UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 4)*
Citadel Holding Corporation
____________________________________________________
(Name of Issuer)
Common Stock, No Par Value
____________________________________________________
(Title of Class of Securities)
172862104
____________________________________________________
(CUSIP Number)
Randall J. Demyan,
Dillon Capital Management,
21 East State Street, Suite 1410
Columbus, Ohio 43215
(614) 222-4204
____________________________________________________
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
November 7, 1994
____________________________________________________
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box.
_______
_______
Check the following box if a fee is being paid with the statement .
(A fee is not required only if the reporting person: (1) has a previous
statement on file reporting beneficial ownership of more than five percent
of the class of securities described in Item 1; and (2) has filed no
amendment subsequent thereto reporting beneficial ownership of five percent
or less of such class.) (See Rule 13d-7.)
Note: Six copies of this statement, including all exhibits, should be filed
with the Commission. See Rule 13d-1(a) for other parties to whom copies are
to be sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities,
and for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 ("Act") or otherwise subject to the liabilities of that section
of the Act but shall be subject to all other provisions of the Act (however,
see the Notes).
Page 1 of 20 Pages
SCHEDULE 13D
CUSIP NO. 172862104 Page 2 of 20 Pages
1. NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON:
Dillon Investors, L.P.
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*:
a. __X__ b. _____
3. SEC USE ONLY:
4. SOURCE OF FUNDS*:
WC
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e):
_______
6. CITIZENSHIP OR PLACE OF ORGANIZATION:
Delaware
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH:
7. SOLE VOTING POWER: 647,000
8. SHARED VOTING POWER: None
9. SOLE DISPOSITIVE POWER: 647,000
10. SHARED DISPOSITIVE POWER: None
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON:
647,000
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES*:
_______
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11):
9.70%
14. TYPE OF REPORTING PERSON*:
PN
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
SCHEDULE 13D
CUSIP NO. 172862104 Page 3 of 20 Pages
1. NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON:
Roderick H. Dillon, Jr.
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*:
a. __X__ b. _____
3. SEC USE ONLY:
4. SOURCE OF FUNDS*:
PF
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e):
_______
6. CITIZENSHIP OR PLACE OF ORGANIZATION:
U.S.A.
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH:
7. SOLE VOTING POWER: 5,000
8. SHARED VOTING POWER: None
9. SOLE DISPOSITIVE POWER: 5,000
10. SHARED DISPOSITIVE POWER:None
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON:
5,000
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES*:
_______
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11):
.075%
14. TYPE OF REPORTING PERSON*:
IN
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
SCHEDULE 13D
CUSIP NO. 172862104 Page 4 of 20 Pages
1. NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON:
Roderick H. Dillon, Jr. - IRA
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*:
a. __X__ b. _____
3. SEC USE ONLY:
4. SOURCE OF FUNDS*:
PF
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e):
_______
6. CITIZENSHIP OR PLACE OF ORGANIZATION:
U.S.A.
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH:
7. SOLE VOTING POWER: 5,000
8. SHARED VOTING POWER: None
9. SOLE DISPOSITIVE POWER: 5,000
10. SHARED DISPOSITIVE POWER:None
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON:
5,000
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES*:
_______
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11):
.075%
14. TYPE OF REPORTING PERSON*:
IN
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
SCHEDULE 13D
CUSIP NO. 172862104 Page 5 of 20 Pages
1. NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON:
Roderick H. Dillon, Jr. Foundation
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*:
a. __X__ b. _____
3. SEC USE ONLY:
4. SOURCE OF FUNDS*:
WC
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e):
_______
6. CITIZENSHIP OR PLACE OF ORGANIZATION:
Ohio
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH:
7. SOLE VOTING POWER: 2,000
8. SHARED VOTING POWER: None
9. SOLE DISPOSITIVE POWER: 2,000
10. SHARED DISPOSITIVE POWER:None
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON:
2,000
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES*:
_______
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11):
.030%
14. TYPE OF REPORTING PERSON*:
OO
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
SCHEDULE 13D
CUSIP NO. 172862104 Page 6 of 20 Pages
1. NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON:
Bradley C. Shoup - IRA
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*:
a. __X__ b. _____
3. SEC USE ONLY:
4. SOURCE OF FUNDS*:
PF
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e):
_______
6. CITIZENSHIP OR PLACE OF ORGANIZATION:
United States of America
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH:
7. SOLE VOTING POWER: 2,000
8. SHARED VOTING POWER: None
9. SOLE DISPOSITIVE POWER: 2,000
10. SHARED DISPOSITIVE POWER:None
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON:
2,000
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES*:
_______
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11):
.030%
14. TYPE OF REPORTING PERSON*:
IN
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
Supplement to Amendment No. 4 to Schedule 13D
Issuer - Citadel Holding Corporation
Reporting Persons - Dillon Investors, L.P., Roderick H. Dillon, Jr.,
Roderick H. Dillon, Jr. - IRA, Roderick H. Dillon, Jr. Foundation and
Bradley C. Shoup - IRA.
