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] No fee required
[ ] 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:
<PAGE>
EAGLE PACIFIC INDUSTRIES, INC.
2430 METROPOLITAN CENTRE
333 SOUTH SEVENTH STREET
MINNEAPOLIS, MINNESOTA 55402
---------------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
APRIL 27, 2000
---------------------------------
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 Thursday, April 27, 2000, at the
Minneapolis Hilton and Towers, 1001 Marquette Avenue, Minneapolis, Minnesota.
The meeting will convene at 3:15 p.m., Minneapolis Time, for the following
purposes:
1. To set the number of directors at five.
2. To elect one Class III director to serve until the 2003 Annual
Meeting of Shareholders.
3. To approve a 547,000 share increase in the number of shares
reserved for grant under the Company's 1997 Stock Option Plan.
4. To amend the Articles of Incorporation to change the Company's
name to "PW Eagle, Inc."
5. 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 17,
2000, 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,
William H. Spell
Chief Executive Officer
Minneapolis, Minnesota
March 23, 2000
================================================================================
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.
================================================================================
<PAGE>
EAGLE PACIFIC INDUSTRIES, INC.
-------------------------
PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 27, 2000
-------------------------
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 27, 2000, 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 March 23, 2000. The Company's corporate
offices are located at 2430 Metropolitan Centre, 333 South Seventh Street,
Minneapolis, Minnesota 55402, and its telephone number is (612) 305-0339.
OUTSTANDING SHARES AND VOTING RIGHTS
The Board of Directors of the Company has fixed March 17, 2000, as the
record date for determining shareholders entitled to vote at the meeting.
Persons who were not shareholders on such date will not be allowed to vote at
the Annual Meeting. At the close of business on March 17, 2000, 7,819,338 shares
of the Company's Common Stock were issued and outstanding. The Common Stock is
the only outstanding class of capital stock of the Company. Each share of Common
Stock is entitled to one vote at the Annual Meeting.
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<PAGE>
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 17, 2000,
concerning the beneficial ownership of the Company's voting securities by
persons who are known to own five percent or more of a class of voting 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
NAME AND ADDRESS BENEFICIALLY PERCENT OF
OF BENEFICIAL OWNER OWNED CLASS(1)
------------------- ----------- ----------
CB Capital Investors, L.P.... 1,343,452(2) 14.7%
380 Madison Avenue
New York, NY 10017
William H. Spell............. 643,763(3)(4)(5) 8.1%
2430 Metropolitan Centre
Minneapolis, MN 55402
Massachusetts Mutual Group 597,090(6) 7.1%
1295 State Street
Springfield, MA 01111
Perkins Capital Management, 487,099 6.2%
Inc...................
730 East Lake Street
Wayzata, MN 55391
William Blair Mezzanine...... 435,000 5.6%
Capital Fund, L.P.
222 West Adams Street
Chicago, IL 60606
Harry W. Spell............... 435,892(4)(5)(7) 5.5%
2430 Metropolitan Centre
Minneapolis, MN 55402
George R. Long............... 263,947(8) 3.4%
29 Las Brisas Way
Naples, FL 33963
Bruce A. Richard............. 200,157(5)(9) 2.5%
2458 Farrington Circle
Roseville, MN 55113
Richard W. Perkins........... 179,082(5)(10) 2.3%
730 East Lake Street
Wayzata, MN 55391
G. Peter Konen............... 161,300(11) 2.1%
818 N. Shore Drive
Hastings NE 68901
James K. Rash................ 82,500 1.1%
1550 Valley River Drive
Eugene, OR 97440
Larry I. Fleming............. 72,500 *
1550 Valley River Drive
Eugene, OR 97440
David P. Schnase............. 30,000(11) *
18 Deer Trail
Hastings, NE 68901
All Directors and Current.... 2,088,921(12) 25.9%
Officers as a Group (12
persons)
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* Less than 1%
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<PAGE>
(1) Shares not outstanding but deemed beneficially owned by virtue of the
right of a person to acquire them as of March 17, 2000 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) Such shares are not outstanding but may be purchased upon exercise of
currently exercisable warrants to purchase Common Stock.
(3) Includes 100,800 shares which may be purchased upon exercise of
currently exercisable options and 21,429 shares held by Mr. Spell's
wife.
(4) Includes 65,500 shares held by the Spell Family Foundation. Messrs.
Harry Spell and William Spell share voting and dispositive power over
such shares.
(5) Messrs. William H. Spell, Harry W. Spell, Richard W. Perkins and Bruce
A. Richard have individually acquired securities of the Company from
the Company and in open market transactions and each of them
individually anticipates that he will acquire additional securities of
the Company in the future. Such persons have entered into an agreement
which requires that a majority of them approve any sale of securities
of the Company by any of them. This agreement is designed to keep all
of such persons interested and focused on the long-term success of the
Company and recognizes that each of such persons contributes specific
expertise to the Company through their positions as directors and/or
officers. The agreement does not require that such persons vote their
shares in any specific manner or act in concert in connection with any
purchase or sale of securities of the Company.
