NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON JUNE 5, 1996
Dear Shareholder:
You are hereby invited to attend the Annual Meeting of Shareholders of Eagle
Food Centers, Inc. which will be held on Wednesday, June 5, 1996, at 10:00
a.m.,Central Daylight Time, at the Milan Community Center, Rt. 67 & 92nd
Avenue, Milan, Illinois. The matters to be considered and voted upon at the
Annual Meeting of Shareholders are:
1. The election of ten persons to serve as directors of the Company until the
1997 Annual Meeting of Shareholders or until their successors shall have
been elected and shall have qualified.
2. A proposal to ratify the appointment of Deloitte & Touche LLP as
independent public accountants for the current fiscal year.
3. 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 May 3,
1996, as the record date for determining the shareholders entitled to notice
of and to vote at the meeting or any adjournment or postponements thereof.
All shareholders of record at the close of business on May 3, 1996,
are invited to attend the meeting in person. However, to ensure your shares
will be voted in the event you are not able to attend, please fill in, sign,
and date the enclosed proxy, and return it in the enclosed envelope as soon
as possible. The attached Proxy Statement contains more detailed information
with respect to the business to be transacted at the meeting.
Herbert T. Dotterer
Secretary
May 7, 1996
Milan, Illinois
<PAGE>
May 7, 1996
EAGLE FOOD CENTERS, INC.
PROXY STATEMENT
GENERAL INFORMATION
This Proxy Statement is being furnished in connection with the
solicitation of proxies by the Board of Directors of Eagle Food Centers, Inc.
(the "Company"), to be voted at the Annual Meeting of Shareholders to be held
on June 5, 1996,at 10:00 a.m., Central Daylight Time at the Milan Community
Center, Rt. 67 & 92nd Avenue, Milan, Illinois. Proxies are solicited to give
all shareholders of record at the close of business on May 3, 1996, an
opportunity to vote upon the items listed on the accompanying proxy card.
This Proxy Statement, the Notice of Annual Meeting, and the proxy card are
intended to be mailed to shareholders commencing on May 7, 1996.
Only holders of record of the Company's Common Stock, $.01 par
value per share, at the close of business on May 3, 1996, are entitled to
notice of and to vote at the annual meeting. On that date, the Company had
outstanding 10,853,894 shares of Common Stock each of which is entitled to
one vote on each proposal presented. A majority of the outstanding shares of
Common Stock present in person or represented by proxy will constitute a quorum
for the transaction of business at the meeting. In the election of directors,
a plurality of votes cast in person or by proxy shall elect. Each other
proposal requires a majority of the votes cast on the proposal to approve.
Abstentions and broker non-votes are counted for purposes of determining the
presence or absence of a quorum for the transaction of business. Abstentions
are counted in tabulations of the votes cast on proposals presented to the
shareholders, whereas broker non-votes are not counted for purposes of
determining whether a proposal has been approved.
All proxies delivered pursuant to this solicitation may be revoked
at any time at the option of the shareholder by giving written notice to the
Secretary of the Company, by submitting a later dated proxy, or by voting in
person at the meeting.
Upon timely receipt of each properly signed proxy card, the shares
represented thereby will be voted in accordance with the directions indicated
on the proxy card. If no instructions are indicated, the shares will be
voted for the election of the nominated directors and for the ratification of
the selection of auditors.
The cost of soliciting proxies will be borne by the Company.
Officers, directors, and regular employees of the Company may solicit proxies
personally, by mail, or by telephone and telegraph for which they will not
receive additional compensation.
The Eagle Food Centers, Inc. 1995 Annual Report and financial
statements for the fiscal year ended February 3, 1996, with comparative
figures for prior periods accompanies this Proxy Statement. The Annual Report
and the financial statements included therein are incorporated in this Proxy
Statement by reference.
The mailing address of the principal executive offices of the
Company is Rt.67 and Knoxville Road, Milan, Illinois, 61264.
<PAGE>
PROPOSALS TO SHAREHOLDERS
ELECTION OF DIRECTORS
Proposal 1
The Board of Directors currently consists of ten members, all of whom have
been nominated to be elected at the 1996 Annual Meeting of Shareholders to
serve until the 1997 Annual Meeting of Shareholders or until their successors
have been elected and qualified. The table below sets forth certain
information regarding the nominees. It is intended that the accompanying
proxy, in the absence of instructions to the contrary, will be voted for the
election of the following ten persons unless the authority to vote is
withheld. If any nominee is unwilling or unable to serve, favorable and
uninstructed proxies will be voted for a substitute nominee designated by
the Board of Directors.
The Board of Directors recommends a vote "FOR" each of the ten nominees
listed below.
