SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. )
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).
[X] $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:
________________________________________________
DILLON INVESTORS, L.P.
__________
CONSENT SOLICITATION STATEMENT
___________
Solicitation of Consents to Remove and Replace Directors,
and Amend By-Laws, of
CITADEL HOLDING CORPORATION
To the Stockholders of Citadel Holding Corporation:
INTRODUCTION
This Consent Solicitation Statement is being furnished to
the holders of common stock, par value $.01 per share (the
"Shares"), of Citadel Holding Corporation, a Delaware
corporation (the "Company"), by Dillon Investors, L.P., a
Delaware limited partnership ("Dillon"), in connection with
the solicitation by Dillon of written consents (the "Consent
Solicitation") to its proposals (the "Dillon Resolutions")
to (i) remove all the incumbent directors of the Company,
(ii) elect to the Board of Directors of the Company (the
"Board") the nominees of Dillon named herein (the "Dillon
Nominees") and (iii) amend the Company's By-Laws in the
manner provided herein to restrict the indemnification of (or
the advancement of expenses to) its officers, directors,
employees and agents, all without a stockholders' meeting,
as permitted by Delaware law. Such proposed corporate
actions may be adopted by the consent of the holders of a
majority of the Shares outstanding on the Consent Record Date
(which, pursuant to Delaware law, has been established as
November 7, 1994 and is hereinafter defined under "CONSENT
PROCEDURE").
According to 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, the Company's Annual Meeting of
Stockholders (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.
Dillon urges you to ignore the request of the Company's
management for your proxy in connection with the Annual
Meeting. Instead, Dillon urges you to sign and return the
enclosed GOLD consent card.
This Consent Solicitation Statement and the enclosed GOLD
consent card are first being furnished on or about
November __, 1994 to the holders of record of outstanding
Shares on the Consent Record Date.
Because a consent to corporate action is effective only if
expressed by holders of record of a majority of the total
number of Shares outstanding, the failure to execute a GOLD
consent card has the same effect as withholding consent for
the Dillon Resolutions discussed herein and may result in the
continuation of the existing Board and the operation of the
Company in a way which, Dillon believes, is contrary to
maximizing stockholder value.
Roderick H. Dillon, Jr. [, together with Dillon, Roderick
H. Dillon, Jr. - IRA and Roderick H. Dillon, Jr. Foundation
(collectively, the "Dillon Entities"), have already consented
to adoption of the Dillon Resolutions with respect to all
659,000 Shares which they beneficially own.] Based on the
6,669,924 Shares reported as outstanding as of November 4,
1994 in the Company Preliminary Proxy Statement, the Dillon
Entities hold approximately 9.88% of the outstanding Shares
as of such date.
BACKGROUND OF THE CONSENT 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 DILLON'S NOMINEES"), the Dillon
Entities began to consider seeking a greater voice in the
Company's affairs.
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.
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 the Consent Solicitation.
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.
Dillon believes that you, the true owners of the Company,
should have the right to decide for yourselves how the
Company should be operated. As a result, Dillon believes the
Consent Solicitation is necessary in order to permit the
stockholders of the Company prior to such improper issuance
of New Preferred Stock to Craig to exercise their franchise
without the dilution in their voting power caused by such
issuance. In the Consent Solicitation, Dillon is seeking
your consent to (i) remove all the incumbent directors of the
Company, (ii) elect to the Board the Dillon Nominees
(described below) and (iii) amend the Company's By-Laws in
the manner provided herein to restrict the indemnification
of (or the advancement of expenses to) its officers,
directors, employees and agents. See "THE DILLON
RESOLUTIONS."
The Distribution, the Real Estate Sales and the Dissolution
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.
Proxy Solicitation and Consent Solicitation
As a means to facilitate the consummation of the
Distribution, the Real Estate Sales and the Dissolution,
Dillon is soliciting proxies from stockholders of the Company
(the "Proxy Solicitation") to elect the Dillon Nominees to
the Board at the Annual Meeting which will be held December
12, 1994. On November __, 1994, Dillon previously furnished
holders of record on November 14, 1994 with a proxy statement
relating to such Proxy Solicitation which, in addition to
soliciting votes for election of the Dillon Nominees,
solicits votes against adoption of an amendment to the
Company's Restated Certificate of Incorporation which would
double the number of authorized Shares from 10,000,000 to
20,000,000.
