class II director of
the Company and has consented to be named as a nominee in this Proxy Statement.
The Board of Directors anticipates that each of the Nominees will serve as a
director if elected. However, if any person nominated by the Board of Directors
is unable to accept election, the proxies will vote for the election of such
other person or persons as the Board of Directors may recommend.

         THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE NOMINEES.


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<PAGE>   4

INFORMATION REGARDING NOMINEES AND DIRECTORS

         The following biographical descriptions set forth certain information
with respect to the three Nominees for election as Class II directors at the
Annual Meeting, the continuing directors whose terms expire at the Annual
Meetings of Stockholders in 2000 and 2001 and certain executive officers, based
on information furnished to the Company by such persons. The following
information is as of March 12, 1999, unless otherwise specified.

 CLASS II NOMINEES FOR ELECTION AT 1999 ANNUAL MEETING - TERM TO EXPIRE IN 2002

MICHAEL W. BRENNAN                                           Director since 1996

         Mr. Brennan, 42, has been a director since March 1996. He has been
         President and Chief Executive Officer of the Company since November
         1998, prior to which time he served as Chief Operating Officer of the
         Company from December 1995 to November 1998 and as Senior Vice
         President--Asset Management of the Company from April 1994 to December
         1995. He was a partner of The Shidler Group between 1988 and 1994 and
         the President of the Brennan/Tomasz/Shidler Investment Corporation and
         was in charge of asset management, leasing, project finance, accounting
         and treasury functions for The Shidler Group's Chicago operations.
         Between 1986 and 1988, Mr. Brennan served as The Shidler Group's
         principal acquisition executive in Chicago. Prior to joining The
         Shidler Group, Mr. Brennan was an investment specialist with CB
         Commercial (now CB Richard Ellis, Inc.). His professional affiliations
         include the Urban Land Institute ("ULI"), the National Association of
         Industrial and Office Properties ("NAIOP"), the National Association of
         Real Estate Investment Trusts ("NAREIT"), National Association of
         Manufacturers, the Council for Logistic Management, the Chicago Union
         League Club Real Estate Group and the Young Presidents Organization.

MICHAEL G. DAMONE                                            Director since 1994

         Mr. Damone, 64, is Director of Strategic Planning for the Company and
         has been a director of the Company since June 1994. Between 1973 and
         1994, Mr. Damone was Chief Executive Officer of Damone/Andrew, a full
         service real estate organization, which developed several million
         square feet of industrial, warehouse, distribution and research and
         development buildings. Prior to co-founding Damone/Andrew in 1973, Mr.
         Damone was the executive vice president of a privately-held, Michigan
         based real estate development and construction company, where he was
         responsible for the development of industrial/business parks. His
         professional affiliations include the Society of Industrial and Office
         Realtors ("SIOR"), the National Association of Realtors ("NAR"), the
         Michigan Association of Realtors and the South Oakland County Board of
         Realtors.

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<PAGE>   5

KEVIN W. LYNCH                                               Director since 1994

         Mr. Lynch, 46, has been a director of the Company since June 1994. Mr.
         Lynch is the co-founder and Principal of The Townsend Group
         ("Townsend"), an institutional real estate consulting firm, which
         provides real estate consulting for pension funds and institutional
         investors. In his capacity as Principal, Mr. Lynch is responsible for
         strategic development and implementation of client real estate
         portfolios. Mr. Lynch is also responsible for new product development.
         Prior to founding Townsend, Mr. Lynch was associated with Stonehenge
         Capital Corporation, where he was involved in the acquisition of
         institutional real estate properties and the structuring of
         institutional real estate transactions. Since 1996, Mr. Lynch has
         served on the Board of Directors for Lexington Corporate Properties. He
         is a member of the National Real Estate Advisory Board for the Real
         Estate Center at New York University, the National Council of Real
         Estate Investment Fiduciaries, the Pension Real Estate Association, the
         American Society for Real Estate Research, ULI and NAREIT.

             CLASS III CONTINUING DIRECTORS - TERM TO EXPIRE IN 2000

JOHN RAU                                                     Director since 1994

         Mr. Rau, 50, has been a director of the Company since June 1994. Mr.
         Rau is President and Chief Executive Officer of Chicago Title
         Corporation, a New York Stock Exchange listed company, and its
         subsidiaries Chicago Title and Trust Co., Chicago Title Insurance Co.,
         Ticor Title Insurance Co. and Security Union Title Insurance Co. Mr.
         Rau is a director of Chicago Title Corporation, Chicago Title and Trust
         Co. and Chicago Title Insurance Co., as well as Chairman of the Board
         of Directors of Ticor Title Insurance Co. and Security Union Title
         Insurance Co. He is also a director of LaSalle National Bank,
         Borg-Warner Automotive, Inc. and Nicor Inc. From July 1993 until
         November 1996, Mr. Rau was Dean of the Indiana University School of
         Business. From 1991 to 1993, Mr. Rau served as Chairman of the Illinois
         Economic Development Board and as special advisor to Illinois Governor
         James Edgar. From 1990 to 1993, he was Chairman of the Banking Research
         Center Board of Advisors and a Visiting Scholar at Northwestern
         University's J.L. Kellogg Graduate School of Management. During that
         time he also served as Special Consultant to McKinsey & Company, a
         worldwide strategic consulting firm. From 1989 to 1991, Mr. Rau served
         as President and Chief Executive Officer of LaSalle National Bank. From
         1979 to 1989, he was associated with The Exchange National Bank,
         serving as President from 1983 to 1989, at which time The Exchange
         National Bank merged with LaSalle National Bank. Prior to 1979, he was
         associated with First National Bank of Chicago.

ROBERT J. SLATER                                             Director since 1994

         Mr. Slater, 61, has been a director of the Company since June 1994.
         Since 1985, Mr. Slater has been President of Jackson Consulting, Inc.,
         a private consulting company specializing in advising basic
         manufacturing and the distribution industries. Mr. Slater is also a
         director of Southdown, Inc., a 

                                       4
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         major cement and cement products manufacturing company, based in
         Houston, Texas. He has retired as President of Crane Co., a
         multinational manufacturing company.

              CLASS I CONTINUING DIRECTORS - TERM TO EXPIRE IN 2001

JAY H. SHIDLER                                               Director since 1993

         Mr. Shidler, 52, has been Chairman of the Board of Directors since the
         formation of the Company in August 1993. He is the founder and managing
         partner of The Shidler Group. A nationally acknowledged expert in the
         field of real estate investment and finance, Mr. Shidler has over 30
         years of experience in real estate investment and has acquired and
         managed properties involving several billion dollars in aggregate
         value. Since 1970, Mr. Shidler has been directly involved in the
         acquisition and management of over 1,000 properties in 40 states and
         Canada. Mr. Shidler is the Chairman of the Board of Directors of
         Corporate Office Properties Trust, Inc. (OFC: NYSE). Mr. Shidler is
         also a founder and Chairman of the Board of Directors of CGA Group,
         Ltd., a holding company whose subsidiary is a AAA-rated financial
         guarantor based in Bermuda. He serves on the boards of directors of
         several private companies and is active as a trustee of several
         charitable organizations, including The Shidler Family Foundation. Mr.
         Shidler is a member of ULI and NAREIT.

JOHN L. LESHER                                               Director since 1994

         Mr. Lesher, 65, has been a director of the Company since June 1994. Mr.
         Lesher is President of Jack Lesher and Associates, a management
         consulting firm. He was President of Resource Evaluation, Inc., a
         consulting firm specializing in working capital management, from 1994
         to July 1997, at which time he became the Chairman. He is a director of
         REL Consultancy Group, the parent of Resource Evaluation, Inc., and a
         director of The Sound Shore Fund. From 1990 to 1993, he was a Managing
         Director of Korn/Ferry International, an executive recruiting
         organization. From 1985 to 1989, he was Vice President of the New York
         financial services practice of Cresap, McCormick & Paget, a management
         consulting organization; President of Home Group Financial Services, a
         subsidiary of Home Insurance Company; and President of Mars & Company,
         an international strategic planning and consulting firm. Prior to 1985,
         he served for 24 years in various capacities at Booz, Allen & Hamilton,
         including from 1976 to 1985 as its President.

J. STEVEN WILSON                                             Director since 1994

         Mr. Wilson, 55, has been a director of the Company since June 1994.
         Since 1991, Mr. Wilson has been Chairman of the Board of Directors,
         President and Chief Executive Officer and a director of Wickes Inc.,
         which is one of the largest lumber yard chains in the United States.
         Since 1985, Mr. Wilson has been President, Chief Executive Officer and
         a director of Riverside Group, Inc., an Internet development company
         with e-commerce operations.