<TABLE>
<CAPTION>
Name Age Position(s) Held
<S> <C> <C>
Martin J. Rabinowitz 64 Chairman of the Board and Director
Robert J. Kelly 51 Chief Executive Officer, President and
Director
Pasquale V. Petitti 66 Director
Herbert T. Dotterer 51 Senior Vice President--Finance and
Administration ,Chief Financial Officer,
Secretary and Director
Peter B. Foreman 60 Director
Steven M. Friedman 41 Director
Michael J. Knilans 69 Director
Alain M. Oberrotman 45 Director
Marc C. Particelli 51 Director
William J. Snyder 53 Director
</TABLE>
The business experience of each of the directors and executive officers
during the past five years is as follows:
Mr. Rabinowitz served as Chairman of the Board from November 1987 to June
1990 and resumed the position as of May 1992. Mr. Rabinowitz has been a
Limited Partner of Odyssey Partners, L.P. since January 1993 and was a General
Partner of Odyssey Partners from February 1984 through December 1992. Prior
to joining Odyssey Partners, Mr. Rabinowitz was a senior tax partner with the
law firm of Weil, Gotshal & Manges. Mr. Rabinowitz also serves as Chairman of
the Board of Thackeray Corporation and as a director of Long Lake Energy
Corporation.
Mr. Kelly joined the Company as President and Chief Executive Officer in
May 1995. Prior to May 1995, Mr. Kelly was Executive Vice President,
Retailing for The Vons Companies, Inc. and was employed by that Company since
1963. Mr. Kelly has 33 years of experience in the supermarket industry.
Mr. Petitti served as a director from June 1989 until April 1993 and
President and Chief Executive Officer from September 1989 through April 1992
when he retired as an officer of the Company. Mr. Petitti resumed the
positions of Director, President and Chief Executive Officer in April 1994
and was replaced as President and Chief Executive Officer on May 22, 1995.
Previously, Mr. Petitti had been with the Company or its predecessor since
1957.
Mr. Dotterer was named Secretary and a director of the Company in
February 1992. He previously served as Controller of the Company from
August 1988 until June 1991 when he became Vice President-Finance, Chief
Financial Officer. He became Senior Vice President-- Finance and
Administration, Chief Financial Officer in January 1994. Prior to August
1988, Mr. Dotterer held various positions with The Kroger Co. and Jewel
Companies, Inc. Mr. Dotterer has 34 years of experience in the supermarket
industry.
Mr. Foreman is President of Sirius Corporation, a private investment
management firm, a position he has held since 1994. Prior to 1994, Mr.
Foreman was a Principal at Harris Associates L.P. since 1976. Mr. Foreman
also serves as a director of Glacier Water Services, Inc.; a director of PCA
International, Inc.; and a director of National Picture and Frame Company.
Mr. Foreman has been a director of the Company since June 1989.
Mr. Friedman is a General Partner of Eos Partners, L.P., a private
investment firm, a position he has held since December 1993. Mr. Friedman
has served as a director of the Company since November 1987 and was a General
Partner of Odyssey Partners from April 1, 1988 until December 1993.
Mr. Friedman also serves as a director of Forstmann & Company, Inc., The
Caldor Corporation, The Leslie Fay Companies, Inc., MICOM Communications
Corporation; and he serves as a director and Chairman of JPS Textile Group,
Inc. and of Rickel Home Centers, Inc.
Mr. Knilans served as the President of Big Bear, Inc., a supermarket
chain in Ohio, from June 1983 to June 1989 when he retired. Mr. Knilans has
been a director of the Company since June 1989. Mr. Knilans also serves as a
director of the Cardinal Fund, Columbus, Ohio and a director and member of
the Audit and Compensation Committees of the Golub Corporation.
Mr. Oberrotman is a Principal of Odyssey Partners, L.P. Prior to joining
Odyssey Partners in October 1992, he was a Principal of Hambro International
Equity Partners, a venture capital firm , from September 1990 to October 1992.
Mr. Oberrotman also serves as a director of JPS Textile Group, Inc. and
Forstmann & Company, Inc.
Mr. Particelli is a Principal and Director of Operations of Odyssey
Partners, L.P. Prior to joining Odyssey Partners in October 1994, he was the
worldwide Consumer Products Practice Leader as well as a Senior Partner of
Booz, Allen & Hamilton, a large management consulting firm he joined in 1973.
Mr. Particelli also serves as a director of JPS Textile Group, Inc. and Monarch
Marking Systems.
Mr. Snyder is a senior shareholder in the law firm of Snyder & Schwarz,
P.C., Rock Island, Illinois where he has been employed since March 1983. Mr.
Snyder and the firm have performed legal services in the past for the Company
and the Company expects such services to continue in the future. Mr. Snyder
has been a director of the Company since June 1989.