(6) Such shares are not outstanding but may be purchased upon exercise of
currently exercisable warrants to purchase Common Stock held by
Massachusetts Mutual Life Insurance Company (238,836 shares),
MassMutual Corporate Investors (197,040 shares), MassMutual
Participation Investors (101,505 shares) and MassMutual Corporate Value
Partners Ltd. (59,709 shares).
(7) Includes 58,560 shares which may be purchased upon exercise of
currently exercisable options.
(8) Includes 17,140 shares which may be purchased upon exercise of
currently exercisable options.
(9) Includes 43,560 shares which may be purchased upon exercise of
currently exercisable options.
(10) Includes 17,140 shares which may be purchased upon exercise of
currently exercisable options, 11,429 shares held by a Profit Sharing
Trust for Mr. Perkins' benefit, and 10,000 shares held by the Perkins
Foundation. Does not include 487,099 shares held by Perkins Capital
Management, Inc. as to which Mr. Perkins has no voting or investment
power.
(11) The information provided is as of December 31, 1999.
(12) Includes 241,280 shares which may be purchased upon exercise of
currently exercisable options.
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 five.
Each Proxy will be voted for or against such number, or not voted at all, as
directed in the Proxy.
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<PAGE>
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
The Board of Directors consists of three classes of Directors, Class I
who hold office until the 2002 Annual Shareholders Meeting, Class II who hold
office until the 2001 Annual Shareholders Meeting and Class III who hold office
until the 2000 Annual Shareholders Meeting or, in all cases, until their
successors are elected. During the fiscal year, as a result of the resignations
of all Class III directors elected by the shareholders at the last annual
meeting and in order to comply with a Bylaw provision that the number of members
of each class of directors be as nearly equal as possible, Harry W. Spell was
moved from Class I to Class III. Accordingly, Harry W. Spell is the current
Class III director whose terms expires as of this Annual Meeting. Mr. Spell has
been nominated for election as Class III Director by the Board of Directors and
has consented to being named as a nominee. It is intended that solicited proxies
will be voted for such nominee. The Company believes that Mr. Spell will be able
to serve; but in the event he 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 Mr.
Spell to serve.
The Board currently consists of five directors, including the nominee listed
below:
Class III Nominee whose term of office will be until the 2003 Annual
Meeting of Shareholders if elected by the shareholders of the Company:
Harry W. Spell (1)(4)
Class II Directors whose terms of office will continue until the 2001
Annual Meeting of Shareholders:
William H. Spell(2)(4)
Bruce A. Richard(1)(3)(4)
Class I Directors whose terms of office will continue until the 2002
Annual Meeting of Shareholders:
George R. Long(3)
Richard W. Perkins (1)(2)(3)
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<PAGE>
(1) Member of Compensation Committee
(2) Member of Nominating Committee
(3) Member of Audit Committee
(4) Member of Executive Committee
The following is information concerning the principal occupations for
at least the past five years of the nominees and those directors whose terms
will continue beyond the Annual Meeting:
HARRY W. SPELL, age 76, has been chairman of the board since January
1992. He also served as chief executive officer of the Company from January 1992
to January 1997. In addition, Mr. Spell is the chief financial manager and
chairman of the board of Spell Capital Partners, LLC, a private equity firm
which focuses on leveraged acquisitions of established businesses in the Upper
Midwest. Mr. Spell has been involved in private equity investing since 1988. He
was employed by Northern States Power, a Fortune 500 company, from 1949 until
August 1988, where he served as senior vice president, finance and chief
financial officer. Mr. Spell currently serves as a director of Appliance
Recycling Centers of America, Inc., as well as several private organizations.
WILLIAM H. SPELL, age 43, has been a director of the Company since
January 1992 and chief executive officer since January 1997, and served as the
Company's president from January 1992 to January 1997. In addition, Mr. Spell is
the president of Spell Capital Partners, LLC, a private equity firm which
focuses on leveraged acquisitions of established businesses in the Upper
Midwest. Mr. Spell has been involved in private equity investing since 1988.
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, Minnesota. Mr. Spell has a B.S. and an M.B.A. degree from the
University of Minnesota.
BRUCE A. RICHARD, age 70, has been a director of the Company since
March of 1992 and vice chairman since February 1996. He also served as secretary
of the Company from mid-1993 to August 1998, as chief financial officer from
mid-1993 to February 1996 and treasurer from mid-1993 to March 1998. In
addition, Mr. Richard is affiliated with Spell Capital Partners, LLC, a private
equity firm which focuses on leveraged acquisitions of established businesses in
the Upper Midwest. Mr. Richard has been involved in private equity investing
since 1988. 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.
GEORGE R. LONG, age 69, 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 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.
RICHARD W. PERKINS, age 69, has been a director of the Company since
January 1992. Mr. Perkins has been President of Perkins Capital Management,
Inc., a registered investment adviser, since 1984 and has had over 40 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 also affiliated with Spell Capital Partners, LLC, which
is a private equity firm which focuses on leveraged acquisitions of established
businesses in the Upper Midwest. Mr. Perkins is a director of various public
companies, including: Bio-
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<PAGE>
Vascular, Inc., Lifecore Biomedical, Inc., iNTELEFILM Corporation, CNS, Inc.,
Quantech Ltd., Nortech Systems, Inc., Vital Images, Inc. and Harmony Holdings,
Inc.