                                       5
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EXECUTIVE OFFICERS AND OTHER SENIOR MANAGEMENT

MICHAEL J. HAVALA

         Mr. Havala, 39, has been Chief Financial Officer, Treasurer and
         Secretary of the Company since April 1994. He joined The Shidler Group
         in 1989, and was Chief Financial Officer for The Shidler Group's
         midwest region with responsibility for accounting, finance and treasury
         functions. With The Shidler Group, Mr. Havala structured joint
         ventures, obtained and refinanced project financing, developed and
         implemented management information systems and directed all financial
         aspects of a several million square foot portfolio located in various
         states throughout the Midwest. Prior to joining The Shidler Group, Mr.
         Havala was a Senior Tax Consultant with Arthur Andersen & Company,
         where he specialized in real estate, banking and corporate finance. Mr.
         Havala is a certified public accountant. His professional affiliations
         include NAREIT and the Illinois CPA Society.

GARY H. HEIGL

         Mr. Heigl, 43, has been the Chief Operating Officer of the Company
         since December 1998, prior to which time he served as Senior Vice
         President--Capital Markets of the Company from January 1996 to December
         1998. Over the last 20 years, Mr. Heigl has specialized in commercial
         real estate finance. During 1994 and 1995, Mr. Heigl was Senior Vice
         President--Director of New Business Development for ITT Real Estate
         Services, Inc. From 1991 through 1993, he operated his own real estate
         consulting firm. From 1984 through 1990, Mr. Heigl served in various
         project finance capacities at VMS Realty Partners culminating as Senior
         Vice President--Finance and Dispositions. Prior to 1984, he served in
         lending officer positions for the commercial real estate groups of ITT
         Financial and Aid Association for Lutherans. Mr. Heigl's professional
         affiliations include ULI and NAREIT.

JOHANNSON L. YAP

         Mr. Yap, 36, has been the Chief Investment Officer of the Company since
         February 1997. From April 1994 to February 1997, he served as Senior
         Vice President--Acquisitions of the Company. During this time, he
         oversaw and implemented the Company's investment strategy and
         initiatives. In addition to participating in over one billion dollars
         of investments, Mr. Yap has extensive experience in entity acquisitions
         using the UPREIT structure. Prior to joining the Company, Mr. Yap
         joined The Shidler Group in 1988 as an acquisitions associate, and
         became Vice President in 1991, with responsibility for acquisitions,
         property management, leasing, project financing, sales and construction
         management functions. Between 1988 and 1994, he participated in the
         acquisition, underwriting and due diligence of several hundred million
         dollars of commercial properties. His 

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         professional affiliations include the Chicago Real Estate Council, ULI,
         NAREIT, NAIOP and the Real Estate Investment Advisory Council.

ANTHONY MUSCATELLO

         Mr. Muscatello, 50, has been the senior officer of the Company in
         charge of development activities, as President of FI Development
         Services Corporation, since September 1996, prior to which he had
         served as a Senior Regional Director for Pennsylvania, Nashville and
         Atlanta since June 1994. Over the last 25 years, he has been
         responsible for the leasing, management and/or development of several
         million square feet of office, industrial and residential real estate.
         From 1987 to 1994, he served as Managing General Partner of the central
         Pennsylvania operations of Rouse & Associates, where he was responsible
         for day-to-day operations, including profit and loss, marketing,
         leasing, acquisition, financing, construction and asset management
         functions. From 1982 to 1987, he served in various capacities with
         Rouse & Associates. From 1969 to 1982, Mr. Muscatello worked for
         several real estate development firms, where his responsibilities
         included land acquisition, market analysis and marketing, sales,
         financing and construction of single family and multi-family homes. He
         is an active member in NAIOP and the Industrial Real Estate Brokers of
         Metropolitan New York.

DAVID P. DRAFT

         Mr. Draft, 47, has been Managing Director of the Company's midwest
         region since December 1998, prior to which time he served as a Senior
         Regional Director of the Company for the Michigan and Northern Ohio
         regions from March 1996 to December 1998. He oversees acquisitions,
         developments, construction, asset management and lease negotiations for
         the several million square foot regional portfolio. He has 24 years
         experience in real estate brokerage, sales, leasing and asset
         management. Between 1994 and March 1996, Mr. Draft was Co-Founder and
         Principal of Draft & Gantos Properties, L.L.C., where he was
         responsible for real estate management, construction and development.
         From 1990 to 1994, Mr. Draft was Director of Development and Operations
         for Robert Grooters Development Company where he was responsible for
         land acquisitions, development project planning, financing and
         construction of industrial property. From 1977 to 1990, he was with
         First Real Estate, Inc. serving in the capacity of chief operating
         officer. Mr. Draft is a licensed real estate broker and a member of NAR
         and the Michigan Association of Realtors.

PETER F. MURPHY

         Mr. Murphy, 33, has been Managing Director of the Company's eastern
         region since December 1998, prior to which time he had served as a
         Senior Regional Director of the Company for Indiana and Ohio since
         March 1996. Between 1991 and March 1996, Mr. Murphy was a Vice
         President of First Highland Management and Development Corporation
         where he was responsible for the acquisition, development, management
         and leasing activities for a portfolio of properties consisting of
         several million square feet in Indiana and Ohio. Mr. Murphy is a member
         of NAIOP.

                                       7
<PAGE>   9

TIMOTHY E. GUDIM

         Mr. Gudim, 39, has been Managing Director of the Company's western and
         Gulf regions since December 1998, prior to which time he served as a
         Senior Regional Director of the Company's western region from June 1998
         to December 1998 and as a Regional Director for Colorado from November
         1997 to June 1998. He oversees acquisitions, development,
         build-to-suits, asset management and lease negotiations for the several
         million square foot regional portfolio. Mr. Gudim has 17 years
         experience in the industrial real estate field. Between 1991 and
         October 1997, he was Vice President and a Principal of Pacifica Holding
         Company, a full service real estate company operating in Denver. Mr.
         Gudim's professional affiliations include NAIOP, SIOR and the
         Association of Industrial Realtors.

THE BOARD OF DIRECTORS AND ITS COMMITTEES

         The Company is currently managed by an eight member Board of Directors,
a majority of whom are independent of both The Shidler Group and the Company's
management. The current independent directors are Messrs. Lesher, Wilson, Lynch,
Rau and Slater. Pursuant to the terms of the Company's Articles, the directors
are divided into three classes. Class II directors hold office for a term
expiring at this Annual Meeting. Class III directors hold office for a term
expiring at the Annual Meeting of Stockholders to be held in 2000. Class I
directors hold office for a term expiring at the Annual Meeting of Stockholders
to be held in 2001. Each director will hold office for the term to which he is
elected and until his successor is duly elected and qualified. At each Annual
Meeting of Stockholders, the successors to the class of directors whose terms
expire at that meeting will be elected to hold office for a term continuing
until the Annual Meeting of Stockholders held in the third year following the
year of their election and the election and qualification of their successors.

         The Board of Directors held eight meetings during the fiscal year of
1998. Except for Messrs. Rau and Lynch, each of the directors attended at least
75% of the total number of meetings of the Board of Directors and of the
respective committees of the Board of Directors of which he was a member.

         The Board of Directors has appointed an Audit Committee, a Compensation
Committee, an Investment Committee, a Nominating Committee and a Special
Committee.

         Audit Committee. The Audit Committee, which consists of Messrs. Rau,
Lynch and Wilson, 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
met two times in 1998.

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<PAGE>   10

         Compensation Committee. The Compensation Committee, which consists of
Messrs. Slater and Lesher, makes recommendations and exercises all powers of the
Board of Directors in connection with certain compensation matters, including
incentive compensation and benefit plans. The Compensation Committee
administers, and has authority to grant awards under, the First Industrial
Realty Trust, Inc. 1994 Stock Incentive Plan (the "1994 Stock Plan"), the First
Industrial Realty Trust, Inc. 1997 Stock Incentive Plan (the "1997 Stock Plan")
and the First Industrial Realty Trust, Inc. Deferred Income Plan (the "Deferred
Income Plan"). The Compensation Committee met five times in 1998.

         Investment Committee. The Investment Committee, which consists of
Messrs. Shidler, Brennan and Damone, provides oversight and discipline to the
acquisition and new investment process. New investment opportunities are
described in written reports based on detailed research and analyses in a
standardized format applying appropriate underwriting criteria. The Investment
Committee meets with the Company's acquisition personnel, reviews each
submission thoroughly and approves acquisitions and development projects having
a total investment of less than $30 million. The Investment Committee makes a
formal recommendation to the Board of Directors for all acquisitions and
development projects with a total investment in excess of $30 million. The
Investment Committee met 37 times during 1998.

