SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement
[X] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
EAGLE PACIFIC INDUSTRIES, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2) or
Items 22(a)(2) of Schedule A.
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transactions applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11. (Set forth the amount on which the
filing fee is calculated and state how it was determined.)
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
(1) Amount previously paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing party:
(4) Date filed:
EAGLE PACIFIC INDUSTRIES, INC.
2430 METROPOLITAN CENTRE
333 SOUTH SEVENTH STREET
MINNEAPOLIS, MINNESOTA 55402
---------------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
APRIL 30, 1996
---------------------------------
TO THE SHAREHOLDERS OF EAGLE PACIFIC INDUSTRIES, INC.:
Notice is hereby given that the Annual Meeting of Shareholders of Eagle
Pacific Industries, Inc. will be held on Tuesday, April 30, 1996, at the Hilton
Hotel, 1001 Marquette Avenue, Minneapolis, Minnesota. The meeting will convene
at 3:30 p.m., Minneapolis Time, for the following purposes:
1. To set the number of directors at seven.
2. To elect three Class I directors to serve until the 1999
Annual Meeting of Shareholders.
3. To ratify and approve the selection of independent public
accountants for the Company for the current fiscal year.
4. To transact such other business as may properly come before
the meeting or any adjournment or adjournments thereof.
The Board of Directors has fixed the close of business on March 19,
1996, as the record date for the determination of shareholders entitled to
notice of and to vote at the meeting.
By Order of the Board of Directors,
Harry W. Spell, Chairman of the Board
and Chief Executive Officer
Minneapolis, Minnesota
April 1, 1996
TO ASSURE YOUR REPRESENTATION AT THE MEETING, PLEASE SIGN, DATE AND RETURN YOUR
PROXY IN THE ENCLOSED ENVELOPE, WHETHER OR NOT YOU EXPECT TO ATTEND IN PERSON.
SHAREHOLDERS WHO ATTEND THE MEETING MAY REVOKE THEIR PROXIES AND VOTE IN PERSON
IF THEY SO DESIRE.
EAGLE PACIFIC INDUSTRIES, INC.
-------------------------
PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 30, 1996
-------------------------
INTRODUCTION
This Proxy Statement is furnished to the shareholders of Eagle Pacific
Industries, Inc. (the "Company") in connection with the solicitation of proxies
by the Board of Directors of the Company to be voted at the Annual Meeting of
Shareholders to be held on April 30, 1996, or any adjournment or adjournments
thereof. The cost of this solicitation will be borne by the Company. In addition
to solicitation by mail, officers, directors, and employees of the Company may
solicit proxies by telephone, telegraph or in person. The Company may also
request banks and brokers to solicit their customers who have a beneficial
interest in the Company's Common Stock registered in the names of nominees and
will reimburse such banks and brokers for their reasonable out-of-pocket
expenses.
Any proxy may be revoked at any time before it is voted by written
notice to the Secretary or any other officer of the Company, or by receipt of a
proxy properly signed and dated subsequent to an earlier proxy, or by revocation
of a written proxy by request in person at the Annual Meeting. Proxies not
revoked will be voted in accordance with the choice specified by shareholders by
means of the ballot provided on the Proxy for that purpose. Proxies which are
signed but which lack any such specification will, subject to the following, be
voted in favor of the proposals set forth in the Notice of Meeting and in favor
of the number and slate of directors proposed by the Board of Directors and
listed herein. If a shareholder abstains from voting as to any matter, then the
shares held by such shareholder shall be deemed present at the Meeting for
purposes of determining a quorum and for purposes of calculating the vote with
respect to such matter, but shall not be deemed to have been voted in favor of
such matter. Abstentions, therefore, as to any proposal will have the same
effect as votes against such proposal. If a broker returns a "non-vote" proxy,
indicating a lack of voting instruction by the beneficial holder of the shares
and a lack of discretionary authority on the part of the broker to vote on a
particular matter, then the shares covered by such non-vote shall be deemed
present at the Meeting for purposes of determining a quorum but shall not be
deemed to be represented at the Meeting for purposes of calculating the vote
required for approval of such matter.
