<Page>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY (AS PERMITTED BY RULE
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-12
Eagle Food Centers, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
(3) Filing Party:
------------------------------------------------------------------------
(4) Date Filed:
------------------------------------------------------------------------
<Page>
EAGLE FOOD CENTERS, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON JUNE 19, 2002
Dear Shareholder:
You are hereby invited to attend the 2002 Annual Meeting of Shareholders of
Eagle Food Centers, Inc. which will be held on Wednesday, June 19, 2002 at 9:00
a.m., Central Daylight Time, at the Milan Community Center, Route 67 and 92nd
Avenue, Milan, Illinois. The matters to be considered and voted upon at the
Annual Meeting of Shareholders are:
1. The election of seven persons to serve as directors of the Company until
the 2003 Annual Meeting of Shareholders or until their successors shall
have been elected and shall have qualified.
2. A proposal to ratify the appointment of KPMG LLP as independent public
accountants for the current fiscal year.
3. A shareholder proposal to urge the sale of the Company.
4. 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 1, 2002 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 1, 2002 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.
S. Patric Plumley
Secretary
May 20, 2002
Milan, Illinois
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May 20, 2002
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
19, 2002, at 9:00 a.m., Central Daylight Time at the Milan Community Center,
Route 67 and 92nd Avenue, Milan, Illinois, and at any adjournments or
postponements thereof. Proxies are solicited to give all shareholders of record
at the close of business on May 1, 2002, 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 20, 2002.
Only holders of record of the Common Stock of the Company, $.04 par value per
share, at the close of business on May 1, 2002, are entitled to notice of and to
vote at the annual meeting. As of April 19, 2002, the Company had 3,114,470
shares of Common Stock outstanding, each of which is entitled to one vote on
each proposal presented. The holders of 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. Shareholders are not
entitled to cumulative voting in the election of directors. 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, for the ratification of the selection
of auditors and against the shareholder proposal to urge the sale of the
Company.
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, by telephone or otherwise for which they will not receive additional
compensation.
The Eagle Food Centers, Inc. 2001 Annual Report and financial statements for
the fiscal year ended February 2, 2002, with comparative figures for prior
periods, accompany this Proxy Statement. The Annual Report and the financial
statements included therein are incorporated in this Proxy Statement by
reference.
On June 27, 2001 the Shareholders of Eagle Food Centers, Inc. approved an
amendment to the Company's Certificate of Incorporation to accomplish a reverse
stock split. This was effective on June 29, 2001 and resulted in each four
outstanding shares of the Company's common stock being automatically
reclassified and changed into one share of the Company's common stock. Prior
period common stock information has been restated to reflect the reverse stock
split.
Jeffrey Little, former Director, Chief Executive Officer and President, left
the Company on March 18, 2002. Robert Kelly returned as the Chief Executive
Officer and President on March 18, 2002, having served as the Company's Chairman
since March 30, 1998 and as the Chief Executive Officer and President from May
10, 1995 to January 31, 2000.
The mailing address of the principal executive offices of the Company is Rt.
67 and Knoxville Road, Milan, Illinois, 61264.
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PROPOSALS TO SHAREHOLDERS
ELECTION OF DIRECTORS
PROPOSAL 1
The Board of Directors currently consists of seven members, all of whom have
been nominated to be elected at the 2002 Annual Meeting of Shareholders to serve
until the 2003 Annual Meeting of Shareholders or until their successors have
been elected and qualified. The Board of Directors consisted of eight members
until Jeffrey Little, former Director, Chief Executive Officer and President,
left the Company on March 18, 2002. The table below sets forth certain
information regarding the nominees. The accompanying proxy, in the absence of
instructions to the contrary, will be voted for the election of the following
seven persons unless the authority to vote is withheld. If any nominee is unable
to serve, or for good cause will not serve, favorable and uninstructed proxies
will be voted for a substitute nominee designated by the Board of Directors.
NOMINATIONS FOR THE COMPANY'S BOARD OF DIRECTORS
<Table>
<Caption>
Name Age Position(s) Held
- ---- --- ----------------
Robert J. Kelly 57 Chairman of the Board of Directors, Chief Executive Officer and President
S. Patric Plumley 53 Senior Vice President - Chief Financial Officer and Secretary, Director
Peter B. Foreman 66 Director
Steven M. Friedman 47 Director
Alain M. Oberrotman 51 Director
Jerry I. Reitman 64 Director
William J. Snyder 59 Director
</Table>
The business experience of each of the nominees during the past five years is as
follows:
Mr. Kelly returned to the position of Chief Executive Officer and President
on March 18, 2002. Mr. Kelly was named Chairman of the Board of Directors for
the Company on March 30, 1998. Mr. Kelly also held the titles of Chief Executive
Officer and President from May 10, 1995 through January 31, 2000. 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 39 years of
experience in the supermarket industry.
Mr. Plumley, who was named Director in September 2000, was named Senior Vice
President - Chief Financial Officer and Secretary on March 1, 1999, served the
Company as Vice President - Chief Financial Officer and Secretary from March 30,
1998 and Vice President and Corporate Controller from September 15, 1997 until
his promotions. Prior to September 1997, Mr. Plumley served as Senior Vice
President of American Stores' Super Saver Division from 1994 to 1997 and Senior
Vice President of Lucky Stores, Inc. from 1990 to 1994. Mr. Plumley has 29 years
of experience in the supermarket industry.
Mr. Foreman has been President of Sirius Corporation, a private investment
management firm, since 1993. Prior to 1993, Mr. Foreman was a Principal at
Harris Associate LP since 1976. Mr. Foreman has been a director of the Company
since June 1989. Mr. Foreman also serves as a director of Glacier Water
Services, Inc.