         Nominating Committee. The Nominating Committee proposes individuals for
election as directors at the Annual Meeting of Stockholders of the Company and
in connection with any vacancy that may develop on the Board of Directors. The
Board of Directors, in turn, as a whole by a majority vote either approves all
of the nominations so proposed by the Nominating Committee or rejects all of the
nominations in whole, but not in part. In the event that the Board of Directors
as a whole by a majority vote rejects the proposed nominations, the Nominating
Committee develops a new proposal. The Nominating Committee will consider
nominees recommended by stockholders of the Company. Such recommendations shall
be submitted in writing to the Secretary of the Company. The membership of the
Nominating Committee consists of a total of four directors which includes (i)
the Chairman of the Board of the Company, (ii) the President of the Company, and
(iii) two other directors selected by the entire Board of Directors of the
Company from among those directors who are not officers of the Company and whose
term is not expiring in the calendar year that the Nominating Committee is
making its proposal. The Nominating Committee that made the proposals approved
by the Board of Directors and set forth in this Proxy Statement consisted of
Messrs. Shidler, Brennan, Rau and Slater. The Nominating Committee met once in
March 1999 to determine its nominations for this Proxy Statement.

         Special Committee. The Special Committee consists of Messrs. Shidler,
Brennan and Rau. The Special Committee is authorized, within limits specified by
the Board of Directors, to approve the terms under which the Company issues
common stock, preferred stock or depository shares representing fractional
interests in preferred stock, or which the Company or any of the Company's
subsidiaries, including First Industrial, L.P., issues debt. The Special
Committee met five times during 1998.

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<PAGE>   11

DIRECTOR COMPENSATION

         Directors of the Company who are also employees receive no additional
compensation for their services as a director. Non-employee directors of the
Company receive an annual director's fee equivalent in value to $20,000. At
least 50% of the value of such fee must be taken in the form of restricted
stock. Each non-employee director also receives $1,000 for each regular
quarterly meeting of the Board of Directors attended, $1,000 for each special
meeting of the Board attended, $1,000 for each substantive special telephonic
Board meeting participated in and $1,000 for each committee meeting attended.
Following the Annual Meeting of Stockholders held in 1998, each of the Company's
non-employee directors received options under the 1997 Stock Plan to purchase
10,000 shares at the market price of the shares on the date of grant. Such
options granted to non-employee directors vest one year after the date of grant.
Following this Annual Meeting the Company intends to grant 10,000 options under
the 1997 Stock Plan to each of the Company's non-employee directors. Such
options will be granted at the market price of the shares on the date of grant
and will vest one year after the date of grant.


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<PAGE>   12


                             EXECUTIVE COMPENSATION

         The following table sets forth the aggregate compensation, including
cash compensation and restricted stock and option awards, paid by the Company
with respect to the fiscal years ended December 31, 1996, 1997 and 1998 to the
Company's Chief Executive Officer, the four other most highly compensated
executive officers of the Company and to the Company's former Chief Executive
Officer (the "Named Executive Officers").


                           SUMMARY COMPENSATION TABLE


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<PAGE>   13

<TABLE>
<CAPTION>
                                                                        Long Term
                                                                      Compensation
                                                             --------------------------------
                                                               Restricted        Shares          All Other
Name and                             Annual                       Stock        Underlying       Compensation
Principal Position        Year     Salary($)     Bonus($)(1)  Awards($)(2)     Options(#)          ($)(6)
------------------        ----     ---------     -----------  ------------     ----------       ------------


<S>                       <C>   <C>           <C>            <C>              <C>              <C>
Michael W. Brennan        1998  $   276,875   $   345,000    $    163,313      85,000 (5)      $   90,054
President and             1997      225,000       337,500         178,125     310,000 (4)          59,112
Chief Executive Officer   1996      190,000       285,000         200,366      65,000 (3)          19,148


Michael J. Havala         1998  $   225,000   $   275,000    $    138,188      45,000 (5)      $   71,434
Chief Financial           1997      195,000       292,500         142,500     220,000 (4)          52,511
Officer, Treasurer and    1996      175,000       236,241         154,135      44,000 (3)          17,529
Secretary

Gary H. Heigl             1998  $   219,167   $   320,000    $    150,750       69,000 (5)     $   58,502
Chief Operating Officer   1997      185,000       277,500         142,500      220,000 (4)         38,157
                          1996      150,000       184,375         129,115       62,000 (3)         10,030


Johannson L. Yap          1998  $   200,000   $   300,000    $    125,625      40,000 (5)      $   58,502
Chief Investment Officer  1997      150,000       300,000         199,500     265,000 (4)          38,157
                          1996      140,000       238,510         144,139      42,500 (3)          10,432


Anthony Muscatello        1998  $   185,000   $   310,000    $    120,600      40,000 (5)      $   52,967
President of FI           1997      165,000       300,000         124,688     232,000 (4)          37,489
Development Services      1996      125,000       209,250          89,250      30,000 (3)          14,688
Corporation

Michael T. Tomasz         1998  $   350,000   $   450,000    $          0      13,700 (5)      $  104,676
                          1997      300,000       450,000         222,656     375,000 (4)         128,608
                          1996      250,000       375,000         249,037      90,000 (3)          51,136

</TABLE>

                                       12
<PAGE>   14



-------------------

(1)      Amounts for 1996 represent bonuses awarded in February 1997 based on
         performance for the year ended December 31, 1996 and include bonus
         amounts awarded in 1996 in conjunction with the Company's profitability
         incentive plan. Amounts for 1997 represent bonuses awarded in February
         1998 based on performance for the year ended December 31, 1997. Amounts
         for 1998, other than for Mr. Tomasz, represent bonuses awarded in
         February 1999 based on performance for the year ended December 31,
         1998. Mr. Tomasz's 1998 bonus was paid pursuant to his Separation
         Agreement. 
(2)      Amounts for 1996 represent restricted Common Stock awarded (but not 
         issued until September and October 1997) in February 1997 as part of 
         the annual bonus with respect to 1996 performance. Amounts for 1997 
         represent restricted Common Stock awarded in February 1998 as part of 
         the annual bonus with respect to 1997 performance. Amounts for 1998 
         represent restricted Common Stock awarded in March 1999 as part of the 
         annual bonus with respect to 1998 performance. The dollar amount shown 
         is approximately equal to the product of the number of shares of 
         restricted Common Stock granted multiplied by the closing price of the 
         Common Stock as reported by the New York Stock Exchange on the date of 
         grant ($29.75 on February 14, 1997 for 1996 amounts; $35.625 on for
         February 18, 1998 for 1997 amounts; $25.125 on March 4, 1999 1998 
         amounts). This valuation does not take into account any diminution in 
         value which results from the restrictions applicable to such Common 
         Stock. From and after the date of issuance, holders of the restricted 
         Common Stock are entitled to vote such Common Stock and receive 
         dividends at the same rate applicable to unrestricted shares of
         Common Stock; however, with respect to the restricted Common Stock
         awarded in February 1997, but issued in September and October 1997, the
         Named Executive Officers earned amounts equal to the dividends that
         would have been payable if such restricted Common Stock had been issued
         when awarded (such amounts equaled as follows: Mr. Brennan - $6,802,
         Mr. Havala - $5,232, Mr. Heigl - $8,929, Mr. Yap - $4,893, Mr.
         Muscatello - $3,030 and Mr. Tomasz - $8,455). The total number of
         shares, and the value, of restricted Common Stock awarded to each Named
         Executive Officer as of December 31, 1998 is as follows: Mr. Brennan -
         11,735 shares ($314,645), Mr. Havala - 9,181 shares ($246,166), Mr.
         Heigl - 12,840 shares ($344,273), Mr. Yap - 10,445 shares ($280,057),
         Mr. Muscatello - 6,200 shares ($166,238) and Mr. Tomasz - 14,621 shares
         ($392,026). Restrictions with respect to restricted Common Stock
         awarded to Mr. Tomasz were removed in November 1998 pursuant to his
         Separation Agreement. An aggregate of 6,051 shares of restricted Common
         Stock awarded to Messrs. Brennan, Havala, Heigl and Yap vested in
         January 1999 and restrictions with respect to such shares have been
         removed. 
(3)      Amounts for 1996 represent (a) an aggregate of 98,500 options granted 
         to the Named Executive Officers on July 11, 1996 under the 1994 Stock 
         Plan at an exercise price equal to $22.75 per share, (b) an aggregate 
         of 215,000 options granted to the Named Executive Officers on May 13, 
         1997 under the 1994 and 1997 Stock Plans at an exercise price equal to 
         $30.38 per share and (c) 20,000 options granted to Mr. Heigl on 
         July 10, 1997 under the 1997 Stock Plan at an exercise price equal to 
         $28.50 per share. These options vested in two equal installments on the
         six-month and first year anniversary of the date of grant. 
(4)      Amounts for 1997 represent (a) an aggregate of 1,335,000 options 
         granted to the Named Executive Officers under the 1997 Stock Plan on 
         January 2, 1998 at an exercise price equal to $35.8125 per share and 
         which vest primarily in accordance with certain performance measures 
         established by the Compensation Committee and (b) an aggregate of 
         287,000 options granted to the Named Executive Officers under the 1997 
         Stock Plan on May 14, 1998 at an exercise price equal to $31.13 per 
         share and which vest in two equal installments on the six month and 
         first year anniversary of the date of grant, except for Mr. Tomasz's 
         options which vested on November 11, 1998 pursuant to his Separation 
         Agreement. All 300,000 options granted to Mr. Tomasz on January 2, 1998
         have been cancelled pursuant to his Separation Agreement. 
(5)      Amounts for 1998 represent an aggregate of 239,000 options which the 
         Compensation Committee, in March 1999, determined to grant following 
         the Annual Meeting in May 1999 to the Named Executive Officers, other 
         than Mr. Tomasz, under the 1997 Stock Plan. Such options will vest in 
         two equal installments on the six-month and first year anniversary of 
         the date of grant and shall have an exercise price equal to the closing
         price per share of Common Stock on the date of grant. Amounts for 1998 
         also represent (a) 13,700 options granted to Mr. 