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 recommends that shareholders vote "For" the nominee for Class III
director named above.
COMMITTEE AND BOARD MEETINGS
The Company has an Audit Committee whose members are Messrs. Richard
(Chairman), Long and Perkins and which met twice during fiscal 1999. 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), Harry Spell and Richard. 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. The Compensation Committee did not formally meet during fiscal 1999.
In lieu of Compensation Committee meetings, the Board of Directors determined
compensation issues.
Finally, the Company has a Nominating Committee whose members are
Messrs. William Spell (Chairman) and Perkins. The Nominating Committee met once
in fiscal 1999. 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 directors and committee members communicate informally to discuss
the affairs of the Company and, when appropriate, take formal Board and
Committee action by unanimous written consent of all directors or committee
members, in accordance with Minnesota law, rather than hold formal meetings. The
Board of Directors met formally nine times during fiscal 1999. Each director
attended all meetings of the Board of Directors and any committee on which he
served.
EXECUTIVE COMPENSATION
BOARD OF DIRECTOR'S REPORT ON EXECUTIVE COMPENSATION
COMPENSATION COMMITTEE'S RESPONSIBILITY. The Compensation Committee of
the Board of Directors is currently composed of directors Richard W. Perkins,
who is the Chairman of the Committee, Bruce A. Richard and Harry W. Spell. Harry
W. Spell was Chairman of the Board of the Company during 1999. Bruce A. Richard
was Vice Chairman of the Board during 1999. The Committee is responsible for
developing and making recommendations to the Board with respect to compensation
of the executive officers of the Company. Although the Company has a
Compensation Committee, during fiscal 1999 the Board of Directors assumed
responsibility for compensation matters.
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<PAGE>
COMPENSATION PHILOSOPHY. The Company is concerned with finding and
retaining top quality people. The Committee and the Board look at industry
averages and surveys, and considers location as well in setting salaries.
The executive compensation plan is comprised of base salaries, annual
EBITDA performance bonuses, long-term incentive compensation in the form of
stock option awards and Company loans to purchase stock, and various benefits in
which all qualified employees of the Company participate. In addition, special
cash bonuses or stock options related to non-recurring, extraordinary
performance may be awarded from time to time.
BASE SALARY. Base salaries for executive officers are reviewed by the
Committee or the Board on an annual basis. Each year the Committee or the Board
assesses the executive employee's level of responsibility, experience, and
external market practices. For the year ended 1999, salaries rose slightly. Each
year the Committee or the Board reviews the Company's performance and recommends
to the full Board the salaries for the coming year. The Chief Executive
Officer's salary increased more substantially as a result of the acquisition of
Pacific Western Extruded Plastics Company (PW Pipe) to reflect increases in
responsibility associated with the growth in size of the Company.
ANNUAL INCENTIVES. In 1996, the Company adopted an EBITDA (earnings
before interest, taxes, depreciation and amortization) Bonus Plan (the "Bonus
Plan"). Generally, executives receive a percentage, up to 100%, of potential
bonuses based upon the Company's performance relative to EBITDA goals as well as
subjective goals. Under the Bonus Plan, the Board of Directors establishes the
Company's EBITDA goals and identifies other factors that will be considered in
awarding bonuses. The Compensation Committee presents recommendations to the
Board for executives' potential bonuses for the Board's approval.
LONG-TERM INCENTIVES. The Company may grant some executive level
employees long-term awards, including stock options pursuant to the Company's
1997 Stock Option Plan. Prior to 1997 the Company had a 1991 Stock Plan; however
beginning in 1997, awards under the 1991 Stock Plan will no longer be made. The
Company adopted a Leverage Equity Purchase Plan (the "LEPP") in 1996 under which
the Company loans 90% of the cost of purchasing shares of the Company's common
stock to selected employees. The purpose of the LEPP is to more closely align
the goals and motivation of management with those of other shareholders and to
provide key personnel with a long-term capital accumulation opportunity. No
grants were made under the LEPP during fiscal 1999 and the Company has
determined that it will no longer make grants under the LEPP.
OTHER COMPENSATION PLANS. The Company has adopted certain broad-based
employee benefit plans in which all employees, including the named executives,
are permitted to participate on the same terms and conditions relating to
eligibility and generally subject to the same limitation on the amounts that may
be contributed or the benefits payable under those plans. The Company maintains
plans qualified under I.R.C. Section 401(k), and the Company made aggregate
contributions to such plans of $821,000 for fiscal year 1999.
CHIEF EXECUTIVE OFFICER COMPENSATION. William H. Spell served as the
Company's Chief Executive Officer in 1999. The Chief Executive Officer is
evaluated annually based on several factors, including the Company's achievement
of targeted EBITDA goals. The Chief Executive Officer is charged with maximizing
the Company's cash flow, as well as executing the corporate growth strategy,
through both internal growth and growth by acquisition. During 1999, the Company
completed an
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<PAGE>
acquisition of PW Pipe and Mr. Spell was awarded a closing bonus of $175,000 in
connection with the transaction.