Dillon believes that the Consent Solicitation is also
necessary to facilitate the consummation of the Distribution,
the Real Estate Sales and the Dissolution, based on 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, CARE
OF GARLAND ASSOCIATES, INC., THE ENCLOSED GOLD CONSENT CARD
TO "CONSENT" TO THE REMOVAL OF THE ENTIRE BOARD OF THE
COMPANY, THE ELECTION OF THE DILLON NOMINEES TO THE BOARD OF
THE COMPANY AND THE AMENDMENT OF THE COMPANY'S BY-LAWS.
REASONS TO REPLACE THE PRESENT BOARD WITH DILLON'S 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, who also
serves as the Company's Chairman and Craig's 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, 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 consent to the Dillon
Resolutions. 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 GOLD CONSENT CARD FOR THE REMOVAL OF THE
INCUMBENT DIRECTORS OF THE COMPANY, THE ELECTION OF THE
DILLON NOMINEES TO THE BOARD AND THE AMENDMENT OF THE
COMPANY'S BY-LAWS.
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").
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 as a savings and loan
holding company 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 Consent Solicitation and/or 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.
THE DILLON RESOLUTIONS
Proposal 1: Removal of the Incumbent Directors of the
Company
In order to facilitate a change in the Company's management
at the earliest practicable time, Dillon proposes that the
incumbent members of the Board, currently consisting of James
J. Cotter, Steve Wesson, Peter W. Geiger, S. Craig Tompkins
and Alfred Villasenor, Jr., be removed from office and be
replaced by the Dillon Nominees. Accordingly, Dillon
recommends that you consent to the removal of all incumbent
directors of the Board, including any person elected or
appointed to the Board to fill any vacancies created by
resignation or incapacity, or newly-created positions on the
Board. The resolution proposed by Dillon for adoption by
consent of the Company's stockholders with respect to the
removal of the incumbent directors of the Company is set
forth below ("Resolution Number One") and is referred to in
the GOLD consent card which accompanies this Consent
Solicitation Statement.
Resolution Number One submitted for stockholder
consideration is as follows:
"RESOLVED, that the entire Board of Directors
of Citadel Holding Corporation, consisting of
James J. Cotter, Steve Wesson, Peter W.
Geiger, S. Craig Tompkins and Alfred
Villasenor, Jr. (collectively, the
"Directors"), or any person or persons elected
or nominated by any or all of the Directors to
fill any position on the Board, including any
vacancy created by the resignation or
incapacity of any of said persons, by any
increase in the number of directors, or
otherwise, is hereby removed, and the office
of each member of the Board of Directors is
hereby declared vacant."
DILLON RECOMMENDS THAT YOU "CONSENT" TO THE REMOVAL OF THE
ENTIRE BOARD OF DIRECTORS OF THE COMPANY.
Proposal 2: Election of the Dillon Nominees
In addition, Dillon recommends that you consent to the
election of Roderick H. Dillon, Jr., Bradley C. Shoup, Ralph
V. Whitworth, Jordan M. Spiegel and Timothy M. Kelley
(collectively, the "Dillon Nominees"), to fill the vacancies
created by the removal of the incumbent directors. The
resolution proposed by Dillon for adoption by consent of the
Company's stockholders with respect to the election of the
Dillon Nominees is set forth below ("Resolution Number Two")
and is referred to in the GOLD consent card which accompanies
this Consent Solicitation Statement.
Resolution Number Two submitted for stockholder
consideration is as follows:
"RESOLVED, that the following persons are
hereby elected as directors of Citadel Holding
Corporation to fill the vacancies on the Board
of Directors, to serve until their respective
successors are duly elected and qualified:
Roderick H. Dillon, Jr., Bradley C. Shoup, Ralph
V.
Whitworth, Jordan M. Spiegel and Timothy M.
Kelley."
The Dillon Nominees
Each of the Dillon Nominees has consented to serve as a
director of the Company, if elected through either the
Consent Solicitation or the Proxy Solicitation. 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.
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 the Proxy
Solicitation, the Consent 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 RECOMMENDS THAT YOU "CONSENT" TO THE ELECTION OF THE
DILLON NOMINEES TO THE BOARD OF DIRECTORS OF THE COMPANY.
