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SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. 1)
Filed by the Registrant[ ]
Filed by a Party other than the Registrant[X]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to par. 240.14a-11(c) or par. 240.14a-12
Citadel Holding Corporation
(Name of Registrant as Specified In Its Charter)
Dillon Investors, L.P.
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[ ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
[ ] $500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i)(3).
[ ] 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:
________________________________________________________________________
4) Proposed maximum aggregate value of transaction:
________________________________________________________________________
[ ] 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:
________________________________________________
PRELIMINARY COPY - NOVEMBER 15, 1994
DILLON INVESTORS, L.P.
__________
PROXY STATEMENT
In Opposition to the Board of Directors of
Citadel Holding Corporation
___________
ANNUAL MEETING OF STOCKHOLDERS
OF CITADEL HOLDING CORPORATION
To be held on December 12, 1994
To the Stockholders of Citadel Holding Corporation:
INTRODUCTION
This Proxy Statement, the accompanying letter and
the enclosed GREEN proxy card are furnished in connection
with the solicitation of proxies (the "Proxy Solicitation")
by and on behalf of Dillon Investors, L.P., a Delaware
limited partnership ("Dillon"), to be used in connection
with the Annual Meeting of Stockholders (the "Annual
Meeting") of Citadel Holding Corporation, a Delaware
corporation (the "Company"), to be held on December 12,
1994, and at any and all adjournments or postponements
thereof. Dillon is soliciting proxies pursuant to this
Proxy Statement to elect the nominees of Dillon named
herein (the "Dillon Nominees") to the Board of Directors of
the Company (the "Board") and to oppose the authorization
of additional shares of common stock of the Company, as
proposed by the Company. The Annual Meeting will be held
on December 12, 1994 at such time and place as specified in
the Company's Notice of Annual Meeting of Stockholders and
Proxy Statement (the "Company Proxy Statement"). This
Proxy Statement and the enclosed GREEN proxy card are first
being furnished to stockholders of the Company on or about
November ___, 1994.
Based on 6,669,924 shares of common stock, par value
$.01 per share (the "Shares"), of the Company reported as
outstanding as of November 4, 1994 in the preliminary
copies of the Notice of Annual Meeting of Stockholders and
Proxy Statement (the "Company Preliminary Proxy Statement")
filed by the Company with the Securities and Exchange
Commission (the "Commission") on October 28, 1994, Dillon,
Roderick H. Dillon, Jr., Roderick H. Dillon, Jr. - IRA and
Roderick H. Dillon, Jr. Foundation (which are sometimes
referred to herein collectively as the "Dillon Entities")
hold 659,000 Shares or approximately 9.88% of the
outstanding Shares as of such date.
By letter dated October 13, 1994, Dillon asked the
Board to promptly call a 1994 annual meeting of
stockholders (which, pursuant to the Company's By-Laws,
should have been held in May 1994) and to respond publicly
to inquiries concerning the current business strategy of
the Company and the best course of action to maximize
stockholder value. Other than scheduling the Annual
Meeting for December 12, 1994, the Board did not respond to
Dillon's letter. Dillon now seeks your votes in support of
an alternative slate of nominees at the Annual Meeting.
Dillon believes that you, the true owners of the Company,
should have the right to decide for yourselves how the
Company should be operated.
DILLON URGES YOU TO SIGN, DATE AND RETURN TO DILLON
THE ENCLOSED GREEN PROXY CARD TO VOTE FOR THE ELECTION OF
THE DILLON NOMINEES AS DIRECTORS.
BACKGROUND OF THE PROXY SOLICITATION
The Dillon Entities purchased their 659,000 Shares
from March 17, 1993 through March 16, 1994 at prices
ranging from $20.22 per Share to $4.54 per Share. On
September 7, 1994, the lowest reported sales price for the
Shares on the American Stock Exchange ("AMEX") was $3.50,
the lowest price at which the Shares have traded in the
past ten years. As a result of the weakness in the market
price of the Shares, and the results of the
recapitalization and restructuring involving the Company
and its formerly wholly owned subsidiary, Fidelity Federal
Bank, a Federal Savings Bank ("Fidelity"), which were
materially less favorable to the Company than had been
anticipated (see "REASONS TO REPLACE THE PRESENT BOARD WITH
THE DILLON NOMINEES"), the Dillon Entities began to
consider seeking a greater voice in the Company's affairs.
As set forth above, by letter dated October 13,
1994, Dillon asked the Board to promptly call a 1994 annual
meeting of stockholders (which, pursuant to the Company's
By-Laws, should have been held in May 1994) and to respond
publicly to inquiries concerning the current business
strategy of the Company and the best course of action to
maximize stockholder value. Other than scheduling the
Annual Meeting for December 12, 1994, with a record date of
November 4, 1994, the Board did not respond to Dillon's
letter. In that letter, Dillon stated its opinion that a
dissolution and liquidation of the Company's assets would
seem to be the best strategy to maximize the value of the
Shares to stockholders. Dillon does not believe that such
value is maximized through the current operation of the
Company as a real estate company, as evidenced by the
recent market prices for the Shares.
On October 21, 1994, the Company sold 74,300 Shares
to Craig Corporation ("Craig"), a company affiliated with
two of the Company's Board members, which resulted in
Craig's owning more than 10% of the outstanding Shares.
The agreed upon purchase price was the lesser of the
average trading price for the Shares on (a) the three
trading days preceding October 21, 1994 or (b) the five
trading days following October 21, 1994. The actual price
paid by Craig for such additional Shares was $3.85 per
Share.(1)
On November 4, 1994, Dillon filed an amendment to
its Schedule 13D stating its intention to solicit proxies
to elect a slate of nominees to the Board. Also on
November 4, the Company announced that the record date for
the stockholders entitled to vote at the Annual Meeting had
been changed from November 4, 1994 to November 11, 1994.
On November 7, 1994, Dillon commenced litigation
(the "Delaware Litigation") in the Court of Chancery of the
State of Delaware in and for New Castle County against the
Company, its present directors James J. Cotter, Steve
Wesson, Peter W. Geiger, S. Craig Tompkins and Alfred
Villasenor, Jr. (the "Individual Defendants") and Craig
alleging that the attempt by the Company's Board to change
the record date for the Annual Meeting was not for a proper
corporate or business purpose of the Company but to enable
the Individual Defendants to perpetuate themselves in
office by improperly manipulating the corporate machinery
of the Company so as to permit them to issue additional
Shares to Craig or other "friendly hands" prior to the new
record date and, in addition, alleging that the Company's
issuance in October of the 74,300 Shares to Craig was done
for inadequate consideration and not for a proper business
purpose of the Company but rather to enable the Individual
Defendants to maintain themselves in office and to affect
adversely and to impede the voting rights of Dillon and the
other stockholders of the Company at the Annual Meeting.