The Company expects mailing of this Proxy Statement to shareholders of
the Company will commence on or about April 1, 1996. The Company's corporate
offices are located at 2430 Metropolitan Centre, 333 South Seventh Street,
Minneapolis, Minnesota 55402, and its telephone number is (612) 371-9650.
OUTSTANDING SHARES AND VOTING RIGHTS
The Company has outstanding two classes of stock: (i) $.01 par value
Common Stock, of which 4,152,940 shares are issued and outstanding; and (ii)
Series A 7% Convertible Preferred Stock ("Preferred Stock") of which 1,383,500
are issued and outstanding. Each share of Common Stock and Preferred Stock is
entitled to one vote. Only shareholders of record at the close of business on
March 19, 1996, will be entitled to vote at the meeting. The presence in person
or by proxy of the holders of a combined majority of the shares of Common Stock
and Preferred Stock entitled to vote at the Annual
Meeting of Shareholders constitutes a quorum for the transaction of business.
The shares represented by the enclosed proxy will be voted if the proxy is
properly signed and received prior to the meeting.
SECURITY OWNERSHIP OF PRINCIPAL SHAREHOLDERS AND MANAGEMENT
The following table provides information as of March 19, 1996,
concerning the beneficial ownership of the Company's Common Stock, assuming
conversion of the Company's Series A 7% Convertible Preferred Stock (the
"Preferred Stock") only as to the particular person listed, by persons who are
known to own five percent or more of the Common Stock of the Company, by each
executive officer named in the Summary Compensation Table, by each director, and
by all directors and executive officers (including the named individuals) of the
Company as a group. Unless otherwise noted, the person listed as the beneficial
owner of the shares has sole voting and investment power over the shares.
Shares Percent
Name and Address of Beneficially of
Beneficial Owner Owned Class(1)
---------------- ----- --------
William Blair Mezzanine 535,000(2) 12.6%
Capital Fund, L.P.
222 West Adams Street
Chicago, Illinois 60606
Harry W. Spell 318,884(5)(6) 7.3%
2430 Metropolitan Centre
Minneapolis, MN 55402
William H. Spell 366,364(4)(5) 8.3%
2430 Metropolitan Centre
Minneapolis, MN 55402
Bruce A. Richard 95,000(9) 2.2%
2458 Farrington Circle
Roseville, MN 55113
Richard W. Perkins 369,727(3) 8.8%
730 East Lake Street
Wayzata, MN 55391
George R. Long 228,660(7) 5.4%
29 Las Brisas Way
Naples, FL 33963
Larry D. Schnase 132,500(8) 3.1%
146 North Maple
Hastings, Nebraska 68901
G. Peter Konen 92,500(8) 2.2%
146 North Maple
Hastings, Nebraska 68901
All Directors and Officers 1,581,135(10) 31.2%
as a Group (7 persons)
(1) Shares not outstanding but deemed beneficially owned by virtue of the
right of a person to acquire them as of March 19, 1996 or within sixty
days of such date are treated as outstanding only when determining the
percent owned by such individual and when determining the percent owned
by the group.
(2) Includes 100,000 shares which may be purchased upon exercise of a
currently exercisable Warrant.
(3) Includes 70,000 shares which may be purchased by Mr. Perkins upon
exercise of currently exercisable options and 22,500 shares of
Preferred Stock. Also includes 113,000 shares of Common Stock and
91,500 shares of Preferred Stock held by Perkins Capital Management,
Inc. ("PCM"), a registered investment adviser, for its clients. Mr.
Perkins is the controlling shareholder and an officer of PCM and has
sole dispositive power over such shares. Mr. Perkins disclaims
beneficial ownership of the shares held by PCM.
(4) Includes 285,000 shares which may be purchased by William Spell upon
exercise of currently exercisable options and 25,000 shares of
Preferred Stock held by William Spell's wife.
(5) Includes 22,500 shares held by the Spell Family Foundation. Messrs.
Harry Spell and William Spell share voting and dispositive power over
such shares.