                                       13
<PAGE>   15

         Tomasz, pursuant to his Separation Agreement, under the 1997 Stock Plan
         on November 11, 1998 at an exercise price equal to $30.00 per share and
         which immediately vested, and (b) an aggregate of 40,000 options
         granted to Messrs. Brennan and Heigl under the 1997 Stock Plan on
         December 3, 1998 at an exercise price equal to $24.00 per share and
         which vest in two equal installments on the six month and first year
         anniversary of the date of grant.
(6)      Includes premiums paid by the Company on term life insurance for the
         benefit of the Named Executive Officers. Amounts reported for 1996 also
         include benefits accrued on units awarded in 1996 to the Named
         Executive Officers under the Deferred Income Plan. Generally, amounts
         accrued under the Deferred Income Plan vest in equal quarterly
         installments over three years and are paid out (in cash or Common Stock
         at the discretion of the Compensation Committee) in three annual
         installments, commencing on the January 31st after the date of grant.
         Amounts accrued under the Deferred Income Plan to each Named Executive
         Officer in 1996 were used to acquire Common Stock having an aggregate
         value at the time of acquisition to each such Named Executive Officer
         as follows: Mr. Brennan - $16,173, Mr. Havala - $14,974, Mr. Heigl -
         $10,030, Mr. Yap - $9,861, Mr. Muscatello - $10,646 and Mr. Tomasz -
         $34,971. Amounts accrued under the Deferred Income Plan to each Named
         Executive Officer in 1997 were used to acquire Common Stock having an
         aggregate value at the time of acquisition to each such Named Executive
         Officer as follows: Mr. Brennan - $56,137, Mr. Havala - $49,956, Mr.
         Heigl - $37,424, Mr. Yap - $37,424, Mr. Muscatello - $33,303 and Mr.
         Tomasz - $112,443. A portion of the amounts accrued under the Deferred
         Income Plan to each Named Executive Officer, other than Mr. Tomasz, in
         1998 were used to acquire Common Stock having an aggregate value at the
         time of acquisition to each such officer as follows: Mr. Brennan -
         $43,591, Mr. Havala - $34,491, Mr. Heigl - $28,936, Mr. Yap - $28,936
         and Mr. Muscatello - $29,389. The remainder of the amounts accrued
         under the Deferred Income Plan to each Named Executive Officer, other
         than Mr. Tomasz, in 1998 were paid in cash. All amounts accrued under
         the Deferred Income Plan to Mr. Tomasz in 1998 were paid in cash
         pursuant to his Separation Agreement. In addition to amounts reported
         for Mr. Tomasz for 1998, on January 6, 1999, the Company paid Mr.
         Tomasz approximately $2,724,214 in connection with his Separation
         Agreement.


OPTION GRANTS AND EXERCISES

         Option Grants. The following table sets forth the options granted in
the fiscal year ended December 31, 1998 to the Named Executive Officers.

<TABLE>
<CAPTION>
                                            OPTION GRANTS IN 1998
                           ------------------------------------------------------------
                                              Individual Grants
                           ------------------------------------------------------------
                                           Percent of
                             Number of    Total Options
                              Options      Granted to      Exercise or                      Total Present
                              Granted     Employees in     Base Price      Expiration         Value as
NAME                          (#)(1)       1998 (%)(2)       ($/SH)          Date(s)      of Grant Date(3)
----                        -----------  ---------------  -------------    -----------   ------------------
<S>                         <C>               <C>         <C>                 <C>          <C>     
Michael W. Brennan          335,000           6.5         $   (4)             (4)          $   (4)
Michael J. Havala           220,000           4.2             (5)             (5)              (5)
Gary  H. Heigl              235,000           4.5             (6)             (6)              (6)
Johannson L. Yap            265,000           5.1             (7)             (7)              (7)
Anthony Muscatello          232,000           4.5             (8)             (8)              (8)
Michael T. Tomasz           388,700           7.5             (9)             (9)              (9)
</TABLE>



                                       14
<PAGE>   16
-------------------

(1)      Represents an aggregate of (i) 1,335,000 options granted on January 2,
         1998 to the Named Executive Officers (ii) 287,000 options granted on
         May 14, 1998 to the Named Executive Officers (iii) 13,700 options
         granted on November 11, 1998 to Mr. Tomasz pursuant to his Separation
         Agreement and (iv) an additional 25,000 and 15,000 options granted to
         Messrs. Brennan and Heigl, respectively, on December 3, 1998. All of
         such options were granted under the 1997 Stock Plan. Of the options
         granted on January 2, 1998, 1,035,000 vest primarily in accordance with
         certain performance measures established by the Compensation Committee;
         of the options granted on May 14, 1998, 212,000 vest in two equal
         installments on the six-month and first year anniversary of the date of
         grant; of the options granted to Mr. Tomasz, 300,000 have been
         cancelled and 88,700 vested on November 11, 1998 pursuant to his
         Separation Agreement. The options granted to Messrs. Brennan and Heigl
         on December 3, 1998 vest in two equal installments on the six month and
         first year anniversary of the date of grant.
(2)      Percentages  do not take into account 60,000 options in the aggregate  
         granted to non-employee directors of the Company.
(3)      Based on the Black-Scholes option pricing model adapted for use in
         valuing stock options. The actual value, if any, that the Named
         Executive Officer may receive would depend on the excess of the stock
         price at the time of exercise over the exercise or base price on the
         date the option is exercised. There is no assurance that the value
         realized by the Named Executive Officer would be at or near the value
         estimated by the Black-Scholes model. The estimated values under the
         model are based on certain assumptions, such as interest rates, stock
         price volatility and future dividend yields.
(4)      Mr. Brennan received a grant of 250,000 options on January 2, 1998
         which expire January 2, 2008, have an exercise price of $35.8125 and
         had a total present value as of the date of grant of $757,500. Mr.
         Brennan received a second grant of 60,000 options on May 14, 1998 which
         expire May 14, 2008, have an exercise price of $31.13 and had a total
         present value as of the date of grant of $159,600. Mr. Brennan received
         a third grant of 25,000 options on December 3, 1998 which expire
         December 3, 2008 have an exercise price of $24.00 and had a total
         present value as of the date of grant of $43,750.
(5)      Mr. Havala received a grant of 180,000 options on January 2, 1998 which
         expire January 2, 2008, have an exercise price of $35.8125 and had a
         total present value as of the date of grant of $545,400. Mr. Havala
         received a second grant of 40,000 options on May 14, 1998 which expire
         May 14, 2008, have an exercise price of $31.13 and had a total present
         value as of the date of grant of $106,400.
(6)      Mr. Heigl received a grant of 180,000 options on January 2, 1998 which
         expire January 2, 2008, have an exercise price of $35.8125 and had a
         total present value as of the date of grant of $545,400. Mr. Heigl
         received a second grant of 40,000 options on May 14, 1998 which expire
         May 14, 2008, have an excise price of $31.13 and had a total present
         value as of the date of grant of $106,400. Mr. Heigl received a third
         grant of 15,000 options on December 3, 1998 which expire December 3,
         2008, have an excise price of $24.00 and had a total present value as
         of the date of grant of $26,250.
(7)      Mr. Yap received a grant of 225,000 options on January 2, 1998 which
         expire January 2, 2008, have an exercise price of $35.8125 and had a
         total present value as of the date of grant of $681,750. Mr. Yap
         received a second grant of 40,000 options on May 14, 1998 which expire
         May 14, 2008, have an exercise price of $31.13 and had a total present
         value as of the date of grant of $106,400.
(8)      Mr. Muscatello received a grant of 200,000 options on January 2, 1998
         which expire January 2, 2008, have an exercise price of $35.8125 and
         had a total present value as of the date of grant of $606,000. Mr.
         Muscatello received a second grant of 32,000 options on May 14, 1998
         which expire May 14, 2008, have an exercise price of $31.13 and had a
         total present value as of the date of grant of $85,120.

