UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 5)*
Citadel Holding Corporation
________________________________________________________________________
(Name of Issuer)
Common Stock, No Par Value
________________________________________________________________________
(Title of Class of Securities)
172862104
________________________________________________________________________
(CUSIP Number)
Randall J. Demyan,
Dillon Capital Management,
21 East State Street, Suite 1410
Columbus, Ohio 43215
(614) 222-4204
_________________________________________________________________________
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
November 16, 1994
_________________________________________________________________________
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition which is the subject of this Schedule 13D, and is
filing this schedule because of Rule 13d-1(b)(3) or (4), check the
following box.
_______
_______
Check the following box if a fee is being paid with the statement .
(A fee is not required only if the reporting person: (1) has a previous
statement on file reporting beneficial ownership of more than five percent
of the class of securities described in Item 1; and (2) has filed no
amendment subsequent thereto reporting beneficial ownership of five percent
or less of such class.) (See Rule 13d-7.)
Note: Six copies of this statement, including all exhibits, should be filed
with the Commission. See Rule 13d-1(a) for other parties to whom copies are
to be sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities,
and for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities
Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of
that section of the Act but shall be subject to all other provisions of
the Act (however, see the Notes).
Page 1 of 47 Pages
SCHEDULE 13D
CUSIP NO. 172862104 Page 2 of 47 Pages
1. NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON:
Dillon Investors, L.P.
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*:
a. ___X___ b. _______
3. SEC USE ONLY:
4. SOURCE OF FUNDS*:
WC
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e):
_______
6. CITIZENSHIP OR PLACE OF ORGANIZATION:
Delaware
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH:
7. SOLE VOTING POWER: 647,000
8. SHARED VOTING POWER: None
9. SOLE DISPOSITIVE POWER: 647,000
10. SHARED DISPOSITIVE POWER: None
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON:
647,000
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES*:
_______
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11):
9.70%
14. TYPE OF REPORTING PERSON*:
PN
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
SCHEDULE 13D
CUSIP NO. 172862104 Page 3 of 47 Pages
1. NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON:
Roderick H. Dillon, Jr.
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*:
a. ___X___ b. _______
3. SEC USE ONLY:
4. SOURCE OF FUNDS*:
PF
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e):
_______
6. CITIZENSHIP OR PLACE OF ORGANIZATION:
U.S.A.
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH:
7. SOLE VOTING POWER: 5,000
8. SHARED VOTING POWER: None
9. SOLE DISPOSITIVE POWER: 5,000
10. SHARED DISPOSITIVE POWER:None
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON:
5,000
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES*:
_______
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11):
.075%
14. TYPE OF REPORTING PERSON*:
IN
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
SCHEDULE 13D
CUSIP NO. 172862104 Page 4 of 47 Pages
1. NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON:
Roderick H. Dillon, Jr. - IRA
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*:
a. ___X___ b. _______
3. SEC USE ONLY:
4. SOURCE OF FUNDS*:
PF
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e):
_______
6. CITIZENSHIP OR PLACE OF ORGANIZATION:
U.S.A.
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH:
7. SOLE VOTING POWER: 5,000
8. SHARED VOTING POWER: None
9. SOLE DISPOSITIVE POWER: 5,000
10. SHARED DISPOSITIVE POWER:None
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON:
5,000
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES*:
_______
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11):
.075%
14. TYPE OF REPORTING PERSON*:
IN
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
SCHEDULE 13D
CUSIP NO. 172862104 Page 5 of 47 Pages
1. NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON:
Roderick H. Dillon, Jr. Foundation
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*:
a. ___X___ b. _______
3. SEC USE ONLY:
4. SOURCE OF FUNDS*:
WC
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e):
_______
6. CITIZENSHIP OR PLACE OF ORGANIZATION:
Ohio
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH:
7. SOLE VOTING POWER: 2,000
8. SHARED VOTING POWER: None
9. SOLE DISPOSITIVE POWER: 2,000
10. SHARED DISPOSITIVE POWER:None
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON:
2,000
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES*:
_______
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11):
.030%
14. TYPE OF REPORTING PERSON*:
OO
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
SCHEDULE 13D
CUSIP NO. 172862104 Page 6 of 47 Pages
1. NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON:
Bradley C. Shoup - IRA
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*:
a. ___X___ b. _______
3. SEC USE ONLY:
4. SOURCE OF FUNDS*:
PF
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e):
_______
6. CITIZENSHIP OR PLACE OF ORGANIZATION:
United States of America
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH:
7. SOLE VOTING POWER: 2,000
8. SHARED VOTING POWER: None
9. SOLE DISPOSITIVE POWER: 2,000
10. SHARED DISPOSITIVE POWER:None
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON:
2,000
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES*:
_______
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11):
.030%
14. TYPE OF REPORTING PERSON*:
IN
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
Supplement to Amendment No. 5 to Schedule 13D
Issuer - Citadel Holding Corporation
Reporting Persons - Dillon Investors, L.P., Roderick H. Dillon, Jr.,
Roderick H. Dillon, Jr. - IRA, Roderick H. Dillon, Jr. Foundation and
Bradley C. Shoup - IRA.