The Company's directors are elected annually to serve until the next
annual meeting of shareholders and until their successors have been elected
and qualified. None of the directors or executive officers listed herein is
related to any other director or executive officer of the Company.
<PAGE>
COMPENSATION OF DIRECTORS
The Company's nonemployee directors receive an annual retainer of $15,000
and fees of $750 for each board meeting and $500 for each committee meeting
attended plus reimbursement of travel expenses. Mr. Snyder does not receive
director's fees, but does receive legal fees for his services as a board and
committee member.
CERTAIN TRANSACTIONS
Snyder & Schwarz, P.C., the law firm of which Mr. Snyder, a director of
the Company is a member, serves as counsel to the Company. The Company paid
that law firm $393,857, $353,613, and $215,556 for services rendered in fiscal
1995, fiscal 1994, and fiscal 1993, respectively. These amounts include
remuneration for Mr. Snyder's services as a director of the Company.
The Board has determined that the fees paid for services rendered from
Snyder & Schwarz, P. C. were fair and competitive.
BOARD OF DIRECTORS AND COMMITTEES MEETINGS
The Board of Directors is responsible for establishing broad corporate
policies and for overseeing the overall performance of the Company. The
directors are kept informed of the Company's business through discussions
with the Chairman, President and Chief Executive Officer, and other directors
and officers, by reviewing reports and analyses, and by participating in
board and committee meetings. In addition, from time to time, members of the
Board of Directors and committees act by unanimous written consent pursuant
to Delaware law.
The Board of Directors held ten meetings during fiscal 1995. All
directors attended at least 75% of all board and committee meetings held
during the periods for which they were directors.
The Board of Directors has an Audit Committee and a Compensation
Committee. The Board has no nominating committee. The Board of Directors
acts as a committee of the whole with respect to functions that would be
performed by a nominating committee.
The Audit Committee is composed of Mr. Knilans, Mr. Foreman, Mr. Snyder
and Mr. Oberrotman, all of whom are non-employee directors. The Committee
met twice during fiscal 1995. The Committee recommends the engagement of an
independent auditor and reviews the scope and results of the Company's audits,
the Company's internal accounting controls, and the professional services
rendered by the Company's independent auditors.
The Compensation Committee is composed of Mr. Rabinowitz, Mr. Friedman
and Mr. Foreman, all of whom are non-employee directors. The Committee met
twice during fiscal 1995. The Committee reviews and approves all salary
arrangements and other remuneration for officers of the Company.
<PAGE>
Limitation of Liability of Directors
As permitted by the Delaware General Corporation Law, the Company's
Certificate of Incorporation provides that a director of the Company will not
be personally liable to the Company or its shareholders for monetary damages
for breach of the fiduciary duty of care as a director, including breaches
which constitute gross negligence. By its terms and in accordance with the
Delaware General Corporation Law, however, this provision does not eliminate
or limit the liability of a director of the Company (i) for breach of the
director's duty of loyalty to the Company or its shareholders, (ii) for acts
or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) under Section 174 of the Delaware General
Corporation Law (relating to unlawful payments of dividends or unlawful stock
repurchases or redemptions), or (iv) for any transaction from which the
director derived an improper personal benefit.
EXECUTIVE COMPENSATION
Summary Compensation
The Summary Compensation Table below shows compensation information for
each Chief Executive Officer of the Company during the last fiscal year, the
three other most highly compensated executive officers who were serving at
the end of the last fiscal year whose total annual salary and bonus exceeded
$100,000, and for certain other former executive officers of the Company (the
"named executive officers"), for the fiscal years indicated.
<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>
Annual Compensation
Long-Term Compensation
Name and Principal Position Fiscal
Year Salary(1) Bonus Other Annual
Compensation Securities
Underlying
Options (#) LTIP
Payouts All Other
Compensation
<S> <C> <C> <C> <C> <C> <C> <C>
Robert J. Kelly 1995 $249,038 $300,000 (2)(7) 600,000 $0 $2,500(8)
Chief Executive Officer
and President
Pasquale V. Petitti(3) 1995 66,692 0 38,951(7)10) 0 0 41,015(11)
Former Chief Executive 1994 168,976 0 26,408(7)(10) 10,000 0 0
Officer and President 1993 0 0 26,408(10) 0 0 0
Herbert T. Dotterer, 1995 117,212 17,250 (7) 25,000 0 3,926(8)
Chief Financial Officer 1994 115,000 0 (7) 3,000 0 3,926(8)
and Senior Vice President-
Finance and Administration 1993 95,000 10,000 (7) 0 158,676(9) 2,945(8)
David S. Norton(4) 1995 72,116 20,817(6) (7) 75,000 0 2,125(8)
Senior Vice President-Retail
Randy P. Smith(5) 1995 78,481 11,515 (7) 25,000 0 2,500(8)
Vice President-Human Resources
</TABLE>
<PAGE>
Notes:
(1) There were no salary increases in 1995. Any increases shown are the
result of the Company's 53 week fiscal year.