                                       15
<PAGE>   17

(9)      Mr. Tomasz received a grant of 300,000 options on January 2, 1998. All
         of such options have been cancelled. Mr. Tomasz received a second grant
         of 75,000 options on May 14, 1998 which, pursuant to the terms of his
         Separation Agreement, expire November 10, 2001, have an exercise price
         of $31.13 and had a total present value as of the date of grant of
         $199,500. Mr. Tomasz received a third grant of 13,700 options on
         November 11, 1998 pursuant to his Separation Agreement which expire
         November 10, 2001, have an exercise price of $30.00 and had a total
         present value as of the date of grant of $16,714.

         Option Exercises and Year-End Holdings. No options were exercised in
1998 by the Named Executive Officers. During such period an aggregate of 42,000
vested options were converted into restricted Common Stock by certain of the
Named Executive Officers. The following table sets forth the value of options
held at the end of 1998 by the Named Executive Officers.


                 AGGREGATED OPTION EXERCISES IN FISCAL YEAR 1998
                     AND FISCAL YEAR-END 1998 OPTION VALUES

<TABLE>
<CAPTION>
                                                        NUMBER OF SECURITIES UNDERLYING       VALUE OF UNEXERCISED
                                                              UNEXERCISED OPTIONS            IN-THE-MONEY OPTIONS AT
                          SHARES                             AT FISCAL YEAR-END(#)             DECEMBER 31, 1998(2) 
                       ACQUIRED ON        VALUE            -----------------------           ----------------------
NAME                  EXERCISE(#)(1)    REALIZED($)       EXERCISABLE   UNEXERCISABLE        EXERCISABLE UNEXERCISABLE
----                  --------------    -----------       -----------   -------------        ----------- -------------
<S>                         <C>            <C>              <C>            <C>                 <C>          <C>
Michael W. Brennan          0              0                115,000        305,000             $ 196,250    $70,313
Michael J. Havala           0              0                130,000        200,000               319,000          0
Gary H. Heigl               0              0                 82,000        215,000                48,750     42,188
Johannson L. Yap            0              0                102,500        245,000               215,781          0
Anthony Muscatello          0              0                 96,000        216,000               271,250          0
Michael T. Tomasz           0              0                330,700              0               739,125          0
</TABLE>

-------------------

(1)      No options were exercised in 1998 by the Named Executive Officers.
         During such period, certain of the Named Executive Officers converted
         an aggregate of 42,000 vested options into restricted Common Stock. The
         number of shares of restricted Common Stock received by each Named
         Executive Officer in 1998 as a result of such conversion were as
         follows: Mr. Brennan - 8,363 and Mr. Havala - 1,235.
(2)      Based on the closing price per share of Common Stock as reported on the
         New York Stock Exchange on December 31, 1998 ($26.8125).

SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

         Section 16(a) of the Securities Exchange Act of 1934 (as amended, the
"Exchange Act") requires the Company's officers and directors, and persons who
own more than ten percent of a registered class of the Company's equity
securities, to file reports of ownership and changes in ownership with the
Securities and Exchange Commission ("SEC") and the New York Stock Exchange.
Officers, directors and "greater than ten-percent" stockholders are required by
SEC regulations to furnish the Company with copies of all Section 16(a) forms so
filed.

         Based solely on review of the copies of such forms furnished to the
Company for 1998, all Section 16(a) filing requirements applicable to the
Company's officers, directors and "greater than ten-

                                       16
<PAGE>   18

percent" stockholders were complied with, except that (i) each of Craig
Cosgrove, Scott Sealy, Sr., Donald Thompson, Timothy Donohue and Timothy Gudim
filed his Form 3 late, (ii) each of Jan Burman, Michael Damone, David Draft,
Timothy Gallagher, Michael Havala, Gary Heigl, Duane Lund, Peter Murphy, Anthony
Muscatello, Scott Musil, Jay Shidler and Michael Tomasz filed one Form 4 late
with respect to a transaction in January 1998 and (iii) Jan Burman filed one
Form 4 late with respect to a transaction in March 1998.

                                       17
<PAGE>   19



EMPLOYMENT AGREEMENTS

         In December 1996, the Company entered into a written employment
agreement with Michael T. Tomasz. The agreement provided for an initial term of
three years and subsequent three-year periods unless otherwise terminated. Upon
certain changes in control of the Company or a termination without cause, Mr.
Tomasz was entitled to severance in an amount equal to three times his annual
salary, three times his average bonus over the prior three years, immediate
vesting of his options and similar awards and the continuation of his other
benefits for three years. Mr. Tomasz agreed to a three-year covenant not to
compete after termination. In November 1998, Mr. Tomasz resigned his position as
President and Chief Executive Officer, and as a director, of the Company
pursuant to a Separation Agreement. Pursuant to the terms of the Separation
Agreement, Mr. Tomasz received, in addition to the remainder of his 1998 salary
and other 1998 compensation, a cash severance payment of approximately
$2,724,214 and 13,700 stock options with an exercise price of $30.00 per share
and an expiration date of November 10, 2001. All 300,000 stock options granted
to Mr. Tomasz on January 2, 1998 were cancelled. The remainder of Mr. Tomasz's
stock options became fully vested, with their expiration date accelerated to
November 10, 2001. In addition, all of Mr. Tomasz's restricted stock became
fully vested. The Separation Agreement supercedes and replaces Mr. Tomasz's
employment agreement except in respect of certain obligations contained in such
agreement, including, without limitation, confidentiality and loyalty,
indemnification and the covenant not to compete.

         In February 1997, the Company entered into a written employment
agreement with Michael W. Brennan, who became the Company's President and Chief
Executive Officer in November 1998. The agreement provides for an initial annual
minimum base salary of $195,000, which may be increased at the discretion of the
Compensation Committee, and an annual bonus at the discretion of the
Compensation Committee. The agreement provides for an initial term of two years
and subsequent two year periods unless otherwise terminated; provided, however,
that the agreement will expire on Mr. Brennan's 70th birthday. Upon certain
changes in control of the Company or a termination without cause, Mr. Brennan is
entitled to severance in an amount equal to two times his annual salary, plus
two times his average bonus over the prior two years. In addition, upon
termination, Mr. Brennan's options and awards under the 1994 Stock Plan, the
1997 Stock Plan and Deferred Income Plan will fully vest and his other benefits
will continue for a period of two years. Severance amounts payable to Mr.
Brennan upon termination will be reduced if such amounts become payable after
Mr. Brennan's 67th birthday. Mr. Brennan has agreed to a two-year covenant not
to compete after termination.

STOCK PERFORMANCE GRAPH

         The incorporation by reference of this Proxy Statement into any
document filed with the SEC by the Company shall not be deemed to include the
following performance graph unless such graph is specifically stated to be
incorporated by reference into such document.

         The following graph provides a comparison of the cumulative total
stockholder return among the Company, the NAREIT Equity REIT Total Return Index
(the "NAREIT Index"), an industry index which, as 

                                       18
<PAGE>   20

of December 31, 1998, was comprised of 173 tax-qualified equity REITs (including
the Company) and the Standard & Poor's 500 Index ("S&P 500"). The comparison is
for the period from May 31, 1994 (for the NAREIT Index and the S&P 500) and June
23, 1994 (for the Company, the date of the Initial Public Offering of its Common
Stock) to December 31, 1998 and assumes the reinvestment of any dividends. The
initial price of the Company's Common Stock shown in the graph below is based
upon the price to the public of $23.50 per share in the Initial Public Offering
on June 23, 1994. The Common Stock of the Company was first listed for quotation
on the New York Stock Exchange on June 24, 1994. The closing price quoted on the
New York Stock Exchange at the close of business on June 24, 1994 was $23-5/8
per share. The NAREIT Index includes REITs with 75% or more of their gross
invested book value of assets invested directly or indirectly in the equity
ownership of real estate. Upon written request, the Company will provide
stockholders with a list of the REITs included in the NAREIT Index. The
historical information set forth below is not necessarily indicative of future
performance. The following graph was prepared at the Company's request by
Research Data Group, Inc., San Francisco, California.



