THE EAGLE PACIFIC INDUSTRIES, INC.

                         LEVERAGED EQUITY PURCHASE PLAN


PURPOSE:

         The purpose of The Eagle Pacific Industries, Inc. Leveraged Equity
Purchase Plan ("LEPP") is to more closely align the goals and motivation of
management with those of other Eagle Pacific shareholders and to provide key
personnel with a long-term capital accumulation opportunity. This purpose is
accomplished by providing selected management employees with loans to permit
them to acquire and retain Eagle Pacific Common Stock.

DEFINITIONS:

"Common Stock" shall mean the common stock of Eagle Pacific, par value $.50 per
share.

"Compensation Committee" shall mean the compensation committee of the Board of
Directors of Eagle Pacific as constituted from time to time; provided, however,
each member of the Compensation Committee shall be a "disinterested" person
within the meaning of Rule 16b-3, as then in effect, under the Securities
Exchange Act of 1934.

"Determination Date" shall mean the date on which the Compensation Committee
determined that an Employee was an Eligible Employee.

"Eligible Employee" shall mean an Employee that the Compensation Committee has
determined may be granted a loan pursuant to the LEPP.

"Employee" shall mean each person who is an employee of Eagle Pacific which term
shall include both full and part-time employees but shall not include
independent contractors providing services to Eagle Pacific.

"I.R.C." shall mean the Internal Revenue Code of 1986, as amended.

"LEPP" or the "Plan" shall mean The Eagle Pacific Industries, Inc. Leveraged
Equity Purchase Plan as described herein.

"Loan" shall mean a loan made to a Participant pursuant to this Plan and
evidenced by a Promissory Note.

"Participant" shall refer to an Eligible Employee that has a Loan outstanding.

"Plan Administrator" shall mean the person or persons designated as such by the
Compensation Committee. If no person has been designated, the Plan Administrator
shall be the Secretary of Eagle Pacific.

"Promissory Note" shall mean a promissory note evidencing a loan made to a
Participant by Eagle Pacific pursuant to the terms of this Plan.

"Purchased Shares" shall mean all of the shares of Common Stock purchased by a
Participant at the time a Loan was made to such Participant hereunder.

"Eagle Pacific" shall mean Eagle Pacific Industries, Inc., a Minnesota
corporation, with its principal office in Minneapolis, Minnesota.

PLAN:

1.       Selection of Eligible Employees.

         From time to time, the Compensation Committee shall determine the
Employees who may be granted Loans hereunder and the maximum amount of the
Loans. As soon as possible after the determination by the Compensation
Committee, the Plan Administrator will notify each Eligible Employee in writing
of his/her eligibility and the maximum amount of the Loans that he/she may
receive. An Eligible Employee shall cease being an Eligible Employee on the
earlier to occur of (i) the date on which he/she ceases to be an Employee or
(ii) the date six months after his/her Determination Date. The rights of an
Eligible Employee to borrow money hereunder are not transferable and may not be
exercised by any person other than the Eligible Employee.

2.       The Loan.

         An Eligible Employee may borrow from Eagle Pacific 90% of the cost of
purchasing the number of shares of Common Stock up to the Loan amount authorized
by the Compensation Committee. The Eligible Employee may only borrow the funds
from Eagle Pacific if they are used to acquire Common Stock pursuant to the
LEPP. The Loan will be evidenced by a Promissory Note. The terms of the
Promissory Note will be:

         a. The unpaid principal balance will accrue simple interest at the
         prime rate in effect at Fleet National Bank plus one-quarter of one
         percent (1/4%) which shall be paid annually on the yearly anniversaries
         of the date of the Promissory Note.

         b. The payment of the unpaid principal balance shall be due in full on
         the earlier to occur of

                  i. the date determined by the Compensation Committee, which
                  date shall not be later than the fifth anniversary of the
                  Determination Date,

                  ii. the Participant's termination of employment with Eagle
                  Pacific for any reason other than death, disability or
                  termination of employment after the age of 60 years, or

                  iii. the Participant sells or otherwise disposes or attempts
                  to dispose of any of the Purchased Shares.

         c. The Promissory Note will be secured by a pledge of all of the
         Purchased Shares.

         d. The Promissory Note will be non-recourse to the Participant and
         payment may be satisfied by voluntary surrender of all of the Purchased
         Shares or by foreclosure by the holder of the Promissory Note on the
         Purchased Shares.

         e. Any cash dividends paid with respect to the Purchased Shares will be
         applied by Eagle Pacific, in payment on the Promissory Note. Any
         non-cash dividends, distributions or stock splits made with respect to
         the Purchased Shares shall be retained by Eagle Pacific as additional
         security for the Loan.

         f. The proceeds of any special bonus arrangement provided by Eagle
         Pacific to the Participant for the purpose of repaying the Loan shall
         not be paid to the Participant but shall be applied directly by Eagle
         Pacific in payment on the Promissory Note.

         g. Sections 415 and 401(a)(17) of the I.R.C. may restrict the ability
         of certain highly compensated Employees from receiving their full
         benefits under certain employee benefit plans sponsored by Eagle
         Pacific. As a result, amounts equal to the value of the number of
         shares or dollars the Participant would have been allocated under any
         and all employee benefit plans sponsored by Eagle Pacific but for the
         limitations under Section 415 and Section 401(a)(17) of the I.R.C. will
         be applied by Eagle Pacific in payment on the Promissory Note at the
         time such allocations would have been made to the Participant.

         h. The Participant may prepay the Loan in whole or in part at any time
         without penalty.

         i. All payments made or applied on the Promissory Note shall be used
         first to pay the accrued but unpaid interest and then to reduce the
         unpaid principal balance.