Item 1. Security and Issuer
This Amendment No. 4 to the Schedule 13D filed by the reporting
persons Dillon Investors, L.P. ("DI"), Roderick H. Dillon, Jr. ("RHD"),
Roderick H. Dillon, Jr.-IRA ("RHD-IRA") and Roderick H. Dillon, Jr. Foundation
("RHD-Foundation")(collectively, the "Dillon Entities"), on March 18, 1994, with
the Securities and Exchange Commission (the "SEC") relates to the common stock,
without par value ("Common Stock"), of Citadel Holding Corporation, a Delaware
corporation (the "Issuer"). The principal executive offices of the Issuer are
located at 700 North Central, Suite 500, Glendale, California 91203. This
Amendment No. 4 amends certain information set forth in the Schedule 13D, as
amended by Amendment No. 1 filed on September 9, 1994 ("Amendment No. 1"),
Amendment No. 2 filed on October 17, 1994 ("Amendment No. 2") and Amendment
No. 3 filed on November 4, 1994 ("Amendment No. 3").
Item 2. Identity and Background
The persons filing this Amendment No. 4 (the "Reporting Persons")
are DI, RHD, RHD-IRA, RHD-Foundation and Bradley C. Shoup - IRA ("Shoup - IRA").
DI is a Delaware limited partnership. Its principal business is
that of a private investment partnership engaging in the purchase and sale of
securities for its own account and its address is Suite 1410, 21 East State
Street, Columbus, Ohio 43215-4228. The sole general partner of DI is
Roderick H. Dillon, Jr.
RHD is an individual investor and is employed as chief investment
officer with Dillon Capital Management Limited Partnership, an investment
advisory and management firm. His business address is Suite 1410, 21 East State
Street, Columbus, Ohio 43215-4228. Roderick H. Dillon, Jr. is the sole
beneficiary of RHD-IRA. Roderick H. Dillon, Jr. is the sole trustee of
RHD-Foundation. The principal business of RHD-Foundation is that of a
charitable foundation, and RHD-Foundation is located at Suite 1410, 21 East
State Street, Columbus, Ohio 43215-4228.
Bradley C. Shoup ("Shoup") is a partner in Batchelder & Partners,
Inc., a financial advisory firm. His business address is 4180 LaJolla Village
Drive, Suite 560, LaJolla, California 92037. Shoup is the sole beneficiary of
Shoup - IRA.
During the last five years, none of the Reporting Persons has been
convicted in a criminal proceeding (excluding traffic violations or similar
misdemeanors).
During the last five years, none of the Reporting Persons has been
a party to a civil proceeding of a judicial or administrative body of competent
jurisdiction and none was or is subject to a judgment, decree or final order
enjoining future violations of, or prohibiting or mandating activities subject
to, federal or state securities laws, or finding any violations with respect to
such laws.