(6) Includes 220,000 shares which may be purchased by Harry Spell upon
exercise of currently exercisable options and 50,000 shares of
Preferred Stock.
(7) Includes 45,000 shares which may be purchased by Mr. Long upon exercise
of currently exercisable options and 33,750 shares of Preferred Stock.
(8) Such shares are not outstanding but may be purchased upon exercise of
currently exercisable options.
(9) Includes 70,000 shares which may be purchased by Mr. Richard upon
exercise of currently exercisable options and 25,000 shares of
Preferred Stock.
(10) Includes 915,000 shares which may be purchased upon exercise of
currently exercisable options and 247,750 shares of Preferred Stock,
all as set forth above.
SET NUMBER OF DIRECTORS
(PROPOSAL NO. 1)
The Bylaws of the Company provide that the number of directors shall
not be less than three nor more than twelve, as determined by the shareholders.
The Board of Directors recommends that the number of directors be set at seven.
Each Proxy will be voted for or against such number, or not voted at all, as
directed in the Proxy.
VOTE REQUIRED; RECOMMENDATION
The adoption of the resolution to set the number of directors requires
the affirmative vote of the greater of (1) a majority of the voting power of
shares represented in person or by proxy at the Meeting with authority to vote
on such matter or (2) a majority of the voting power of the minimum number of
shares that would constitute a quorum for the transaction of business at the
meeting. The Board of Directors recommends that the shareholders vote in favor
of this Proposal No. 1.
ELECTION OF DIRECTORS
(PROPOSAL NO. 2)
GENERAL INFORMATION
Three directors will be elected at the Annual Meeting of Shareholders.
The Board of Directors consists of three classes of Directors, Class I who hold
office until the 1996 Annual Shareholders Meeting, Class II who hold office
until the 1998 Annual Shareholders Meeting and Class III who hold office until
the 1997 Annual Shareholders Meeting or, in all cases, until their successors
are elected. Richard W. Perkins, George R. Long and Harry W. Spell are current
Class I directors whose terms expire as of this Annual Meeting. Messrs. Perkins,
Long and Spell have been nominated for reelection as Class I Directors by the
Board of Directors and each has consented to being named as a nominee. It is
intended that solicited proxies will be voted for such nominees. The Company
believes that each nominee named below will be able to serve; but in the event
any nominee is unable to serve as a director, the persons named as proxies have
advised that they will vote for the election of such substitute nominee as the
Board of Directors may propose or, in the absence of such proposal, for such
fewer directors as results from the inability of a nominee to serve.
The Board currently consists of seven directors, including the nominees
listed below:
Class I Nominees whose terms of office will be until the 1999 Annual
Meeting of Shareholders if elected by the shareholders of the Company:
Richard W. Perkins
George R. Long
Harry W. Spell
Class II directors whose terms of office will continue until the 1998
Annual Meeting of Shareholders:
William H. Spell
Bruce A. Richard
Class III directors whose terms of office will continue until the 1997
Annual Meeting of Shareholders:
Larry D. Schnase
G. Peter Konen
The following is information concerning the principal occupations of
the nominees, as well as of those directors whose terms will continue beyond the
Annual Meeting, for at least the past five years.
William H. Spell, age 39. Mr. Spell has been President and a director
of the Company since January 1992. In addition, Mr. Spell is the Chief Executive
Officer and a Director of Discus Acquisition Corporation, which during 1995
completed the leveraged buyout of Peerless Chain, Inc. Peerless is a
manufacturer of chain and wire form products with over $45 million of sales in
1995. Previously Mr. Spell was involved with the acquisitions of a specialty
food products company and a manufacturer of various clothing sportswear. From
1981 through 1988, Mr. Spell was vice president and director of corporate
finance at John G. Kinnard & Co., a regional investment banking firm located in
Minneapolis. Mr. Spell serves as a director of Discus Acquisition Corporation
and Garment Graphics, Inc. as well as several private organizations. Mr. Spell
has a B.S. and an M.B.A. degree from the University of Minnesota.