Proposal 3: Amendment of the Company's By-Laws
In order to ensure that the incumbent directors of the
Company are acting to maximize stockholder value in
accordance with the wishes of the Company's unaffiliated
stockholders and that the Company's resources are not
depleted absent stockholder approval, Dillon proposes that
the Company's By-Laws be amended to restrict the
indemnification of (or the advancement of expenses to) the
Company's officers, directors, employees and agents without
the prior approval of the holders of a majority of the
outstanding Shares. In addition, Dillon proposes that the
Company's By-Laws provide that such amendment may not be
further amended without the approval of either the holders
of a majority of the outstanding Shares or a majority of the
Board of Directors of the Company who are not "Continuing
Directors." Continuing Directors are defined for purposes
of such amendment as (i) each member of the Board on November
4, 1994 and (ii) any member of the Board 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. Such amendment is designed to inhibit the
incumbent officers, directors, employees and agents from
engaging in defensive strategies which may preclude the
Company's stockholders from considering the Dillon
Resolutions on their merits or dilute the voting power of
such stockholders with respect thereto. Dillon believes that
any such improper defensive strategy should be at the cost
and peril of the incumbent officers, directors, employees and
agents and not of the Company and you, its owners.
Accordingly, Dillon recommends that you consent to the
amendment of the Company's By-Laws in the manner provided
herein. The resolution proposed by Dillon for adoption by
consent of the Company's stockholders with respect to the
amendment of the Company's By-Laws is set forth below
("Resolution Number Three," and together with Resolution
Number One and Resolution Number Two, collectively the
"Dillon Resolutions") and is referred to in the GOLD consent
card which accompanies this Consent Solicitation Statement.
Resolution Number Three submitted for stockholder
consideration is as follows:
"RESOLVED, that the By-Laws of Citadel Holding
Corporation be amended to provide that as of
November 4, 1994 the By-Laws shall not permit
indemnification of (or allow advancement of
expenses to) its officers, directors,
employees and agents without the prior
approval of the holders of a majority of the
Common Stock outstanding. This amendment to
the 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
Corporation who are not "Continuing
Directors." Continuing Directors shall be
defined as (i) each member of the Board of
Directors of Citadel Holding Corporation on
November 4, 1994 and (ii) any member of the
Board of Directors of Citadel Holding
Corporation 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."
DILLON RECOMMENDS THAT YOU "CONSENT" TO THE AMENDMENT OF
THE COMPANY'S BY-LAWS.
CONSENT PROCEDURE
Delaware Law and Corporate Authorization
Section 228 of the DGCL states that, unless otherwise
provided in the certificate of incorporation, any action
which may be taken at any annual or special meeting of
stockholders of a corporation may be taken without a meeting,
without prior notice and without a vote, if consents in
writing setting forth the action so taken are signed by the
holders of outstanding stock having not less than the minimum
number of votes that would be necessary to authorize or take
such action at a meeting at which all shares entitled to vote
thereon were present and voted, and those consents are
delivered to such corporation by delivery to its registered
agent in Delaware, its principal place of business or an
officer or agent of such corporation having custody of the
book in which proceedings of meetings of stockholders thereof
are recorded. The Restated Certificate of Incorporation of
the Company does not limit the applicability of Section 228.
Accordingly, pursuant to Section 11 of Article II of the
Company's By-Laws, the incumbent directors of the Company may
be removed and the Dillon Nominees elected in their stead by
the consent in writing to such actions, signed and delivered
as set forth in Section 228 of the DGCL, of the holders of
a majority of the outstanding Shares as of the Consent Record
Date.
Pursuant to the DGCL, consents to corporate action are
valid for a maximum of sixty (60) days after the date of the
earliest dated consent delivered to the Company in the manner
provided in Section 228 of the DGCL. It is, therefore,
important that you sign and date the GOLD consent card and
return it in the postage-prepaid envelope provided as soon
as possible. To be effective, the GOLD consent card must
bear the date of signature of the stockholder who signs such
GOLD consent card. Under Delaware law, only stockholders of
record on the Consent Record Date (as defined below) are
eligible to give their consent to the Dillon Resolutions.