The complaint sought an order declaring that such 74,300
Shares were improperly issued and enjoining Craig from
voting such Shares at the Annual Meeting, determining that
any Shares issued by the Company after November 4, 1994
shall not be voted or counted towards a quorum at the
Annual Meeting, and preliminarily and permanently enjoining
the Individual Defendants and the Company from issuing any
Shares prior to the Annual Meeting. Also on November 7,
Roderick H. Dillon, Jr. delivered a consent to the Company,
together with a letter announcing Dillon's intention to
engage in a consent solicitation.
__________
1. The Office of Thrift Supervision (the OTS) approval for Craig to
purchase in excess of 10% of the outstanding Shares was scheduled to
expire on October 23, 1994; thus, the issuance of such Shares, at
what Dillon believes to be depressed market prices, enabled Craig to
buy additional Shares in the future without regulatory delay. Craig
had stated in Amendment No. 13 to its Schedule 13D filed with the
Commission on October 26, 1994 that it would have been unwilling to file
an agreement with the OTS to avoid such delay because such an agreement
"would have substantially limited Craig's ability to exercise an influence
over the business and affairs of" the Company.
___________
On November 8, 1994, the Company announced that the
record date for purposes of the Annual Meeting was November
14, 1994, and that the prior announcement "erroneously
reported the record date of the meeting." On November 11,
1994, the Company issued a press release indicating that it
had sold to Craig 1,329,114 shares of 3% Cumulative Voting
Convertible Preferred Stock (the "New Preferred Stock") on
November 10, 1994 at a price of $3.95 per share by
exchanging such shares for $5.2 million of debt owed by the
Company to Craig. The New Preferred Stock votes jointly
with the Shares on most matters, including the election of
directors, on a share-for-share basis and is convertible
into Shares at any time, at the option of the holder, at a
conversion ratio based upon the market price of the Shares.
The New Preferred Stock is redeemable at a premium at the
option of the Company after November 10, 1997. Holders of
the New Preferred Stock have the right to require the
Company to purchase their shares at a premium under certain
circumstances, including a change of control (which would
include failure of the existing directors or any persons
elected or nominated by the existing directors to
constitute a majority of the Board).
On November 14, 1994, Dillon amended its complaint
filed in the Delaware Litigation to seek rescission of the
sale of the New Preferred Stock and to preliminarily and
permanently enjoin the voting of such stock at the Annual
Meeting or otherwise. Such amended complaint
alleges that such issuance of New Preferred Stock was in
violation of the Board's fiduciary duties, as such stock
was issued for inadequate consideration and not for a
proper business or corporate purpose of the Company. The
shares of New Preferred Stock were issued at a share price
below the closing sales price for the Shares on the AMEX on
such date, notwithstanding the fact that such New Preferred
Stock has superior liquidation, dividend and redemption
rights to the Shares, voting rights equal to the Shares and
is convertible into Shares. Dillon believes that the New
Preferred Stock was issued to Craig solely for the purposes
of improperly increasing Craig's voting power, diluting the
voting power of the Company's existing stockholders other
than Craig and entrenching the Company's management.
The Distribution, the Real Estate Sales and the Dissolution
Dillon believes that you, the true owners of the
Company, should have the right to decide for yourselves how
the Company should be operated. If elected, the Dillon
Nominees intend to propose, subject to their fiduciary
duties, that the Company (i) effect a pro rata distribution
of the shares of Fidelity currently held by the Company to
the stockholders of the Company (the "Distribution"),
(ii) effect an orderly sale of the Company's real estate
assets at the best available price (the "Real Estate
Sales") and (iii) thereafter promptly dissolve and
liquidate the Company (the "Dissolution"). None of the
Dillon Entities or their affiliates would participate in
any transaction with the Company regarding a sale or
liquidation of any of the Company's assets, other than
pursuant to their pro rata interest as stockholders.
Consent Solicitation
As an alternate means to facilitate the consummation
of the Distribution, the Real Estate Sales and the
Dissolution, Dillon is also soliciting consents from
stockholders of the Company (the "Consent Solicitation")
concurrently with the Proxy Solicitation. Dillon believes
that the Consent Solicitation is necessary due to the
differing record dates for purposes of the Consent
Solicitation and the Proxy Solicitation. The earlier
record date for the Consent Solicitation of November 7,
1994, rather than the Company's proposed November 14, 1994
record date for the Proxy Solicitation, allows only the
record holders of Shares (as the only voting securities)
prior to the issuance of the New Preferred Stock to vote
their Shares with respect to how the Company should be
operated.
DILLON URGES YOU TO SIGN, DATE AND RETURN TO DILLON
THE ENCLOSED GREEN PROXY CARD TO VOTE FOR THE ELECTION OF
THE DILLON NOMINEES AS DIRECTORS.
REASONS TO REPLACE THE PRESENT BOARD WITH THE DILLON NOMINEES
The Company has incurred significant operating
losses during recent years, primarily as a result of the
poor performance of Fidelity. The Company reported a net
loss of $92.0 million ($13.95 per Share) for the second
quarter of 1994, and a loss of $106.8 million ($16.19 per
Share) for the six months ended June 30, 1994, as reported
in the Company's Quarterly Report on Form 10-Q for the
period ended June 30, 1994 (the "Form 10-Q"). As a result
of such losses, the Company commenced a series of steps to
internally reorganize in order to, among other things,
strengthen Fidelity's operations. The Company ultimately
entered into a restructuring and recapitalization
transaction (the "Restructuring and Recapitalization"),
major aspects of which were consummated on August 4, 1994.
Pursuant to the Restructuring and Recapitalization,
Fidelity transferred certain of its real estate assets to a
newly-formed subsidiary of the Company and made a public
offering which resulted in the reduction of the Company's
equity interest in Fidelity from 100% to approximately
16.18%. The Board announced that, following the
Restructuring and Recapitalization, the Company would
become a real estate company and focus on the servicing and
enhancement of its real estate portfolio.
Unfortunately, as noted by the Company in the Form
10-Q, the results of the Restructuring and Recapitalization
were materially less favorable to the Company than had
previously been anticipated. In light of such results, by
letter dated October 13, 1994, Dillon asked the Board to
respond publicly to inquiries concerning the current
business strategy of the Company, the action required to
effect a pro rata distribution to the stockholders of the
Company of the shares of Fidelity currently held by the
Company, whether a dissolution of the Company and
liquidation of its assets would be the best strategy to
maximize stockholder value, and why, in light of the
consummation of the Restructuring and Recapitalization, the
Company is still registered with the OTS as a savings and
loan holding company.