Harry W. Spell, age 72. Mr. Harry Spell has been Chairman of the Board
and CEO of the Company since January 1992. In addition, Mr. Spell is the
Chairman of the Board of Discus Acquisition Corporation, which during 1995
completed the leveraged buyout of Peerless Chain, Inc. Peerless is a
manufacturer of chain and wire form products with over $45 million of sales in
1995. Previously Mr. Spell was involved with the acquisitions of a specialty
food products company and a manufacturer of various clothing sportswear. He was
employed by Northern States Power, a Fortune 500 company, from 1949 until August
1988 when he reached the mandatory retirement age of 65 and he retired from all
positions at Northern States Power Company. Mr. Harry Spell was Senior Vice
President, Finance and Chief Financial officer of Northern States Power Company
from May 1983 until April 1988. Mr. Harry Spell currently serves as a director
of Appliance Recycling Centers of America, Inc. and Discus Acquisition
Corporation, as well as several private organizations.
Bruce A. Richard, age 66. Mr. Richard has been a director of the
Company since March of 1992, Secretary, Treasurer since the summer of 1993 and
Vice Chairman since February 1996. He also served as Chief Financial Officer of
the Company from mid-1993 to February 1996. In addition, Mr. Richard is the
Chief Financial Officer of Discus Acquisition Corporation, which during 1995
completed the leveraged buyout of Peerless Chain, Inc. Peerless is a
manufacturer of chain and wire form products with over $45 million of sales in
1995. As a member of the Spell Investment Group, Mr. Richard has been involved
in numerous acquisitions and investment activities. He retired as President and
Chief Operating Officer of Northern States Power Company, a Fortune 500 company,
in July of 1986. He is a former member of the Board of Regents of St. John's
University and is actively involved in other philanthropic organizations.
Richard W. Perkins, age 65. Mr. Perkins has been a director of the
Company since January 1992. Mr. Perkins has been President of Perkins Capital
Management, Inc. since 1984 and has had over 35 years experience in the
investment business. Prior to establishing Perkins Capital Management, Inc., Mr.
Perkins was a Senior Vice President at Piper Jaffray Inc. where he was involved
in corporate finance and venture capital activities, as well as rendering
investment advice to domestic and international investment managers. Mr. Perkins
is a director of various public companies, including: Bio-Vascular, Inc.,
Lifecore Biomedical, Inc., Children's Broadcasting Corporation, Garment
Graphics, Inc., Discus Acquisition Corporation, CNS, Inc., Quantech Ltd. and
Nortech Systems, Inc.
George R. Long, age 65. Mr. Long has been a director of the Company
since 1986. He has served as Chairman of the Board of Directors of the Mayfield
Corporation, a financial advisory and services firm, since 1973. For over five
years, he has been a private investor. Mr. Long also is a director of the IAI
Series of Mutual Funds, Minneapolis, Minnesota.
Larry D. Schnase, age 63. Mr. Schnase has been a director of the
Company since December 1993. He has been Chief Executive Officer and a director
of Eagle since its inception in 1984 and served as President of Eagle from 1984
to February 1996. Prior to founding Eagle, Mr. Schnase served as Vice President
of Sales for Western Plastics, a PVC pipe and PE tubing manufacturer. Mr.
Schnase has over 35 years of experience in the business of manufacturing and
sales of plastic pipe.
G. Peter Konen, age 46. Mr. Konen has been a director of the Company
and Eagle since December 1993 and President and Chief Operating Officer of Eagle
since February 1996. He was Executive Vice President and Chief Operating Officer
of Eagle from 1984 to February 1996. Prior to 1984 he was Plant Manager with
Western Plastics, a PVC pipe and PE tubing manufacturer. Mr. Konen has over 22
years of experience in the business of manufacturing and sales of plastic pipe.
Harry W. Spell is William H. Spell's father.
VOTE REQUIRED; RECOMMENDATION
The election of each nominee requires the affirmative vote of a
majority of the shares represented in person or by proxy at the Annual Meeting.
The Board unanimously recommends that shareholders vote "For" the three nominees
for Class I directors named above.