(2) Mr. Kelly received a signing bonus of $150,000 pursuant to the terms of
his employment agreement in addition to the bonus received in fiscal year
1995.
(3) Mr. Petitti was Chief Executive Officer and President from April 13, 1994
until May 22, 1995 when he was succeeded by Robert J. Kelly.
(4) Mr. Norton joined the Company July 10, 1995 and was elected an officer
December 14, 1995.
(5) Mr. Smith was elected an officer of the Company December 14, 1995.
(6) Mr. Norton received a signing bonus of $10,000 pursuant to the terms of
his employment agreement in addition to the bonus received in fiscal year
1995.
(7) Received other annual compensation consisting of perquisites and personal
benefits valued at less than ten percent of total annual salary and bonus.
(8) Amounts represent the full dollar value of premiums paid by the Company
on compensatory split-dollar executive life insurance policies for each
executive, respectively.
(9) Amounts represent payouts in respect of long-term awards under the
Performance Equity Plan.
(10) Represents retirement benefits and deferred compensation payments related
to Mr. Petitti's previous employment with the Company of $26,408 and
moving expenses of $12,543.
(11) Amount represents accrued vacation and the full dollar value of premiums
paid by the Company on a compensatory split-dollar executive life
insurance policy.
Options/Grants in Fiscal Year 1995
The following table sets forth information concerning individual grants
of stock options during the last fiscal year to each of the named executive
officers. The Compensation Committee approved distribution of stock option
grants to certain named executive officers at the option price of $1.50 per
share. The option price was based on the market price of the Company's
shares on the date of the grant. Option grants to Mr. Kelly and Mr. Norton
were made pursuant to the terms of their respective employment agreements.
<PAGE>
<TABLE>
OPTION GRANTS IN FISCAL YEAR 1995
<CAPTION>
Individual Grants Potential realizable
value at assumed
annual rates of stock
price appreciation
for option term
Name Number of
Securities
underlying
Options
granted (#) Percent of
total options
granted to
employees
in fiscal
year Exercise
or base
price
($/Sh) Expiration
Date 5%(4) 10%(4)
<S> <C> <C> <C> <C> <C> <C>
Robert J.
Kelly(1) 200,000
200,000
200,000 59.05% 2.50
3.50
4.50 5/22/2001
5/22/2002
5/22/2003 $138,000
193,200
248,400 $305,500
427,700
549,900
Herbert T.
Dotterer(2) 25,000 2.46% 1.50 12/14/2005 23,588 59,775
David S.
Norton(3) 25,000
25,000
25,000 7.38% 2.50
3.50
4.50 7/10/2005
7/10/2006
7/10/2007 39,313
55,038
70,763 99,625
139,475
179,325
Randy P.
Smith(2) 25,000 2.46% 1.50 12/14/2005 23,588 59,775
</TABLE>
Notes:
(1) Options were granted for a term of five years from the date exercisable.
Options for 200,000 shares become exercisable on each of the first three
anniversaries of employment.
(2) Options were granted for a term of ten years on December 14, 1995,
subject to earlier termination in certain events related to termination
of employment. One-fourth of the options become exercisable on each of
the first four anniversaries of the grant date.
(3) Options were granted for a term of ten years on July 10, 1995. Options
for 25,000 shares become exercisable on each of the first three
anniversaries of employment.
(4) Caution is recommended in interpreting the financial significance of
these figures. The amounts under the columns labeled "5%" and "10%" are
included pursuant to certain rules promulgated by the Securities and
Exchange Commission and are not intended to forecast future appreciation,
if any, in the price of the Company's common stock. These amounts are
based on the assumption that the named executives hold options granted
for the full term of their options and that the price the Company's
common stock appreciates at assumed rates of 5% and 10%, respectively,
compounded annually over the term of the options. The actual value of
the options will vary in accordance with market price of the Company's
common stock.
<PAGE>
Aggregated Option/SAR Exercises and Fiscal Year and Option/SAR Values
The following table shows information regarding the values of certain
unexercised options at the end of the last completed fiscal year. No stock
appreciation rights were granted during fiscal 1995 or were outstanding at
the end of fiscal 1995.
<TABLE>
Aggregated Option/SAR Exercises in Last Fiscal Year and FY-End
Option/SAR Values
Table
<CAPTION>
Number of Securities Underlying
Unexercised
Options at February 3, 1996 Value of Unexercised in- the-
Money Options
at February 3, 1996(1)
Name Acquired
On
Exercise Value
Realized Exercisable Nonexercisable Exercisable Nonexercisable
<S> <C> <C> <C> <C> <C> <C>
Robert J.