3.       Purchase of Common Stock.

         During the six month period following the Determination Date, an
Eligible Employee may borrow funds as set forth above to purchase shares of
Common Stock on the following terms:

         a. All purchases by the Eligible Employee will be made on the open
         market through a licensed broker-dealer selected by the Plan
         Administrator.

         b. The broker-dealer shall follow all guidelines for purchasing shares
         determined by the Plan Administrator.

         c. Eagle Pacific will pay the fees and commissions of the broker-dealer
         executing the purchase of the Common Stock.

         d. The Plan Administrator may prohibit Eligible Employees from trading
         in Common Stock purchased or to be purchased with a Loan at times that
         Eagle Pacific is aware of material non-public information about its
         business.

         e. An Eligible Employee that wishes to borrow funds pursuant to this
         Plan to acquire Common Stock may do so by giving written notice to the
         Plan Administrator indicating the Eligible Employee's name, social
         security number, date of birth, home address, the number of shares of
         Common Stock he/she desires to acquire hereunder and any other
         information reasonably requested by the Plan Administrator.

         f. As soon as the purchase of Common Stock requested by the Eligible
         Employee has been executed by the broker-dealer, the Eligible Employee
         will (i) execute and deliver the Promissory Note to the Plan
         Administrator who will forward the proceeds of the Loan to the
         Broker-dealer and (ii) deliver his/her check or other funds directly to
         the broker-dealer in an amount equal to 10% of the purchase price of
         the Purchased Shares.

         g. The certificate representing the Purchased Shares will be registered
         in the name of the Participant, but it will be held by Eagle Pacific
         and pledged to Eagle Pacific to secure payment of the Promissory Note.
         So long as the Participant owns the Purchased Shares and is not in
         default under the Loan, he/she shall retain the right to vote the
         Purchased Shares.

4.       Miscellaneous.

         a. The Board of Directors of Eagle Pacific may amend or terminate this
         Plan at any time; provided, however, no such termination or amendment
         shall affect any Loan or Promissory Note outstanding at the time the
         LEPP is amended by the Board of Directors of Eagle Pacific.

         b. The Compensation Committee may, without further action by the Board
         of Directors or shareholders of Eagle Pacific, make Loans hereunder up
         to an aggregate amount of $600,000 upon a finding that Eagle Pacific
         can reasonably expect to benefit from each such Loan.

         c. A Participant may not sell, transfer or otherwise dispose of the
         Purchased Shares within six months of their acquisition except in the
         case of the Participant's death or disability.

APPROVALS:

         The foregoing plan was adopted by the Board of Directors of Eagle
Pacific at its meeting on October 28, 1996.



                                              _________________________________
                                              Secretary




                       THE EAGLE PACIFIC INDUSTRIES, INC.
                         LEVERAGED EQUITY PURCHASE PLAN
                                    AGREEMENT

PURPOSE:

         The purpose of The Eagle Pacific Industries, Inc. Leveraged Equity
Purchase Plan ("LEPP") is to more closely align the goals and motivation of
management with those of other Eagle Pacific shareholders and to provide key
personnel with a long-term capital accumulation opportunity. This purpose is
accomplished by providing selected management employees with loans to permit
them to acquire and retain Eagle Pacific Common Stock.

         Pursuant to the provisions of the LEPP, and by specific action of the
Compensation Committee, Eagle Pacific hereby grants ____________ ("Eligible
Employee") the right to obtain a loan of ___________ dollars ($__________) from
Eagle Pacific Industries, Inc. to purchase shares of Eagle Pacific Common Stock
on the open market, with a determination date of November 13, 1996 and
expiration date of May 13, 1996 in accordance with and subject to the following
terms and conditions. Capitalized terms used herein shall have the meanings
ascribed to them in the LEPP.

