EXHIBIT 10.18


The Warrant represented by this certificate has not been registered, under
either the Securities Act of 1933, as amended, or applicable state securities
laws. It may not be sold, offered for sale or transferred in the absence of an
effective registration under the Securities Act of 1933, as amended, and the
applicable state securities laws or an opinion of counsel satisfactory in form
and substance to counsel for the Company that such transaction will not result
in a prohibited transaction under the Securities Act of 1933, as amended, or the
applicable state securities laws.


         WARRANT

         To Purchase 215,000 Shares of Common Stock
          of
         Eagle Pacific Industries, Inc.


         THIS CERTIFIES THAT, for good and valuable consideration, William Blair
Mezzanine Capital Fund, L.P. ( "Blair"), or its registered assigns, is entitled
to subscribe for and purchase from Eagle Pacific Industries, Inc., a Minnesota
corporation (the "Company"), at any time up to and including March 16, 1998, Two
Hundred Fifteen Thousand (215,000) fully paid and nonassessable shares of the
Common Stock of the Company at the price of $3.25 per share (the "Warrant
Exercise Price"), subject to the antidilution provisions of this Warrant. The
shares which may be acquired upon exercise of this Warrant are referred to
herein as the "Warrant Shares." As used herein, the term "Holder" means Blair,
any party who acquires all or a part of this Warrant as a registered transferee
of Blair, or any record holder or holders of the Warrant Shares issued upon
exercise, whether in whole or in part, of the Warrant; the term "Common Stock"
means and includes the Company's presently authorized common stock, no par
value, and shall also include any capital stock of any class of the Company
hereafter authorized which shall not be limited to a fixed sum or percentage in
respect of the rights of the holders thereof to participate in dividends or in
the distribution of assets upon the voluntary or involuntary liquidation,
dissolution, or winding up of the Company; and the term "Convertible Securities"
means any stock or other securities convertible into, or exchangeable for,
Common Stock.

         This Warrant is subject to the following provisions, terms and
conditions:

         1.       Exercise; Transferability.

         (a)      The rights represented by this Warrant may be exercised by the
                  Holder hereof, in whole or in part (but not as to a fractional
                  share of Common Stock), by written notice of exercise (in the
                  form attached hereto) delivered to the Company at the
                  principal office of the Company prior to the expiration of
                  this Warrant and accompanied or preceded by the surrender of
                  this Warrant along with one of the following methods of
                  payment in the amount of the Warrant Exercise Price for such
                  shares: (i) if the Company or any Company subsidiary owes
                  Blair any funds pursuant to loans, promissory notes or
                  otherwise, Blair may provide appropriate documentation to
                  reflect the reduction of such indebtedness owed to Blair from
                  the Company or Company subsidiary by the amount of the Warrant
                  Exercise Price; (ii) in the event there is insufficient
                  indebtedness to allow all or part of the offset provided in
                  (i), then Blair may pay the Warrant Exercise Price of such
                  shares by assigning and transferring to the Company a number
                  of shares of Common Stock which when multiplied by the then
                  Fair Market Value (as defined in Section 9 below) of a share
                  of the Company's Common Stock (as in effect immediately prior
                  to the time of exercise) is at least equal to the Warrant
                  Exercise Price for such shares (the shares of Common Stock so
                  assigned and transferred may be a portion of the shares of
                  Common Stock acquired in such exercise of this Warrant); or
                  (iii) a check or other form of cash payment.

         (b)      This Warrant is transferable in whole or in part, subject to
                  applicable federal and state securities laws and regulations.
                  This Warrant may not be sold, transferred, assigned,
                  hypothecated or divided into two or more Warrants of smaller
                  denominations, nor may any Warrant Shares issued pursuant to
                  exercise of this Warrant be transferred, except as provided in
                  Section 7 hereof.