COMMITTEE AND BOARD MEETINGS
The Company has an Audit Committee whose members are Messrs. Richard
(Chairman), Konen and Perkins and which met once during fiscal 1995. The Audit
Committee, among other responsibilities, recommends to the full Board of
Directors the selection of auditors and reviews and evaluates the activities and
reports of the auditors, as well as the internal accounting controls of the
Company.
The Company has a Compensation Committee whose members are Messrs.
Perkins (Chairman), Long and Richard. The Compensation Committee met two times
during fiscal 1995. The Compensation Committee is charged with determining the
compensation to be paid to officers of the Company and to determine other
compensation issues if requested by the Board of Directors.
Finally, the Company has a Nominating Committee whose members are
Messrs. Harry Spell (Chairman), Schnase and William Spell and which met once in
fiscal 1995. The Nominating Committee presents nominees for members on the Board
of Directors to the full Board of Directors for approval. The Nominating
Committee does consider nominees recommended by Company shareholders. Such
recommendations should be submitted in writing to William Spell and include a
biography of the nominee.
The Board of Directors met four times during fiscal 1995. Each director
attended at least 75% of the meetings of the Board of Directors and any
committee on which he served.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth all cash compensation paid or to be paid
by the Company and its subsidiary, Eagle Plastics, Inc., as well as certain
other compensation paid or accrued, during the last three fiscal years to the
Chief Executive Officers of the Company and Eagle Plastics, Inc. and the
executive officers of the Company and Eagle Plastics who received more than
$100,000 during fiscal 1995:
<TABLE>
<CAPTION>
Long Term
Compen-
Annual Compensation sation
------------------- ------
Securities
Underlying
Name and Other Options All
Principal Fiscal Annual and Other
Position Year Salary Bonus Compensation SARs Compensation
-------- ---- ------ ----- ------------ ---- ------------
<S> <C> <C> <C> <C> <C> <C>
Harry W. Spell 1995 $ 7,200(1) $ 0 $ 0 15,000 $ 0
Chief Executive 1994 $ 6,000 0 0 0 0
Officer and 1993 $ 6,000 0 0 45,000 0
Chairman of the
Board of the Company
William H. Spell 1995 $ 74,648(2) $ 0 $ 0 50,000 $ 0
President and Chief 1994 $ 62,500 $ 35,000 0 0 0
Operating Officer of 1993 $ 40,500 $100,000 0 175,000(3) 0
the Company and
Chairman of the Board
of Eagle Plastics, Inc.
Larry D. Schnase 1995(5) $167,225(4) $ 0 $ 0 35,000 $ 0
Chief Executive 1994(5) $150,000 $150,000 0 0 0
Officer of Eagle 1993(5) $125,000 $348,295 $139,000(6) 575,000(7) 0
Plastics, Inc.
G. Peter Konen 1995(5) $118,000(8) $ 0 $ 0 75,000 $ 0
President of 1994(5) $105,500 $ 50,000 $ 0 0 0
Eagle Plastics, Inc. 1993(5) $ 72,250 $ 69,840 $ 0 175,000(9) 0
</TABLE>
- ----------------------
(1) As of January 1, 1995, Harry W. Spell, pursuant to an oral agreement,
began to receive $600 per month for his services as Chairman of the
Board and Chief Executive Officer. No other benefits are provided to
Mr. Spell other than stock options that he has received.
(2) William H. Spell, President and Chief Operating Officer of the Company,
entered into a restated employment contract with the Company for a five
year term beginning January 1, 1995. Under such contract, Mr. Spell
will receive an annual base salary (currently $89,188) and a $600 per
month car allowance. Along with this base salary, he can receive a
bonus up to $35,000 per year if Eagle meets certain operating profit
levels. Such employment agreement has a confidentiality provision, a
four year noncompetition clause and provides for a severance payment of
$64,188 in the event of his termination other than for cause.
(3) Includes options to purchase 75,000 shares of the Company's Common
Stock and options to purchase 100,000 shares of Eagle Plastics, Inc.
Common Stock.
