EXECUTION VERSION
AGREEMENT
THIS AGREEMENT, dated as of April 21, 2006, by and among: (i) PW Eagle,
Inc., a Minnesota corporation (the "COMPANY"); (ii) Xxxxxx Xxxxxxx LLC, a
Delaware limited liability company ("XXXXXX XXXXXXX"); and (iii) Xxxxx Xxxxx
Fund LP, a Delaware limited partnership and an investment fund, Xxxxx Xxxxx
Offshore Fund LTD, a British Virgin Islands company and an investment fund, and
Xxxxx Xxxxx Activist Portfolio Company LTD, a Cayman Islands exempted company
and an investment fund (together, the "XXXXX XXXXX FUNDS").
WHEREAS, Xxxxxx Xxxxxxx and Xxxxxx X. Xxxxxx Xx. filed a Schedule 13D
dated February 28, 2006 with regard to securities of the Company held by the
Xxxxx Xxxxx Funds (the "XXXXXX XXXXXXX SCHEDULE 13D");
WHEREAS, the Xxxxxx Xxxxxxx Schedule 13D and letters to the Company
dated March 9, 2006 indicated Xxxxxx Xxxxxxx'x intention to make certain
nominations and proposals at the Company's 2006 annual meeting of shareholders
(the "ANNUAL MEETING") with the purpose of, among other things, effectuating a
change in the majority of the Board of Directors of the Company (the "BOARD");
WHEREAS, in view of the Xxxxxx Xxxxxxx Schedule 13D and other
considerations, including a Schedule 13D filed by another shareholder
independent of Xxxxxx Xxxxxxx, the Xxxxx Xxxxx Funds and Xxxxxx X. Xxxxxx Xx.
(collectively, the "PIRATE PARTIES"), the Board has determined that it is in the
best interests of the Company and its shareholders to effectuate certain changes
with regard to the Board and other agreements of the Company by entering into
this Agreement;
WHEREAS, each of Denver Xxxxxxx, Xxxxxxx X. Xxxxxxx, Xxxxx X. Xxxxxxx
and Xxxxxxx X. Xxxxx has submitted his written irrevocable resignation from the
Board effective as of the election of directors at the Annual Meeting, and Xxxxx
X. Xxxxx has notified the Board in writing that he has irrevocably determined
not to stand for re-election at the Annual Meeting, copies of which have been
provided to Xxxxxx Xxxxxxx, and each such director has determined that it is in
the best interests of the Company and its shareholders for him to take such
action and for the Company to enter into this Agreement and to consummate the
transactions contemplated hereby; and
WHEREAS, the Company has delivered to Xxxxxx Xxxxxxx a Secretary's
Certificate certifying to the adoption and effectiveness of resolutions, copies
of which are attached to such certificate, duly approved unanimously by the
Board, that (i) authorize and direct the Company to enter into this Agreement
and consummate the transactions contemplated hereby, (ii) approve each of the
matters set forth herein and contemplated hereby, (iii) accept the resignation
of each of Denver Xxxxxxx, Xxxxxxx X. Xxxxxxx, Xxxxx X. Xxxxxxx and Xxxxxxx X.
Xxxxx and the decision of Xxxxx X. Xxxxx not to stand for re-election, (iv)
nominate each of the individuals identified in Section 3 hereof for election to
the Board at the Annual Meeting, (v) resolve to propose and recommend at the
Annual Meeting that the shareholders of the Company approve the by-law amendment
set forth in Section 1 hereof, (vi) set the record date, meeting date, time and
location for the Annual Meeting, and (vii) determine that each of the foregoing
matters is in the best interests of the Company and its shareholders.