Mr. Friedman is a General Partner of EOS Partners, LP, an investment firm
which he co-founded in 1994. EOS invests in private companies and marketable
securities. Until 1994 he was a General Partner of Odyssey Partners, LP, an
investment partnership where he was responsible for its private investment
group. Before joining Odyssey in 1983, he was vice president at Citibank, NA. He
is a director of several public and private companies. Mr. Friedman has served
as a director of the Company since November 1987. He has an AB and MBA from the
University of Chicago and a JD from Brooklyn Law School.
Mr. Oberrotman is currently employed in merchant banking and consulting and
previously was a Principal with Odyssey Partners LP from October 1992 to May
1997. Mr. Oberrotman became a director of the Company in June 1996.
3
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Mr. Reitman is Vice Chairman, Partner of the Callahan Group, a full service
management consulting company in Chicago, Illinois, a lecturer at Northwestern
University, author, and an advisor to Senior Management on direct marketing,
integrated communications, and strategic positioning. Previously, Mr. Reitman
was Executive Vice President of Worldwide Direct Marketing for the Leo Burnett
Agency. Mr. Reitman became a director of the Company in December 1998. Mr.
Reitman also serves on the board of directors of CADMUS Communication (CDMS).
Mr. Snyder is a senior shareholder in the law firm of Snyder, Schwarz, Park &
Nelson P.C., Attorneys at Law, Rock Island, Illinois since March 1983 and has
maintained an active law practice for 35 years in the Quad-City area. The law
firm of Snyder, Schwarz, Park & Nelson, P.C., has acted as legal counsel to the
Company for many years and has received legal fees from the Company in various
amounts. Mr. Snyder has been a director of the Company since June 1989.
The directors of the Company 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.
RECOMMENDATION OF THE COMPANY'S BOARD OF DIRECTORS
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH OF THE SEVEN NOMINEES LISTED
ABOVE. PROXIES SOLICITED BY THE BOARD OF DIRECTORS WILL BE SO VOTED UNLESS
SHAREOWNERS SPECIFY OTHERWISE IN THEIR PROXIES.
COMPENSATION OF DIRECTORS
Four of the non-employee directors of the Company receive an annual retainer
of $32,000 and fees of $750 for each board meeting and $1,000 for each committee
meeting attended plus reimbursement of travel expenses. Mr. Snyder does not
receive fees as director, but does receive legal fees for his services as
counsel to the Company while serving as a member of the board and as a committee
member.
CERTAIN TRANSACTIONS
Snyder, Schwarz, Park & Nelson 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 $116,492, $275,437 and $279,055 for services rendered
in fiscal 2001, 2000, and 1999, respectively. These amounts include remuneration
for the services of Mr. Snyder as a director of the Company. The Board has
determined that the fees paid for services rendered from Snyder, Schwarz, Park &
Nelson P.C. were fair and competitive.
Mr. Oberrotman was paid $15,000 and $121,619, including expenses, in fiscal
2000 and fiscal 1999, respectively, for services rendered as a consultant in
connection with the restructuring of the Senior Notes of the Company. The Board
has determined that the fees paid for services rendered by Mr. Oberrotman were
fair and competitive.
BOARD OF DIRECTORS AND COMMITTEE 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 business of the Company through discussions
with the Chairman, Chief Executive Officer and President, and other directors
and officers, by reviewing reports and analyses, and by participating in board
and committee meetings.
The Board of Directors held eight meetings during fiscal 2001. In addition,
from time to time, members of the Board of Directors and committees act by
unanimous written consent pursuant to Delaware law. All directors attended at
least 75% of the meetings of the board and committees on which they served.
The Board of Directors has an Audit Committee and a Compensation Committee.
The reports of these committees are included herein. The Board does not have a
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.
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LIMITATION OF LIABILITY OF DIRECTORS
As permitted by the Delaware General Corporation Law, the Certificate of
Incorporation of the Company 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, this provision does not eliminate or limit the
liability of a director of the Company (i) for breach of the duty of loyalty to
the Company or its shareholders by the director, (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 payment of dividends or unlawful stock repurchase or redemption), 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 the
Chief Executive Officer of the Company and the four 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 for the fiscal years
indicated, as well as one individual for whom disclosure would have been
provided had the individual been serving as an executive officer at the end of
the fiscal year.
SUMMARY COMPENSATION TABLE
<Table>
<Caption>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
----------------------------------------------------- ------------
SECURITIES
NAME AND FISCAL OTHER ANNUAL UNDERLYING ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION OPTIONS (#) COMPENSATION
------------------ ---- ------- ------ ------------ ----------- ------------
Jeffrey L. Little, (2) 2001 $333,613 $ 0 (1) 0 $ 13,382 (5)
Chief Executive Officer, 2000 331,250 57,978 (1) 150,000 197,397 (5)
President
Robert J. Kelly, (3) 2001 $190,000 $ 0 (1) 0 $ 20,736 (6)
Chairman of the Board 2000 221,271 0 (1) 0 15,121 (6)
1999 369,513 225,957 (1) 0 278,132 (7)
S. Patric Plumley, 2001 $192,246 $ 0 (1) 0 $ 12,622 (8)
Senior Vice President, 2000 183,462 32,111 (1) (11) 10,000 85,908 (9)
Chief Financial Officer, 1999 155,421 95,999 (1) (11) 3,750 7,272 (10)
Secretary
Stanley W. Stephens, 2001 $159,761 $ 0 (1) 0 $138,750 (12)
Senior Vice President, 2000 127,500 (4) 22,316 (1) 18,750 88,642 (13)
Retail
Clark J. Jordan, 2001 $158,878 $ 0 (1) 6,250 $ 6,882 (14)
Senior Vice President, 2000 108,750 (4) 19,034 (1) 12,500 58,518 (14)
Operations
Patrick M. Flatley 2001 $114,095 $ 0 (1) 0 $ 12,546 (15)
Vice President, 2000 107,565 26,838 (1) 10,000 30,000 (16)
Non-Retail Procurement 1999 90,000 33,021 (1) 13,808 (17)
</Table>
Notes:
(1) Received other annual compensation consisting of perquisites and personal
benefits valued at less than the lesser of ten percent of total annual
salary and bonus or $50,000.