(4) Larry Schnase, Chief Executive Officer of Eagle, entered into a
restated employment contract for a five year term beginning January 1,
1995. Under such contract, Mr. Schnase will receive an annual base
salary (currently $179,050) and a $600 per month car allowance. Along
with this base salary, Mr. Schnase can receive an annual bonus up to
$150,000, if Eagle meets certain operating profit levels. Such
employment agreement has a confidentiality provision, a four year
noncompetition clause and provides for a severance payment of $154,050
in the event of his termination other than for cause. Finally, Mr.
Schnase has also entered into a deferred compensation agreement with
Eagle that provides for the payment of $75,000, in ten equal monthly
installments in the event of his death or at the end of his employment
upon retirement.
(5) Compensation to Messrs. Schnase, Konen and Spell is paid by Eagle,
which was acquired by the Company on December 17, 1993.
(6) Reflects an airplane that was previously owned by Eagle and provided to
Mr. Schnase as compensation at the time of the acquisition of Eagle by
the Company.
(7) Includes options to purchase 195,000 shares of the Company's Common
Stock and options to purchase 380,000 shares of Eagle Common Stock.
(8) G. Peter Konen, President of Eagle, entered into a restated employment
contract for a five year term beginning January 1, 1995. Under such
contact, Mr. Konen will receive an annual base salary (currently
$145,000). Along with his base salary, Mr. Konen can receive an annual
bonus up to $50,000 if Eagle meets certain operating profit levels.
Such employment agreement has a confidentiality provision, a four year
noncompetition clause and provides for a severance payment of $120,000
in the event of his termination other than for cause.
(9) Includes options to purchase 95,000 shares of the Company's Common
Stock and options to purchase 80,000 shares of Eagle Common Stock.
OPTION/SAR GRANTS DURING 1995 FISCAL YEAR
The following table provides details regarding stock options and SARs
granted to the named executive officers of the Company and Eagle Plastics, Inc.
in fiscal 1995.
<TABLE>
<CAPTION>
Number of Percent of Total
Securities Options/SARs
Underlying granted to Exercise or
Options/SARs Employees Base Price Expiration
Name Granted in Fiscal Year Per Share Date
---- ------- -------------- --------- ----
<S> <C> <C> <C> <C> <C>
William H. Spell 50,000(1) 10.8% $3.00 2/27/00
Harry W. Spell 15,000(1) 3.2% $3.00 2/27/00
Larry D. Schnase 35,000(1) 7.6% $3.00 2/27/00
G. Peter Konen 40,000(2) 8.7% $2.50 12/31/99
35,000(1) 7.6% $3.00 2/27/00
</TABLE>
- ------------------
(1) Such options are exercisable in full immediately.
(2) Exercisable in annual increments of 10,000 shares each commencing
December 31, 1995.
OPTION/SAR EXERCISES IN 1995 FISCAL YEAR AND FISCAL YEAR END OPTION VALUES
The following table sets forth information as to individual exercises
of options, number of options and value of options at December 31, 1995 with
respect to the named executive officers of the Company and Eagle:
<TABLE>
<CAPTION>
Number of Value of
Unexercised Unexercised
Securities In-the-Money
Underlying Options/SARs
Options/SARs at
Shares at FY-End (#) FY-End ($)
Acquired Value Exercisable/ Exercisable/
Name on Exercise Realized Unexercisable Unexercisable
---- ----------- -------- ------------- -------------
<S> <C> <C> <C> <C>
William H. Spell 0 0 285,000/0 $175,000/0
Harry W. Spell 0 0 220,000/0 $175,000/0
Larry D. Schnase 0 0 132,500/97,500 0/0
G. Peter Konen 0 0 92,500/77,500 0/0
</TABLE>
DIRECTORS' COMPENSATION
Each director who is not an employee of the Company or a subsidiary
(other than the Chairman and the Vice Chairman) is entitled to a fee of $600 for
attendance at each meeting of the Board of Directors or any committee meeting of
the Board. Harry W. Spell, Chairman of the Board, and Bruce A. Richard, Vice
Chairman of the Board, are compensated for their services in such capacities at
the rate of $600 per month and $450 per month, respectively. Also, each
nonemployee member of the Board of Directors who is (i) elected, re-elected or
serving an unexpired term as a director at any Annual Meeting of Shareholders or
(ii) elected as a director at any special meeting of shareholders of the
Company, is entitled to receive at the time of such election, re-election or
annual or special meeting of shareholders an option to purchase 5,000 shares of
the Company's Common Stock at a purchase price equal to the fair market value of
the Company's Common Stock on the date of such election, re-election or meeting.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Office Sharing. William H. Spell, President of the Company, pursuant to
his employment contract, has an office sharing arrangement with the Company. In
addition to those responsibilities pertaining to the Company, Mr. Spell is
engaged in activities unrelated to those of the Company, for which he agreed to
pay a fee equal to fair market value. Currently, another business with which Mr.