         2.       Exchange and Replacement. Subject to Sections l and 7 hereof,
                  this Warrant is exchangeable upon the surrender hereof by the
                  Holder to the Company at its office for new Warrants of like
                  tenor and date representing in the aggregate the right to
                  purchase the number of Warrant Shares purchasable hereunder,
                  each of such new Warrants to represent the right to purchase
                  such number of Warrant Shares (not to exceed the aggregate
                  total number purchasable hereunder) as shall be designated by
                  the Holder at the time of such surrender. Upon receipt by the
                  Company of evidence reasonably satisfactory to it of the loss,
                  theft, destruction, or mutilation of this Warrant, and, in
                  case of loss, theft or destruction, of indemnity or security
                  reasonably satisfactory to it, and upon surrender and
                  cancellation of this Warrant, if mutilated, the Company will
                  make and deliver a new Warrant of like tenor, in lieu of this
                  Warrant; provided, however, that if Blair shall be such
                  Holder, an agreement of indemnity by such Holder shall be
                  sufficient for all purposes of this Section 2. This Warrant
                  shall be promptly canceled by the Company upon the surrender
                  hereof in connection with any exchange or replacement. The
                  Company shall pay all expenses, taxes (other than stock
                  transfer taxes), and other charges payable in connection with
                  the preparation, execution, and delivery of Warrants, exercise
                  of Warrants and issuance of the Warrant Shares pursuant to
                  this Section 2.

         3.       Issuance of the Warrant Shares.

         (a)      The Company agrees that the shares of Common Stock purchased
                  hereby shall be and are deemed to be issued to the Holder as
                  of the close of business on the date on which this Warrant
                  shall have been surrendered and the payment made for such
                  Warrant Shares as aforesaid. Subject to the provisions of the
                  next section, certificates for the Warrant Shares so purchased
                  shall be delivered to the Holder within a reasonable time, not
                  exceeding fifteen (15) days after the rights represented by
                  this Warrant shall have been so exercised, and, unless this
                  Warrant has expired, a new Warrant representing the right to
                  purchase the number of Warrant Shares, if any, with respect to
                  which this Warrant shall not then have been exercised shall
                  also be delivered to the Holder within such time.

         (b)      Notwithstanding the foregoing, however, the Company shall not
                  be required to deliver any certificate for Warrant Shares upon
                  exercise of this Warrant except in accordance with exemptions
                  from the applicable securities registration requirements or
                  registrations under applicable securities laws. Nothing
                  herein, however, shall obligate the Company to effect
                  registrations under federal or state securities laws. If
                  registrations are not in effect and if exemptions are not
                  available when the Holder seeks to exercise the Warrant, the
                  Warrant exercise period will be extended, if need be, to
                  prevent the Warrant from expiring, until such time as either
                  registrations become effective or exemptions are available,
                  and the Warrant shall then remain exercisable for a period of
                  at least 30 calendar days from the date the Company delivers
                  to the Holder written notice of the availability of such
                  registrations or exemptions. The Holder agrees to execute such
                  documents and make such representations, warranties, and
                  agreements as may be reasonably required solely to comply with
                  the exemptions relied upon by the Company, or the
                  registrations made, for the issuance of the Warrant Shares.

         4.       Covenants of the Company. The Company covenants and agrees
                  that all Warrant Shares will, upon issuance, be duly
                  authorized and issued, fully paid, nonassessable, and free
                  from all taxes, liens, charges and preemptive or similar
                  rights with respect to the issue thereof. The Company further
                  covenants and agrees that during the period within which the
                  rights represented by this Warrant may be exercised, the
                  Company will at all times have authorized and reserved for the
                  purpose of issue or transfer upon exercise of the subscription
                  rights evidenced by this Warrant a sufficient number of shares
                  of Common Stock to provide for the exercise of the rights
                  represented by this Warrant.

         5.       Antidilution Adjustments. The provisions of this Warrant are
                  subject to adjustment as provided in this Section 5.

         (a)      The Warrant Exercise Price shall be adjusted from time to time
                  such that in case the Company shall hereafter:

                  (i) pay any dividends on any class of stock of the Company
         payable in Common Stock or securities convertible into Common Stock;

                  (ii) subdivide its then outstanding shares of Common Stock
         into a greater number of shares; or