NOW, THEREFORE, the parties hereto agree as follows:
1. AMENDMENT TO BY-LAWS. The Board shall propose for adoption at the
Annual Meeting, and recommend that the Company's shareholders approve, an
amendment of Section 3.2 of the Company's by-laws to eliminate the Company's
staggered board of directors, which shall read as follows:
"Section 3.2 of the Company's by-laws is hereby deleted in its
entirety and replaced with the following:
`3.2) NUMBER, TERM AND QUALIFICATIONS. The Board of Directors
shall consist of one or more members. At each regular meeting, the
shareholders shall determine the number of directors; provided, that
between regular meetings the authorized number of directors may be
increased or decreased by the shareholders or increased by the Board of
Directors. Each director shall serve for an indefinite term that
expires at the next regular meeting of shareholders, and until such
director's successor is elected and qualified, or until such director's
earlier death, resignation, disqualification, or removal as provided by
statute.'"
2. SIZE OF BOARD OF DIRECTORS. The Board shall propose for adoption at
the Annual Meeting, and recommend that the Company's shareholders approve, a
resolution setting the size of the Board at seven (7) directors.
3. NOMINATIONS FOR BOARD OF DIRECTORS. The Board shall nominate for
election to the Board by the shareholders of the Company at the Annual Meeting,
and recommend that the Company's shareholders elect, each of the following
individuals and only such individuals: Xxxxx X. Xxxxx, Xxxxxx Xxxxx, Xxxxxx X.
Xxxxxx Xx., Xxxxxxx X. Xxxxxx, Xxxx Xxxxxxx, Xxx X. Xxxxx and Xxxxxxx X.
Xxxxxxxx. Xxxxxx Xxxxxxx has determined, based on information provided by such
individual, that Xxxx Xxxxxxx meets the qualifications of financial
sophistication as set forth in the second sentence of Rule 4350(d)(2)(A) of the
Marketplace Rules of the National Association of Securities Dealers, Inc.
Notwithstanding any provision of this Agreement to the contrary, if at any time
prior to the election of directors at the Annual Meeting any of Xxxxxx X. Xxxxxx
Xx., Xxxxxxx X. Xxxxxx and Xxxx Xxxxxxx is unable or unwilling to stand for
election as a director at the Annual Meeting or to serve as a director if
elected, then Xxxxxx Xxxxxxx shall designate a replacement for such person and
this Agreement shall apply with respect to such replacement as if such
replacement was named in the first sentence of this Section 3, any such
replacement to be reasonably acceptable to the nominating committee of the
Board. The election of directors shall be the last item of business at the
Annual Meeting, with the possible exception (if the Company so chooses) of
ratification of the appointment of the Company's auditors. Notwithstanding any
provision of this Agreement to the contrary, if at any time prior to the
election of directors at the Annual Meeting any of Xxxxx X. Xxxxx, Xxxxxx Xxxxx,
Xxx X. Xxxxx or Xxxxxxx Xxxxxxxx is unable or unwilling to stand for election as
a director at the Annual Meeting or to serve as a director if elected, then the
nominating committee of the Board shall designate a replacement for such person
and this Agreement shall apply with respect to such replacement as if such
replacement was named in the first sentence of this Section 3.
4. VOTE ON OPTIONS. The Company has indicated to Xxxxxx Xxxxxxx that
the Board may propose for approval at the Annual Meeting, and recommend that the
Company's shareholders approve, an amendment to the Company's 1997 Stock Option
Plan increasing the number of shares reserved for issuance under the plan from
2,200,000 to 2,700,000. The Company represents, warrants and covenants that the
most recent grant of stock options or other Company securities, pursuant to such
plan or otherwise, was as of the date hereof, and shall be as of the Annual
Meeting, the grant on December 13, 2005 of 184,000 stock options pursuant to
such plan, all of which were issued only to current management and employees of
the Company.
5. VOTE ON RESTRICTED STOCK GRANTS. The Company has indicated to
Xxxxxx Xxxxxxx that the Board may propose for approval at the Annual Meeting,
and recommend that the Company's shareholders approve, restricted stock grants
made by the Company on March 6, 2003, September 30, 2003 and April 3, 2006
consisting of an aggregate of 90,500 shares of the Company's common stock. The
Company represents and warrants that all of such shares were issued only to
current management and employees of the Company or pursuant to the express
informed approval of the Board pursuant to Section 302A.255 of the Minnesota
Business Corporation Act.