Persons owning Shares "beneficially" (i.e., deriving the
economic benefits of ownership thereto or having the power
to vote or dispose of Shares), but not "of record" (i.e.,
those holders whose names are recorded on the stock transfer
records of the Company), such as persons whose ownership of
Shares is through a broker, bank or other financial
institution, should contact such broker, bank or financial
institution and instruct such person or entity to execute the
GOLD consent card on their behalf or have such broker, bank
or financial institution's nominee (for example, a central
security depository) execute and mail such GOLD consent card.
Consent Record Date
To the knowledge of Dillon, the Board has not set a record
date for this Consent Solicitation. Pursuant to the DGCL,
if a record date related to such a consent solicitation has
not been set by the Company, the record date for determining
the stockholders entitled to consent to corporate action in
writing, without a meeting, will be the first date on which
a signed, written consent setting forth the action taken or
proposed to be taken is delivered to a corporation by
delivery to its registered office in Delaware, its principal
place of business, or an agent or officer of such corporation
having custody of the book in which proceedings of meetings
of stockholders are recorded. On November 7, 1994, Roderick
H. Dillon, Jr. delivered his written consent to the Company,
dated such date, consenting to the removal of the current
members of the Board, the election of the Dillon Nominees and
the amendment of the Company's By-Laws, thus establishing the
statutory consent record date (the "Consent Record Date").
Therefore, the enclosed GOLD consent card may be executed
only by stockholders of record on November 7, 1994. Each
record holder of Shares on the Consent Record Date is
entitled to execute a consent representing such Shares. The
Company's Restated Certificate of Incorporation does not
provide for cumulative voting.
Duration of Consent
Pursuant to Section 228 of the DGCL, the written consent
of stockholders will not be effective to remove the incumbent
directors, elect the Dillon Nominees and amend the Company's
By-Laws unless valid, unrevoked GOLD consent cards executed
by the holders of a majority of the outstanding Shares on the
Consent Record Date are delivered to the Company on or before
January 6, 1995 (sixty (60) days from the date of the
earliest dated consent delivered to the Company).
The proposed actions may be taken at any time on or prior
to January 6, 1995, upon proper delivery to the Company of
unrevoked GOLD consent cards representing a majority of the
outstanding Shares on the Consent Record Date. Such delivery
may take place at Dillon's election, based upon circumstances
then existing, either prior or subsequent to the Annual
Meeting. If the actions consented to become effective,
prompt notice of the corporate action taken by written
consent will be given, as required under Delaware law, to the
stockholders who have not consented.
Consent Required
The unrevoked, signed GOLD consent cards of the record
holders, as of the Consent Record Date, of a majority of the
outstanding Shares are necessary for the adoption of each of
the Dillon Resolutions. Each record holder of Shares on the
Consent Record Date is entitled to execute a GOLD consent
card representing the Shares held by the record holder on
such date.
As disclosed in the Company Preliminary Proxy Statement,
as of November 4, 1994, there were 6,669,924 Shares
outstanding and eligible to consent. Dillon is not aware of
any change in the number of outstanding Shares between such
date and the Consent Record Date.
The enclosed GOLD consent card provides a means for a
stockholder to consent, withhold consent or abstain with
respect to each of the Dillon Resolutions, subject to the
right of each stockholder to withhold his or her consent to
the election of any of the Dillon Nominees. A stockholder
in favor of the Dillon Resolutions should mark the "FOR"
boxes on the enclosed GOLD consent card, date and sign the
GOLD consent card and mail it to Dillon's consent
solicitation agent (Garland Associates, Inc.) in the
enclosed, postage-prepaid envelope. A stockholder consenting
to the proposed actions may withhold his or her consent to
the election of any particular Dillon Nominee by writing the
name(s) of each Dillon Nominee(s), to the election of whom
the stockholder does not consent, in the applicable
"EXCEPTION" space provided on the enclosed GOLD consent card.
If a consent card is executed but no indication is made as
to what action is to be taken with respect to any Dillon
Resolution, it will be deemed to constitute a "CONSENT" to
such Dillon Resolution.
NO MATTER HOW MANY SHARES YOU OWN, YOUR CONSENT IS VERY
IMPORTANT. PLEASE SIGN AND DATE THE GOLD CONSENT CARD AND
PROMPTLY RETURN IT IN THE ENCLOSED ENVELOPE.