The Board did not respond to Dillon's inquiries and
appears unwilling to consider proposals to operate the
Company in any manner other than as a real estate company.
The Board's only action to date has been to reset the
record date for the Annual Meeting and, prior to such new
date, issue securities having over 1.3 million votes to
Craig for what Dillon believes was inadequate
consideration, so that Craig would be able to vote such
securities at the Annual Meeting for the existing
directors, including Craig's own Chairman and its
President.
Dillon is concerned that the Board may dispose of
the shares of Fidelity held by the Company and may use the
proceeds of such disposition in furtherance of its stated
plans to develop the Company as a real estate company.
Likewise, Dillon is concerned that the Board, which is
seeking stockholder approval at the Annual Meeting to
double the number of authorized Shares (see "MATTERS TO BE
CONSIDERED AT THE ANNUAL MEETING - PROPOSAL 2:
AUTHORIZATION OF ADDITIONAL SHARES OF COMMON STOCK"), will
issue additional Shares and use the proceeds of such
issuances in furtherance of such plans. Such issuances
could also be utilized to further increase the stock
ownership of management and persons friendly to management
in order to provide them an even greater voice in pursuing
such plans.
Dillon's investment of over $3.8 million in the
Company was not made for the purpose of investing in a real
estate company. Dillon further believes that most other
stockholders did not intend to invest in a real estate
company. Dillon now seeks your votes in support of an
alternative slate of nominees at the Annual Meeting.
Dillon believes that you, the true owners of the Company,
should have the right to decide for yourselves how the
Company should be operated. Our nominees are committed to
maximizing stockholder value by establishing the
stockholders' direct investment in Fidelity, selling the
real estate assets of the Company and dissolving the
Company and liquidating any remaining assets, as described
below.
YOU CAN TAKE SOME IMMEDIATE STEPS TO HELP OBTAIN THE
MAXIMUM VALUE FOR YOUR SHARES BY SIGNING, DATING AND
RETURNING YOUR GREEN PROXY CARD FOR THE ELECTION OF THE
DILLON NOMINEES TO THE BOARD.
DILLON'S STRATEGY FOR THE COMPANY
The Distribution
In connection with the Restructuring and
Recapitalization, the Company's equity interest in Fidelity
was reclassified into 4,202,243 shares of Fidelity's non-
voting Class B Common Stock (the "Fidelity Class B Stock"),
representing approximately 16.18% of the outstanding shares
of Fidelity.
Dillon believes that, to maximize stockholder value
and establish the stockholders' direct investment in
Fidelity, the Board should effect a pro rata distribution
of the shares of Fidelity currently held by the Company to
the stockholders of the Company (the "Distribution").
Dillon believes that the value of such shares of Fidelity
are being discounted by the market due to the operation of
the Company as a real estate company, wherein such shares
are mixed with the Company's real estate assets. While
there is not an active market for Fidelity shares, which
are currently unregistered, Dillon has been informed by
J.P. Morgan Securities Inc., the principal market maker for
the Fidelity voting Class A Common Stock (the "Fidelity
Class A Stock") (into which the Fidelity Class B Stock is
automatically convertible upon transfer by the Company to
an unaffiliated party) that since the offering of Fidelity
common stock at $5.25 per share pursuant to the
Restructuring and Recapitalization, the Fidelity Class A
Stock has traded between $5.00 and $5.75 per share. These
prices would be equal to approximately $3.15 to $3.62 per
Share (on a primary basis, not including as outstanding
Shares issuable upon conversion of the New Preferred Stock
issued to Craig). Dillon therefore believes that the
shares of Fidelity would be more valuable to the
stockholders of the Company if held by them directly, as
opposed to being held by the Company.
If elected, the Dillon Nominees intend to fix a
record date for the Distribution as soon as practicable and
distribute to each holder of Shares on such record date, on
a pro rata basis, shares of Fidelity. As a result of the
Distribution, stockholders of the Company would hold shares
in both the Company and Fidelity.
All stockholders of the Company would likely receive
shares of Fidelity Class A Stock as a result of the
Distribution. Currently, the Company holds shares of
Fidelity Class B Stock. However, the terms of the Fidelity
Class B Stock provide that such shares will automatically
be converted into shares of Fidelity Class A Stock when
they are received by any person who is not an affiliate of
the Company. In addition, the terms of the Fidelity Class
B Stock provide that all shares of Fidelity Class B Stock
will automatically be converted into shares of Fidelity
Class A Stock at such time as all shares of Fidelity Class
B Stock represent less than 10% of the outstanding common
stock of Fidelity on a fully diluted basis. Since the
Fidelity Class B Stock currently represents approximately
16.18% of the outstanding fully diluted common stock of
Fidelity and since according to the Company Preliminary
Proxy Statement less than 25% of the Company's stockholders
are affiliates of the Company, the Distribution would
likely cause all stockholders of the Company, including
both affiliates and non-affiliates of the Company, to
receive Fidelity Class A Stock. The preferences and
privileges of the Fidelity Class A Stock and the Fidelity
Class B Stock are the same except with respect to voting
rights and conversion rights.
The exact timing and details of the Distribution
will depend on a variety of factors and legal requirements,
including determination by the Dillon Nominees that the
Fidelity shares received in the Distribution by the
Company's stockholders (other than affiliates, if any, of
Fidelity) will be freely transferable. This may require
registration of the Fidelity shares pursuant to existing
registration rights for such shares, which rights are not
exercisable by the Company until March 31, 1995.
Real Estate Sales
As set forth above, Dillon's investment of over $3.8
million in the Company was not made for the purpose of
investing in a real estate company. Dillon also believes
that most of the Company's other stockholders did not
intend to invest in a real estate company. Based upon
statements made by the Company in the Form 10-Q, Dillon
believes that the Company's real estate assets (including
assets on which the Company holds purchase options) have a
market value in excess of their purchase price or option
exercise price. Therefore, Dillon believes that, to
maximize stockholder value, the Board should effect an
orderly sale of the real estate assets of the Company at
the best available price (the "Real Estate Sales").