Item 4. Purpose of Transaction
As previously stated in Amendment No. 3, the Dillon Entities have
determined to solicit proxies from the stockholders of the Issuer for election
at the Issuer's annual meeting of stockholders scheduled to be held December 12,
1994 (the "1994 Annual Meeting") of the following slate of directors in
opposition to that expected to be nominated by the Board of Directors of the
Issuer: RHD, Shoup, Ralph V. Whitworth, Jordan M. Spiegel and Timothy M. Kelley
(collectively, the "Dillon Nominees"). On November 8, 1994, DI filed
preliminary proxy materials with the SEC to solicit proxies for the election
of the Dillon Nominees and to oppose a proposed amendment to the Issuer's
Restated Certificate of Incorporation to double the number of authorized
shares of Common Stock. As previously stated, if elected, it is the
intention of the Dillon Nominees to propose, subject to their fiduciary
duties, that the Issuer effect a pro rata distribution to the Issuer's
stockholders of the common stock of Fidelity Federal Bank, a Federal Savings
Bank, held by the Issuer and thereafter promptly dissolve and liquidate the
remaining assets of the Issuer at the best price available.
On November 4, 1994, the Board of Directors of the Issuer issued a
press release announcing that the record date for the determination of
stockholders of the Issuer entitled to receive notice of, and to vote at, the
1994 Annual Meeting (the "Record Date") had been postponed from November 4, 1994
to November 11, 1994. On November 7, 1994, DI commenced an action in the Court
of Chancery of the State of Delaware in and for New Castle County against the
Issuer, its directors James J. Cotter, Steve Wesson, Peter W. Geiger, S. Craig
Tompkins and Alfred Villasenor, Jr. (the "Individual Defendants") and Craig
Corporation ("Craig") alleging that the attempt by the Board of Directors of the
Issuer to change the record date was not for a proper corporate or business
purpose of the Issuer but to enable the Individual Defendants to perpetuate
themselves in office by improperly manipulating the corporate machinery of the
Issuer so as to permit them to issue additional shares of Common Stock to Craig
or other "friendly hands" prior to the new record date and, in addition,
alleging that the Issuer's issuance of 74,300 shares (the "Entrenchment
Shares") of Common stock to Craig on October 21, 1994 was done for inadequate
consideration and not for a proper business purpose of the Issuer but rather
to enable the Individual Defendants to maintain themselves in office and to
affect adversely and to impede the voting rights of DI and the other
stockholders of the Issuer. The complaint seeks an order declaring that the
Entrenchment Shares have been improperly issued and enjoining Craig from
voting such shares or counting such shares towards a quorum at the 1994
Annual Meeting, determining that any shares issued by the Issuer after
November 4, 1994 shall not be voted or counted towards a quorum at the 1994
Annual Meeting, and preliminarily and permanently enjoining the Individual
Defendants and the Issuer from issuing any shares of stock of the Issuer
prior to the 1994 Annual Meeting. A copy of the complaint is attached
hereto as Exhibit B and is incorporated herein by reference.
In addition, on November 7, 1994, a Stockholder Consent in Lieu of
Meeting (the "Consent") was executed on behalf of RHD in which RHD consented to
(i) the removal of the current directors of the issuer and their replacement by
the Dillon Nominees and (ii) the amendment of the Issuer's By-Laws to restrict
the indemnification of (or the advancement of expenses to) the Issuer's
officers, directors, employees and agents without the prior approval of the
holders of a majority of the Common Stock outstanding. The Consent provides
that such amendment to the Issuer's By-Laws may not be further amended
without the approval of either the holders of a majority of the Common Stock
outstanding or a majority of the Board of Directors of the Issuer who are not
"Continuing Directors." Continuing Directors are defined for purposes of the
Consent as (i) each member of the Board of Directors of the Issuer on
November 4, 1994 and (ii) any member of the Board of Directors of the Issuer
who was nominated for election or elected to such Board of Directors with the
affirmative vote of the majority of the Continuing Directors who were members
of such Board at the time of such nomination or election.
DI intends to proceed promptly with the proxy solicitation referred
to above. RHD has informed the Issuer that the Dillon Entities will not proceed
with the consent solicitation referred to above until after the 1994 Annual
Meeting so long as the Issuer (i) has not previously issued any shares other
than as have already been publicly disclosed prior to November 7, 1994, (ii)
does not issue any additional shares prior to the 1994 Annual Meeting and
(iii) holds and completes the 1994 Annual Meeting on December 12, 1994.
Item 5. Interest in Securities of the Issuer
(a)(b) As of the date of this Amendment No. 4, DI, RHD,
RHD-IRA, RHD-Foundation and Shoup - IRA owned beneficially 647,000, 5,000,
5,000, 2,000 and 2,000 shares of the Issuer's Common Stock, respectively.