                      [Graphic materials is presented here]



<TABLE>
<CAPTION>
       --------------------------------------------------------------------------------------------
                                         CUMULATIVE TOTAL RETURN
       --------------------------------------------------------------------------------------------
                                                      6/24/94 12/94   12/95   12/96  12/97   12/98
       --------------------------------------------------------------------------------------------

<S>                                                      <C>    <C>    <C>    <C>     <C>    <C> 
       FIRST INDUSTRIAL REALTY TRUST, INC.               $100   $87    $110   $161    $204   $163

       NAREIT EQUITY                                      100    96     111    150     180    148

       S & P 500                                          100   102     141    173     231    297
       --------------------------------------------------------------------------------------------
</TABLE>

                                       19
<PAGE>   21


REPORT OF THE COMPENSATION COMMITTEE

         The Compensation Committee of the Board of Directors is composed of two
of the Company's independent outside directors, Messrs. Slater and Lesher. The
Compensation Committee is responsible for administering the policies which
govern the Company's executive compensation.

         Objectives of Executive Compensation. The Compensation Committee has
designed its compensation policy to provide the proper incentives to management
to maximize the Company's performance in order to serve the best interests of
its stockholders. As a result, the Compensation Committee intends to focus on
incentive awards, such as stock option grants, restricted stock awards and
deferred income awards (as described below), as opposed to large salary
increases, to emphasize performance related incentive compensation. The
Compensation Committee currently grants stock option and other incentive awards
under the 1997 Stock Plan and the Deferred Income Plan.

         The bonuses and incentive awards awarded for 1998 performance to the
Chief Executive Officer and the other executive officers were based on the
Company's Funds from Operations ("FFO"), an industry recognized measure of a
REIT's performance, and officer specific performance objectives, such as
individual performance related to same property net operating income growth and
investment goals.

         The Company maintains the philosophy that compensation of its executive
officers and others should be directly and materially linked to operating
performance. To achieve this linkage, executive compensation is weighted towards
bonuses paid and incentive awards granted on the basis of the Company's
performance. Thus, while annual salary increases are based on personal
performance of the executive officers and general economic conditions, annual
bonuses and incentive award grants are directly tied to the Company's actual
economic performance during the applicable fiscal year.

         Stock options, together with other incentive awards (e.g., restricted
stock), are granted to the executives under the provisions of the 1997 Stock
Plan. In addition, incentive awards are granted under the Deferred Income Plan.
Such incentive awards are granted to provide incentive to improve stockholder
value over the long-term and to encourage and facilitate executive stock
ownership. Stock options are granted at the market price of the Common Stock at
the date of grant to ensure that executives can only be rewarded for
appreciation in the price of the Common Stock when the Company's stockholders
are similarly benefited. The Compensation Committee determines those executives
who will receive incentive award grants and the size of such awards.

         Compensation Committee Procedures. The Compensation Committee will
annually evaluate the personal performance of the Chief Executive Officer and
the other executive officers of the Company, as well as the Company's
performance. In setting the salary levels for compensation, the Compensation
Committee compares the total annual compensation and stock ownership of the
Chief Executive Officer and the other executive officers to the executive
compensation of executive officers of other publicly-held REITs. Personal
performance can include such qualitative factors as organizational and
management development exhibited 

                                       20
<PAGE>   22

from year to year. Generally the Compensation Committee will meet prior to the
beginning of each fiscal year to establish base salary and performance targets
for the upcoming year and will meet again at the beginning of each year to
review performance and approve incentive awards for the preceding fiscal year.

         Section 162(m) of the Internal Revenue Code of 1986, as amended, limits
the deductibility on the Company's tax return of compensation over $1 million to
any of the named executive officers of the Company unless, in general, the
compensation is paid pursuant to a plan which is performance-related,
non-discretionary and has been approved by the Company's stockholders. The
Compensation Committee's policy with respect to Section 162(m) is to make
reasonable efforts to ensure that compensation is deductible to the extent
permitted while simultaneously providing Company executives with appropriate
rewards for their performance.

         The Compensation Committee believes that it has designed and
implemented a compensation structure which provides appropriate awards and
incentives for the Company's executive officers as they work to sustain and
improve the Company's overall performance.

         Submitted by the Compensation Committee:

                  Robert J. Slater          John L. Lesher


COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

         The Compensation Committee consists of Messrs. Slater and Lesher.
Neither of them has served as an officer of the Company and Mr. Lesher has no
other business relationship or affiliation with the Company, except his service
as a director. From time to time, Mr. Slater provides consulting services to the
Company through his private consulting firm, Jackson Consulting, Inc.

                                       21
<PAGE>   23


CERTAIN RELATIONSHIPS AND TRANSACTIONS

         The Company often obtains title insurance coverage for its properties
from Chicago Title Corporation ("CTC"). John Rau, a director of the Company,
became the President, Chief Executive Officer and a director of CTC in 1996.
Management of the Company believes the terms of the title insurance provided by
CTC to the Company and the premiums therefor are as favorable to the Company as
could be obtained from other title insurance companies.

         The Company often engages in transactions for which CB Richard Ellis,
Inc. ("CB Richard Ellis") acts as a broker. The brother of Michael W. Brennan,
the President and Chief Executive Officer and a director of the Company, is an
employee of CB Richard Ellis and, in four such transactions in 1998 in which the
Company purchased or developed properties for an aggregate consideration or
project cost of approximately $139.8 million, received an aggregate of $130,115
as a portion of the brokerage commissions paid by the Company to CB Richard
Ellis in connection with such transactions. Management of the Company believes
the terms of brokerage services provided by CB Richard Ellis in such
transactions were as favorable to the Company as could be obtained in an arm's
length transaction.

         From time to time, Robert J. Slater, a director of the Company,
provides consulting services to the Company through his private consulting firm,
Jackson Consulting, Inc. ("Jackson Consulting"). In 1998, the Company paid
Jackson Consulting approximately $36,000 in connection with Mr. Slater's
consulting services.

         From time to time, the Company utilizes leasing services from Sealy and
Company, Inc. ("SCI") in which Scott P. Sealy, Sr., a former Senior Regional
Director of the Company, has a 62.5% ownership interest. In 1998, the Company
paid approximately $200,000 of leasing commissions to SCI. Management of the
Company believes the terms under which SCI provides leasing services are as
favorable to the Company as could be obtained in an arm's length transaction.

         On January 30, 1998, First Industrial, L.P. acquired four industrial
properties located in the metropolitan Chicago area from Western Suburban
Industrial Investment Limited Partnership ("Western") for a total consideration
of approximately $7.9 million. The sole general partner of Western, having a 5%
interest, is Tomasz/Shidler Investment Corporation ("TSIC"), the sole
shareholders of which are Michael T. Tomasz, the former President and Chief
Executive Officer and a former director of the Company, and Jay H. Shidler,
Chairman of the Board of Directors of the Company. Messrs. Tomasz and Shidler
were also limited partners in Western having approximate interests of 32% and
53% respectively. Further, Michael W. Brennan was also a limited partner of
Western having an interest of 2%. As a result of this transaction, Mr. Shidler
was issued 1,886 Units (as defined below) of First Industrial, L.P., Mr. Tomasz
was issued 1,979 Units of First Industrial, L.P. and Mr. Brennan was issued 115
Units of First Industrial, L.P. The Units issued to Messrs. Shidler, Tomasz and
Brennan were valued at $36.72 per Unit at the time of the closing of the Western
transaction (having an aggregate value of $69,254, $72,669 and $4,229
respectively). Management of the Company believes the terms of this acquisition
were as favorable to the Company as could be obtained in an arm's length
transaction.

                                       22
<PAGE>   24

         On May 21, 1998, the Company acquired Thompson-Kirk Properties, Inc.
("TKP"), a real estate firm in which Donald C. Thompson, at the time one of the
Company's Senior Regional Directors, owned a 52.5% interest. Gross proceeds to
TKP totaled approximately $2.3 million. On July 16, 1998, the Company acquired
TK-SV, Ltd., a real estate partnership in which Mr. Thompson owned a 60.4%
interest, for approximately $3.2 million. Management of the Company believes the
terms of these acquisitions were as favorable to the Company as could be
obtained in an arm's length transaction.

         On June 23, 1998, the Company purchased a 292,471 square foot light
industrial property located in Denver, Colorado for approximately $12.2 million.
The property was purchased from Pacifica Bryant Warehouse, LLC., in which
Timothy E. Gudim, one of the Company's Managing Directors, owned a 12.08%
interest. Management of the Company believes the terms of this acquisition were
as favorable to the Company as could be obtained in an arm's length transaction.