George R. Long
Richard W. Perkins
Bruce A. Richard
Harry W. Spell
William H. Spell
Members of the Board of Directors
SUMMARY COMPENSATION TABLE
The following table sets forth all cash compensation paid or to be paid
by the Company, as well as certain other compensation paid or accrued, during
the last three fiscal years to the Chief Executive Officer of the Company and
the executive officers of the Company who received more than $100,000 during
fiscal 1999:
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
---------------------------------
AWARDS PAYOUTS
ANNUAL COMPENSATION ----------------------- -------
--------------------------------- SECURITIES
RESTRICTED UNDERLYING
OTHER ANNUAL STOCK OPTIONS/ LTIP ALL OTHER
NAME AND PRINCIPAL SALARY BONUS COMPENSATION AWARD(S) SARs PAYOUTS COMPENSATION
POSITION YEAR ($) ($) ($)(1) ($)(2) (#) ($) ($)
- ------------------ ---- ------- ------- ------------ ---------- ---------- ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
William H. Spell, 1999 145,700 280,000 0 70,000 10,000 0 7,404(3)
Chief Executive 1998 115,000 51,000 0 0 120,000 0 5,072
Officer 1997 108,000 12,750 0 0 100,000 0 3,236
James K. Rash, 1999(4) 68,368 86,576 0 103,313 72,500 0 11,871(5)
President
Larry I. Fleming, 1999(4) 53,172 46,207 0 105,000 67,500 0 10,845(6)
Sr. Vice President
G. Peter Konen, 1999 193,800 84,500 0 0 0 0 305,904(7)
Former President 1998 182,000 81,000 0 0 75,000 0 5,072
1997 175,000 20,250 0 0 80,000 0 3,469
David P. Schnase, 1999 155,357 35,000 0 0 0 0 142,404(8)
Former Sr. Vice 1998 130,000 35,000 0 0 0 0 5,072
President 1997 125,000 8,750 0 0 44,500 0 3,469
</TABLE>
- ----------------------
(1) Does not include car allowances or personal use of Company car, group
life insurance or other personal benefits, the aggregate amount of
which was less than 10% of the individual's listed compensation.
(2) Dividends, if declared by the Company, will be paid on the shares.
Aggregate shares of restricted stock held by the named executive
officers at December 31, 1999 and the value of such shares on that date
(based on a closing stock price of $4.25 per share) are as follows: Mr.
Spell held 20,000 shares valued at $85,000; Mr. Rash held 29,000 shares
valued at $123,250; and Mr. Fleming held 30,000 shares valued at
$127,500.
(3) Amount reflects Company contributions to the 401(k) Plan.
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<PAGE>
(4) Mr. Rash and Mr. Fleming began employment with the Company during
fiscal 1999.
(5) Amount includes Company contributions to the 401(k) Plan ($2,600) and
nonqualified pension plan ($9,271).
(6) Amount includes Company contributions to the 401(k) plan ($2,600) and
nonqualified pension plan ($8,245).
(7) Amount includes Company contributions to the 401(k) Plan ($7,404) and
amount accrued for severance payment ($298,500).
(8) Amount includes Company contributions to the 401(k) Plan ($7,404) and
amount accrued for severance payment ($135,000).
EMPLOYMENT AGREEMENTS
The Company has an employment agreement with William H. Spell, Chief
Executive Officer of the Company, for a term ending December 31, 2002. Under
such contract, Mr. Spell will receive an annual base salary of not less than
$200,000 and a $600 per month car allowance. Along with his base salary, he can
receive an annual bonus of up to 50% of his base salary if the Company meets
certain operating profit levels. In addition, under the terms of the Agreement,
Mr. Spell received a special transaction bonus upon closing of the Company's
acquisition of PW Pipe. Such employment agreement has a confidentiality
provision, a one year noncompetition clause and provides for a severance payment
equal to Mr. Spell's base salary for the balance of the initial term of the
Agreement (but not less than 12 months) in the event of his termination other
than for cause.
The Company has an employment agreement with James K. Rash, President
of the Company, for a term ending December 31, 2000 which renews automatically
for successive one-year terms. Under such contract, Mr. Rash will receive an
annual base salary of not less than $267,500. Along with his base salary, he can
receive an annual bonus of up to 50% of his base salary if the Company meets
certain operating profit levels. Such employment agreement has a confidentiality
provision, a one year noncompetition clause and provides for a severance payment
equal to Mr. Rash's base salary for the balance of the initial term of the
Agreement (but not less than 12 months) in the event of his termination other
than for cause.
The Company has an employment agreement with Larry I. Fleming, Senior
Vice President of the Company, for a term ending December 31, 2002 which renews
automatically for successive one-year terms. Under such contract, Mr. Fleming
will receive an annual base salary of not less than $197,500. Along with his
base salary, he can receive an annual bonus of up to 50% of his base salary if
the Company meets certain operating profit levels. Such employment agreement has
a confidentiality provision, a one year noncompetition clause and provides for a
severance payment equal to Mr. Fleming's base salary for the balance of the
initial term of the Agreement (but not less than 12 months) in the event of his
termination other than for cause.