Kelly 0 0 0 600,000 0 0
Herbert T.
Dotterer 0 0 3,000 25,000 0 0
David S.
Norton 0 0 0 75,000 0 0
Randy P.
Smith 0 0 5,000 25,000 0 0
</TABLE>
Note:
(1) Market value of underlying securities at February 3, 1996 minus the base
price.
Long Term Incentive Plan Awards
The Company did not make any Long Term Incentive Plan awards in fiscal
1995.
Compensation Committee Report
The Compensation Committee for fiscal 1995 was composed of three
nonemployee members from the Board of Directors. The members were Mr.
Rabinowitz, Mr. Friedman and Mr. Foreman. Mr. Kelly attended meetings as a
non-voting member. The Committee establishes objectives for the executive
compensation program and reviews and approves all salary and other
remuneration for the executive officers of the Company. The objectives of the
executive compensation program are to:
1. Promote the attainment of Company goals by placing a greater portion
of compensation subject to performance goals.
2. Attract and retain, and motivate the high caliber executives
required for the success of the business.
3. Enhance shareholder value by providing opportunities for equity
ownership through performance-based programs.
The executive officer compensation program is comprised of salary, cash
incentive compensation and other benefits, including pension and medical
benefits which are available to other employees in the Company.
<PAGE>
Base Salary
There is no formal Compensation Committee policy regarding the
determination of salaries; however, consideration is given to several factors
including individual work experience, performance, and comparable salaries
within the retail food industry. Based upon a 1992 study conducted by Hewitt
Associates of fifteen similar retail food chains, the Company's salary
structure for executive officers was approximately one-third below the
industry median. Salary adjustments for fiscal year 1994 reflect promotions
and changes in responsibility, but did not include any annual adjustments.
The compensation peer group used in the Hewitt Study is not the same as the
S & P Retail Food peer group index used in the Comparison of Five Year
Cumulative Total Return graph included in this Proxy Statement. The group with
which the Company competes for executive talent does not necessarily include
all of companies which should be used to compare shareholder returns.
Annual Incentive Bonuses
The Company used the Hewitt study and other industry comparative data to
determine annual bonus potentials. Annual bonus potentials depend upon job
levels and are set at a stated percent of the base compensation. The entire
annual incentive bonus paid for 1993 and 1995 was on a discretionary basis
except for bonuses paid pursuant to contractual guarantees bonus payments
were awarded to the named executive officers for 1994 due to the Company's
results.
Long-Term Incentive
The Committee intends to utilize stock options as the vehicle to provide a
long-term focus for fiscal 1995 and later fiscal years. The number of shares
granted to key individuals was increased in 1995 to be more meaningful for
the long-term focus; the 1995 grants also incorporated longer vesting
periods for executive retention.
Chief Executive Officer Compensation
As of May 10, 1995, the Company retained Robert J. Kelly as its President
and Chief Executive Officer. Mr. Kelly is one of the nominees for the Board
of Directors. The Company and Mr. Kelly have entered into an Employment
Agreement which has a term of three years ending on May 22, 1998. The
Employment Agreement provides for a base salary at the rate of $350,000 per
year. In addition, the Company paid a signing bonus of $150,000 at the
commencement of his employment. Also, Mr. Kelly is eligible to receive
bonus compensation in an amount determined by the Board of Directors based
upon mutually acceptable performance targets and up to 100% of the base
salary. The bonus compensation in the first year of Mr. Kelly's employment
was $150,000. Mr. Kelly purchased 125,000 shares of common stock of the
Company at the time of the execution of the Employment Agreement by
delivering to the Company a promissory note with the purchase price of the
shares based upon the closing sale price of the Company's common stock on the
business day immediately preceding the date of the Employment Agreement. The
Company has also granted Mr. Kelly the option to purchase up to 600,000
shares of the Company's common stock. Under the terms of this option, up to
200,000 shares may be purchased by Mr. Kelly on or after the first
anniversary date of his employment at a price equal to $2.50 per share, up to
an additional 200,000 shares may be purchased on or after the second
anniversary of his employment at a price equal to $3.50 per share, and the
balance of the shares may be purchased on or after the third anniversary of
<PAGE>
Mr. Kelly's employment at a price equal to $4.50 per share. This option
becomes immediately exercisable in the event of the termination of Mr. Kelly's
employment by reason of his death or permanent disability, by the Company for
any reason other than cause (as defined in the Employment Agreement), or by
Mr. Kelly for good reason (as defined in the Employment Agreement). The
option also becomes immediately exercisable in the event of a change of
control of the Company. The Employment Agreement provides that Mr. Kelly is
entitled to four weeks of vacation per year.