5
<Page>
(2) Mr. Little left the Company March 18, 2002 and received a severance of
$342,286, outplacement of $20,000 and up to 12 months of company provided
health insurance coverage. Mr. Little's stock options expired April 17,
2002.
(3) Mr. Kelly returned as the Chief Executive Officer and President on March
18, 2002, having served as the Company's Chairman since March 30, 1998
and as the Chief Executive Officer and President from May 10, 1995 to
January 31, 2000. Mr. Kelly's annual salary became $350,000 effective
March 18, 2002.
(4) Mr. Stephens and Mr. Jordan each began working for the Company in May of
fiscal 2000.
(5) Mr. Little received full dollar value of premiums paid by the Company on
Executive Term Life policy of $3,182, a 401(k)-matching amount of $5,100
and a $5,100 defined contribution to his 401(k) in 2001. In 2000, Mr.
Little received a signing bonus of $100,000, temporary living expenses of
$12,855, taxable moving expenses of $61,927, non-taxable moving expenses
of $15,243, full dollar value of premiums paid by the Company on
Executive Term Life policy of $2,122 and a 401(k)-matching amount of
$5,250.
(6) Mr. Kelly received a 401(k)-matching amount of $5,250; a $5,100 defined
contribution to his 401(k) and full dollar value of premiums paid by the
Company on an Executive Term Life policy of $10,386 in 2001. Mr. Kelly
received a 401(k)-matching amount of $5,250 and full dollar value of
premiums paid by the Company on an Executive Term Life policy of $9,871
in 2000.
(7) Mr. Kelly received full dollar value of premiums paid by the Company on a
compensatory split-dollar executive life insurance policy of $14,073,
full dollar value of premiums paid by the Company on Executive Term Life
policy of $10,386, debt forgiveness of $248,673, including taxes, for a
note given to the Company regarding the purchase of stock and a
401(k)-matching amount of $5,000.
(8) Mr. Plumley received a 401(k)-matching amount of $5,250; a $5,100 defined
contribution to his 401(k) and full dollar value of premiums paid by the
Company on an Executive Term Life policy of $2,272.
(9) Mr. Plumley received a 401(k)-matching amount of $5,250, a retention
bonus of $78,495 and full dollar value of premiums paid by the Company on
an Executive Term Life policy of $2,163.
(10) Mr. Plumley received a 401(k)-matching amount of $5,000 and full dollar
value of premiums paid by the Company on an Executive Term Life policy of
$2,272.
(11) Along with other key employees, Mr. Plumley agreed to cancellation and
reissue of options on 10,000 shares as follows: 3,750 shares issued
September 15, 1997 at $20.00 per share, expiring September 15, 2007, were
cancelled and reissued at $5.00 per share, expiring September 15, 2005;
2,500 shares issued September 15, 1998 at $10.00 per share, expiring
September 15, 2008, were cancelled and reissued at $5.00 per share,
expiring September 15, 2006; and 3,750 shares issued April 1, 1999 at
$11.75 per share, expiring April 1, 2009, were cancelled and reissued at
$5.00 per share, expiring April 1, 2007. Mr. Plumley received an option
grant for 15,000 shares on May 31, 2000.
(12) Mr. Stephens left the Company November 16, 2001 and received a severance
of $138,750, was eligible for outplacement reimbursement of up to $10,000
and up to nine months of company provided health insurance coverage. Mr.
Stephens' stock options expired November 16, 2001.
(13) Mr. Stephens received a signing bonus of $30,000, temporary living
expenses of $5,122, taxable moving expenses of $34,054, non-taxable
moving expenses of $15,945 and a 401(k) matching amount of $3,521.
(14) Mr. Jordan received full dollar value of premiums paid by the Company on
an Executive Term Life policy of $1,782 and a $5,100 defined contribution
to his 401(k) in 2001. In 2000, Mr. Jordan received a signing bonus of
$25,000, temporary living expenses of $2,559, taxable moving expenses of
$21,821, non-taxable moving expenses of $8,395 and full dollar value of
premiums paid by the Company on an Executive Term Life policy of $743.
(15) Mr. Flatley received a 401(k)-matching amount of $5,250; a $5,100 defined
contribution to his 401(k) and full dollar value of premiums paid by the
Company on an Executive Term Life policy of $2,196.
(16) Mr. Flatley received $30,000 for cost savings management.
(17) Mr. Flatley received taxable moving expenses of $13,808.
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OPTIONS/SAR GRANTS IN FISCAL YEAR 2001
Clark Jordan received a stock option grant along with his promotion to Senior
Vice President. No other named Executive Officer was granted stock options in
fiscal year 2001.