6. ANNUAL MEETING; VOTING AGREEMENT; SEC FILINGS.
(a) The Company shall call and hold the Annual Meeting as soon as
reasonably practicable following the execution of this Agreement, and shall file
the Company's proxy statement with respect to the Annual Meeting no later than
April 28, 2006 and hold the Annual Meeting no later than 35 days following
notification from the SEC of no review (or, if no such notification is given,
then following passage of the 10-day review period without notification from the
SEC of its intent to review), or in the event of a review, notification that the
SEC has no further comments. The Company shall, with respect to the Annual
Meeting, solicit proxies in favor of each of the items of business described in
Sections 1-3 of this Agreement in a reasonable and timely manner, in accordance
with applicable laws, rules and regulations, and shall cause all valid proxy
cards timely received to be voted as indicated thereon or, if no indication is
made thereon, then in favor of each of the items of business described in
Sections 1-3 of this Agreement and against any other item of business to come
before the Annual Meeting (other than the items of business described in Section
4 and 5 of this Agreement and any routine matters such as the ratification of
the appointment of the Company's auditors and those incident to the conduct of
the meeting). The Company may, with respect to the Annual Meeting, in its
discretion, solicit proxies in favor of each of the items of business described
in Sections 4 and 5 of this Agreement in a reasonable and timely manner, in
accordance with applicable laws, rules and regulations. Provided that the Board
and the Company take all of the actions required thereof in this Agreement,
Xxxxxx Xxxxxxx shall vote all of the Company's common stock beneficially owned
by it on the record date for the Annual Meeting in favor of each of the items of
business set forth in Sections 1-3 hereof, and, if proposed as set forth above,
the items of business set forth in Sections 4 and 5 hereof, at the Annual
Meeting. Neither Xxxxxx Xxxxxxx, the Company nor any of their respective
affiliates or associates (as those terms are defined in Rule 12b-2 under the
Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT")), will, and
they will not assist or encourage others (including by providing financing) to,
directly or indirectly, with respect to the Annual Meeting, propose a competing
slate of directors, or solicit votes of the shareholders of the Company in
opposition to the slate of directors to be nominated
as set forth herein or in opposition to any of the items of business described
in Sections 1-5 hereof. Neither the Company nor the Board shall propose or
support any other item of business to be conducted, or any other director to be
elected, at the Annual Meeting other than as set forth in Sections 1-5 of this
Agreement and any routine matters such as the ratification of the appointment of
the Company's auditors and those incident to the conduct of the meeting.
(b) The Company shall provide Xxxxxx Xxxxxxx with a copy of the
preliminary and definitive proxy statements and any additional solicitation
materials with respect to the Annual Meeting at least five (5) days (in the case
of any proxy statement) and at least two days (in the case of any additional
solicitation materials) in advance of the earlier filing or dissemination of
such documents and shall incorporate into such documents any revisions thereto
reasonably requested by Xxxxxx Xxxxxxx within such time period. The Company
shall promptly deliver to Xxxxxx Xxxxxxx a copy of any comments of the
Securities and Exchange Commission or its Staff (the "SEC") regarding any
documents filed with the SEC and of any request from the SEC for amendments or
supplements to any such documents or for any additional information. The Company
shall provide Xxxxxx Xxxxxxx and its outside counsel with a reasonable
opportunity (in no event less than one business day) to review all responses to
such comments and requests, including any documents to be filed in response
thereto, in each case in advance of their being provided to the SEC, and shall
incorporate into such documents any revisions thereto reasonably requested by
Xxxxxx Xxxxxxx within such time period. Additionally, the Company shall promptly
and fully inform Xxxxxx Xxxxxxx and its outside counsel with respect to all
communications with the SEC, including all meetings and telephone conferences,
relating to such documents, the preliminary or definitive proxy statements, any
additional solicitation materials, this Agreement or any of the transactions
contemplated hereby.