_______________
(2) The Form 10-Q states that with "active management and certain capital
expenditures, the Company's owned properties "if sold on an individual
basis, could be worth more than [the Company] purchased them for in
connection with the Restructuring and Recapitalization, but there can be
no assurance on this point." In addition, the Form 10-Q states that the
value of the options could be "up to $3 million above the exercise price
of [the options], before costs the Company would incur in connection with
the exercise, which may be significant." The terms of the options indicate
that they are transferable prior to exercise.
_______________
The Dissolution
Following the consummation of the Distribution and
the Real Estate Sales, the Dillon Nominees intend to
dissolve and liquidate the Company as promptly as
practicable (the "Dissolution"). Dillon's recommendation
to effect the Dissolution is based on its determination
that no reasonable business alternatives will exist for the
Company following the Distribution and the Real Estate
Sales. Therefore, Dillon believes that, at such time, the
Dissolution is the most appropriate course of action.
In the Dissolution, the Company will take all
necessary steps to dissolve pursuant to the provisions of
the DGCL, including the filing of a Certificate of
Dissolution with the Delaware Secretary of State. Upon
such a filing, the Company will cease business operations.
The Company's corporate existence will continue thereafter,
but solely for the purpose of liquidating any remaining
assets, winding up its business affairs, paying its
liabilities and distributing any cash remaining to
stockholders.
The exact timing and details of the Distribution,
the Real Estate Sales and the Dissolution will depend on a
variety of factors and legal requirements. Dillon and the
Dillon Nominees can give no assurance that the
Distribution, the Real Estate Sales and the Dissolution
will each be consummated or as to the timing of such events
if they are consummated. Although the Dillon Nominees
currently intend to propose the Distribution, the Real
Estate Sales and the Dissolution generally on the terms
described above, it is possible that, as a result of
substantial delays in the ability of the Dillon Nominees to
effect such transactions, information hereafter obtained by
the Dillon Nominees, changes in general economic or market
conditions or in the business of the Company or other
presently unforeseen factors, the Distribution, the Real
Estate Sales and the Dissolution may not be so proposed, or
may be delayed or abandoned (whether before or after
stockholder authorization or consent). Although it has no
current intention to do so, the Dillon Nominees expressly
reserve the right to propose the Distribution, the Real
Estate Sales and the Dissolution on terms other than
described above, if they, in the exercise of their
fiduciary duties, believe such action to be appropriate.
Stockholder Vote
Pursuant to Section 271 and Section 275 of the
Delaware General Corporation Law (the "DGCL"),
respectively, the approval of stockholders owning a
majority of the outstanding stock of the corporation
entitled to vote thereon is required to effect a sale of
substantially all of the assets, or a dissolution, of such
corporation. If elected, the Dillon Nominees intend to
seek any such approvals necessary in order to carry out the
transactions described above. Dillon and its affiliates
intend to vote any Shares owned by them in favor of such
actions.
REGULATORY APPROVALS
Because the Company is registered with the OTS, on
November 4, 1994, the Dillon Entities filed with the OTS a
request for interpretive advice and advice with respect to
the enforcement of the OTS' regulations governing
acquisitions of savings associations and savings and loan
holding companies set forth in Part 574 of Title 12 of the
Code of Federal Regulations (the "OTS Control
Regulations"). The Dillon Entities are requesting a
determination by the OTS that the OTS will refrain from
initiating or recommending enforcement action against the
Dillon Entities if the Dillon Entities acquire proxies or
otherwise obtain votes from stockholders of the Company
enabling the Dillon Entities to elect the Dillon Nominees
without first filing a change of control notice or rebuttal
of control submission pursuant to the OTS Control
Regulations. If the OTS does not provide the determination
sought by the Dillon Entities, the Dillon Entities may
elect to (i) not proceed with the proxy solicitation or
(ii) file with the OTS a change of control notice or
rebuttal of control submission. A rebuttal of control
submission can take up to 35 days for approval and a change
of control notice can take up to 90 days for approval,
subject to extensions by the OTS.
MATTERS TO BE CONSIDERED AT THE ANNUAL MEETING
Proposal 1: Election of Directors
Dillon proposes that the Dillon Nominees named below
be elected as directors of the Company, to serve until the
next Annual Meeting of Stockholders and until their
successors shall have been duly elected and qualified.
The accompanying GREEN proxy card will be voted in
accordance with the stockholder's instructions on such
GREEN proxy card. As to the election of directors,
stockholders may vote for the election of the entire slate
of Dillon Nominees or may withhold their votes by marking
the proper box on the GREEN proxy card. Stockholders also
may withhold their votes from any of the Dillon Nominees by
writing the name of such Dillon Nominee in the space
provided on the GREEN proxy card. If the enclosed GREEN
proxy card is signed and returned and no direction is
given, it will be voted FOR the election of each of the
Dillon Nominees.
The directors are to be elected by a plurality of
the votes cast. Withheld votes and broker non-votes (i.e.,
Shares held by a broker or nominee which are represented at
the Annual Meeting, but with respect to which such broker
or nominee is not empowered to vote on a particular
proposal) will not be counted toward a nominee's
achievement of a plurality but may be counted for purposes
of obtaining a quorum at the Annual Meeting.
Each of the Dillon Nominees has consented to serve
as a director of the Company, if elected. Dillon does not
expect that any of the Dillon Nominees will be unable to
stand for election, but in the event that one or more
vacancies in the slate of Dillon Nominees should occur
unexpectedly, Shares represented by the accompanying GREEN
proxy card will be voted for a substitute candidate or
candidates selected by Dillon, provided that Dillon does
not intend to vote proxies received for any substitute for
an unaffiliated Dillon Nominee who is not also unaffiliated
with Dillon.
Delaware law provides, in effect, that the Board
shall consist of such number of persons as is fixed by, or
in the manner provided in, the Company's By-Laws. The By-
Laws of the Company provide that there shall be five
directors. In the event the Board acts to reduce the
number of directors to fewer than five, the persons named
as proxies on the enclosed GREEN proxy card will vote in
favor of the appropriate number of Dillon Nominees (or
substitute nominees as provided above). Should the Board
act to increase the number of directors to greater than
five, such proxies will vote in favor of the five Dillon
Nominees (or substitute nominees as provided above) and
will abstain as to any remaining positions, since the
proxies named on the enclosed GREEN proxy card cannot vote
for more than five nominees. In such event, Dillon
presently intends to nominate additional nominees and
distribute new proxy cards in compliance with the rules of
the Commission.
Of the five Dillon Nominees, one (Mr. Dillon) is
employed by or otherwise affiliated with Dillon, and the
remaining four are neither employed by nor affiliated with
Dillon. None of the Dillon Nominees is affiliated with or
has or has had any business relationship with the Company,
other than as a stockholder.