IF THE COMPANY CHOOSES TO OPPOSE DILLON'S CONSENT
SOLICITATION AND IF, IN SUCH INSTANCE, YOU SIGN A CONSENT
REVOCATION CARD SENT TO YOU BY THE BOARD, YOU MAY OVERRIDE
THAT REVOCATION BY SIGNING, DATING AND RETURNING A
SUBSEQUENTLY DATED AND SIGNED GOLD CONSENT CARD.
EXECUTION OF A GOLD CONSENT CARD WILL NOT CONSTITUTE A VOTE
IN FAVOR OF THE DILLON NOMINEES AT THE ANNUAL MEETING. TO
VOTE FOR THE ELECTION OF THE DILLON NOMINEES AND AGAINST THE
COMPANY'S PROPOSAL TO AUTHORIZE ADDITIONAL SHARES OF COMMON
STOCK AT THE ANNUAL MEETING, YOU MUST ALSO EXECUTE A GREEN
PROXY CARD IN ACCORDANCE WITH THE DILLON PROXY STATEMENT
PREVIOUSLY FURNISHED TO YOU.
Revocation of Consent
Section 228 of the DGCL provides that a consent executed
and delivered by a stockholder may subsequently be revoked
by written notice of revocation to a corporation or to the
stockholder or stockholders soliciting consents (in this
case, Dillon) or soliciting revocations in opposition to
action by consent, or to the solicitor or other agent
soliciting consents (in this case, Garland Associates, Inc.)
or soliciting revocations in opposition to action by consent.
A revocation may be in any written form validly signed by the
record holder as long as it clearly states that such holder's
consent previously given is no longer effective. To prevent
confusion, the notice of revocation must be dated. To be
effective, a stockholder's written notice of revocation of
his or her previously executed and delivered consent must be
delivered prior to the time that the signed unrevoked GOLD
consent cards representing consent to the Dillon Resolutions
by the holders of a majority of the outstanding Shares on the
Consent Record Date have been delivered to the Company as set
forth above. The revocation may be delivered to either
Dillon, care of Garland Associates, Inc. at its address set
forth on the back cover page of this Consent Solicitation
Statement, or any other address provided by the Company.
Dillon requests that, if a revocation is delivered to the
Company, a photostatic or other legible copy of the
revocation also be delivered to Dillon, care of Garland
Associates, Inc. at its address set forth on the back cover
page of this Consent Solicitation Statement. In this manner,
Dillon will be aware of all revocations and can more
accurately determine if and when the Dillon Resolutions
described herein have received the required approval.
A proxy given to the Company in connection with the Annual
Meeting will not revoke a GOLD consent card given to Dillon.
However, Dillon asks each stockholder to ignore the proxy
solicitations of the Company in connection with the Annual
Meeting and furnish to Dillon the enclosed GOLD consent card
approving each of the Dillon Resolutions.
If a stockholder signs, dates and delivers a GOLD consent
card to Dillon and thereafter, on one or more occasions,
dates, signs and delivers a later-dated GOLD consent card,
the latest-dated GOLD consent card is controlling as to the
instructions indicated therein and supersedes such
stockholder's prior consent or consents as embodied in any
previously submitted GOLD consent cards; provided, however,
that any such later-dated GOLD consent card will be
inoperative and of no effect if it is delivered after January
6, 1995 (when the Consent Solicitation period expires) or
such earlier date as GOLD consent cards representing consents
to the Dillon Resolutions by the holders of a majority of the
outstanding Shares on the Consent Record Date are delivered
to the Company. See "Duration of Consent" above.
CONSENT SOLICITATION EXPENSES AND PROCEDURES
The entire expense of preparing, assembling, printing and
mailing this Consent Solicitation Statement and the
accompanying form of consent, and the cost of soliciting
consents, 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, consents 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 consent 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 consents 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
solicitation will be approximately $__________, including
fees payable to Garland Associates, Inc. directly
attributable to the Consent Solicitation. To date, Dillon
has spent approximately $__________ of such total estimated
expenditures.
SCHEDULE I
PARTICIPANTS IN THE CONSENT SOLICITATION
Set forth below is the name, business address and present
occupation or employment or business of the "participants"
in the Consent 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 CONSENT 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). 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 Consent 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 Consent 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 Consent 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
Consent Solicitation had or will have a direct or indirect
material interest. 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 Consent
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.
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 Consent
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 Consent Solicitation 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 Per Share
Date of Shares Price (1)
Total Price
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 by 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 consent with respect to
your Shares and only upon your specific instructions.