                  (iii) combine outstanding shares of Common Stock, by
         reclassification or otherwise; then, in any such event, the Warrant
         Exercise Price in effect immediately prior to such event shall (until
         adjusted again pursuant hereto) be adjusted immediately after such
         event to a price (calculated to the nearest full cent) determined by
         dividing (a) the number of shares of Common Stock outstanding
         immediately prior to such event (including the maximum number of shares
         of Common Stock issuable in respect of any securities convertible into
         Common Stock), multiplied by the then existing Warrant Exercise Price,
         by (b) the total number of shares of Common Stock outstanding
         immediately after such event (including the maximum number of shares of
         Common Stock issuable in respect of any securities convertible into
         Common Stock), and the resulting quotient shall be the adjusted Warrant
         Exercise Price per share. An adjustment made pursuant to this
         Subsection shall become effective immediately after the record date in
         the case of a dividend or distribution and shall become effective
         immediately after the effective date in the case of a subdivision,
         combination or reclassification. If, as a result of an adjustment made
         pursuant to this Subsection, the Holder of any Warrant thereafter
         surrendered for exercise shall become entitled to receive shares of two
         or more classes of capital stock or shares of Common Stock and other
         capital stock of the Company, the Board of Directors shall determine
         the allocation of the adjusted Warrant Exercise Price between or among
         shares of such classes of capital stock or shares of Common Stock and
         other capital stock. All calculations under this Subsection shall be
         made to the nearest cent or to the nearest 1/100 of a share, as the
         case may be. In the event that at any time as a result of an adjustment
         made pursuant to this Subsection, the holder of any Warrant thereafter
         surrendered for exercise shall become entitled to receive any shares of
         the Company other than shares of Common Stock, thereafter the Warrant
         Exercise Price of such other shares so receivable upon exercise of any
         Warrant shall be subject to adjustment from time to time in a manner
         and on terms as nearly equivalent as practicable to the provisions with
         respect to Common Stock contained in this Section.

         (b)      If and whenever the Company shall (1) issue or sell any shares
                  of its Common Stock for a consideration per share less than
                  the Fair Market Value of the Company's Common Stock (as
                  adjusted for appropriate discounts due to the restricted
                  nature of the securities) in effect immediately prior to the
                  time of such issuance or sale, (2) issue or sell any warrants,
                  options or other rights to acquire shares of its Common Stock
                  at a purchase price less than the Fair Market Value of the
                  Company's Common Stock (as adjusted for appropriate discounts
                  due to the restricted nature of the securities) in effect
                  immediately prior to the time of such issuance or sale, or (3)
                  issue or sell any other securities that are convertible into
                  shares of its Common Stock for a purchase or exchange price
                  less than the Fair Market Value of the Company's Common Stock
                  (as adjusted for appropriate discounts due to the restricted
                  nature of the securities) in effect immediately prior to the
                  time of such issuance or sale (except for the issuance of
                  options or warrants approved by the Board of Directors of the
                  Company to employees, director and consultants), then, upon
                  such issuance or sale, the Warrant Exercise Price shall be
                  reduced to the price at which such shares of Common Stock are
                  being issued or sold by the Company or the price at which such
                  other securities are exercisable or convertible into shares of
                  the Company's Common Stock; provided, however, that no such
                  adjustment in the Warrant Exercise Price shall be made upon
                  the issuance of shares of Common Stock pursuant to (i)
                  options, warrants, convertible securities and other rights to
                  acquire shares listed on Schedule 1 to that certain Amendment
                  Agreement dated May 10, 1996 by and between Blair, the
                  Company, Eagle Plastics, Inc., Pacific Plastics, Inc. and
                  Arrow Pacific Plastics, Inc. or (ii) the conversion or
                  exercise into shares, and related issuance, of Common Stock
                  pursuant to any warrant, option or other right to acquire
                  shares of Common Stock that, upon the issuance of such
                  warrant, option or other right did not require an adjustment
                  to the Warrant Exercise Price pursuant hereto.

         (c)      Upon each adjustment of the Warrant Exercise Price pursuant to
                  Section 5(a) above, the Holder of each Warrant shall
                  thereafter (until another such adjustment) be entitled to
                  purchase at the adjusted Warrant Exercise Price the number of
                  shares, calculated to the nearest full share, obtained by
                  multiplying the number of shares specified in such Warrant (as
                  adjusted as a result of all adjustments in the Warrant
                  Exercise Price in effect prior to such adjustment) by the
                  Warrant Exercise Price in effect prior to such adjustment and
                  dividing the product so obtained by the adjusted Warrant
                  Exercise Price.