The Dillon Nominees are listed below and have
furnished to Dillon the following information concerning
their principal occupations, business addresses and certain
other matters. All Dillon Nominees are citizens of the
United States.
Dillon Nominees
Roderick H. Dillon, Jr., 38, has served as Chief
Investment Officer of Dillon Capital Management Limited
Partnership, an investment advisory and management firm,
since July 1993. From June 1986 through June 1993, Mr.
Dillon was Vice President of Loomis, Sayles & Co., Inc., an
investment advisory firm. Mr. Dillon's business address is
Suite 1410, 21 East State Street, Columbus, Ohio 43215-
4228.
Bradley C. Shoup, 36, is a partner in Batchelder &
Partners, Inc., a financial advisory firm, and has held
such position for more than the past five years. Mr.
Shoup's business address is 4180 La Jolla Village Drive,
Suite 560, La Jolla, California 92037.
Timothy M. Kelley, 36, is Secretary, Treasurer and
General Counsel of Donald W. Kelley & Associates, Inc., a
real estate consulting and development firm, and has held
such position for more than the past five years. Mr.
Kelley's business address is 250 E. Broad Street, 11th
Floor, Columbus, Ohio 43215.
Ralph V. Whitworth, 39, has served as President of
Whitworth & Associates, a corporate consulting firm, since
1988. From 1986 until 1993, Mr. Whitworth was President of
United Shareholders Association, a prominent shareholder
rights group. Mr. Whitworth's business address is 801
Pennsylvania Avenue, N.W., Suite 747, Washington, D.C.
20004.
Jordan M. Spiegel, 32, is Executive Vice President
of A. B. Laffer, V. A. Canto & Associates, an economic
consulting firm, and has held such position for more than
the past five years. Mr. Spiegel's business address is
Regents Square One, 4275 Executive Square, Suite 330, La
Jolla, California 92037.
Dillon has agreed to indemnify each of the Dillon
Nominees against all liabilities, including liabilities
under the federal securities laws, in connection with this
proxy solicitation and such person's involvement in the
operation of the Company, including the Distribution, the
Real Estate Sales and the Dissolution, and to reimburse
such Dillon Nominee for his out-of-pocket expenses.
Dillon strongly encourages you to vote on the
enclosed GREEN proxy card FOR each of the Dillon Nominees
listed above.
Proposal 2: Authorization of Additional Shares of Common
Stock
The Company Preliminary Proxy Statement indicates
that the Company's current Board has approved and is
seeking the approval of the Company's stockholders of an
amendment to the Company's Restated Certificate of
Incorporation to double the authorized number of Shares
from the 10,000,000 currently authorized to 20,000,000.
Currently, according to the Company Preliminary Proxy
Statement, only 6,669,924 Shares are outstanding.
Dillon believes that the Company's stockholders
should not approve such an increase in the authorized
number of Shares. The Dillon Nominees believe that, since
the Shares are currently trading at near all-time low
levels and the current actions of the Board are not
maximizing stockholder value, the Company's stockholders
should not authorize additional Shares for sale at this
time. The Company Preliminary Proxy Statement does not
describe any specific uses for which such additional Shares
are needed and does not offer any rationale for such
proposal other than to "have flexibility in acquiring
working capital in the future." Dillon and the Dillon
Nominees have already indicated above their plans for the
Company in the event the Dillon Nominees are elected. The
Distribution, the Real Estate Sales and the Dissolution
will not require any additional Shares to be issued.
Furthermore, as Dillon believes the issuance of the
New Preferred Stock demonstrates, authorized but unissued
Shares could be used in the future by the Company in ways
that would make it more difficult to effect a change in
control of the Company or replace the Company's Board of
Directors, for instance through a private sale to
purchasers allied with management or by decreasing the
percentage stock ownership of a third party seeking to gain
control of the Company. Any such share issuances to
purchasers allied with management could also have the
effect of impeding an offer for the Shares, even if such an
offer were favored by a majority of the Company's
stockholders not affiliated with the Company. The issuance
of additional Shares may, among other things, have the
effect of decreasing earnings per Share and diminishing the
relative equity and voting rights of existing holders of
Shares in addition to the effect of discouraging a change
in control or unsolicited business combination proposals.
The Company Preliminary Proxy Statement contains a
description of the Company's existing common stock and the
Company's undetermined plans with respect to additional
issuances of common stock.
The accompanying GREEN proxy card will be voted in
accordance with the stockholder's instruction on such GREEN
proxy card. As to the Company's Proposal 2, stockholders
may vote for or against or abstain from voting on such
Proposal. If the enclosed GREEN proxy card is signed and
returned and no direction is given, it will be voted
AGAINST Proposal 2. In order to become effective, Proposal
2 would require the affirmative vote of a majority of the
Shares outstanding. Withheld votes and broker non-votes
will, therefore, have the same effect as a vote against
Proposal 2.
Dillon intends to vote AGAINST the Company's
Proposal 2 and strongly recommends that all other
stockholders also vote AGAINST such Proposal.
VOTING AND PROXY PROCEDURES
Shares represented by properly executed GREEN proxy
cards will be voted as directed or, if no direction is
indicated, will be voted FOR the election of each of the
Dillon Nominees (Proposal 1) and AGAINST the authorization
of additional Shares (Proposal 2). A GREEN proxy card will
not be voted for the election of all the Dillon Nominees as
directors if authority to do so is specifically withheld on
the GREEN proxy card and will not be voted for the election
of any Dillon Nominee whose name is written in the
indicated space on the GREEN proxy card. If any other
matters are properly brought before the Annual Meeting,
such proxies will be voted on such matters as Dillon, in
its sole discretion and consistent with the federal proxy
rules, may determine. Unless voted or revoked in the
manner provided below, such proxy will expire twelve months
from the date executed.
For the proxy solicited hereby to be voted, the
enclosed GREEN proxy card must be signed, dated and
returned to Dillon, c/o Garland Associates, Inc., P.O. Box
3355, Grand Central Station, New York, New York 10163-
3355, in time to be voted at the Annual Meeting. Execution
of a GREEN proxy card will not affect your right to attend
the Annual Meeting and to vote in person. Any proxy may be
revoked at any time prior to the Annual Meeting by
delivering written notice of revocation or a later dated
proxy to Dillon, c/o Garland Associates, Inc., or to the
Secretary of the Company at Citadel Holding Corporation,
600 North Brand Boulevard, Glendale, California 91203, or
by voting in person at the Annual Meeting. ONLY YOUR
LATEST DATED PROXY WILL COUNT AT THE ANNUAL MEETING.