7. EXPENSE REIMBURSEMENT. The Company agrees to reimburse Xxxxxx
Xxxxxxx for its reasonable fees and expenses (including those of its counsel)
incurred in connection with (i) the Annual Meeting, including all actions taken
prior to or after the date hereof in furtherance of Xxxxxx Xxxxxxx'x
contemplated proxy solicitation with respect to the Annual Meeting, and (ii)
this Agreement, including the negotiation and execution hereof and the
transactions contemplated hereby, subject to an aggregate cap of $200,000. Such
reimbursement payments to be made within five (5) business days of delivery of
the applicable invoices or other documentation.
8. REPRESENTATIONS AND WARRANTIES.
(a) Each of the Company, Xxxxxx Xxxxxxx and the Xxxxx Xxxxx Funds
hereby represents and warrants with respect to itself as follows:
(i) AUTHORITY RELATIVE TO THIS AGREEMENT. It has the full legal right
and power and all authority and approval required to enter into, execute and
deliver this Agreement and to perform fully its obligations hereunder. This
Agreement has been duly authorized, executed and delivered by it and this
Agreement constitutes the valid and binding obligation of it enforceable against
it in accordance with the terms hereof.
(ii) ABSENCE OF CONFLICTS. Its execution and delivery of this
Agreement, the consummation of the transactions contemplated hereby and its
performance hereunder in
accordance with the terms and conditions hereof do not and will not: (i) require
the approval of any third party, including its shareholders or investors, (ii)
violate, conflict with or result in a breach of any provision of its articles of
incorporation, by-laws or comparable governing documents, (iii) violate,
conflict with or result in a breach of any provision of or constitute a default
(or an event that, with notice or lapse of time or both, would constitute a
default) under, or result in the termination of, or accelerate the performance
required by, or result in the creation of any lien, charge, penalty or
encumbrance under, any contract or other agreement to which it is a party or by
or to which it is bound or subject, or (iv) violate any judgment, ruling, order,
writ, injunction, award, decree, statute, law, ordinance, code, rule or
regulation of any court or foreign, federal, state, county or local government
or any other governmental, regulatory or administrative agency or authority that
is applicable to it.
(b) Xxxxxx Xxxxxxx represents and warrants that the Pirate Parties are
acting independently of any third party, and not pursuant to an agreement,
arrangement, relationship, understanding or otherwise for the purpose of
acquiring, owning, holding, voting or disposing of any shares of the Company,
and the Pirate Parties do not constitute a single person with any third party
for purposes of the definition of an "Acquiring Person" in Section 302A.011
Subd. 37 of the Minnesota Business Corporation Act or "Beneficial Ownership" in
Section 302A.011 Subd. 41(c) of the Minnesota Business Corporation Act and do
not constitute a "group" with any third party within the meaning of Rule 13d-5
under the Exchange Act.
(c) The Company represents and warrants that each of the following
individuals have irrevocably agreed with the Company (but not with each other),
in their capacity as shareholders, not to take any action opposed to or
inconsistent with this Agreement and the transactions contemplated hereby:
Denver Xxxxxxx, Xxxxxxx X. Xxxxxxx, Xxxxx X. Xxxxxxx, Xxxxx X. Xxxxx, Xxxxxxx X.
Xxxxx and Xxxxxx West. Any amendment or waiver of such agreement or failure by
any such person to so act shall constitute a breach by the Company of this
Agreement.
9. AMENDMENT. No amendment or waiver of any provision of this
Agreement shall be effective unless in writing and signed by all of the parties
hereto.
10. SEVERABILITY. Wherever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be prohibited by or
invalid under applicable law, such provision shall be ineffective only to the
extent of such prohibition or invalidity, without invalidating the remainder of
such provision or the remaining provisions of this Agreement.
11. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
inure to the benefit of the successors and assigns of each party.
12. EXECUTION IN COUNTERPARTS. This Agreement may be executed in any
number of counterparts and by different parties hereto in separate counterparts,
each of which when so executed and delivered shall be deemed to be an original
and all of which counterparts taken together shall constitute one and the same
instrument.
13. FURTHER ASSURANCES. Each party agrees to take or cause to be taken
such further actions, and to execute, deliver and file or cause to be executed,
delivered or filed, such further documents and instruments, and to obtain such
consents, as may be reasonably required or requested by another party in order
to effectuate fully the purposes, terms and conditions of this agreement.