Compensation Committee:
Martin J. Rabinowitz
Steven M. Friedman
Peter B. Foreman
Compensation Committee Interlocks and Insider Information
The Compensation Committee is comprised exclusively of directors who are
not and have never been Company employees. No Company executive officer
serves on the Compensation Committee or as a director of another company for
which any member of the Compensation Committee serves as a director or
executive officer.
Performance Graph
Shown below is a line graph comparing a five-year cumulative total
shareholder return for the Company, the S & P Retail Stores (Food), and the
Russell 2000.
<TABLE>
Comparison of Five-Year Cumulative Total Return*
Eagle Food Centers, S & P Retail Food Stores, and Russell 2000
<CAPTION>
Year Eagle Foods S&P Retail Food Stores Russell 2000
<S> <C> <C> <C>
January 1991 $100 $100 $100
January 1992 121.28 97.11 144.85
January 1993 123.40 123.89 164.01
January 1994 110.64 119.46 194.55
January 1995 27.66 130.09 182.86
January 1996 36.17 164.48 237.61
</TABLE>
*Total return assumes reinvestment of dividends on a quarterly basis.
Note: Companies comprising the S & P Retail Stores (Food) Index include:
Albertson's, Inc.; American Stores Co.; Giant Food Inc.; Great Atlantic &
Pacific Tea Co.; Kroger Co.; and Winn-Dixie Stores Inc.
<PAGE>
Summary of Compensation Plans
Retirement Plan
The Company maintains a tax-qualified defined benefit pension plan covering
both salaried and non-union hourly employees. The benefit formula under such
plan is the sum of 1% of annual compensation for each year up to the Social
Security Wage Base for that year and 1.33% of annual compensation over the
Social Security Wage Base with a minimum benefit of $360 per year multiplied
by years of credited service. There is full vesting of benefits after five
years of service. All contributions are made by the Company. Effective
October 1, 1990, the pension plans were amended to provide for voluntary
early retirement at age 55. Assuming continued employment with the Company
until retirement at age 65, the estimated annual benefits payable beginning
at age 65 to the named executive officers are as follows: Mr. Kelly--$26,653;
Mr. Dotterer--$29,560; Mr. Norton--$24,746 and Mr. Smith--$20,230.
Stock Incentive Plan
The Company has a Stock Incentive Plan which was ratified by the
shareholders at the 1995 Annual Shareholders Meeting. The Plan provides the
Compensation Committee with the discretion to make grants until June 20, 2005
to all salaried employees of the Company who are not in a bargaining unit, in
the form of Nonqualified Stock Options, Incentive Stock Options, Stock
Appreciation Rights, Limited Stock Appreciation Rights, and Restricted Stock.
Grants of Stock Appreciation Rights, Limited Stock Appreciation Rights, and
Restricted Stock are intended to be confined to key employees in special
situations. The Plan originally authorized two million shares of common
stock. There are 983,950 shares available for future grants.
Employment Contracts and Termination of Employment and
Change-in-Control Arrangements
Robert J. Kelly, who was named as President and Chief Executive Officer
on May 22, 1995 has an employment agreement which is described above.
David S. Norton, Senior Vice President-Retail of the Company, has an
employment agreement which provides for a base salary of $125,000 per year
and a signing bonus of $10,000. Mr. Norton is eligible to receive bonus
compensation in an amount determined by the Board of Directors contingent on
company performance with a targeted norm of fifty percent of base salary.
The Company granted Mr. Norton options to purchase 75,000 shares of the
Company's common stock. Details on the stock options is provided within the
Executive Compensation section of this proxy statement. The options have a
term of ten years from award. In the event of a change in control of the
Company, the option becomes immediately exercisable. Mr. Norton is entitled
to eighteen months salary if his employment with the Company is terminated
for reasons other than a felony, failure to perform duties after warnings or
embezzlement, fraud or theft of Company property. The employment agreement
also provides for vacation and enrollment in Company benefit plans.
In order to protect all of the participant's rights in the event of a Change
in Control (as defined below) of the Company, the 1995 Stock Incentive Plan
provides for the immediate vesting of all outstanding awards upon the
occurrence of such an event. For purposes of such Plan, a Change in Control
of the Company is deemed to occur if: (i) any person or entity (with the
exception of Odyssey Partners) acquires 50% or more of the voting securities
of the Company; (ii) the shareholders approve a plan of complete liquidation,
<PAGE>
an agreement for sale or disposition of substantially all of the Company's
assets, or a materially dilutive merger or consolidation of the Company; or
(iii) the Board of Directors agrees by a two-thirds vote that a Change in
Control has occurred or is about to occur and within six months actually does
occur. However, for purposes of such Plan, no Change in Control would be
deemed to occur with respect to any Plan participant who is a material equity
participant of the purchasing group that consummates a Change in Control.