Item 1. Security and Issuer
This Amendment No. 5 to Schedule 13D filed by the reporting
persons Dillon Investors, L.P. ("DI"), Roderick H. Dillon, Jr. ("RHD"),
Roderick H. Dillon, Jr.-IRA ("RHD-IRA") and Roderick H. Dillon, Jr. Foundation
("RHD-Foundation") (collectively, the "Dillon Entities") and Bradley C. Shoup
("Shoup") (the "Dillon Entities" and "Shoup" are collectively referred to as
the "Reporting Persons") with the Securities and Exchange Commission (the
"SEC") relates to the common stock, without par value ("Common Stock"), of
Citadel Holding Corporation, a Delaware corporation (the "Issuer"). The
principal executive offices of the Issuer are located at 700 North Central,
Suite 500, Glendale, California 91203. This Amendment No. 5 amends certain
information set forth in the Schedule 13D filed by the Dillon Entities on
March 18, 1994, as amended by Amendment No. 1 filed on September 9, 1994
("Amendment No. 1"), Amendment No. 2 filed on October 17, 1994 ("Amendment
No. 2"), Amendment No. 3 filed on November 4, 1994 ("Amendment No. 3") and
Amendment No. 4 filed on November 8, 1994 ("Amendment No. 4").
Item 4. Purpose of Transaction
As previously stated in Amendment Nos. 3 and 4, the Dillon
Entities have determined to solicit proxies from the stockholders of the
Issuer for election at the Issuer's annual meeting of stockholders scheduled
to be held December 12, 1994 (the "1994 Annual Meeting") of the following
slate of directors in opposition to that expected to be nominated by the Board
of Directors of the Issuer: RHD, Shoup, Ralph V. Whitworth, Jordan M. Spiegel
and Timothy M. Kelley (collectively, the "Dillon Nominees"). On November 8,
1994, DI filed preliminary proxy materials with the SEC to solicit proxies for
the election of the Dillon Nominees and to oppose a proposed amendment to the
Issuer's Restated Certificate of Incorporation to double the number of
authorized shares of Common Stock (the "Proxy Solicitation"). If elected, it
is the intention of the Dillon Nominees to propose, subject to their fiduciary
duties, that the Issuer effect a pro rata distribution to the Issuer's
stockholders of the common stock of Fidelity Federal Bank, a Federal Savings
Bank, held by the Issuer and an orderly sale of the Issuer's real estate
assets at the best available price, and thereafter promptly dissolve and
liquidate the Issuer. On November 15, 1994, DI filed amended preliminary
proxy materials in order to respond to comments provided by the SEC on
November 14, 1994, with respect to the preliminary proxy materials filed on
November 8, 1994, and to take into account recent events with respect to the
Issuer's issuance on November 10, 1994, to Craig Corporation ("Craig") of
1,329,114 shares of 3% Cumulative Voting Convertible Preferred Stock (the "New
Preferred Stock") at a price of $3.95 per share by exchanging such shares of
New Preferred Stock for $5.2 million of debt owed by the Issuer to Craig. The
New Preferred Stock votes jointly with the shares of Common Stock on most
matters, including the election of directors, on a share-for-share basis and
is convertible into shares of Common Stock at any time, at the option of the
holder, at a conversion ratio based upon the market value of the shares of
Common Stock. The New Preferred Stock is redeemable at a premium at the
option of the Issuer, after November 10, 1997. Holders of the New Preferred
Stock have the right to require the Issuer to purchase their shares at a
premium under certain circumstances, including a change of control (which
would include failure of the existing directors of the Issuer or any persons
elected or nominated by the existing directors of the Issuer to constitute a
majority of the Board).