         (d)      In case of any consolidation or merger to which the Company is
                  a party other than a merger or consolidation in which the
                  Company is the continuing corporation, or in case of any sale
                  or conveyance to another corporation of the property of the
                  Company as an entirety or substantially as an entirety, or in
                  the case of any statutory exchange of securities with another
                  corporation (including any exchange effected in connection
                  with a merger of a third corporation into the Company), there
                  shall be no adjustment under Subsection (a) of this Section
                  above but the Holder of each Warrant then outstanding shall
                  have the right thereafter to convert such Warrant into the
                  kind and amount of shares of stock and other securities and
                  property which he would have owned or have been entitled to
                  receive immediately after such consolidation, merger,
                  statutory exchange, sale, or conveyance had such Warrant been
                  converted immediately prior to the effective date of such
                  consolidation, merger, statutory exchange, sale, or conveyance
                  and in any such case, if necessary, appropriate adjustment
                  shall be made in the application of the provisions set forth
                  in this Section with respect to the rights and interests
                  thereafter of any Holders of the Warrant, to the end that the
                  provisions set forth in this Section shall thereafter
                  correspondingly be made applicable, as nearly as may
                  reasonably be, in relation to any shares of stock and other
                  securities and property thereafter deliverable on the exercise
                  of the Warrant. The provisions of this Subsection shall
                  similarly apply to successive consolidations, mergers,
                  statutory exchanges, sales or conveyances.

         (e)      Upon any adjustment of the Warrant Exercise Price, then and in
                  each such case, the Company shall give written notice thereof,
                  by first-class mail, postage prepaid, addressed to the Holder
                  as shown on the books of the Company, which notice shall state
                  the Warrant Exercise Price resulting from such adjustment and
                  the increase or decrease, if any, in the number of shares of
                  Common Stock purchasable at such price upon the exercise of
                  this Warrant, setting forth in reasonable detail the method of
                  calculation and the facts upon which such calculation is
                  based.

         (f)      In case at any time:

                  (i) The Company shall pay any dividend upon its Common Stock
         payable in stock or make any distribution (other than cash dividends)
         to the holders of its Common Stock; or

                  (ii) The Company shall offer for subscription pro rata to the
         holders of its Common Stock any additional shares of stock of any class
         or any other rights; or

                  (iii) There shall be any capital reorganization or
         reclassification of the capital stock of the Company, or consolidation
         or merger of the Company with, or sale, conveyance, lease or other
         transfer of all or substantially all of its assets to, another
         corporation; or

                  (iv) There shall be a voluntary or involuntary dissolution,
         liquidation or winding up of the Company; then in any one or more of
         such cases, the Company shall give prior written notice, by first class
         mail, postage prepaid, addressed to each registered Holder at the
         address of such Holder as shown on the books of the Company, of the
         date on which (a) the books of the Company shall close or a record
         shall be taken for such stock dividend, distribution or subscription
         rights or (b) such reorganization, reclassification, consolidation,
         merger, sale, dissolution, liquidation or winding up shall take place,
         as the case may be. Such notice shall also specify the date as of which
         the holders of the Common Stock of record shall participate in said
         dividend, distribution or subscription rights or shall be entitled to
         exchange their Common Stock for securities or other property
         deliverable upon such reorganization, reclassification, consolidation,
         merger, sale, dissolution, liquidation or winding up, as the case may
         be. Such written notice shall be given at least twenty (20) days prior
         to the action in question and not less than twenty (20) days prior to
         the record date or the date on which the Company's transfer books are
         closed in respect thereto.

         6.       No Voting Rights. This Warrant shall not entitle the Holder to
                  any voting rights or other rights as a shareholder of the
                  Company.

         7.       Notice of Transfer of Warrant or Resale of the Warrant Shares.

         (a)      Subject to the sale, assignment, hypothecation, or other
                  transfer restrictions set forth in Section 1 hereof, the
                  Holder, by acceptance hereof, agrees to give written notice to
                  the Company before transferring this Warrant or transferring
                  any Warrant Shares of such Holder's intention to do so,
                  describing briefly the manner of any proposed transfer.
                  Promptly upon receiving such written notice, the Company shall
                  present copies thereof to the Company's counsel and to counsel
                  to the original purchaser of this Warrant. If in the
                  reasonable opinion of each such counsel the proposed transfer
                  may be effected without registration or qualification (under
                  any federal or state securities laws), the Company, as
                  promptly as practicable, shall notify the Holder of such
                  opinion, whereupon the Holder shall be entitled to transfer
                  this Warrant or to dispose of Warrant Shares received upon the
                  previous exercise of this Warrant, all in accordance with the
                  terms of the notice delivered by the Holder to the Company;
                  provided that an appropriate legend may be endorsed on this
                  Warrant or the certificates for such Warrant Shares respecting
                  restrictions upon transfer thereof necessary or advisable in
                  the opinion of counsel and satisfactory to the Company to
                  prevent further transfers which would be in violation of
                  Section 5 of the 1933 Act and applicable state securities
                  laws; and provided further that the prospective transferee or
                  purchaser shall execute such documents and make such
                  representations, warranties, and agreements as may be
                  reasonably required solely to comply with the exemptions
                  relied upon by the Company for the transfer or disposition of
                  the Warrant or Warrant Shares.