SECURITY OWNERSHIP OF PRINCIPAL SHAREHOLDERS
AND MANAGEMENT
The following table sets forth information with respect to the beneficial
ownership of shares of Common Stock by (a) each person or group that is known
to the Company to be the beneficial owner of more than 5% of the outstanding
shares, (b) each director and named executive officer of the Company, and (c)
all directors and executive officers of the Company as a group.
<TABLE>
<CAPTION>
Amount
and Nature Percent
Name and Address of Beneficial of
of Beneficial Owner Ownership(1) Class(2)
<S> <C> <C>
Odyssey Partners, L.P.(3) 5,754,835 53.02
Stephen Berger(4) 5,754,835
Leon Levy(4) 5,754,835
Jack Nash(4) 5,754,835
Joshua Nash(4) 5,754,835
Brian Wruble(4) 5,754,835
c/o Odyssey Partners, L.P.
31 West 52nd Street
New York, New York 10019
Steven M. Friedman(3) 267,345 2.46
Pasquale V. Petitti 250,000 2.30
Robert J. Kelly(5) 325,000 2.94
Herbert T. Dotterer(7) 20,226 *
Peter B. Foreman 151,022 1.39
Michael J. Knilans 500 *
William J. Snyder(6) 1,000 *
Randy P. Smith(8) 5,000 *
Alain M. Oberrotman(9) 25,000 *
Marc C. Particelli(9) 25,000 *
Directors and officers as a group 6,507,583 58.83
(11) persons including certain of
the persons listed above.
</TABLE>
(1) Unless otherwise noted, each person has sole investment and voting power
with respect to the shares indicated.
(2) 10,853,894 shares of Common Stock were outstanding on April 8, 1996.
(3) Odyssey Partners, a private investment firm has beneficial ownership of
5,754,835 shares. This includes 267,345 shares in which Steven M.
Friedman, a former general partner of Odyssey Partners, L.P., and 29,670
shares in which Salem D. Shuchman, a former associate of Odyssey Partners,
L.P., has an economic interest. Odyssey Partners retains sole voting and
dispositive power over Mr. Friedman's and Mr. Shuchman's shares.
<PAGE>
(4) Represents shares owned by Odyssey Partners which may be deemed to be
beneficially owned by each of Messrs. Berger, Levy, Jack Nash, Joshua Nash
and Brian Wruble by virtue of each being a General Partner of Odyssey
Partners.
(5) Mr. Kelly purchased 125,000 shares of common stock of the Company at the
time of the execution of the Employment Agreement. The beneficial
ownership includes 200,000 shares which are exercisable under a stock
option awarded in fiscal 1995.
(6) The profit sharing plan of Snyder & Schwarz, P.C., the law firm of which
Mr. Snyder is a member, owns 1,000 shares of Common Stock.
(7) Includes 3,000 shares which are exercisable under a stock option awarded
in fiscal 1994.
(8) Represents shares which are exercisable under a stock option awarded in
fiscal 1994.
(9) Mr. Oberrotman and Mr. Particelli each own an option to purchase 75,000 of
the shares owned by Odyssey Partners, L.P. One-third of the option is
exercisable as of March 1, 1996 at an option price of $2.50 per share.
Neither Mr. Oberrotman nor Mr. Particelli beneficially own any other
shares of the Company.
* Owns less than 1% of the total outstanding Common Stock of the Company.
Ownership of Principal Shareholders
Odyssey Partners currently holds the right to vote 53.02% of the issued and
outstanding shares of Common Stock of the Company. As long as Odyssey
Partners owns a majority of the outstanding voting stock of the Company,
Odyssey Partners will be able, acting alone, to elect the entire Board of
Directors of the Company and to approve any action requiring shareholder
approval.
Compliance With Section 16(a) of the Securities Exchange Act
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers, and persons who own more than ten percent of
a registered class of the Company's equity securities, 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 ten-percent shareholders are
required by SEC regulation to furnish the Company with copies of all Section
16(a) forms they file.
To the Company's knowledge, based solely on review of the copies of such
reports furnished to the Company and written representations that no other
reports were required, during the two fiscal years ended February 3, 1996,
all Section 16(a) filing requirements applicable to its officers, directors,
and greater than ten-percent beneficial owners were complied with; except
that one report of ownership by Mr. Herbert Dotterer disclosing one
transaction was inadvertently filed late.
<PAGE>
RATIFICATION OF THE
SELECTION OF AN INDEPENDENT AUDITOR
Proposal 2
Deloitte & Touche LLP, 101 W. Second Street, Davenport, Iowa, independent
certified public accountants, have performed an examination of the financial
statements of the Company for the fiscal year ended February 3, 1996.