Spell is involved shares the space with the Company and pays fees to the Company
for such office sharing. Because of such payments, Mr. Spell's payment
obligation under his employment contract has been waived by the Company.
Eagle Stock Agreement. In conjunction with the acquisition of Eagle,
the Company entered into an Eagle Stock Agreement (the "Agreement"). Pursuant to
the Agreement: (i) an aggregate of 628,581 shares of Eagle Common Stock held by
Larry Schnase and G. Peter Konen; (ii) an aggregate of 500,000 shares of Eagle
Common Stock that may be acquired upon exercise of Stock Options held by Larry
Schnase, G. Peter Konen and David Schnase; and (iii) up to 338,357 shares that
may be purchased upon exercise of Stock Options that may be granted under the
Eagle 1993 Stock Option Plan (collectively the "Liquidity Shares") have
liquidity rights. Such liquidity rights provide that at any time after June 30,
1995, upon request by a holder of Liquidity Shares the Company will provide such
holder liquidity in his or her Liquidity Shares by: (i) purchasing such
Liquidity Shares for cash based on the market value of the Company's Common
Stock at the time of the request; (ii) by registering the Liquidity Shares
pursuant to the Securities Act of 1933, as amended, for public sale; (iii)
exchanging the Liquidity Shares for the Company's Common Stock on a one-for-one
ratio, provided, however, that only 314,290 of the Liquidity Shares may be
presented to the Company pursuant to the Agreement from June 30, 1995 through
December 31, 1995 and an additional 157,145 Liquidity Shares may be presented
after January 1, 1997 and January 1, 1998. The determination of which form of
liquidity to be provided is in the sole discretion of the Company. During Fiscal
1995, 72,500 Liquidity Shares previously owned by Larry Schnase were exchanged
for 72,500 shares of the Company's Common Stock.
APPROVAL OF INDEPENDENT PUBLIC ACCOUNTANTS
(PROPOSAL NO. 3)
Deloitte & Touche LLP, independent public accountants, has served as
the auditors of the Company since August 18, 1992. The Board of Directors has
again selected Deloitte & Touche LLP as the Company's auditors for Fiscal 1996
and shareholder ratification of the appointment is requested. In the event the
appointment is not approved by the shareholders, the Board of Directors will
make another appointment at the earliest feasible time.
A representative of Deloitte & Touche LLP is expected to be present at
the Annual Meeting of Shareholders and will have an opportunity to make a
statement if he or she desires to do so and will be available to respond to
appropriate questions. The Board of Directors recommends a vote "For" the
appointment of Deloitte & Touche LLP.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's executive officers and directors, and persons who own more than 10
percent of the Company's Common Stock, to file with the Securities and Exchange
Commission initial reports of ownership and reports of changes in ownership of
Common Stock and other equity securities of the Company. Officers, directors and
greater than 10% shareholders ("Insiders") are required by SEC regulations to
furnish the Company with copies of all Section 16(a) forms they file.
To the Company's knowledge, based on a review of the copies of such
reports furnished to the Company, during the fiscal year ended December 31, 1995
all Section 16(a) filing requirements applicable to Insiders were complied with
except as follows: one form covering two transactions was filed late by G. Peter
Konen; two forms covering two transactions were filed late by each of Harry W.