         (b)      If in the opinion of either of the counsel referred to in this
                  Section 7, the proposed transfer or disposition of this
                  Warrant or such Warrant Shares described in the written notice
                  given pursuant to this Section 7 may not be effected without
                  registration or qualification of this Warrant or such Warrant
                  Shares the Company shall promptly give written notice thereof
                  to the Holder, and the Holder will limit its activities in
                  respect to such as, in the opinion of both such counsel, are
                  permitted by law.

         8.       Fractional Shares. Fractional shares shall not be issued upon
                  the exercise of this Warrant, but in any case where the holder
                  would, except for the provisions of this Section, be entitled
                  under the terms hereof to receive a fractional share, the
                  Company shall, upon the exercise of this Warrant for the
                  largest number of whole shares then called for, pay a sum in
                  cash equal to the sum of (a) the excess, if any, of the Fair
                  Market Value (as defined in Section 9 below) of such
                  fractional share over the proportional part of the Warrant
                  Exercise Price represented by such fractional share, plus (b)
                  the proportional part of the Warrant Exercise Price
                  represented by such fractional share.

         9.       For purposes of this Agreement, "Fair Market Value" of a share
                  of the Company's Common Stock as of a particular date (the
                  "Determination Date") shall mean:

         (a)      If the Company's Common Stock is traded on an exchange or is
                  quoted on the Nasdaq National Market, then the average closing
                  or last sale prices, respectively, reported for the thirty
                  (30) business days immediately preceding the Determination
                  Date, and

         (b)      If the Common Stock is not traded on an exchange or on the
                  Nasdaq National Market but is traded on the Nasdaq SmallCap
                  Market or other over-the-counter market, then the average
                  (arithmetic mean) closing bid and asked prices reported for
                  the thirty (30) business days immediately preceding the
                  Determination Date.


         IN WITNESS WHEREOF, Eagle Pacific Industries, Inc. has caused this
                  Warrant to be signed by its duly authorized officer and this
                  Warrant to be dated May 10, 1996.

                                         "Company"

                                         EAGLE PACIFIC INDUSTRIES, INC.



                                         ------------------------------
                                         William H. Spell, President



To:      Eagle Pacific Industries, Inc.



NOTICE OF EXERCISE OF WARRANT --    To Be Executed by the Registered Holder in
                                           Order to Exercise the Warrant

The undersigned hereby irrevocably elects to exercise the attached Warrant to
purchase for cash, _________________ of the shares issuable upon the exercise of
such Warrant, and requests that certificates for such shares (together with a
new Warrant to purchase the number of shares, if any, with respect to which this
Warrant is not exercised) shall be issued in the name of


                                    ______________________________
                                               (Print Name)


Please insert social security
or other identifying number
of registered holder of
certificate (______________)        Address:

                                    ______________________________

                                    ______________________________


Date:  _________, 19__     ______________________________
                                             Signature*




*The signature on the Notice of Exercise of Warrant must correspond to the name
as written upon the face of the Warrant in every particular without alteration
or enlargement or any change whatsoever. When signing on behalf of a
corporation, partnership, trust or other entity, PLEASE indicate your
position(s) and title(s) with such entity.




         ASSIGNMENT FORM


To be signed only upon authorized transfer of Warrants.

         FOR VALUE RECEIVED, the undersigned hereby sells, assigns, and

                  transfers unto _____________________________ the right to

                  purchase the securities of Eagle Pacific Industries, Inc. to

                  which the within Warrant relates and appoints _____________,

                  attorney, to transfer said right on the books of Eagle Pacific

                  Industries, Inc. with full power of substitution in the

                  premises.

Dated:________________     ______________________________
                                     (Signature)

                                               Address:

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