As previously stated in Amendment No. 4, DI commenced litigation
(the "Delaware Litigation") in the Court of Chancery of the State of Delaware
in and for New Castle County against the Issuer, 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 Issuer's Board to change the record date for the Annual
Meeting, from the previously announced date of November 4, 1994 to the
November 11, 1994 date announced by the Board of Directors of the Issuer on
November 4, 1994, 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 Issuer, so as
to permit them to issue additional shares of Common Stock to Craig or other
"friendly hands" prior to the new record date and, in addition, alleging that
the Issuer's issuance in October of 74,300 shares of Common Stock to Craig was
done for inadequate consideration and not for a proper business purpose of the
Issuer, but rather to enable the Individual Defendants to maintain themselves
in office and to affect adversely and to impede the voting rights of DI and
the other stockholders of the Company at the Annual Meeting. The complaint
sought an order declaring that such 74,300 shares of Common Stock were
improperly issued and enjoining Craig from voting such shares at the Annual
Meeting, determining that any shares of Common Stock issued by the Issuer
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 Issuer from issuing any shares of Common Stock prior to the
Annual Meeting. On November 9, 1994, prior to the Issuer's issuance of New
Preferred Stock to Craig, the Court scheduled a trial beginning January 4,
1995, after determining that a prompt trial after the 1994 Annual Meeting,
together with a status quo order preserving the parties in the position they
were from the time of the 1994 Annual Meeting through conclusion of the trial,
would afford sufficient relief. The Court did, however, indicate that it
would entertain a new request for injunctive relief should significant events
occur. DI has not definitively determined whether to request relief from the
Court prior to the 1994 Annual Meeting although DI will continue to monitor
the situation. If the Dillon Nominees are elected by vote at the 1994 Annual
Meeting or pursuant to written consent (see below), it is DI's present
intention to prosecute the Delaware Litigation in order to invalidate the
issuance of the New Preferred Stock. The election of the Dillon Nominees
would, depending upon the outcome of such action, either permit Craig to
accelerate its original $6,200,000 loan to the Issuer or to accelerate the
$950,000 balance of the loan currently outstanding and require the Issuer to
repurchase the New Preferred Stock at a premium, for a total cost to the
Issuer of $6,200,000 plus approximately $39,000 per month pro rated from the
date of issuance to the date of redemption of the New Preferred Stock.
Although Dillon has not approached any financing sources with respect to the
Issuer's obtaining funds to enable it to meet such obligations, DI believes,
based upon the Issuer's statements with respect to its real estate assets in
its Quarterly Report on Form 10-Q for the Quarter and Six Months ended
June 30, 1994, that financing, secured by such assets, would be available,
although there can be no assurance on this point.
On November 14, 1994, DI 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 New Preferred
Stock at the Annual Meeting or otherwise. The amended complaint of DI alleges
that such issuance of New Preferred Stock was in violation of the Board's
fiduciary duties, as such New Preferred Stock was issued for inadequate
consideration and not for a proper business or corporate purpose of the
Issuer. The shares of New Preferred Stock were issued at a share price below
the closing sales price for the shares of Common Stock on the American Stock
Exchange on November 10, 1994, notwithstanding the fact that such New
Preferred Stock has superior liquidation, dividend and redemption rights to
the shares of Common Stock, voting rights equal to the shares of Common Stock
and is convertible into shares of Common Stock. A copy of the amended
complaint filed by DI in the Delaware Litigation is attached hereto as
Exhibit B and is incorporated herein by reference.
On November 16, 1994, DI filed preliminary consent solicitation
materials with the SEC with respect to the solicitation of consents from the
stockholders of the Issuer (the "Consent Solicitation"). The record date for
determining the persons entitled to deliver a consent in the Consent
Solicitation is November 7, 1994 (the date on which, as previously disclosed,
RHD delivered his Consent to the Issuer), rather than the Issuer's proposed
November 14, 1994 record date for the Proxy Solicitation, which allows only
the recordholders of shares of Common Stock (as the only voting securities)
prior to the issuance of the New Preferred Stock to vote their shares of
Common Stock with respect to the composition of the Board. Pursuant to the
Consent Solicitation, DI is seeking the consent (the "Consent") of the
stockholders of the Issuer to (1) the removal of the current directors of the
Issuer, (2) the election of the Dillon Nominees, and (3) the amendment of the
Issuer's By-Laws to restrict the indemnification of (or the advancement of
expenses to) the Issuer's officers, directors, employees and agents without
the prior approval of the holders of the majority of the Common Stock of the
Issuer outstanding. The Consent provides that such amendment to the Issuer's
By-Laws may not be further amended without the approval of either of the
holders of the majority of the Common Stock outstanding or a majority of the
Board of Directors of the Issuer who are not "Continuing Directors".
Continuing Directors are defined for purposes of the Consent as (i) each
member of the Board of Directors of the Issuer on November 4, 1994, and
(ii) any member of the Board of Directors of the Issuer who was nominated for
election or elected to such Board of Directors with the affirmative vote of
the majority of the Continuing Directors who were members of such Board at the
time of such nomination or election. Adoption of the proposed corporate
actions addressed in the Consent will require the consent of the holders of a
majority of the shares of Common Stock outstanding on November 7, 1994, in
accordance with Delaware law.