OPTION GRANTS IN FISCAL YEAR 2001
<Table>
<Caption>
INDIVIDUAL GRANTS POTENTIAL
------------------------ REALIZABLE
NUMBER OF PERCENT OF VALUE AT
SECURITIES TOTAL OPTIONS ASSUMED
UNDERLYING GRANTED TO EXERCISE OR ANNUAL RATES OF
OPTIONS EMPLOYEES IN BASE PRICE EXPIRATION OPTION TERM
NAME GRANTED (#) FISCAL YEAR ($/SH) DATE 5% 10%
---- ----------- ----------- ------ ---- -- ---
Clark Jordan 6,250 50.0% 1.30 10/15/11 $7,146 $16,191
</Table>
Note: Caution is recommended in interpreting the financial significance of
these figures. The amounts under the columns labeled "5%" and "10%" are
included pursuant to certain rules promulgated by the Securities and
Exchange Commission and are not intended to forecast future appreciation,
if any, in the price of the common stock of the Company. These amounts
are based on the assumption that the named executive holds the options
granted for the full term of the options and that the market price of the
underlying security appreciates in value from the date of the grant to
the end of the option term at the annualized rates of 5% and 10%,
respectively, compounded annually over the term of the options. The
actual value of the options will vary in accordance with the market price
of the common stock of the Company.
AGGREGATED OPTION/SAR EXERCISES AND FISCAL YEAR END OPTION/SAR VALUES
The following table shows information regarding the values of certain
unexercised options owned by the named executive officers at the end of the last
completed fiscal year. No options or stock appreciation rights were exercised
during the fiscal year. No stock appreciation rights were granted during fiscal
2001 or were outstanding at the end of fiscal 2001.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END
OPTION/SAR VALUES TABLE
<Table>
<Caption>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
SHARES UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
ACQUIRED OPTIONS AT FEBRUARY 2, 2002 AT FEBRUARY 2, 2002 (1)
ON VALUE --------------------------- -----------------------
EXERCISE REALIZED EXERCISABLE(#) NON-EXERCISABLE(#) EXERCISABLE($) NON-EXERCISABLE($)
-------- -------- -------------- ------------------ -------------- ------------------
Robert J. Kelly 0 0 100,000 0 0 0
Jeffrey L. Little(2) 0 0 100,000 50,000 0 0
S. Patric Plumley 0 0 11,875 13,125 0 0
Clark Jordan 0 0 5,000 13,750 0 0
Pat Flatley 0 0 6,250 3,750 0 0
</Table>
Notes:
(1) Market value of underlying securities at February 2, 2002 ($0.75) minus the
base price. The market price of all unexercised options was below the
exercise price on February 2, 2002.
(2) Mr. Little's options expired April 17, 2002.
7
<Page>
COMPENSATION COMMITTEE REPORT
The Compensation Committee for fiscal 2001 was composed of two non-employee
members from the Board of Directors. The members were Mr. Friedman and Mr.
Reitman. Mr. Kelly attended meetings as a non-voting participant. 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 emphasizing a greater portion
of compensation subject to performance goals.
2. Attract and retain qualified talent.
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, 401(k)
contributions and medical benefits that are available to other employees of the
Company.
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.
ANNUAL INCENTIVE BONUSES
Annual bonus potentials depend upon job levels and are set at a stated
percent of the base compensation. Bonuses are paid based on an allocation
formula primarily derived from performance against budgeted sales and earnings
targets. The corporate plan paid out below target amounts in fiscal 2001 and
fiscal 2000 and above target amounts in fiscal 1999 based on the financial
results for each year.
LONG-TERM INCENTIVE
The Committee intends to utilize stock options as the vehicle to provide a
long-term focus. Stock options were issued in fiscal 2001 and in fiscal 2000.
CHIEF EXECUTIVE OFFICER COMPENSATION
Robert Kelly returned as the Chief Executive Officer and President on March
18, 2002, having served as the Company's Chairman since March 30, 1998 and as
the Chief Executive Officer and President from May 10, 1995 to January 31, 2000.
On January 24, 2002, the Company and Robert Kelly entered into an extension
of the employment agreement dated May 10, 1995. The Company agreed to extend his
employment through December 31, 2002 with all other terms to remain the same.
The agreement provides Mr. Kelly with $190,000 per year as Chairman of the Board
of Directors and for services provided in the ongoing operation of the Company
through the end of the agreement. Any period of time spent over and above one
week per month shall be compensated at the annual salary of $350,000 and paid on
a weekly basis. Mr. Kelly's annual salary became $350,000 effective March 18,
2002.
Through fiscal 1999, Mr. Kelly was eligible to receive bonus compensation, in
an amount determined by the Board of Directors based upon mutually acceptable
performance targets, of 50% of the base salary with a maximum potential of 100%
should the Company exceed budgeted expectations.
Under the December 15, 1999 extension of his Employment Agreement, Mr. Kelly
was also entitled to (1) in the event of a Change of Control of the Company
occurring within two years of termination of his employment for any reason other
than cause, to an extended exercise period for each group of options, based on a
one year
8
<Page>
extension for each completed year of service from December 31, 1997 (up to a
maximum exercise period of the ten year expiration period as provided for under
the stock incentive plans of the Company), and (2) upon termination of his
employment for any reason other than cause, extended payment by the Company of
all premiums associated with the split dollar life insurance policy in effect
for Mr. Kelly, for a period equal to each year of service from December 31,
1997.
Mr. Kelly purchased 31,250 shares of common stock of the Company at the time
of his original employment by delivering to the Company a promissory note with
the purchase price of the shares based upon the closing sale price of the common
stock of the Company on the business day immediately preceding the date of the
Employment Agreement. Under the May 10, 1998 amendment to his Employment
Agreement, the foregoing loan (and interest) was forgiven in 50% increments for
each year of service completed by Mr. Kelly, commencing as of December 31, 1997.