The shares of the Issuer's Common Stock owned beneficially by Shoup - IRA had
been reported in Amendment No. 3 as owned beneficially by Shoup; however,
such shares have always been owned by Shoup - IRA rather than by Shoup
individually. Based on the number of shares of the Issuer's Common Stock
outstanding on November 4, 1994 (6,669,924 shares), as reported in the
preliminary copies of the Notice of Annual Meeting of Stockholders and Proxy
Statement filed by the Issuer with the SEC on October 28, 1994, as of the
date of this Amendment No. 4, DI, RHD, RHD-IRA, RHD-Foundation and Shoup -
IRA owned beneficially approximately 9.70%, .075%, .075%, .030% and .030% of
the Issuer's Common Stock, respectively. Each of DI, RHD, RHD-IRA, RHD-
Foundation and Shoup - IRA exercises sole voting and investment power with
respect to the shares of the Issuer beneficially owned by such person.
(c) None of the Reporting Persons has engaged in any
transactions with respect to the shares of Common Stock of the Issuer within
the past sixty (60) days.
Item 6. Contracts, Arrangements, Understandings or Relationships with Respect
to Securities of the Issuer
See Item 4 above.
Item 7. Material to Be Filed as Exhibits
Exhibit A - Joint Filing Agreement, dated November 3, 1994, among
the Reporting Persons. (Incorporated herein by reference to
Exhibit A of Amendment No. 3 to Schedule 13D filed by the Reporting
Persons on November 4, 1994).
Exhibit B - Complaint filed by DI on November 7, 1994 in the Court
of Chancery of the State of Delaware in and for New Castle County
in action captioned Dillon Investors, L.P. v. James J. Cotter, Steve
Wesson, Peter W. Geiger, S. Craig Tompkins, Alfred Villasenor, Jr.,
Craig Corporation and Citadel Holding Corporation (Included beginning
at page 12 of this Amendment No. 4 to Schedule 13D.
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief,
I certify that the information set forth in this statement is true, complete and
correct.
Date: November 8, 1994 Dillon Investors, L.P.
By: /s/ Roderick H. Dillon, Jr.
Roderick H. Dillon, Jr.,
General Partner
Roderick H. Dillon, Jr.
By: /s/ Roderick H. Dillon, Jr.
Roderick H. Dillon, Jr.
Roderick H. Dillon, Jr. - IRA
By: /s/ Roderick H. Dillon, Jr.
Roderick H. Dillon, Jr.
Roderick H. Dillon, Jr. - Foundation
By: /s/ Roderick H. Dillon, Jr.
Roderick H. Dillon, Jr.,
Trustee
Bradley C. Shoup - IRA
By: /s/ Bradley C. Shoup
Bradley C. Shoup
Exhibit B
Complaint filed by Dillon Investors, L.P. on November 7, 1994 in the
Court of Chancery of the State of Delaware in and for New Castle County in
action captioned Dillon Investors, L.P. v. James J. Cotter, Steve Wesson,
Peter W. Geiger, S. Craig Tompkins, Alfred Villasenor, Jr., Craig Corporation
and Citadel Holding Corporation.
IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
DILLON INVESTORS, L.P., )
)
Plaintiff, )
)
v. ) C.A. No. ______
)
JAMES J. COTTER, STEVE WESSON, )
PETER W. GEIGER, S. CRAIG )
TOMPKINS, ALFRED VILLASENOR, JR., )
CRAIG CORPORATION and CITADEL )
HOLDING CORPORATION, )
)
Defendants. )
COMPLAINT
For its complaint against the defendants, plaintiff Dillon Investors, L.P.
("Dillon L.P.") alleges as follows:
1. Dillon L.P. is a limited partnership formed under the laws of the
State of Delaware and is the beneficial owner of 647,000 shares of the common
stock of defendant Citadel Holding Corporation ("Citadel").
2. Citadel is a corporation organized under the laws of the State of
Delaware. Citadel is the owner of more than 10% of the issued and outstanding
shares of stock of Fidelity Federal Bank FSB ("Fidelity"), is a registered
savings and loan holding company and is subject to the rules and regulations
of the Office of Thrift Supervision ("OTS").