The Company had an employment agreement with G. Peter Konen, its former
President. Under such contract, Mr. Konen received an annual base salary
determined by the Board each year and a $600 per month car allowance. Along with
his base salary, Mr. Konen was eligible to receive an annual bonus up to $84,500
if the Company met certain operating profit levels. Such employment agreement
had a confidentiality provision, a two year noncompetition clause and provided
for a severance payment equal
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<PAGE>
to Mr. Konen's base salary in the event of his termination other than for cause.
In addition, Mr. Konen is entitled to receive paid health insurance for 18
months, his unused vacation as of December 21, 1999, and $600 per month until
June, 2001.
The Company had an employment agreement with David P. Schnase, its
former Senior Vice President Sales. Under such contract, Mr. Schnase received an
annual base salary determined by the Board each year. Along with his base
salary, Mr. Schnase was eligible to receive an annual bonus up to $35,000 if the
Company met certain operating profit levels. Such employment agreement had a
confidentiality provision a two-year noncompetition clause and provided for a
severance payment equal to his then annual base salary in the event of his
termination other than for cause.
OPTION/SAR GRANTS DURING 1999 FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE
AT ASSUMED ANNUAL RATES
OF STOCK PRICE APPRECIATION
INDIVIDUAL GRANTS FOR OPTION TERM
------------------------------------------------------------ ---------------------------
NUMBER OF PERCENT OF TOTAL
SECURITIES OPTIONS/SARs
UNDERLYING GRANTED TO EXERCISE OR
OPTIONS/SARs EMPLOYEES IN BASE PRICE EXPIRATION
NAME GRANTED(#) FISCAL YEAR ($/SH) DATE 5%($) 10%($)
- ---- ------------ ---------------- ------------ ---------- ----- ------
<S> <C> <C> <C> <C> <C> <C>
William H. Spell.... 10,000(1) 2.4% $3.50 09/16/09 $ 22,011 $ 55,780
James K. Rash....... 72,500(2) 17.6% $3.5635 10/14/09 $162,432 $411,633
Larry I. Fleming.... 67,500(1) 9.1% $3.50 09/16/09 $148,576 $376,522
G. Peter Konen...... 0 N/A N/A N/A N/A N/A
David P. Schnase.... 0 N/A N/A N/A N/A N/A
</TABLE>
(1) Option was granted on September 16, 1999 and vests at a rate of 2% per
year starting September 16, 2000.
(2) Option was granted on October 15, 1999 and vests at a rate of 20% per
year starting October 15, 2000.
OPTION/SAR EXERCISES IN 1999 FISCAL YEAR AND FISCAL YEAR END OPTION VALUES
The following table sets forth information as to individual exercises
of options, number of options and value of options at December 31, 1999 with
respect to the named executive officers:
<TABLE>
<CAPTION> NUMBER OF
UNEXERCISED VALUE OF
SECURITIES UNEXERCISED
UNDERLYING IN-THE-MONEY
OPTIONS/SARs AT OPTIONS/SARs AT
FY-END(#) FY-END($)(1)
SHARES ACQUIRED EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE VALUE REALIZED UNEXERCISABLE UNEXERCISABLE
---- ----------------- -------------- ------------- -------------
<S> <C> <C> <C> <C>
William H. Spell................... 150,000 $281,250 100,800/89,200 $243,450/225,300
James K. Rash...................... 0 N/A 0/72,500 0/49,844
Larry I. Fleming................... 0 N/A 0/67,500 0/50,625
G. Peter Konen..................... 230,500 574,125 0/49,500(2) 0/136,125
David P. Schnase................... 74,500 214,094 0/0 0/0
</TABLE>
(1) Based on the difference between the closing price of the Company's
Common Stock as reported by Nasdaq at fiscal year end and the option
exercise price.
(2) Such options terminated in connection with Mr. Konen's termination of
employment.
- 10 -
<PAGE>
DIRECTORS' COMPENSATION
In 1999, Harry W. Spell, Chairman of the Board, and Bruce A. Richard,
Vice Chairman of the Board, were each compensated for their services in such
capacities at the annual rate of $30,000. George R. Long and Richard W. Perkins
received fees of $12,000 and $21,000, respectively, for their roles as
non-employee directors.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
OFFICE SHARING. The Company has an office sharing arrangement with
Spell Capital Partners, LLC pursuant to which the Company pays $11,000 per month
for space and administrative support. William H. Spell and Harry W. Spell are
both members of Spell Capital Partners, LLC.
LOANS TO PURCHASE STOCK. In fiscal 1999, the Company sold stock to its
directors and executive officers and accepted Promissory Notes in payment of all
or a portion of the consideration for such stock. The Company believes that each
member of its management team should have a significant stake in the Company's
financial performance. By having a meaningful amount of equity at risk,
management's interests are closely aligned with those of the Company's
shareholders. The Notes bear interest at the rate the Company is paying to the
senior secured lender on its revolving credit facility, currently 8.1% per
annum. Loans in excess of $60,000 were made to the following persons:
<TABLE>
<CAPTION>
HIGHEST AMOUNT OUTSTANDING AMOUNT OUTSTANDING AS OF
NAME AND TITLE DURING FISCAL 1999 MARCH 15, 2000
-------------- ------------------ --------------
<S> <C> <C>
William H. Spell, Chief Executive Officer $340,488 $340,488
James K. Rash, President $106,575 $106,575
Larry I. Fleming, Senior Vice President $ 98,547 $ 98,547
John R. Cobb, Senior Vice President $ 86,953 $ 86,953
Roger R. Robb, Chief Financial Officer $ 89,447 $ 89,447
</TABLE>
STOCK PERFORMANCE CHART
The following chart compares the cumulative total shareholder return on
the Company's Common Stock with the S&P Smallcap 600 Index and an index of peer
companies selected by the Company (the "Peer Group Index"). The comparison
assumes $100 was invested on December 31, 1994 in the Company's Common Stock and
in each of the foregoing indices and assumes reinvestment of dividends.