1.       The Loan

         The Eligible Employee may borrow from Eagle Pacific 90% of the cost of
         purchasing shares of Common Stock up to the Loan amount authorized by
         the Compensation Committee. The Eligible Employee may only borrow the
         funds from Eagle Pacific if they are used to acquire Common Stock
         pursuant to the LEPP. The Loan will be evidenced by a Promissory Note.
         The terms of the Promissory Note will be:

         a.       The unpaid principal balance will accrue simple interest at
                  the prime rate in effect at Fleet National Bank plus
                  one-quarter of one percent (1/4%) which shall be paid annually
                  on the yearly anniversaries of the date of the Promissory
                  Note.

         b.       The payment of the unpaid principal balance shall be due in
                  full on the earlier to occur of

                  i.       the fifth anniversary of the date of this Agreement,

                  ii.      the Participant's termination of employment with
                           Eagle Pacific for any reason other than death,
                           disability or termination of employment after the age
                           of 60 years, or

                  iii.     the Participant sells or otherwise disposes or
                           attempts to dispose of any of the Purchased Shares.

         c.       The Promissory Note will be secured by a pledge of all of the
                  Purchased Shares.

         d.       The Promissory Note will be non-recourse to the Participant
                  and payment may be satisfied by voluntary surrender of all of
                  the Purchased Shares or by foreclosure by the holder of the
                  Promissory Note on the Purchased Shares.

         e.       Any cash dividends paid with respect to the Purchased Shares
                  will be applied by Eagle Pacific in payment on the Promissory
                  Note. Any non-cash dividends, distributions, or stock splits
                  made with respect to the Purchased Shares shall be retained by
                  Eagle Pacific as additional security for the Loan.

         f.       The proceeds of any special bonus arrangement provided by
                  Eagle Pacific to the Participant for the purpose of repaying
                  the Loan shall not be paid to the Participant but shall be
                  applied directly by Eagle Pacific in payment on the Promissory
                  Note.

         g.       Sections 415 and 401(a)(17) may restrict the ability of
                  certain highly compensated Employees from receiving their full
                  benefits under certain employee benefit plans sponsored by
                  Eagle Pacific. As a result, amounts equal to the value of the
                  number of shares or dollars the Participant would have been
                  allocated under any and all employee benefit plans sponsored
                  by Eagle Pacific but for the limitations under Section 415 and
                  Section 401(a)(17) of the Internal Revenue Code will be
                  applied by Eagle Pacific in payment on the Promissory Note at
                  the time such allocations would have been made to the
                  Participant.

         h.       The Participant may prepay the Loan in whole or in part at any
                  time without penalty.

         i.       All payments made or applied on the Promissory Note shall be
                  used first to pay the accrued but unpaid interest and then to
                  reduce the unpaid principal balance.

2.       Purchase of Common Stock

         During the six-month period following the Determination Date, the
         Eligible Employee may borrow funds as set forth above to purchase
         shares of Common Stock on the following terms:

         a.       All purchases by the Eligible Employee will be made on the
                  open market through a licensed broker-dealer selected by the
                  Plan Administrator.

         b.       The broker-dealer shall follow all guidelines for purchasing
                  shares determined by the Plan Administrator;

         c.       Eagle Pacific will pay the fees and commissions of the
                  broker-dealer executing the purchase of the Common Stock;

         d.       The Plan Administrator may prohibit the Eligible Employee from
                  trading in Common Stock purchased or to be purchased with a
                  Loan at times that Eagle Pacific is aware of material
                  non-public information about its business;

         e.       Eligible Employee that wishes to borrow funds pursuant to this
                  Plan to acquire Common Stock may do so by giving written
                  notice to the Plan Administrator (Corporate Secretary)
                  indicating the Eligible Employee's name, social security
                  number, date of birth, home address, the number of shares of
                  Common Stock he/she desires to acquire hereunder and any other
                  information reasonably requested by the Plan Administrator;

         f.       As soon as the purchase of Common Stock requested by Eligible
                  Employee has been executed by the broker-dealer, Eligible
                  Employee will (i) execute and deliver the Promissory Note to
                  the Plan Administrator who will forward the proceeds of the
                  Loan to the broker-dealer and (ii) deliver his/her check or
                  other funds directly to the broker-dealer in an amount equal
                  to 10% of the purchase price of the Purchased Shares.

         g.       The certificate representing the Purchased Shares will be
                  registered in the name of the Participant, but it will be held
                  by Eagle Pacific and pledged to Eagle Pacific to secure
                  payment of the Promissory Note. So long as the Participant
                  owns the Purchased Shares and is not in default under the
                  Loan, he/she shall retain the right to vote the Purchased
                  Shares.

3.       Conditions

         a.       An Eligible Employee shall cease being an Eligible Employee on
                  the earlier to occur of (i) the date on which he/she ceases to
                  be an Employee or (ii) the date six months after his/her
                  Determination Date. The rights of an Eligible Employee to
                  borrow money hereunder are not transferable and may not be
                  exercised by any person other than the Eligible Employee.

         b.       The Board of Directors of Eagle Pacific may amend or terminate
                  this Plan at any time provided, however, no such termination
                  or amendment shall affect any Loan or Promissory Note
                  outstanding at the time the LEPP is amended by the Board of
                  Directors of Eagle Pacific.

         c.       A Participant may not sell, transfer, or otherwise dispose of
                  the Purchased Shares within six months of their acquisition
                  except in the case of the Participant's death or disability.


Date:
      -------------------------


EAGLE PACIFIC INDUSTRIES, INC.


By
    ---------------------------
Its      Chairman
    ---------------------------


Accepted and Confirmed as of the above date:


By
    ---------------------------