         On November 19, 1998, the Company sold two industrial properties to two
limited partnerships, Roosevelt Glen Corporate Center ("Roosevelt") and Hartford
Center Investment Company ("Hartford"), for a total consideration of
approximately $8.3 million. TSIC has a 11.638% general partner interest and Mr.
Tomasz has a 75.585% limited partner interest in Roosevelt. TSIC has a 12.39%
general partner interest and Mr. Tomasz has a 80.454% limited partnership
interest in Hartford. On December 4, 1998, the Company sold one industrial
property to Eastgate Shopping Center Investment Co. ("Eastgate"), a limited
partnership, for a total consideration of approximately $2.4 million. TSIC has a
12.972% general partner interest and Mr. Tomasz has a 79.536% limited partner
interest in Eastgate. With respect to each transaction, the purchaser(s) has the
option to sell the property back to the Company and the Company has the option
to repurchase the property. Management of the Company believes the terms of
these transactions were as favorable to the Company as could be obtained in an
arm's length transaction.

                                       23
<PAGE>   25


         SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERS

         The following table presents information concerning the ownership of
Common Stock of the Company and limited partnership units ("Units") of First
Industrial, L.P. (which generally are exchangeable on a one-for-one basis,
subject to adjustments, for Common Stock) by all directors, the Named Executive
Officers, the directors and executive officers as a group and persons and
entities known to the Company to be beneficial owners of more than 5% of the
Company's Common Stock. The information is presented as of March 12, 1999,
unless otherwise indicated, and is based on representations of officers and
directors of the Company and filings received by the Company on Schedule 13G
under the Exchange Act.

<TABLE>
<CAPTION>
                                                        Common Stock/Units
                                                           Beneficially
                                                               Owned
                                                      -------------------------

                                                                     Percent
                                                      Number        of Class
                                                     --------    --------------
          Names and Addresses of
              5% Stockholders
              ---------------

<S>                                                 <C>              <C>  
Cohen & Steers Capital
Management, Inc.(1)
757 Third Avenue
New York, New York  10017...............            3,918,000        10.3%
                                                             
Glickenhaus & Co.(2)
6 East 43rd Street
New York, New York  10017................           2,796,500         7.4%

<CAPTION>
          Names and Addresses of
          Directors and Officers*
          -----------------------

<S>                                                 <C>              <C>  
Jay H. Shidler(3)........................           1,299,121         3.4%

Michael T. Tomasz(4).....................             549,464         1.4%

John L. Lesher(5)........................              43,068          **

Kevin W. Lynch(6)........................              36,086          **

Michael G. Damone(7).....................             229,996          **

John Rau(8)..............................              45,068          **

Robert J. Slater(9)......................              29,173          **
</TABLE>

                                       24
<PAGE>   26


<TABLE>
<CAPTION>
                                                        Common Stock/Units
                                                           Beneficially
                                                               Owned
                                                      -------------------------

                                                                     Percent
                                                      Number        of Class
                                                     --------    --------------
          Names and Addresses of
              5% Stockholders
              ---------------

<S>                                                 <C>              <C>  
J. Steven Wilson(10).....................              43,634          **

Michael W. Brennan(11)...................             270,170          **

Michael J. Havala(12)....................             189,684          **

Gary H. Heigl(13)........................             128,291          **

Johannson L. Yap(14).....................             167,461          **

Anthony Muscatello(15)...................             209,007          **

All directors, Named Executive
  Officers and other executive officers
  as a group (16 persons)(16)............           3,459,104         8.6%
</TABLE>

--------------
*        The business address for each of the Directors and executive officers
         of the Company is 311 South Wacker Drive, Suite 4000, Chicago, Illinois
         60606.
**       Less than 1%

(1)      Pursuant to a Schedule 13G dated February 9, 1999 filed by Cohen &
         Steers Capital Management, Inc. ("CSCM"), CSCM has the sole power to
         dispose of all 3,918,000 shares reported, but has the sole power to
         vote only 3,337,100 of such shares.
(2)      Pursuant to a Schedule 13G dated February 1, 1999 filed by Glickenhaus
         & Co.. ("Glickenhaus"), Glickenhaus has the sole power to dispose of
         all 2,796,500 shares reported, but has the sole power to vote only
         2,318,900 of such shares.
(3)      Includes 910,660 shares held by Shidler Equities, L.P., a Hawaii
         limited partnership owned by Mr. Shidler and Wallette Shidler, 66,984
         Units held by Mr. Shidler directly, 254,541 Units held by Shidler
         Equities, L.P., 1,223 Units held by Mr. and Mrs. Shidler jointly, and
         22,079 Units held by Holman/Shidler Investment Corporation. Also
         includes 22,500 shares which may be acquired by Mr. Shidler upon the
         exercise of vested options granted under the 1994 Stock Plan,
         consisting of 15,000 at an exercise price of $23.50 per share and 7,500
         shares at an exercise price of $18.25 per share. Also includes 10,000
         shares which may be acquired upon the exercise of vested options
         granted under the 1997 Stock Plan at an exercise price of $30.50 per
         share and 10,000 shares which may be acquired upon the exercise of
         options (which will vest in May 1999) granted under the 1997 Stock Plan
         at an exercise price of $31.13 per share. Also includes 1,134 shares of
         restricted Common Stock issued under the 1997 Stock Plan.
(4)      Includes 4,000 shares held by a trust for the benefit of Mr. Tomasz's
         spouse and 6,200 shares held by a trust for the benefit of Mr. Tomasz's
         daughters. A relative of Mr. Tomasz is the sole trustee of each of such
         trusts. Includes 182,000 shares which may be acquired by Mr. Tomasz
         upon the exercise of vested options granted under the 1994 Stock Plan,
         consisting of 117,000 shares at an exercise price of $23.50 per share,
         35,000 shares at an exercise price of $20.25 per share and 30,000
         shares at an exercise price of $22.75 per share. Also includes 148,700
         shares which may

                                       25
<PAGE>   27

         be acquired by Mr. Tomasz upon the exercise of vested options granted
         under the 1997 Stock Plan, consisting of 60,000 shares at an exercise
         price of $30.38 per share, 75,000 shares at an exercise price of $31.13
         per share and 13,700 shares at an exercise price of $30.00. Also
         includes 25,847 Units.
(5)      Includes 22,500 shares which may be acquired by Mr. Lesher upon the
         exercise of vested options granted under the 1994 Stock Plan,
         consisting of 15,000 shares at an exercise price of $23.50 per share
         and 7,500 shares at an exercise price of $18.25 per share. Also
         includes 10,000 shares which may be acquired upon the exercise of
         vested options granted under the 1997 Stock Plan at an exercise price
         of $30.50 and 10,000 shares which may be acquired upon the exercise of
         options (which will vest in May 1999) granted under the 1997 Stock Plan
         at an exercise price of $31.13. Also includes 568 shares of restricted
         Common Stock under the 1997 Stock Plan.
(6)      Includes 15,000 shares which may be acquired by Mr. Lynch upon the
         exercise of vested options granted under the 1994 Stock Plan at an
         exercise price of $23.50 per share. Also includes 10,000 shares which
         may be acquired upon the exercise of vested options granted under the
         1997 Stock Plan at an exercise price of $30.50 and 10,000 shares which
         may be acquired upon the exercise of options (which will vest in May
         1999) granted under the 1997 Stock Plan at an exercise price of $31.13.
         Also includes 568 shares of restricted Common Stock issued under the
         1997 Stock Plan.
(7)      Includes 3,000 shares held by a trust for the benefit of Mr. Damone's
         wife. Also includes 37,500 shares which may be acquired by Mr. Damone
         upon the exercise of vested options granted under the 1994 Stock Plan,
         consisting of 30,000 shares at an exercise price of $23.50 per share
         and 7,500 shares at an exercise price of $22.75 per share. Also
         includes 10,000 shares which may be acquired upon the exercise of
         vested options granted under the 1997 Stock Plan at an exercise price
         of $30.38 and 10,000 shares which may be acquired upon the exercise of
         options (5,000 of which have vested and 5,000 of which will vest in May
         1999) granted under the 1997 Stock Plan at an exercise price of $31.13.
         Also includes 144,296 Units. Also includes 2,000 shares of restricted
         Common Stock issued under the 1997 Stock Plan.
(8)      Includes 22,500 shares which may be acquired by Mr. Rau upon the
         exercise of vested options granted under the 1994 Stock Plan,
         consisting of 15,000 shares at an exercise price of $23.50 per share
         and 7,500 shares at an exercise price of $18.25 per share. Also
         includes 10,000 shares which may be acquired upon the exercise of
         vested options granted under the 1997 Stock Plan at an exercise price
         of $30.50 and 10,000 shares which may be acquired upon the exercise of
         options (which will vest in May 1999) granted under the 1997 Stock Plan
         at an exercise price of $31.13. Also includes 568 shares of restricted
         Common Stock issued under the 1997 Stock Plan.
(9)      Includes 10,000 shares which may be acquired by Mr. Slater upon the
         exercise of vested options granted under the 1997 Stock Plan at an
         exercise price of $30.50 per share and 10,000 shares which may be
         acquired upon the exercise of options (which will vest in May 1999)
         granted under the 1997 Stock Plan at an exercise price of $31.13. Also
         includes 8,173 shares of restricted Common Stock issued under the 1997
         Stock Plan.
(10)     Includes 22,500 shares which may be acquired by Mr. Wilson upon the
         exercise of vested options granted under the 1994 Stock Plan,
         consisting of 15,000 shares at an exercise price of $23.50 per share
         and 7,500 shares at an exercise price of $18.25 per share. Also
         includes 10,000 shares which may be acquired upon the exercise of
         vested options granted under the 1997 Stock Plan at an exercise price
         of $30.50 and 10,000 shares which may be acquired upon the exercise of
         options (which will vest in May 1999) granted under the 1997 Stock Plan
         at an exercise price of $31.13. Also includes 1,134 shares of
         restricted Common Stock issued under the 1997 Stock Plan.
(11)     Includes 40,000 shares which may be acquired by Mr. Brennan upon the
         exercise of options granted under the 1994 Stock Plan, consisting of
         5,000 shares at an exercise price of $23.50 per share, 15,000 shares at
         an exercise price of $20.25 per share and 20,000 shares at an exercise
         price of $22.75 per share. Also includes 45,000 shares which may be
         acquired by Mr. Brennan upon the exercise of vested options granted
         under the 1997 Stock Plan at an exercise price of $30.38 per share.
         Also includes 60,000 shares which may be acquired by Mr. Brennan upon
         the exercise of options (30,000 of which have vested and 30,000 of
         which will vest in May 1999) granted under the 1997 Stock Plan 