Spell and William H. Spell; and one form covering one transaction was filed late
by each of George R. Long, Richard W. Perkins, Bruce A. Richard and Larry D.
Schnase.
SHAREHOLDER PROPOSALS
The proxy rules of the Securities and Exchange Commission permit
shareholders of a Company, after timely notice to the Company, to present
proposals for shareholder action in the Company's proxy statements where such
proposals are consistent with applicable law, pertain to matters appropriate for
shareholder action and are not properly omitted by Company action in accordance
with the proxy rules. The Company did not receive from its shareholders any
proposals for action at the 1996 Annual Meeting. Any appropriate proposal
submitted by a shareholder of the Company and intended to be presented at the
1997 Annual Meeting of Shareholders must be received by the Company on or before
November 26, 1996 to be includable in the Company's proxy statement and related
proxy for the 1997 annual meeting.
GENERAL
Management knows of no other matters that will be presented at the
Annual Meeting of Shareholders. However, the enclosed proxy gives discretionary
authority in the event that any additional matters should be presented.
The Annual Report of the Company for the past fiscal year is enclosed
herewith and contains the Company's financial statements for the fiscal year
ended December 31, 1995. No portion of the Annual Report is incorporated herein
or is considered to be proxy soliciting material. SHAREHOLDERS MAY RECEIVE,
WITHOUT CHARGE, A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-KSB, INCLUDING
FINANCIAL STATEMENTS, AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, BY
WRITING TO: INVESTOR RELATIONS, EAGLE PACIFIC INDUSTRIES, INC., 2430
METROPOLITAN CENTRE, 333 SOUTH SEVENTH STREET, MINNEAPOLIS, MINNESOTA 55402.
By Order of the Board of Directors,
Harry W. Spell, Chairman and Chief
Executive Officer
EAGLE PACIFIC INDUSTRIES, INC.
PROXY
FOR 1996 ANNUAL MEETING OF SHAREHOLDERS TO BE HELD APRIL 30, 1996
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Harry W. Spell and William H. Spell,
and each of them acting alone, with full power of substitution, his or her
Proxies to represent and vote, as designated below, all shares of Eagle Pacific
Industries, Inc. (the "Company") registered in the name of the undersigned, at
the Company's 1996 Annual Meeting of Shareholders to be held at the Hilton
Hotel, 1001 Marquette Avenue, Minneapolis, Minnesota, at 3:30 p.m., Minneapolis
Time, on Tuesday, April 30, 1996, and at any adjournment thereof, and the
undersigned hereby revokes all proxies previously given with respect to the
Meeting.
1. To set the number of directors at seven.
|_| FOR |_| AGAINST |_| ABSTAIN
2. To elect three Class I directors to hold office until the 1998 Annual
Meeting of Shareholders. (Nominees: Richard W. Perkins, George R. Long
and Harry W. Spell)
|_| FOR all nominees listed above |_| WITHHOLD AUTHORITY to vote
(except those whose names have for all nominees listed above
been written on the line below)
(To withhold authority to vote for any individual nominee write that
nominee's name on the line below.)
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3. To ratify and approve the selection of Deloitte & Touche LLP as
independent public accountants for the Company for the current fiscal
year.
|_| FOR |_| AGAINST |_| ABSTAIN
4. OTHER MATTERS. In their discretion, the appointed Proxies are.
|_| AUTHORIZED |_| NOT AUTHORIZED
to vote upon such other business as may properly come
before the Meeting.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS DIRECTED, OR IF NO DIRECTION
IS GIVEN FOR A PARTICULAR PROPOSAL, WILL BE VOTED FOR SUCH PROPOSAL AND, IN THE
CASE OF PROPOSAL #4 WILL BE DEEMED TO GRANT AUTHORITY UNDER PROPOSAL #4.
Dated: ____________________, 1996 _____________________________________________
_____________________________________________
(PLEASE DATE AND SIGN name(s) exactly as
shown on your stock certificate. Executors,
administrators, trustees, guardians, etc.,
should indicate capacity when signing. For
stock held in Joint Tenancy, each joint
owner should sign.)