Subject to any court action (see "BACKGROUND OF THE
PROXY SOLICITATION"), only holders of record as of the
close of business on November 14, 1994 (the "Record Date")
will be entitled to vote at the Annual Meeting. If you
sold your Shares before the Record Date (or acquired them
without voting rights attached after the Record Date), you
may not vote such Shares. If you were a stockholder of
record on the Record Date, you will retain the voting
rights in connection with the Annual Meeting even if you
sell or sold such Shares after the Record Date.
Accordingly, it is important that you vote the Shares held
by you on the Record Date or grant a proxy to vote such
Shares whether or not you still own such Shares.
If your Shares are held in the name of a brokerage
firm, bank or nominee on the Record Date, only it can vote
your Shares and only upon receipt of your specific
instructions. Accordingly, please contact the person
responsible for your account and give instructions for your
Shares to be voted.
According to the Company Preliminary Proxy
Statement, 6,669,924 Shares were outstanding as of November
4, 1994 and eligible to vote. On November 10, 1994, the
Company issued 1,329,114 shares of New Preferred Stock.
Each Share and each share of the New Preferred Stock
outstanding is entitled to one vote, voting as a single
class, on each matter to be voted at the Annual Meeting.
SOLICITATION EXPENSES AND PROCEDURES
The entire expense of preparing, assembling,
printing and mailing this Proxy Statement and the
accompanying form of proxy, and the cost of soliciting
proxies, will be borne by Dillon. Dillon intends to seek
reimbursement from the Company for these expenses if the
Dillon Nominees are elected to the Board, and such
reimbursement will not be submitted to a vote of the
stockholders of the Company.
In addition to the use of the mails, proxies may be
solicited by the Dillon Nominees and certain employees or
affiliates of Dillon by telephone, telegram, personal
solicitation, and live or prerecorded audio or video
presentations, for which no compensation will be paid to
such individuals. Banks, brokerage houses and other
custodians, nominees and fiduciaries will be requested to
forward the solicitation material to the customers for whom
they hold Shares, and Dillon will reimburse them for their
reasonable out-of-pocket expenses.
Dillon has retained Garland Associates, Inc. for
advisory, information agent and proxy solicitation
services, for which Garland Associates, Inc. will be paid a
fee of $4,000, and will be reimbursed for its expense
charges, which are anticipated to be approximately $2,500.
Dillon has also agreed to indemnify Garland Associates,
Inc. against certain liabilities and expenses in connection
with its engagement, including certain liabilities under
the federal securities laws. Garland Associates, Inc. will
solicit proxies from individuals, brokers, bank nominees
and other institutional holders. Approximately five
persons will be utilized by Garland Associates, Inc. in its
solicitation efforts, which may be made by telephone,
telegram, facsimile and in person.
Dillon estimates that total expenditures relating to
the Proxy Solicitation will be approximately $__________,
including fees payable to Garland Associates, Inc. directly
attributable to the Proxy Solicitation. To date, Dillon
has spent approximately $__________ of such total estimated
expenditures.
STOCKHOLDER PROPOSALS FOR 1995 ANNUAL MEETING
Any proposal of a stockholder to be presented at the 1995
Annual Meeting of Stockholders must be received in the
Office of the Secretary of the Company by the date
specified in the Company Proxy Statement in order to be
considered for inclusion in the Board's Proxy Statement and
form of proxy relating to that Meeting.
VOTING YOUR SHARES
Whether or not you plan to attend the Annual
Meeting, we urge you to vote FOR the election of the DILLON
NOMINEES (Proposal 1) and AGAINST the authorization of
additional Shares (Proposal 2) by so indicating on the
enclosed GREEN proxy card and immediately mailing it in the
enclosed envelope. You may do this even if you have
already sent in a different proxy solicited by the Board.
It is the latest dated proxy that counts. Execution and
delivery of a proxy by a record holder of Shares will be
presumed to be a proxy with respect to all Shares held by
such record holder unless the proxy specifies otherwise.
YOUR VOTE IS IMPORTANT.
PLEASE SIGN, DATE AND RETURN THE GREEN PROXY CARD TODAY.
IF YOU HAVE ALREADY SENT A PROXY CARD TO THE BOARD,
YOU MAY REVOKE THAT PROXY AND VOTE FOR THE ELECTION OF THE
DILLON NOMINEES AND AGAINST PROPOSAL 2 BY SIGNING, DATING
AND MAILING THE ENCLOSED GREEN PROXY CARD.
SCHEDULE I
PARTICIPANTS IN THE PROXY SOLICITATION
Set forth below is the name, business address and
present occupation or employment or business of the
"participants" in the Proxy Solicitation, other than the
Dillon Nominees. None of the participants has been
convicted in a criminal proceeding (excluding traffic
violations or similar misdemeanors) during the past ten
years.
Participant Business Address Description of Business or
Present Principal Occupation
Dillon Investors, L.P. Suite 1410
21 East State Street
Columbus, OH 43215-4228
A limited partnership,
of which Roderick H.
Dillon, Jr. is the sole
general partner,
principally engaged in
the purchase and sale of
securities for its own
account.
Roderick H.
Dillon, Jr. - IRA Suite 1410
21 East State Street
Columbus, OH 43215-4228
An individual retirement
account, of which
Roderick H. Dillon, Jr.
is the sole beneficiary.
Roderick H.
Dillon, Jr.
Foundation Suite 1410
21 East State Street
Columbus, OH 43215-4228
A charitable foundation,
of which Roderick H.
Dillon, Jr. is the sole
trustee.
Bradley C. Shoup - IRA Suite 560
4180 La Jolla Village Drive
La Jolla, CA 92037
An individual retirement
account, of which
Bradley C. Shoup is the
sole beneficiary.
SCHEDULE II
BENEFICIAL OWNERSHIP OF
COMPANY SHARES BY PARTICIPANTS IN THE SOLICITATION
On the date hereof, Dillon is the record holder of
647,000 Shares, and together with the other Dillon Entities
beneficially owns, directly or indirectly, an aggregate of
659,000 Shares, including the Shares held of record by
Dillon (representing in the aggregate approximately 9.88%
of the 6,669,924 Shares outstanding as of November 4, 1994,
according to the Company Preliminary Proxy Statement).(1)
Mr. Shoup, through an IRA for which he is the sole
beneficiary, beneficially owns 2,000 Shares (representing
approximately .03% of the outstanding Shares). Messrs.