Services provided by Deloitte & Touche LLP included work related to the
examination of the annual financial statements, reviews of unaudited
quarterly financial information and preparation of state and federal income
tax returns.
The Board of Directors, upon recommendation of its Audit Committee, has
appointed Deloitte and Touche LLP to audit the books and accounts of the
Company for the fiscal year ending February 1, 1997 and is seeking
ratification of this appointment by the Shareholders. It is intended that
the shares represented by the proxy will be voted (unless the proxy indicates
to the contrary) for ratification of the appointment.
A representative of Deloitte & Touche LLP will be attending the meeting
and provided the opportunity to make a statement, if desired, and will be
available to respond to appropriate questions.
The Board of Directors recommends a vote "FOR" the ratification of the
selection of an independent auditor.
1997 SHAREHOLDER PROPOSALS
Any shareholder who desires to present a proposal qualified for inclusion
in the Company's proxy materials for the 1997 Annual Shareholders Meeting must
forward the proposal in writing to the Secretary of the Company at the address
shown on the first page of this proxy statement in time to arrive at the
Company no later than January 8, 1997.
ADDITIONAL INFORMATION
Included with this Proxy Statement is the Company's Annual Report
indicating the general scope and nature of such business together with a
summary of the activities and financial results of the Company for fiscal
1995. Shareholders may upon written request and without charge, obtain a
copy of the Company's Securities and Exchange Commission Annual Report
on Form 10-K. Exhibits to the Form 10-K are also available. The Company
will require payment of a fee covering its reasonable expenses in furnishing
such exhibits. Address any request to Mr. Herbert T. Dotterer, Senior Vice
President-Finance and Administration and Chief Financial Officer, Eagle
Food Centers, Inc., Rt. 67 and Knoxville Rd., Milan, Illinois, 61264.
OTHER MATTERS
The Board of Directors of the Company knows of no other matters which may
come before the meeting. However, if any matters other than those referred to
above should properly come before the meeting, it is the intent of the persons
named in the enclosed proxy to vote such proxy in accordance with their
discretion.
BY ORDER OF THE BOARD OF DIRECTORS
Herbert T. Dotterer, Secretary
Dated May 7, 1996
<PAGE>
PROXY CARD
Eagle Food Centers, Inc. Proxy/Voting Instruction Card
Milan, Illinois
This proxy is solicited on behalf of the Board of Directors for the Annual
Meeting on June 5, 1996
The undersigned hereby appoints Robert J. Kelly and Herbert T. Dotterer as
true and lawful proxies each with the power to appoint substitutes, and to
vote the shares of common stock of the Company held on record by the
undersigned on May 3, 1996, at the Annual Shareholders Meeting of Eagle Food
Centers, Inc. to be held June 5, 1996 at 10:00a.m., Central Daylight Time, at
the Milan Community Center, Rt. 67 & 92nd Avenue, Milan, Illinois, and at any
adjournments thereof, on all the matters coming before said meeting including
any matters which the Board of Directors is not aware of on May 7, 1996.
IF NO DIRECTION AS TO THE MANNER OF VOTING THE PROXY IS
MADE, THE PROXY WILL BE VOTED FOR THE ELECTION OF
DIRECTORS AND FOR PROPOSAL 2 AS INDICATED ON THE REVERSE
SIDE HEREOF.
Election of Directors:
Nominees: Martin J. Rabinowitz, Robert J. Kelly, Pasquale V. Petitti,
Herbert T. Dotterer, Steven M. Friedman, Peter B. Foreman, Michael J.
Knilans, Alain M. Oberrotman, Marc C. Particelli, William J. Snyder
You are encouraged to specify your choices by marking appropriate boxes on the
reverse side. However, you need not mark any boxes if you wish to vote in
accordance with the Board of Directors' recommendations. The Proxy Committee
cannot vote your shares unless you sign, date and return this card.
[See Reverse Side]
<PAGE>
[X] Please mark your vote as in this example.
This proxy will be voted in accordance with the instructions set forth below.
If no selection is made, this proxy will be voted FOR the election of the Board
of Directors and FOR proposal 2.
The Board of Directors recommends a vote FOR proposal 2.
1. Election of Directors FOR [ ] Withheld as to ALL Nominees [ ]
(See opposite side.)
For, except authority to vote for the following nominee(s) is withheld:
2. Ratification of the selection of Deloitte & Touche LLP as independent
Auditors. FOR[ ] AGAINST [ ] ABSTAIN [ ]
SIGNATURES(S) DATE
NOTE: Please sign exactly as name appears hereon. Joint owners should each
sign. When signing as attorney, executor, administrator, trustee, or
guardian, please indicate your full title as such. If the signer is a
Corporation, please sign full Corporate name by duly authorized officer. If
a Partnership, please sign in Partnership by authorized person.
<PAGE>