- 11-
<PAGE>
TOTAL SHAREHOLDER RETURNS
[PLOT POINTS CHART]
Indexed Returns
Years Ending
<TABLE>
<CAPTION>
Base
Period
Company Name/Index Dec 94 Dec 95 Dec 96 Dec 97 Dec 98 Dec 99
- ------------------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Eagle Pacific Industries 100 64 122 100 89 189
S&P SmallCap 600 Index 100 129 155 192 188 210
Peer Group 100 129 107 106 98 94
</TABLE>
The Peer Group Index includes the following companies: Lamson and Sessions
Co. and Royal Group Tech Ltd.
APPROVAL OF INCREASE IN SHARES RESERVED FOR 1997 STOCK OPTION PLAN
(PROPOSAL NO. 3)
GENERAL
The Company currently has in effect a 1997 Stock Option Plan (the
"Plan"). The Board has approved a 547,000 share increase in the number of shares
reserved for the Plan and has directed that such increase be submitted to the
shareholders for approval. The Board believes that the Plan has been, and will
continue to be, important for attracting, retaining and providing incentives for
those officers, directors and key employees upon whose judgment, initiatives and
efforts the Company is largely dependent for the successful conduct of its
business.
- 12 -
<PAGE>
DESCRIPTION OF PLAN
A general description of the basic features of the Plan is presented
below, but such description is qualified in its entirety by reference to the
full text of the Plan, a copy of which may be obtained without charge upon
written request to the Company's Chief Financial Officer.
PURPOSE. The purpose of the Plan is to promote the success of the
Company by facilitating the employment and retention of competent personnel and
by furnishing incentive to directors, officers, employees and key consultants
upon whose efforts the success of the Company will depend to a large degree.
TERM. Incentive stock options may be granted pursuant to the Plan
during a period of ten years from the date the Plan was adopted by the Board of
Directors, and nonqualified stock options may be granted until the Plan is
discontinued or terminated by the Board of Directors.
ADMINISTRATION. The Plan may be administered by the Board of Directors
or a Committee of the Board (the "Administrator"). The Plan gives broad powers
to the Administrator to administer and interpret the Plan, including the
authority to select the individuals to be granted options and to prescribe the
particular form and conditions of each option granted.
ELIGIBILITY. All employees of the Company or any subsidiary are
eligible to receive incentive stock options pursuant to the Plan. All employees,
officers and directors of and consultants and advisors to the Company or any
subsidiary are eligible to receive nonqualified stock options. As of March 15,
2000, the Company had approximately 836 employees, of which eight are officers,
and four non-employee directors.
OPTIONS. When an option is granted under the Plan, the Administrator,
at its discretion, specifies the option price, the type of option (either
"incentive" or "nonqualified") to be granted, and the number of shares of Common
Stock which may be purchased upon exercise of the option. The exercise price of
an incentive stock option may not be less than 100% of the fair market value of
the Company's Common Stock, as that term is defined in the Plan. Unless
otherwise determined by the Administrator, the exercise price of a nonqualified
stock option will not be less than 100% of the fair market value on the date of
grant. The market price of the Company's Common Stock on March 15, 2000 was
$10.00. The period during which an option may be exercised and whether the
option will be exercisable immediately, in stages, or otherwise, are determined
by the Administrator, but the term of an incentive stock option may not exceed
ten years from the date of grant. Optionees may pay for shares upon exercise of
options with cash, certified check or, of approved by the Administrator, Common
Stock of the Company valued at the stock's then "fair market value" as defined
in the Plan. Each incentive stock option granted under the Plan is
nontransferable during the lifetime of the optionee. Each outstanding option
under the Plan may terminate earlier than its stated expiration date in the
event of the optionee's termination of employment or other relationship with the
Company.
CHANGE OF CONTROL. In the event that the Company is acquired through
the sale of substantially all of its assets or through a merger or other
transaction (a "Transaction"), all outstanding options will become immediately
exercisable in full and will remain exercisable during the remaining terms of
such outstanding options. The acceleration of the exercisability of outstanding
options may be limited, however, if the acquiring party seeks to account for a
Transaction on a "pooling of interests" basis
- 13 -
<PAGE>
which would be precluded if such options are accelerated. The Board may also
take certain additional actions, such as terminating the Plan, providing cash or
stock valued at the amount equal to the excess of the fair market value of the
stock over the exercise price, or allowing exercise of the options for stock of
the succeeding company.