14. NOTICE. All notices, requests and demands to or upon a party
hereto, to be effective with respect to this Agreement, shall be in writing, and
shall be sent by certified or registered mail, return receipt requested, by
personal delivery against receipt, by overnight courier or by facsimile and,
unless otherwise expressly provided herein, shall be deemed to have been validly
served, given, delivered or received immediately when delivered against receipt,
three (3) business days' after deposit in the mail, postage prepaid, one (1)
business day after deposit with an overnight courier or, in the case of
facsimile notice, when sent with respect to machine confirmed, addressed as
follows:
If to Company: PW Eagle, Inc.
0000 Xxxxxx Xxxxx Xxxxx
Xxxxxx, Xxxxxx 00000
Attention: Xxxxx X. Xxxx
Facsimile No.: (000) 000-0000
With a copy to: Xxxxxxxxxx & Xxxxx, P.A.
000 Xxxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxxxx, XX 00000-0000
Attention: K. Xxxx Xxxxxx
Facsimile No.: (000) 000-0000
If to Xxxxxx Xxxxxxx and Xxxxxx Xxxxxxx LLC
the Xxxxx Xxxxx Funds: 000 Xxxxxxxxxxx Xxxxxx, 0xx Xxxxx
Xxxxxxx, XX 00000
Attention: Xxxxxxxxxxx Xxxxx, Esq.
Facsimile No. (000) 000-0000
With a copy to: Xxxxxxx Xxxx & Xxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxx Xxxxxxxxxx, Esq.
Facsimile No.: (000) 000-0000
or to such other address as each party may designate for itself by notice given
in accordance with this Section 14.
15. TIME OF ESSENCE. Time is of the essence with respect to this
Agreement.
16. ENTIRE AGREEMENT. This Agreement embodies the entire understanding
and agreement between the parties hereto with respect to the subject matter
hereof and
supersedes all prior agreements, understandings and inducements, whether express
or implied, oral or written, with respect to the subject matter hereof.
17. INTERPRETATION. No provision of this Agreement shall be construed
against or interpreted to the disadvantage of any party hereto by any court or
other governmental or judicial authority by reason of such party having or being
deemed to have structured or dictated such provision. Each party hereto
acknowledges that it has had the benefit of legal counsel of its own choice and
has been afforded an opportunity to review this Agreement with its legal counsel
and that this Agreement shall be construed as if jointly drafted by the parties.
Any breach by or nonperformance of any provision of this Agreement that calls
for action to be taken by the Board shall constitute a breach of this Agreement
by the Company. The headings in this Agreement are for convenience of reference
only and shall not limit or otherwise affect the meaning of terms contained
herein. Unless the context of this Agreement otherwise requires, as used herein:
(i) words of any gender shall be deemed to include each other gender; (ii) words
using the singular or plural number shall also include the plural or singular
number, respectively; (iii) the words "hereof", "herein" and "hereunder" and
words of similar import refer to this Agreement as a whole and not to any
particular provision of this Agreement; (iv) the word "including" and words of
similar import mean "including, without limitation"; (v) "or" is not exclusive;
and (vi) provisions apply to successive events and transactions.