3. Defendant Craig Corporation ("Craig") is also a corporation
organized under the laws of the State of Delaware. Craig purports to be the
owner of more than 10% of the shares of the outstanding common stock of
Citadel. Craig has extended a $8.2 million line of credit to a wholly owned
subsidiary of Citadel of which $6.2 million has been drawn down and
guaranteed by Citadel. Craig has admitted that under the regulations of the
OTS, it controls Citadel.
4. Defendants James J. Cotter ("Cotter"), Steve Wesson ("Wesson"), Peter
W. Geiger, S. Craig Tompkins ("Tompkins") and Alfred Villasenor, Jr.
(collectively the "Individual Defendants") are the members of the board of
directors of Citadel. Cotter is (a) the chairman of the board of directors
of Citadel and (b) a principal stockholder of and a member of and the
chairman of the board of directors of Craig. Tompkins is (a) the vice
chairman of the board of directors, secretary/treasurer and principal
accounting officer of Citadel and (b) a director of and president of Craig.
Non-employee directors of Citadel receive $10,000 per year for their
attendance at regularly scheduled meetings of the board of directors, except
for Cotter and Tompkins who will receive $45,000 per year and $25,000 per
year respectively. Cotter received $100,000 per year until some date
subsequent to August 4, 1994. In addition, "it is contemplated" that Wesson
(the President and CEO of Citadel) will be granted options to purchase an
"estimated" 35,000 shares of common stock of Citadel.
5. By Amendment No. 1 to its Schedule 13D filed September 8, 1994, Dillon
L.P., together with others, announced for the first time that it and the others
had "begun to consider seeking a greater voice in the affairs of [Citadel],"
that they "may consider seeking representation on the Board of Directors of
[Citadel] in the future" and that they may suggest business strategies to
Citadel.
6. By letter dated October 13, 1994 (the "October 13 letter"), Dillon
L.P. requested that the Individual Defendants schedule an annual meeting for
Citadel and recommended that the Individual Defendants distribute the shares
of stock of Fidelity to the Citadel stockholders and liquidate the remaining
Citadel assets in order to maximize stockholder value.
7. By Amendment No. 2 to its Schedule 13D filed October 17, 1994, Dillon
L.P., together with others, disclosed the October 13 letter, and reiterated
that they had "begun to consider seeking a greater voice in the affairs of
[Citadel]" and announced that depending on Citadel's response to the October
13 letter, they "may consider seeking representation on the Board of
Directors of [Citadel] in the future."
8. Subsequent to the receipt of the October 13 letter and the filing of
Amendment No. 2 to the Schedule 13D of Dillon L.P, the Individual Defendants
scheduled the 1994 annual meeting for December 12, 1994 (the "1994 Citadel
Annual Meeting"). The Individual Defendants declared November 4, 1994 as
the record date for the 1994 Citadel Annual Meeting.
9. On October 21, 1994, the Individual Defendants issued 74,300 shares
(the "Entrenchment Shares") of Citadel common stock to Craig. OTS approval
for Craig to purchase in excess of 10% of the outstanding shares of common
stock of Citadel was scheduled to expire on October 23, 1994. The Entrench-
ment Shares were issued for the lesser of the average trading prices (a) for
3 trading days preceding October 21 or (b) the 5 trading days after October
21. On October 24, 1994, Wesson stated that the issuance of the Entrenchment
Shares "was important to our Board to preserve Craig as a potential source of
future equity financing without the need to seek new OTS approval." (Emphasis
supplied). Stated more succinctly, the Entrenchment Shares were issued to
Craig so that future issuances to Craig could be accomplished without any
regulatory delay. Craig has stated that in addition it would have been
unwilling to file an agreement with the OTS to avoid delay since the
agreement "would have substantially limited Craig's ability to exercise an
influence over the business and affairs of" Citadel.
10. On November 4, 1994, Dillon L.P. amended its Schedule 13D and thereby
indicated its intention (with others) to solicit proxies to elect its nominees
as the board of directors of Citadel at the 1994 Citadel Annual Meeting.
Should its nominees be elected, Dillon L.P. intends to implement (subject to
the fiduciary duties of the directors) the changes it recommended in its
October 13 letter and liquidate Citadel.