AMENDMENT. The Board of Directors may from time to time suspend or
discontinue the Plan or revise or amend it in any respect; provided, however,
that no such revision or amendment may impair the terms and conditions of any
outstanding option to the material detriment of the optionee without the consent
of the optionee, except as authorized in the event of a sale, merger,
consolidation or liquidation of the Company. The Plan may not be amended in any
manner that will cause incentive stock options to fail to meet the requirements
of Code Section 422, and may not be amended in any manner that will: (i)
materially increase the number of shares subject to the Plan, except as provided
in the case of stock splits, consolidations, stock dividends or similar events;
(ii) change the designation of the class of employees eligible to receive
options; (iii) decrease the price at which options will be granted; or (iv)
materially increase the benefits accruing to optionees under the Plan, without
the approval of the shareholders, if such approval is required to comply with
Code Section 422 or the requirements of Section 16(b) of the Act.
The Board of Directors will equitably adjust the maximum number of
shares of Common Stock reserved for issuance under the Plan, the number of
shares covered by each outstanding option and the option price per share in the
event of stock splits or consolidations, stock dividends or other transactions
in which the Company receives no consideration.
FEDERAL INCOME TAX CONSEQUENCES OF THE PLAN. Under present law, an
optionee will not realize any taxable income on the date a nonqualified stock
option is granted to the optionee pursuant to the Plan. Upon exercise of the
nonqualified stock option, however, the optionee will realize, in the year of
exercise, ordinary income to the extent of the difference between the option
price and the fair market value of the Company's Common Stock on the date of
exercise. Upon the sale of the shares, any resulting gain or loss will be
treated as capital gain or loss. The Company will be entitled to a tax deduction
in its fiscal year in which nonqualified stock options are exercised, equal to
the amount of compensation required to be included as ordinary income by those
optionees exercising such options.
Incentive stock options granted pursuant to the Plan are intended to
qualify for favorable tax treatment to the optionee under Code Section 422.
Under Code Section 422, an employee realizes no taxable income when the
incentive stock option is granted. If the employee has been an employee of the
Company or any subsidiary at all times from the date of grant until three months
before the date of exercise, the employee will realize no taxable income when
the option is exercised. If the employee does not dispose of shares acquired
upon exercise for a period of two years from the granting of the incentive stock
option and one year after receipt of the shares, the employee may sell the
shares and report any gain as capital gain. The Company will not be entitled to
a tax deduction in connection with either the grant or exercise of an incentive
stock option. If the employee should dispose of the shares prior to the
expiration of the two-year or one-year periods described above, the employee
will be deemed to have received compensation taxable as ordinary income in the
year of the early sale in an amount equal to the lesser of (i) the difference
between the fair market value of the Company's Common Stock on the date of
exercise and the option price of the shares, or (ii) the difference between the
sale price of the shares and the option price of shares. In the event of such an
early sale, the Company will be entitled to a tax deduction equal to the amount
recognized by the employee as
- 14 -
<PAGE>
ordinary income. The foregoing discussion ignores the impact of the alternative
minimum tax, which may particularly be applicable to the year in which an
incentive stock option is exercised.
PLAN BENEFITS. The table below shows the total number of stock options
that have been received under the Plan by the indicated individuals and groups:
Number of
Name and Position/Group Options Received(1)
----------------------- -------------------
William H. Spell, CEO 280,000
James K. Rash, President 72,500
Larry I. Fleming, Senior Vice President 67,500
G. Peter Konen, Former President 205,000
David P. Schnase, Former Senior Vice President 74,500
Current Executive Officer Group 694,500
Current Non-Executive Officer Director Group 220,000
Current Non-Executive Officer Employee Group 253,200
(1) This table reflects only the total stock options granted as of March
15, 2000, without taking into account exercises or cancellations.
Because future grants of stock options under the Plan are subject to
the discretion of the Administrator, the future benefits that may be
received by such individuals or groups under the Plan cannot be
determined at this time.
VOTE REQUIRED; RECOMMENDATION
The Board of Directors recommends that the shareholders approve the
increase in the shares reserved for the 1997 Stock Option Plan. Approval of the
increase requires the affirmative vote of the greater of (i) a majority of the
shares represented at the meeting with authority to vote on such matter of (ii)
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.
AMENDMENT OF ARTICLES OF INCORPORATION
(PROPOSAL #4)
At the Annual Meeting, shareholders will be asked to approve an
amendment to the Company's Articles of Incorporation to change the name of the
Company from "Eagle Pacific Industries, Inc." to "PW Eagle, Inc." The Board of
Directors believes that "PW Eagle, Inc." reflects the combination of Eagle with
PW Pipe, as a result of the merger of the two companies which occurred in the
3rd quarter of 1999. This name signifies the Company's broader product line and
larger geographic territory. Accordingly, the Board of Directors has adopted and
recommends for shareholder approval an amendment to the Articles of
Incorporation of the Company which would change the name of the Company to "PW
Eagle, Inc."
VOTE REQUIRED; RECOMMENDATION
Adoption of the amendment to the Company's Articles of Incorporation to
change the Company's name requires the affirmative vote of the holders of the
greater of (1) a majority of the voting
- 15 -
<PAGE>
power of the shares represented in person or by proxy at the Annual 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 Annual Meeting.