The company also provided Mr. Kelly with a tax gross up of the loan forgiveness.
Mr. Kelly had an option to purchase 150,000 shares of Company stock as follows:
50,000 shares of stock of the Company at $10.00 per share which expired May 22,
2001, 50,000 shares at $14.00 per share which expire May 22, 2002 and 50,000
shares at $18.00 per share which expire May 22, 2003, all of which are
contingently exercisable within two years of termination of employment under the
January 24, 2002 and December 15, 1999 extensions of the Employment Agreement
dated May 15, 1995. The May 10, 1998 extension to the Employment Agreement of
Mr. Kelly also subjects him to a one year non-competition restriction following
the termination of his employment, prohibiting Mr. Kelly from engaging in any
supermarket business conducted in the service area of the Company.
Jeffery Little served as the Company's President and Chief Executive Officer
from January 31, 2000 until March 18, 2002. His employment with the Company
ended on March 18, 2002. His severance package included: wages of $342,286,
outplacement costs of $20,000 and up to 12 months of company provided health
insurance coverage.
As of January 31, 2000, the Company retained Mr. Jeffrey Little as its
President and Chief Executive Officer. The Company and Mr. Little entered into
an Employment Contract with an initial term of three years to end January 31,
2003. The Employment Contract provided for a base salary at the rate of $325,000
per year. In addition, the Company paid a signing bonus of $100,000 at the
commencement of his employment. Also, Mr. Little was eligible to receive bonus
compensation, in an amount determined by the Board of Directors based upon
mutually acceptable performance targets, of 50% of the base salary, with a
maximum potential of 100% should the Company exceed budgeted expectations. In
the event the Company terminated Mr. Little's Employment other than for "cause",
Mr. Little was to receive a payment in a lump sum equal to eighteen (18) months
of compensation, continued health and dental insurance coverage for a period of
eighteen (18) months, any accrued and unused vacation pay and professional
outplacement services up to the sum of $20,000.
The Company had also granted Mr. Little the option to purchase up to 150,000
shares of stock of the Company. Under the terms of his option, up to 50,000
shares could have been purchased by Mr. Little on or after the first anniversary
date of his employment at $5.04 per share, up to an additional 50,000 shares
could have been purchased on or after the second anniversary of his employment
at $9.04 per share and the final 50,000 shares could have been purchased on or
after the third anniversary of the employment of Mr. Little at $13.04 per share
with the expiration of options at January 31, 2010. One hundred thousand shares
represented by the vested options expired April 17, 2002. All other options
expired on March 18, 2002, the date his employment ended. Mr. Little received
relocation and temporary housing expenses and was entitled to regular Company
benefits and four weeks of vacation per year.
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 in which one of
whose executive officers serves as a director or executive officer of the
Company.
9
<Page>
SUMMARY OF COMPENSATION PLANS
RETIREMENT PLANS
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. The Company makes all contributions. Effective October 1, 1990, the
pension plans were amended to provide for voluntary early retirement at age 55.
The annual benefits payable beginning at age 65 to the executive officers are as
follows: Mr. Kelly--$11,426; Mr. Plumley--$6,351; and Mr. Jordan--$1,605. This
plan was frozen as of December 31, 2000 and no future benefits will accrue after
that date.
The Company maintains a tax-qualified defined contribution plan covering both
salaried and non-union hourly employees. Under this plan, employees may
contribute up to 17% of eligible earnings up to a maximum of $10,500 during the
plan year. The plan year begins on January 1 and ends on December 31. The plan
includes a discretionary Company matching contribution of up to 50% of the first
10% of employee contributions or a maximum match of 5% of eligible earnings. The
matching contribution becomes partially vested after two years of service and
fully vested after five years. Effective January 1, 2001, the Company amended
the plan to include a profit sharing contribution of 3% of eligible earnings.
The profit sharing contribution is immediately vested. The profit sharing
contribution was added in fiscal 2001 to replace the defined benefit plan
described above.
STOCK INCENTIVE PLAN
The Company has a Stock Incentive Plan which was ratified by the shareholders
at the 2000 Annual Shareholders Meeting. The Plan provides the Compensation
Committee with the discretion to make grants until September 12, 2010 to all
salaried employees of the Company who are not in a bargaining unit, in the form
of Non-qualified Stock Options, Incentive Stock Options, Stock Appreciation
Rights and Restricted Stock. The plan contains a provision allowing non-employee
Directors of the Company to elect annually to receive payment of all or any
portion of the fees for their services as Directors in the form of options to
acquire Company Common Stock. The Plan authorized 250,000 shares of common
stock. There were 250,000 shares available as of February 2, 2002 for future
grants.
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
Non-qualified 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 500,000 shares of common stock. There were 90,317 shares
available as of February 2, 2002 for future grants.
In order to protect all of the rights of the participant in the event of a
Change in Control of the Company, the 2000 and 1995 Stock Incentive Plans
provide for the immediate vesting of all outstanding awards upon the occurrence
of such an event. A Change in Control of the Company is deemed to occur if any
one or more of the following conditions are fulfilled: (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, an agreement for sale or disposition of substantially all of the
assets of the Company, 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, in no event shall a Change in Control 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.
10
<Page>
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL
ARRANGEMENTS
Jeffrey L. Little, former President and Chief Executive Officer, had an
employment contract which is described above. Mr. Little left the Company on
March 18, 2002.