Accordingly, please contact the persons responsible for your
account and instruct them to execute the GOLD consent card
on your behalf.
WE URGE YOU TO CONSENT TO THE REMOVAL OF THE ENTIRE
BOARD, THE ELECTION OF THE DILLON NOMINEES AND THE
AMENDMENT OF THE COMPANY'S BY-LAWS BY SIGNING, DATING AND
MAILING THE ENCLOSED GOLD CONSENT 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 this Consent Solicitation Statement,
please contact:
Garland Associates, Inc.
PROXY SOLICITORS
________
(212) 866-0095
PRELIMINARY COPY - NOVEMBER 15, 1994
CONSENT IN LIEU OF MEETING
OF THE STOCKHOLDERS OF
CITADEL HOLDING CORPORATION
THIS CONSENT IS SOLICITED BY DILLON INVESTORS, L.P.
The following resolutions are approved and adopted by
the stockholders who have signed this Consent, or a
counterpart hereof (this Consent and all counterparts being
hereby deemed to constitute a single Consent), without a
meeting, pursuant to Section 228 of the Delaware General
Corporation Law. The resolutions set forth herein shall be
effective when unrevoked Consents, or counterparts thereof,
have been executed and delivered by or on behalf of the
stockholders holding of record on November 7, 1994 a majority
of the outstanding shares of Common Stock of Citadel Holding
Corporation. This Consent is effective only through January
6, 1995.
RESOLUTION NUMBER ONE: Removal of Citadel Holding
Corporation's existing Board of Directors.
RESOLVED, that the entire Board of Directors of
Citadel Holding Corporation, consisting of James J. Cotter,
Steve Wesson, Peter W. Geiger, S. Craig Tompkins and Alfred
Villasenor, Jr. (collectively, the "Directors"), or any
person or persons elected or nominated by any or all of the
Directors to fill any position on the Board, including any
vacancy created by the resignation or incapacity of any of
said persons, by any increase in the number of directors, or
otherwise, is hereby removed, and the office of each member
of the Board of Directors is hereby declared vacant.
__ FOR __ AGAINST __ ABSTAIN
RESOLUTION NUMBER TWO: Election of a new Board of Directors
of Citadel Holding Corporation.
RESOLVED, that the following persons are hereby
elected as directors of Citadel Holding Corporation to fill
the vacancies on the Board of Directors, to serve until their
respective successors are duly elected and qualified:
Roderick H. Dillon, Jr., Bradley C. Shoup, Ralph V.
Whitworth, Jordan M. Spiegel and Timothy M. Kelley.
__ FOR all nominees __ AGAINST __ ABSTAIN
listed above (except as
marked to the contrary all nominees listed
below above
(INSTRUCTIONS: To consent for the election of all nominees listed here,
mark the "FOR" box above; to withhold consent as to the election of
all nominees listed here, mark the "AGAINST" box above; and
to withhold consent as to the election of any individual nominee
listed here, mark the "FOR" box above and write the
nominee's name in the space below):
RESOLUTION NUMBER THREE: Amendment of By-Laws.
RESOLVED, that the By-Laws of Citadel Holding
Corporation be amended to provide that as of November 4, 1994
the By-Laws shall not permit indemnification of (or allow
advancement of expenses to) its officers, directors,
employees and agents without the prior approval of the
holders of a majority of the Common Stock outstanding. This
amendment to the 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 Corporation who are not "Continuing
Directors." Continuing Directors shall be defined as (i)
each member of the Board of Directors of Citadel Holding
Corporation on November 4, 1994 and (ii) any member of the
Board of Directors of Citadel Holding Corporation 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.
__ FOR __ AGAINST __ ABSTAIN
Unless otherwise indicated, a validly executed and dated
consent will be deemed to constitute a "CONSENT" to the
Resolutions, namely, the removal of all incumbent directors
of Citadel Holding Corporation, the election of all the
Dillon nominees and the amendment of the By-Laws of Citadel
Holding Corporation as described above.
Dated:
, 1994
(Signature)
Signature if jointly held
Title:
Please sign exactly as name appears
hereon. 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 person.
PLEASE SIGN, DATE AND MAIL PROMPTLY IN THE POSTAGE-PAID ENVELOPE ENCLOSED.