11. In apparent anticipation of the amended Schedule 13D, Citadel issued a
press release on November 4, 1994, declaring that the Individual Defendants
had "reset" the record date for the 1994 Citadel Annual Meeting to November
11, 1994.
12. Craig knowingly participated in the breaches of duty hereinafter
alleged since two of its officers and directors, Cotter and Tompkins,
participated actively in the wrongdoing.
FIRST CAUSE OF ACTION
13. Dillon L.P. realleges and restates paragraphs 1 through 12 above.
14. On information and belief, the Entrenchment Shares were issued to
Craig solely to permit it to have more shares to vote at the 1994 Citadel
Annual Meeting and to facilitate the issuance of further shares to Craig
prior to the record date for the 1994 Citadel Annual Meeting. Such shares
were issued hastily for inadequate consideration and not for a proper
business or corporate purpose of Citadel.
15. As such, the Entrenchment Shares were issued to enable the Individual
Defendants to maintain themselves in office and to affect adversely and to
impede the voting rights of Dillon L.P. and the other stockholders of Citadel
at the 1994 Citadel Annual Meeting.
16. Thus, the Entrenchment Shares were improperly and invalidly issued
to Craig.
SECOND CAUSE OF ACTION
17. Dillon L.P. realleges and restates paragraphs 1 through 16 above.
18. The Individual Defendants have improperly attempted to change the
record date for the 1994 Citadel Annual Meeting from November 4, 1994 to
November 11, 1994. No explanation for the attempted change was given in the
press release issued by Citadel on November 4, 1994. On information and
belief, the purported change in the record date was attempted by the
Individual Defendants not for a proper corporate or business purpose of
Citadel but to enable the Individual Defendants to perpetuate themselves in
office by improperly manipulating the corporate machinery of Citadel so as to
permit them to issue additional shares of stock of Citadel to Craig or other
"friendly hands" prior to the new record date of November 11, 1994.
THIRD CAUSE OF ACTION
19. Dillon L.P. realleges and restates paragraphs 1 through 18 above.
20. On information and belief, the Individual Defendants and Craig intend
to issue additional shares of voting stock of Citadel prior to November 11,
1994 to Craig or to other "friendly hands." Such an issuance would not be
for a proper business or corporate purpose of Citadel. Any such shares would
be issued for the primary purpose of enabling the Individual Defendants to
maintain themselves in office and Craig's control of Citadel and in an
attempt to dilute, adversely affect and impede the voting power and rights
of Dillon L.P. and the other stockholders of Citadel.
21. Unless and until enjoined, pendente lite and permanently, the
Individual Defendants intend to proceed with such an issuance of stock in
violation of their fiduciary duties to Dillon L.P. and the other stockholders
of Citadel.
WHEREFORE, Dillon L.P. prays that the Court enter its judgments and
orders:
a. declaring that the Entrenchment Shares have been improperly issued
and cannot be voted or counted toward a quorum at the 1994 Citadel Annual
Meeting;
b. determining that any shares issued by Citadel after November 4,
1994 shall not be voted at or counted towards a quorum at the 1994 Citadel
Annual Meeting;
c. enjoining, pendente lite and permanently, the Individual
Defendants from issuing any shares of stock of Citadel prior to the 1994
Citadel Annual Meeting;
d. awarding Dillon L.P. its costs and expenses, including reasonable
attorneys' fees, incurred in maintaining this action; and
e. awarding and granting such other relief as the Court may deem
equitable.
R. Franklin Balotti
Daniel A. Dreisbach
Todd C. Schiltz
Richards, Layton & Finger
One Rodney Square
P.O. Box 551
Wilmington, Delaware 19899
(302) 658-6541
Attorneys for Plaintiff
Dillon Investors, L.P.
Dated: November 7, 1994
CERTIFICATE OF SERVICE
I, Todd C. Schiltz, hereby certify that on this 7th day of November,
1994, two copies of the foregoing document were served by hand delivery on
the following:
CITADEL HOLDING CORPORATION CRAIG CORPORATION
c/o The Corporation Trust Company c/o The Corporation Trust Company
1209 Orange Street 1209 Orange Street
Wilmington, Delaware 19801 Wilmington, Delaware 19801
Todd C. Schiltz