INDEPENDENT AUDITORS
The Board of Directors has selected PricewaterhouseCoopers LLP as the
Company's auditors for fiscal 2000.
Deloitte & Touche LLP, independent public accountants, served as the
auditors of the Company for fiscal 1998. On April 30, 1999, the Company
dismissed Deloitte & Touche, LLP as its principal independent public accountant.
The decision to dismiss the Company's certifying accountant was recommended and
approved by the Company's Board of Directors. The report of Deloitte & Touche,
LLP on the Company's financial statements for the past two fiscal years contain
no adverse opinion or a disclaimer of opinion and were not qualified or modified
as to uncertainty, audit scope or accounting principles. In connection with its
audits as of and for the years ended December 31, 1998 and 1997, there have been
no disagreements between the Company and Deloitte & Touche, LLP on any matter of
accounting principles or practices, financial statement disclosure, or auditing
scope or procedure, which disagreements, if not resolved to the satisfaction of
Deloitte & Touche, LLP, would have caused it to make reference thereto in its
report on the financial statements for the Company for such years.
A representative of PricewaterhouseCoopers 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.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
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, 1999
all Section 16(a) filing requirements applicable to Insiders were complied with
except that James K. Rash was late filing a report covering one transaction.
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 2000 Annual Meeting. Any appropriate proposal
submitted by a shareholder of the Company and intended to be presented at the
- 16 -
<PAGE>
2001 Annual Meeting of Shareholders must be received by the Company on or before
November 23, 2000 to be includable in the Company's proxy statement and related
proxy for the 2001 annual meeting.
Also, if a shareholder proposal intended to be presented at the 2001
annual meeting but not included in the Company's proxy statement and proxy is
received by the Company after February 7, 2001, then management named in the
Company's proxy form for the 2001 annual meeting will have discretionary
authority to vote shares represented by such proxies on the shareholder
proposal, if presented at the meeting, without including information about the
proposal in the Company's proxy materials.
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.
A copy of the Company's Form 10-K Annual Report for the past fiscal
year (without exhibits) accompanies this Notice of Annual Meeting and Proxy
Statement. No portion of such Report is incorporated herein or is considered to
be proxy soliciting material. THE COMPANY WILL FURNISH TO ANY SHAREHOLDER, UPON
WRITTEN REQUEST, ANY EXHIBIT DESCRIBED IN THE LIST ACCOMPANYING THE FORM 10-K
UPON THE PAYMENT IN ADVANCE OF REASONABLE FEES RELATED TO THE COMPANY'S
FURNISHING SUCH EXHIBIT(S). ANY SUCH REQUEST SHOULD INCLUDE A REPRESENTATION
THAT THE SHAREHOLDER WAS THE BENEFICIAL OWNER OF SHARES OF EAGLE COMMON STOCK ON
MARCH 17, 2000, THE RECORD DATE FOR THE 1999 ANNUAL MEETING, AND SHOULD BE
DIRECTED TO: INVESTOR RELATIONS, EAGLE PACIFIC INDUSTRIES, INC., 2430
METROPOLITAN CENTRE, 333 SOUTH SEVENTH STREET, MINNEAPOLIS, MINNESOTA 55402.
By Order of the Board of Directors,
William H. Spell
Chief Executive Officer
- 17 -
<PAGE>
EAGLE PACIFIC INDUSTRIES, INC.
ANNUAL MEETING OF SHAREHOLDERS
APRIL 27, 2000
3:15 P.M. MINNEAPOLIS TIME
MINNEAPOLIS HILTON AND TOWERS
1001 MARQUETTE AVENUE
MINNEAPOLIS, MINNESOTA
EAGLE PACIFIC INDUSTRIES, INC.
333 SOUTH 7TH STREET, SUITE 2430, MINNEAPOLIS, MINNESOTA 55402 PROXY
- --------------------------------------------------------------------------------
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
2000 Annual Meeting of Shareholders to be held at the Minneapolis Hilton and
Towers, 1001 Marquette Avenue, Minneapolis, Minnesota, at 3:15 p.m., Minneapolis
Time, on Thursday, April 27, 2000, and at any adjournment thereof, and the
undersigned hereby revokes all proxies previously given with respect to the
Meeting.
SEE REVERSE FOR VOTING INSTRUCTIONS.
<PAGE>
[ARROW] PLEASE DETACH HERE [ARROW]
1. To set the number of directors at five. [ ] For [ ] Against [ ] Abstain
2. To elect one Class III director to hold office until the 2003 Annual
Meeting of Shareholders. (Nominee: Harry W. Spell)
[ ] FOR the nominee listed above [ ] WITHHOLD AUTHORITY to vote
for nominee listed above
3. To approve a 547,000 share increase in number of shares reserved
for the 1997 Stock Option Plan.
[ ] For [ ] Against [ ] Abstain
4. To amend the Articles of Incorporation to change the Company's
name to "PW Eagle, Inc."
[ ] For [ ] Against [ ] Abstain
5. OTHER MATTERS. In their discretion, the appointed Proxies are 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.
Address Change? Mark Box [ ] Indicate changes below:
Date ____________________________
______________________________________
| |
| |
|______________________________________|
Signature(s) in Box
(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.)