Kelley, Whitworth and Spiegel do not own any Shares. The
Shares now owned by each "participant" in the Proxy
Solicitation were purchased in the transactions described
in Schedule IV hereto.
Except as otherwise set forth in this Schedule II,
none of Dillon, the Dillon Nominees or any associate of any
of the foregoing persons or any other person who may be
deemed a "participant" in the Proxy Solicitation is the
beneficial or record owner of any Shares. Except as
otherwise set forth in this Schedule II or in Schedule IV,
none of Dillon, the Dillon Nominees or any associate of any
of the foregoing persons or any other person who may be
deemed a "participant" in the Proxy Solicitation has
purchased or sold any Shares within the past two years,
borrowed any funds for the purpose of acquiring or holding
any Shares, or is or was within the past year a party to
any contract, arrangement or understanding with any person
with respect to any Shares. There is not any currently
proposed transaction to which the Company or any of its
subsidiaries was or is a party, in which any of Dillon, the
Dillon Nominees or any associate or immediate family member
of any of the foregoing persons or any other person who may
be deemed a "participant" in the Proxy Solicitation had or
will have a direct or indirect material interest. None of
Dillon, the Dillon Nominees or any associate or any of the
foregoing persons or any other person who may be deemed a
"participant" in the Proxy Solicitation has any arrangement
or understanding with any person with respect to any future
employment by the Company or its affiliates, or with
respect to any future transactions to which the Company or
its affiliates will or may be a party.
____________
(1) The 659,000 Shares include (i) 647,000 Shares held by Dillon, (ii) 5,000
Shares held by Roderick H. Dillon, Jr., (iii) 5,000 Shares held by
Roderick H. Dillon Jr.-IRA, and (iv) 2,000 Shares held by Roderick H. Dillon,
Jr. Foundation
____________
SCHEDULE III
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT AS A GROUP
The following table sets forth, based solely on the
Company Preliminary Proxy Statement, the security ownership
of certain persons, other than the participants in the
Proxy Solicitation, who have advised the Company that as of
November 4, 1994, each "beneficially" owned more than 5% of
the outstanding Shares, and the beneficial ownership of
Shares by all directors and officers of the Company as a
group as of November 4, 1994.
Amount and Nature
of Beneficial Percentage
Name and Address Ownership of Class
Craig Corporation
116 North Robertson Boulevard
Los Angeles, CA 90048 667,012 10.0%
All directors and
executive officers
as a group (5 persons) 667,012 10.0%
Except as otherwise noted, the information concerning
the Company contained in this Proxy Statement has been
taken from or is based upon documents and records on file
with the Commission and other publicly available
information. Although Dillon does not have any knowledge
that would indicate that any statements contained herein
based upon such documents and records are untrue, Dillon
does not take any responsibility for the accuracy or
completeness of the information contained in such documents
and records, or for any failure by the Company to disclose
events that may have occurred and may affect the
significance or accuracy of any such information but which
are unknown to Dillon.
SCHEDULE IV
TRANSACTIONS IN SHARES OF CITADEL HOLDING CORPORATION
BY PARTICIPANTS IN THE SOLICITATION
Purchases since November ___, 1992 were made as shown below.
All transactions were effected in open market transactions and,
unless otherwise indicated, entered into by Dillon.
Transaction Number of Shares Price Per Share(1) Total Price
Date
03/17/93(2) 5,000 $20.22 $101,104
03/17/93(3) 1,000 20.22 20,224
05/04/93(4) 5,000 12.72 63,604
05/04/93(5) 1,000 12.72 12,724
01/27/94 27,500 6.27 172,299
01/28/94 75,000 7.05 528,775
02/04/94 10,000 6.43 64,275
02/04/94 75,000 6.55 491,275
02/04/94 8,000 6.55 52,425
02/07/94 7,500 6.31 47,350
02/08/94 7,500 6.19 46,412
02/09/94 10,000 6.30 63,025
02/09/94 200 6.43 1,285
02/15/94 700 6.34 4,435
02/16/94 5,800 6.44 37,348
02/22/94 20,800 6.38 132,789
02/23/94 10,000 6.55 65,525
02/24/94 11,200 6.18 69,185
02/25/94 15,000 6.18 92,650
03/02/94 1,200 5.95 7,135
03/04/94 28,000 6.05 169,425
03/08/94 30,000 5.80 174,025
03/14/94 55,100 5.00 275,729
03/16/94 248,500 4.54 1,128,215
04/22/94(6) 2,000 6.07 12,140
TOTALS: 661,000 $3,833,378
___________
(1) Rounded to the nearest cent.
(2) Purchased by Roderick H. Dillon, Jr. - IRA.
(3) Purchased b Roderick H. Dillon, Jr. Foundation
(4) Purchased by Roderick H. Dillon, Jr.
(5) Purchased by Roderick H. Dillon, Jr. Foundation
(6) Purchased by Bradley C. Shoup - IRA.
________________
If your Shares are held in the name of a brokerage
firm, bank or bank nominee, only they can vote your Shares
and only upon your specific instructions. Accordingly,
please contact the persons responsible for your account and
instruct them to execute the GREEN proxy card.
____________________________________________________
WE URGE YOU TO VOTE FOR THE ELECTION OF THE DILLON
NOMINEES AND AGAINST
PROPOSAL 2 BY SIGNING, DATING AND MAILING THE ENCLOSED
GREEN PROXY CARD.
THE FAILURE TO DO SO MAY BE THE EQUIVALENT OF A VOTE
AGAINST MAXIMIZING
STOCKHOLDER VALUE.
____________________________________________________
If you have any questions or require any additional
information concerning the vote of your Shares at the
Annual Meeting, please contact:
Garland Associates, Inc.
PROXY SOLICITORS
________
(212) 866-0095
- ------------------ COMPARISON OF FOOTNOTES ------------------
- -FOOTNOTE 1-
The Office of Thrift Supervision (the "OTS") approval for Craig to purchase in excess of 10% of the
outstanding Shares was scheduled to expire on October 23, 1994; thus, the issuance of such Shares, at
what Dillon believes to be depressed market prices, ^ enabled Craig to buy additional Shares in the future
without regulatory delay. Craig had stated in Amendment No. 13 to its Schedule 13D filed with the
Commission on October 26, 1994 that it would have been unwilling to file an agreement with the OTS to
avoid such delay because such an agreement "would have substantially limited Craig's ability to exercise
an influence over the business and affairs of" the Company.
- -FOOTNOTE 1 2-
The Form 10-Q states that with "active management and certain capital expenditures, the Company's
owned properties "if sold on an individual basis, could be worth more than [the Company] purchased them
for in connection with the Restructuring and Recapitalization, but there can be no assurance on this point."