Robert Kelly, Chairman, President and Chief Executive Officer, has an
employment contract which is described above.
Mr. Stephens left the Company November 16, 2002 and received a severance of
$138,750, was eligible for outplacement reimbursement of up to $10,000 and up to
nine months of company provided health insurance coverage. Mr. Stephens' stock
options expired November 16, 2001.
The Company had an Employment Contract effective as of May 8, 2000, as
revised, with a term of three years, with Stanley W. Stephens, Senior Vice
President - Retail. Under the terms of this Contract, Mr. Stephens received a
signing bonus of $30,000 and a base salary of $170,000. In addition, Mr.
Stephens was entitled to participate in the Eagle Bonus Plan at the Senior Vice
President targeted norm of 50% of average annual salary with a maximum potential
of 100% should the Company exceed budgeted expectations.
The Company also granted Mr. Stephens the option to purchase up to 18,750
shares of stock of the Company. Under the terms of his option, up to 6,250
shares could have been purchased by Mr. Stephens on or after the first
anniversary date of his employment at $4.00 per share, up to an additional 6,250
shares could have been purchased on or after the second anniversary of his
employment at $8.00 per share and the final 6,250 shares could have been
purchased on or after the third anniversary of the employment of Mr. Stephens at
$12.00 per share with the expiration of options at May 8, 2010. Mr. Stephens
received relocation and temporary housing expenses and was entitled to regular
Company benefits and four weeks of vacation per year. Mr. Stephens had entered
into a Change in Control Agreement with the Company dated April 11, 2000 which
provided eighteen months of salary, continued health and dental insurance for up
to eighteen months, as well as outplacement assistance if his employment was
terminated due to a change of control.
RETENTION AGREEMENT
The Company entered into a Retention Agreement with certain key employees in
the event that the Company commenced a voluntary case under Chapter 11 of the
United States Bankruptcy Code. The agreement provided a bonus for continuing
services provided that the employee is still employed by the Company six months
after consummation of a plan of reorganization in the Chapter 11 Case. On May
31, 2000 the Retention Agreements were modified to provide for the payment of
the bonuses should the employee's employment by the Company be terminated prior
to such six month period as a result of (i) a sale of all or substantially all
of the assets of the Company, whether in separate transaction or as part of a
plan of reorganization for the company, or (ii) a merger, consolidation,
liquidation, dissolution or similar transaction involving the Company. The
Company did commence Chapter 11 proceedings on February 29, 2000. On July 7,
2000 the United States District Court for the District of Delaware confirmed the
Company's plan of reorganization, which plan the Company consummated on August
7, 2000. Payments under the Retention Agreements were made in January 2001.
CHANGE OF CONTROL
The Company entered into a Change of Control Agreement on June 1, 2001 with
certain key employees, which provides that upon a change of control (defined
above) all options granted to those employees to acquire stock in the Company
shall immediately vest. In addition, the Agreement provides that if the employee
is terminated other than for cause within the two year period following the
effective date of a change of control or resigns for good reason within the six
month period following the effective date of the change in control, the employee
will be entitled to: (i) a prorated bonus based on the Company bonus plan, (ii)
payment of accrued vacation, (iii) professional outplacement at a cost of up to
$20,000 and (iv) based on the employment level of the employee, payment of lump
sum compensation and continued health and dental coverage for a period of twelve
or eighteen months. The Agreement terminates if a change of control has not
occurred within one year of its date.
Respectfully submitted,
Steven M. Friedman, Chairman Jerry I. Reitman
11
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AUDIT COMMITTEE REPORT
The Audit Committee is composed of three directors who are not officers of
the Company, and operates under a written charter adopted by the Board of
Directors. The members of the Audit Committee are listed at the end of this
report.
Under the terms of the charter and listing standards of the Nasdaq Stock
Market, Inc., all of the Audit Committee members are considered to be
independent, except for Mr. Snyder. Mr. Snyder may not be considered independent
because he is a partner with Snyder, Schwarz, Park and Nelson, PC, a law firm
that received over $200,000 from the Company during two of the past three fiscal
years. The Company's Board of Directors determined that it is in the best
interests of the Company and its shareholders for Mr. Snyder to serve on the
Audit Committee, notwithstanding this relationship, because of Mr. Snyder's
extensive knowledge of the Company gained through many years as legal counsel
and member of the Board of Directors.
Management is responsible for the Company's internal controls and the
financial reporting process. The independent auditors are responsible for
performing an independent audit of the Company's consolidated financial
statements in accordance with auditing standards generally accepted in the
United States of America and to issue a report thereon. The Audit Committee's
responsibility is to monitor and oversee those processes. The Audit Committee
also recommends to the Board of Directors, subject to stockholder ratification,
the appointment of the Company's independent auditors.
In this regard, the Audit Committee has reviewed and discussed the audited
financial statements for fiscal 2001 with management and discussed other matters
related to the audit with the independent auditors. Management represented to
the Audit Committee that the Company's consolidated financial statements were
prepared in accordance with accounting principles generally accepted in the
United States of America. The Audit Committee discussed with the independent
auditor matters required to be discussed by Statement on Auditing Standards No.
61 (Communication with Audit Committees), as amended by Statements on Auditing
Standards Nos. 89 and 90.
The independent auditors also provided to the Audit Committee the written
disclosures required by Independence Standards Board Standard No. 1
(Independence Discussions with Audit Committees), and the Audit Committee
discussed with management and the independent auditors the independent auditor's
independence. The Committee considered whether the information technology and
other non-audit consulting services provided by the independent auditors are
compatible with maintaining the auditor's independence and concluded that such
services have not impaired the auditors' independence.