18. GOVERNING LAW AND JURISDICTION. THIS AGREEMENT SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF MINNESOTA (WITHOUT
GIVING EFFECT TO ANY CHOICE OR CONFLICT OF LAW PROVISION OR RULE). EACH PARTY
HEREBY CONSENTS AND AGREES THAT ANY FEDERAL OR STATE COURT LOCATED IN HENNEPIN
COUNTY, MINNESOTA SHALL HAVE EXCLUSIVE JURISDICTION TO HEAR AND DETERMINE ANY
CLAIMS OR DISPUTES BETWEEN THE COMPANY ON THE ONE HAND AND THE PIRATE PARTIES ON
THE OTHER HAND PERTAINING TO THIS AGREEMENT OR TO ANY MATTER ARISING OUT OF OR
RELATED TO THIS AGREEMENT. EACH PARTY EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE
TO SUCH JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY SUCH COURT, AND
HEREBY WAIVES ANY OBJECTION WHICH IT MAYHAVE BASED UPON LACK OF PERSONAL
JURISDICTION, IMPROPER VENUE OR FORUM NON CONVENIENS. EACH PARTY HEREBY WAIVES
PERSONAL SERVICE OF THE SUMMONS, COMPLAINT AND OTHER PROCESS ISSUED IN ANY SUCH
ACTION OR SUIT AND AGREES THAT SERVICE OF SUCH SUMMONS, COMPLAINT AND OTHER
PROCESS MAYBE MADE BY REGISTERED OR CERTIFIED MAIL ADDRESSED TO SUCH PARTY AT
THE ADDRESS SET FORTH IN THIS AGREEMENT AND THAT SERVICE SO MADE SHALL BE DEEMED
COMPLETED UPON THE EARLIER OF SUCH PARTY'S ACTUAL RECEIPT THEREOF OR 3 DAYS
AFTER DEPOSIT IN THE U.S. MAILS, PROPER POSTAGE PREPAID. NOTHING IN THIS
AGREEMENT SHALL BE DEEMED OR OPERATE TO AFFECT THE RIGHT OF ANY PARTY TO SERVE
LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW, OR TO PRECLUDE THE
ENFORCEMENT BY ANY PARTY OF ANY JUDGMENT OR ORDER OBTAINED IN SUCH FORUM OR THE
TAKING OF ANY ACTION UNDER THIS AGREEMENT TO ENFORCE SAME IN ANY OTHER
APPROPRIATE FORUM OR JURISDICTION.
19. INJUNCTIVE RELIEF. Each of the Pirate Parties, on the one hand,
and the Company, on the other, acknowledges that a party will suffer irreparable
harm if any other party breaches this Agreement. Accordingly, a non-breaching
party shall be entitled, in addition to any other rights and remedies that it
may have, at law or at equity, to an injunction, without the posting of a bond
or other security, enjoining or restraining any other party from any violation
of this Agreement. Each party hereby consents to the other parties' right to the
issuance of such injunction.
20. PUBLIC ANNOUNCEMENTS. Any public announcement or similar publicity
with respect to this Agreement may be issued, at such time and in such manner as
the parties shall agree in advance; provided, however, that (i) the Pirate
Parties shall be permitted, in their discretion, to amend the Xxxxxx Xxxxxxx
Schedule 13D to reflect this Agreement or otherwise, and to make any other
disclosure required by applicable law, and (ii) the Company shall be permitted
to disclose this Agreement on Form 8-K, and to make any other disclosure
required by applicable law, after Xxxxxx Xxxxxxx is provided with a reasonable
opportunity to review and comment on any such disclosure.
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IN WITNESS WHEREOF, each of the parties hereto has caused a
counterpart of this AGREEMENT to be duly executed and delivered as of the date
first above written.
PW EAGLE, INC.
By: /s/ Xxxxxxx Xxxxx
------------------------------
Name: Xxxxxxx Xxxxx
Title: Co-Chairman
XXXXX XXXXX FUND LP XXXXXX XXXXXXX LLC
By: Xxxxxx Xxxxxxx LLC
Its: General Partner By: /s/ Xxxxxx X. Xxxxxx Xx.
-------------------------------
Name: Xxxxxx X. Xxxxxx Xx.
Title: Managing Member
By: /s/ Xxxxxx X. Xxxxxx Xx.
-----------------------------
Name: Xxxxxx X. Xxxxxx Xx.
Title: Managing Member
XXXXX XXXXX OFFSHORE FUND XXXXX XXXXX ACTIVIST
LTD PORTFOLIO COMPANY LTD
By: Xxxxxx Xxxxxxx LLC By: Xxxxxx Xxxxxxx LLC
Its: Investment Advisor Its: Investment Advisor
By: /s/ Xxxxxx X. Xxxxxx Xx. By: /s/ Xxxxxx X. Xxxxxx Xx.
----------------------------- -------------------------------
Name: Xxxxxx X. Xxxxxx Xx. Name: Xxxxxx X. Xxxxxx Xx.
Title: Managing Member Title: Managing Member