In addition, the Form 10-Q states that the value of the options could be "up to $3 million above the exercise
price of [the options], before costs the Company would incur in connection with the exercise, which may
be significant." The terms of the options indicate that they are transferable prior to exercise.
- -FOOTNOTE 1-
The 659,000 Shares include (i) 647,000 Shares held by Dillon, (ii) 5,000 Shares held by Roderick H. Dillon,
Jr., (iii) 5,000 Shares held by Roderick H. Dillon Jr. - IRA, and (iv) 2,000 Shares held by Roderick H. Dillon,
Jr. Foundation.
- -FOOTNOTE 1-
Except as otherwise indicated, the persons listed as beneficial owners of the Shares have the sole voting
and investment power with respect to such Shares.
- -FOOTNOTE 2-
Does not include the 1,329,114 shares of newly authorized 3% Cumulative Voting Convertible Preferred Stock
issued by the Company to Craig on November 10, 1994, which shares are immediately convertible into
Shares.
- -FOOTNOTE 1-
Rounded to the nearest cent.
- -FOOTNOTE 2-
Purchased by Roderick H. Dillon, Jr. - IRA.
- -FOOTNOTE 3-
Purchased by Roderick H. Dillon, Jr. Foundation.
- -FOOTNOTE 4-
Purchased by Roderick H. Dillon, Jr.
- -FOOTNOTE 5-
Purchased by Roderick H. Dillon, Jr. Foundation.
- -FOOTNOTE 6-
Purchased by Bradley C. Shoup - IRA.
DILLON INVESTORS, L.P.
Notice of Annual Meeting of Stockholders
of
CITADEL HOLDING CORPORATION
Dear Stockholders:
The 1994 Annual Meeting of Stockholders (the "Annual
Meeting") of Citadel Holding Corporation, a Delaware corporation
(the "Company"), has been scheduled by the Company to be held at
the Four Seasons Hotel, 300 South Doheny Drive, Beverly Hills,
California on December 12, 1994, at 10:00 a.m. local time, subject
to adjournment or postponement by the Board of Directors, for the
following purposes:
1. To elect five persons to the Board of Directors to
serve until the 1995 annual meeting of stockholders and until their
successors are duly elected and qualified;
2. To act upon the proposal to amend the Company's
Restated Certificate of Incorporation to increase the number of
authorized shares of common stock, par value $.01 per share (the
"Shares"), of the Company from 10,000,000 to 20,000,000; and
3. To transact such other business as may properly come
before the Annual Meeting or any or all adjournments or
postponements thereof.
Only holders of record of the Shares on November 14, 1994
will be entitled to notice of, and to vote at, the Annual Meeting
and any adjournment or postponement thereof.
Your vote or proxy in connection with the Annual Meeting
is extremely critical. Examine the issues! Make your choice! And
please vote! Remember, the GREEN proxy card is a vote for our
nominees.
Very truly yours,
DILLON INVESTORS, L.P.
_________________________
All stockholders are cordially invited to attend the
Annual Meeting. Whether or not you plan to attend in person, you
are urged to date and sign the enclosed GREEN proxy card and return
it promptly in the envelope provided. This will assure your
representation and a quorum for the transaction of business at the
Annual Meeting. If you do attend the Annual Meeting in person, the
proxy will not be used if so requested by you.
_________________________
THE PROXY BEARING THE DATE MOST IMMEDIATELY PRECEDING THE
ANNUAL MEETING WILL BE THE PROXY ENTITLED TO VOTE. ANY PROXY WHICH
YOU GIVE REVOKES ALL EARLIER DATED PROXIES. IF YOU HAVE ALREADY
GIVEN YOUR PROXY, ALL YOU NEED TO DO IS EXECUTE AND CURRENTLY DATE
THE ENCLOSED PROXY AND THAT WILL REVOKE ANY PRIOR PROXIES.
_________________________
Please read the enclosures. This election is critical
and the consequences directly affect you as a stockholder of the
Company. Be sure to vote. Vote the GREEN proxy card!
PRELIMINARY COPY
[front of proxy card]
PROXY - Citadel Holding Corporation - Solicited by Dillon Investors, L.P.
for Annual Meeting December 12, 1994
The undersigned, revoking all other proxies heretofore given, appoints
Roderick H. Dillon, Jr. and Bradley C. Shoup, and each of them, with full
power of substitution, as proxy or proxies, to vote all shares of the
undersigned of Common Stock of Citadel Holding Corporation at the Annual
Meeting of Stockholders on December 12, 1994, and at any adjournment or
postponement thereof, as instructed below upon the proposals which are
more fully set forth in the Proxy Statement of Dillon Investors, L.P., dated
November ____, 1994 (receipt of which is acknowledged) and in their
discretion upon any other matters as may properly come before
the meeting, including but not limited to, any proposal to adjourn or
postpone the meeting.
Dillon Investors, L.P. Recommends a Vote FOR all Nominees listed and AGAINST
Proposal 2
1. ELECTION OF DIRECTORS:___ FOR all nominees listed below
(except as marked to the
contrary below)
___ WITHHOLD AUTHORITY to vote for all nominees listed below
Roderick H. Dillon, Jr., Bradley C. Shoup, Timothy M. Kelley, Ralph V.
Whitworth and Jordan M. Spiegel
(INSTRUCTION: To vote for all nominees listed here, mark the "FOR" line above;
to withhold authority for all nominees listed here,
mark the "WITHHOLD AUTHORITY" line above; and to withhold authority to
vote for any individual nominee listed here, mark the
"FOR" line above and write the nominee's name in the space below):
2. AMENDMENT OF RESTATED CERTIFICATE OF INCORPORATION: FOR ___
AGAINST ___ ABSTAIN ___
(Continued on reverse side)
[REVERSE OF PROXY CARD]
The shares represented hereby will be voted in accordance with the
directions given in this proxy. If not otherwise directed
herein, shares represented by this proxy will be voted FOR Proposal 1
and AGAINST Proposal 2.
Dated: , 1994
(Signature)
(Signature if jointly held)
Title:
Please sign exactly as name appears herein.
When shares are held by joint tenants, both
should sign; when signing as an attorney,
executor, administrator, trustee or guardian,
give full title as such. If a corporation, sign
in full corporate name by President or other
authorized officer. If a partnership, sign
in partnership name by authorized partner.
PLEASE SIGN, DATE AND MAIL PROMPTLY IN THE POSTAGE-PAID ENVELOPE
ENCLOSED.