                                       26
<PAGE>   28

         at an exercise price of $31.13 per share. Also includes 3,806 Units and
         39,625 shares of restricted Common Stock issued under the 1997 Stock
         Plan. Does not include 380 shares of Preferred Stock.
(12)     Includes 1,251 shares held in custodial accounts for Mr. Havala's
         children. Also includes 73,000 shares which may be acquired by Mr.
         Havala upon the exercise of options granted under the 1994 Stock Plan,
         consisting of 58,000 shares at an exercise price of $23.50 per share
         and 15,000 shares at an exercise price of $20.25 per share. Also
         includes 30,000 shares which may be acquired by Mr. Havala upon the
         exercise of vested options granted under the 1997 Stock Plan at an
         exercise price of $30.38 per share and 40,000 shares which may be
         acquired by Mr. Havala upon the exercise of options (20,000 of which
         have vested and 20,000 of which will vest in May 1999) granted under
         the 1997 Stock Plan at an exercise price of $31.13 per share. Also
         includes 26,150 shares of restricted Common Stock issued under the 1997
         Stock Plan. Does not include 750 shares of Preferred Stock.
(13)     Includes 12,000 shares which may be acquired by Mr. Heigl upon the
         exercise of vested options granted under the 1994 Stock Plan at an
         exercise price of $22.75 per share. Also includes 50,000 shares which
         may be acquired upon the exercise of vested options granted under the
         1997 Stock Plan, consisting of 30,000 shares at an exercise price of
         $30.38 per share and 20,000 at an exercise price of $28.50 per share.
         Also includes 40,000 shares which may be acquired by Mr. Heigl upon the
         exercise of options (20,000 of which have vested and 20,000 of which
         will vest in May 1999) granted under the 1997 Stock Plan at an exercise
         price of $31.13 per share. Also includes 18,000 shares of restricted
         Common Stock issued under the 1997 Stock Plan.
(14)     Includes 1,390 shares held in a custodial account for the benefit of
         Mr. Yap's children. Also includes 52,500 shares which may be acquired
         by Mr. Yap upon the exercise of options granted under the 1994 Stock
         Plan, consisting of 30,000 shares at an exercise price of $23.50 per
         share, 10,000 shares at an exercise price of $20.25 per share and
         12,500 shares at an exercise price of $22.75 per share. Also includes
         30,000 shares which may be acquired by Mr. Yap upon the exercise of
         options granted under the 1997 Stock Plan at an exercise price of
         $30.38 and 40,000 shares which may be acquired by Mr. Yap upon the
         exercise of options (20,000 of which have vested and 20,000 of which
         will vest in May 1999) granted under the 1997 Stock Plan at an exercise
         price of $31.13 per share. Also includes 1,680 Units. Also includes
         18,551 shares of restricted Common Stock to be issued under the 1997
         Stock Plan.
(15)     Includes 60,000 shares which may be acquired by Mr. Muscatello upon the
         exercise of options granted under the 1994 Stock Plan, consisting of
         30,000 shares at an exercise price of $23.50 per share, 20,000 shares
         at an exercise price of $20.25 per share and 10,000 shares at an
         exercise price of $22.75 per share. Includes 20,000 shares which may be
         acquired by Mr. Muscatello upon the exercise of vested options granted
         under the 1997 Stock Plan at an exercise price of $30.38 and 32,000
         shares which may be acquired by Mr. Muscatello upon the exercise of
         options (16,000 of which have vested and 16,000 of which will vest in
         May 1999) granted under the 1997 Stock Plan at an exercise price of
         $31.13 per share. Also includes 81,654 Units. Also includes 11,000
         shares of restricted Common Stock issued under the 1997 Stock Plan.
(16)     Includes 572,000 shares in the aggregate which may be acquired by
         directors or executive officers upon the exercise of options granted
         under the 1994 Stock Plan, consisting of 345,000 shares at an exercise
         price of $23.50 per share, 30,000 shares at an exercise price of $18.25
         per share, 95,000 shares at an exercise price of $20.25 per share and
         102,000 shares at an exercise price of $22.75 per share. Includes
         767,700 shares in the aggregate which may be acquired by directors and
         executive officers upon the exercise of options granted under the 1997
         Stock Plan, consisting of 265,000 shares at an exercise price of
         $30.38, 60,000 shares at an exercise price of $30.50, 20,000 shares at
         an exercise price of $28.50, 409,000 shares at an exercise price of
         $31.13 and 13,700 shares at an exercise price of $30.00. Also includes
         698,749 Units. Also includes 145,071 shares of restricted Common Stock
         issued under the 1997 Stock Plan. Does not include 1,130 shares of
         Preferred Stock in the aggregate owned by certain executive officers
         and directors of the Company.


                                       27
<PAGE>   29


                                   PROPOSAL II

         RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS

         The accounting firm of PricewaterhouseCoopers LLP (or its predecessor,
Coopers & Lybrand L.L.P.) has served as the Company's independent auditors since
the Company's formation in August 1993. On March 5, 1999, the Board of Directors
voted to appoint PricewaterhouseCoopers LLP as the Company's independent
auditors for the current fiscal year. A representative of PricewaterhouseCoopers
LLP will be present at the Annual Meeting, will be given the opportunity to make
a statement if he or she so desires and will be available to respond to
appropriate questions.

         THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION OF THE
APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP AS THE COMPANY'S INDEPENDENT AUDITORS
FOR FISCAL 1999.


         OTHER MATTERS

SOLICITATION OF PROXIES

         The cost of solicitation of proxies in the form enclosed herewith will
be borne by the Company. In addition to the solicitation of proxies by mail, the
directors, officers and employees of the Company may also solicit proxies
personally or by telephone without additional compensation for such activities.
The Company will also request persons, firms and corporations holding shares in
their names or in the names of their nominees, which are beneficially owned by
others, to send proxy materials to and obtain proxies from such beneficial
owners. The Company will reimburse such holders for their reasonable expenses.

STOCKHOLDER PROPOSALS

         Stockholder proposals intended to be presented at the 2000 Annual
Meeting of Stockholders must be received by the Secretary of the Company no
later than December ___, 1999, in order to be considered for inclusion in the
proxy statement and on the proxy card that will be solicited by the Board of
Directors in connection with the 2000 Annual Meeting of Stockholders.

         In addition, the Bylaws of the Company provide that in order for a
stockholder to nominate a candidate for election as a director at an annual
meeting or propose business for consideration at such annual meeting, notice
must generally be given to the Secretary of the Company not more than 180 days
nor less than 75 days prior to the first anniversary of the preceding year's
annual meeting. The fact that the Company may not insist upon compliance with
these requirements should not be construed as a waiver by the Company of its
right to do so at any time in the future.


                                       28
<PAGE>   30

OTHER MATTERS

         The Board of Directors does not know of any matters other than those
described in this Proxy Statement that will be presented for action at the
Annual Meeting. If other matters are presented, it is the intention of the
persons named as proxies in the accompanying Proxy Card to vote in their
discretion all shares represented by validly executed proxies.

         REGARDLESS OF THE NUMBER OF SHARES YOU OWN, YOUR VOTE IS IMPORTANT TO
THE COMPANY. PLEASE COMPLETE, SIGN, DATE AND PROMPTLY RETURN THE ENCLOSED PROXY
CARD TODAY.


                                       29