Based on the Audit Committee's discussions with management and the
independent auditors and the Audit Committee's review of the representations of
management and the report of the independent auditors to the Audit Committee,
the Audit Committee recommended that the Board of Directors include the audited
consolidated financial statements in the Company's Annual Report on Form 10-K
for the year ended February 2, 2002 filed with the Securities and Exchange
Commission.
Fees paid to the independent auditor's firm are as follows (in thousands):
<Table>
Audit Fees - Fiscal year ending February 2, 2002, including quarterly reviews $116
Financial Information Systems Design and Implementation Fees $ -0-
All Other Fees: Audit-related $ 6
Other non-audit services 10
Total Other Fees $ 16
</Table>
Respectfully submitted,
Peter B. Foreman, Chairman Alain M. Oberrotman William J. Snyder
12
<Page>
PERFORMANCE PRESENTATION
Shown below is a line graph comparing total shareholder return for the
Company, the Russell 2000 and the S&P Retail Stores (Food) since the Company's
stock resumed trading on August 7, 2000 at the exit from Chapter 11, as required
by Item 402(l) of SEC Regulation S-K. The graph assumes $100 invested on August
7, 2000 in Eagle common stock and $100 invested at the same time in the Russell
2000 index and the S&P 500 Retail index.
<Table>
<Caption>
Eagle Food Centers Russell 2000 S&P 500 Retail
08/2000 100.00 100.00 100.00
01/2001 30.30 102.11 106.63
01/2002 8.24 98.44 90.98
</Table>
Note: Companies comprising the S&P Retail Stores (Food) Index include:
Albertson's, Inc., Kroger Co., Safeway, Inc. and Winn-Dixie Stores, Inc.
13
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SECURITY OWNERSHIP OF PRINCIPAL SHAREHOLDERS AND MANAGEMENT
The following table sets forth information with respect to the beneficial
ownership of shares of Common Stock (after adjustment for the reverse stock
split) 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. A total of 3,114,470 shares of Common Stock
were outstanding on April 19, 2002. Mr. Jeffrey Little left the Company on March
18, 2002 and his stock options expired April 17, 2002.
<Table>
<Caption>
AMOUNT AND
NATURE OF PERCENT
BENEFICIAL OF
NAMES OF BENEFICIAL OWNERS OWNERSHIP (1) CLASS
-------------------------- ------------- -----
Odyssey Partners, LP (2) 996,096 30.71%
Dimensional Fund Advisors, Inc. (3) 182,850 5.64%
Robert J. Kelly (4) 131,250 4.05%
Steven M. Friedman (5) 56,836 1.75%
Peter B. Foreman 37,755 1.16%
S. Patric Plumley (6) 11,922 *
The Friedman Family Foundation (5) 10,000 *
Patrick M. Flatley (8) 6,250 *
Clark J. Jordan (7) 6,130 *
Jerry I. Reitman 500 *
William J. Snyder (9) 250 *
Alain M. Oberrotman 0 *
Directors and Executive Officers as a group (11 persons)
including certain of the persons listed above. 272,065 8.39%
*Owns less than 1%.
</Table>
Notes:
(1) Unless otherwise noted, each person has sole investment and voting power
with respect to the shares indicated.
(2) Odyssey Partners LP, 280 Park Avenue, West Tower, 21st Floor, New York, NY
10017, a private investment partnership in liquidation, owns 996,096
shares, which may be deemed to be beneficially owned by each of Messrs.
Stephen Berger, Leon Levy, Jack Nash, Joshua Nash and Brian Wruble, who
collectively constitute all of the general partners of Odyssey Partners,
LP. Does not include 158,034 shares of Common Stock owned by The Jerome
Levy Foundation, as to which Mr. Leon Levy may be deemed to have beneficial
ownership, or 115,300 shares of Common Stock owned by The Nash Family
Foundation, a charitable foundation, as to which Messrs. Nash may be deemed
to have beneficial ownership.
(3) Dimensional Fund Advisors Inc. ("Dimensional"), an investment advisor
registered under Section 203 of the Investment Advisors Act of 1940,
furnishes investment advice to four investment companies registered under
the Investment Company Act of 1940, and serves as investment manager to
certain other investment vehicles, including commingled group trusts.
(These investment companies and investment vehicles are the "Portfolios.")
In its role as investment advisor and investment manager, Dimensional
possessed both investment and voting power over 182,850 shares of Eagle
Food Centers, Inc. stock as of December 31, 2001. The Portfolios own all
securities reported in this statement, and Dimensional disclaims beneficial
ownership of such securities. The business office address of Dimensional
Fund Advisors Inc. is 1299 Ocean Avenue, 11th Floor, Santa Monica, CA
90401.
(4) Mr. Kelly purchased 31,250 shares of Common Stock of the Company at the
time of the execution of his Employment Agreement. The beneficial ownership
includes options for 100,000 shares that are exercisable as of April 19,
2002.
(5) Steven M. Friedman owns 56,836 shares of Common Stock of the Company, which
does not include the 10,000 shares owned by The Friedman Family Foundation,
a charitable foundation, as to which Steven M. Friedman may be deemed to
have beneficial ownership.
(6) The beneficial ownership represents 47 shares that are owned by Mr. Plumley
plus the exercisable portion of options on 25,000 shares. A total of 11,875
shares were exercisable as of April 19, 2002.
(7) The beneficial ownership represents 1,130 shares that are owned by Mr.
Jordan plus the exercisable portion of options on 18,750 shares. A total of
5,000 shares were exercisable as of April 19, 2002.
(8) The beneficial ownership represents the exercisable portion of options on
10,000 shares owned by Mr. Flatley. A total of 6,250 shares were
exercisable as of April 19, 2002.
14
<Page>
(9) The profit sharing plan of Snyder, Schwarz, Park & Nelson P.C., the law
firm of which Mr. Snyder is a member, owns 250 shares of Common Stock.
OWNERSHIP OF PRINCIPAL SHAREHOLDERS
Odyssey Partners, LP, Dimensional Fund Advisors, certain Beneficial Owners of
Odyssey Partners, LP and Company Directors and Executive Officers currently hold
the right to vote, or have the right to acquire through the exercise of options,
shares of Common Stock of the Company representing 53.15% of shares that would
be outstanding upon the exercise of such options.
STOCK ISSUED IN CONJUNCTION WITH THE COMPANY'S PLAN OF REORGANIZATION
The Company filed a voluntary petition under Chapter 11 of the Bankruptcy
Code in the United States Bankruptcy Court for the District of Delaware on
February 29, 2000. Pursuant to the Company's Plan of Reorganization, 15% of the
fully-diluted common stock of the Company was issued to the holders of the
Senior Notes, of which 10% would have been returned to the Company if the
Company had been sold or the debt retired prior to October 15, 2001. If the
Company is sold or the debt is retired after October 14, 2001 and prior to
October 15, 2002, 5% of the common stock will be returned to the Company. None
of the common stock will be returned to the Company if the Company is not sold
or the debt retired prior to October 15, 2002.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the directors
of the Company and executive officers, and persons who own more than ten percent
of a registered class of the equity securities of the Company, 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 knowledge of the Company, 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 three fiscal years ended February 2, 2002, all
Section 16(a) filing requirements applicable to its officers, directors, and
greater than ten-percent beneficial owners were in compliance except for the
following, which were inadvertently filed late in fiscal 2000: Mr. Jeffrey
Little and Mr. Stan Stephens each with one report disclosing one transaction
each; Mr. Frank Klun with two reports disclosing one transaction each; and Mr.
S. Patric Plumley with three reports each disclosing one transaction. There was
one report for Mr. Clark Jordan disclosing two transactions, which was
inadvertently filed late in fiscal 2001.
15
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RATIFICATION OF THE
SELECTION OF AN INDEPENDENT AUDITOR
PROPOSAL 2
KPMG LLP, 666 Grand Avenue, Des Moines, Iowa, independent certified public
accountants, have performed an audit of the financial statements of the Company
for the fiscal year ended February 2, 2002. Services provided by KPMG LLP
included work related to the examination of the annual financial statements and
reviews of unaudited quarterly financial information.
The Board of Directors, upon recommendation of its Audit Committee, has
appointed KPMG LLP to audit the books and accounts of the Company for the fiscal
year ending February 1, 2003 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 from KPMG LLP is expected to attend the annual meeting of
shareholders and will be provided the opportunity to make a statement, if
desired, and is expected to be available to respond to appropriate questions.
RECOMMENDATION OF THE COMPANY'S BOARD OF DIRECTORS
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE RATIFICATION OF THE
SELECTION OF KPMG LLP AS INDEPENDENT AUDITOR. PROXIES SOLICITED BY THE BOARD OF
DIRECTORS WILL BE SO VOTED UNLESS SHAREOWNERS SPECIFY OTHERWISE IN THEIR
PROXIES.
SHAREHOLDER PROPOSAL
PROPOSAL 3
Management has been advised that a shareholder intends to present the
following proposal at the annual meeting. The name, address and share ownership
of the proponent will be furnished to any person upon oral or written request to
Mr. S. Patric Plumley, Secretary, Eagle Food Centers, Inc., Route 67 and
Knoxville Road, Milan, Illinois 61264.
SHAREHOLDER PROPOSAL
The shareholders of Eagle Food Centers, Inc. urge the Board of
Directors to promptly place the Company up for sale to the highest
bidder.
SUPPORTING STATEMENT
Eagle Food Centers, Inc., continues to struggle to turn a profit
despite managements efforts. Another year of poor profit performance
also means shareholders are still not getting the best value for their
equity investment. Continual shareholder support for management and the
Directors has failed to yield a satisfactory return. The time has come
to offer the Company for sale, thereby maximizing shareholder value by
allowing the market to set a true value for the Company.
WE URGE YOU TO VOTE FOR THIS PROPOSAL
RECOMMENDATION OF THE COMPANY'S BOARD OF DIRECTORS
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREOWNERS VOTE "AGAINST" THIS
SHAREHOLDER PROPOSAL. PROXIES SOLICITED BY THE BOARD OF DIRECTORS WILL BE SO
VOTED UNLESS SHAREOWNERS SPECIFY OTHERWISE IN THEIR PROXIES.
16
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2003 SHAREHOLDER PROPOSALS
Any shareholder who desires to present a proposal qualified for inclusion in
the proxy materials of the Company for the 2003 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 20, 2003.
ADDITIONAL INFORMATION
Included with this Proxy Statement is the Annual Report of the Company
indicating the general scope and nature of the business of the Company together
with a summary of the activities and financial results of the Company for fiscal
2001. Shareholders may upon written request and without charge, obtain a copy of
the Securities and Exchange Commission Annual Report on Form 10-K of the
Company. Exhibits to the Form 10-K are also available. The Company may require
payment of a fee covering its reasonable expenses in furnishing such exhibits.
Address any request to Mr. S. Patric Plumley, Secretary, 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 that 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
S. Patric Plumley, Secretary
Dated May 20, 2002
17