On November 16, 1994, the Issuer filed an answer and counterclaim
against DI in the Delaware Litigation which seeks an order declaring invalid
any purported removal of the Board either prior to the 1994 Annual Meeting
(unless consented to by a majority of the stockholders entitled to vote at the
1994 Annual Meeting, which would include Craig as the holder of the New
Preferred Stock) or after the 1994 Annual Meeting, declaring that the consent
procedure cannot be used to amend the By-Laws as set forth in the Consent and
that any such amendment is void, even if approved by the stockholders, and
enjoining DI from utilizing consents to attempt to obtain stockholder approval
of such By-Laws amendment. DI believes the Issuer's counterclaim to be simply
another attempt to prevent public stockholders from exercising their voting
rights without the dilution of such rights caused by the issuance of the New
Preferred Stock to Craig in anticipation of the 1994 Annual Meeting and DI's
Proxy Solicitation.
On November 16, 1994, the Issuer commenced an action in the United
States District Court for the Central District of California (the "California
Litigation") against the Reporting Persons and the Dillon Nominees
(collectively, the "California Litigation Defendants") alleging that the
California Litigation Defendants have violated Section 13(d) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and the rules and
regulations promulgated thereunder by failing to disclose certain information
in the Schedule 13D, as amended. The complaint of the Issuer seeks an order
forbidding the California Litigation Defendants from soliciting any proxies or
consents related to shares of Common Stock of the Issuer until the California
Litigation Defendants have disclosed the material information allegedly
omitted from, and corrected the information allegedly misstated in, the
Schedule 13D and amendments thereto; prohibiting the voting of any shares of
Common Stock pursuant to any proxy or consent which may be granted pursuant to
the California Litigation Defendants' Proxy Solicitation prior to the date ten
days following public dissemination of the corrective disclosures; enjoining
each of the California Litigation Defendants from acquiring or attempting to
acquire any further shares of Common Stock of the Issuer until ten days after
the California Litigation Defendants have disclosed the material information
allegedly omitted from, and corrected the information allegedly misstated in,
the Schedule 13D and the Amendments thereto; enjoining each of the California
Litigation Defendants from exercising or attempting to exercise any influence
or control over the business or management of the Issuer until an amendment to
the Schedule 13D is filed disclosing all material information allegedly
omitted from the Schedule 13D and the Amendments thereto; enjoining each of
the California Litigation Defendants from using or attempting to use any
shares of Common Stock as a means of controlling or affecting the management
of the Issuer; and prohibiting the California Litigation Defendants from
soliciting or arranging the solicitation of orders to buy or sell any shares
of the Issuer. The Reporting Persons, together with the other California
Litigation Defendants, intend to file an answer to the Issuer's complaint in
the California Litigation which reflects their belief that the claims of the
Issuer are without merit and will vigorously defend against such claims. A
copy of the complaint filed by the Issuer in the California Litigation is
attached hereto as Exhibit C and is incorporated herein by reference.
Item 6. Contracts, Arrangements, Understandings or Relationships with
Respect to Securities of the Issuer
See Item 4 above.
Item 7. Material to Be Filed as Exhibits
Exhibit A - Joint Filing Agreement, dated November 11, 1994, among
the Reporting Persons. (Included at page 13 of this Amendment
No. 5 to Schedule 13D.
Exhibit B - Amended Complaint filed by DI on November 14, 1994 in
the Court of Chancery of the State of Delaware in and for New
Castle County in action captioned Dillon Investors, L.P. v.
James J. Cotter, Steve Wesson, Peter W. Geiger, S. Craig Tompkins,
Alfred Villasenor, Jr., Craig Corporation and Citadel Holding
Corporation, C.A. No. 13867 (Included beginning at page 14 of this
Amendment No. 5 to Schedule 13D.)
Exhibit C - Complaint filed by the Issuer on November 16, 1994 in
the United States District Court for the Central District of
California in action captioned Citadel Holding Corporation v.
Dillon Investors, L.P., Roderick H. Dillon, Jr., Roderick H.
Dillon, Jr. Foundation, Bradley C. Shoup, Timothy M. Kelley,
Ralph V. Whitworth and Jordan M. Spiegel (Included beginning at
page 26 of this Amendment No. 5 to Schedule 13D.)
SIGNATURE
After reasonable inquiry and to the best of my knowledge and
belief, I certify that the information set forth in this statement is true,
complete and correct.
Date: November 17, 1994 Dillon Investors, L.P.
By: /s/ Roderick H. Dillon, Jr.
Roderick H. Dillon, Jr.,
General Partner
Roderick H. Dillon, Jr.
By: /s/ Roderick H. Dillon, Jr.
Roderick H. Dillon, Jr.
Roderick H. Dillon, Jr. - IRA
By: /s/ Roderick H. Dillon, Jr.
Roderick H. Dillon, Jr.
Roderick H. Dillon, Jr. - Foundation
By: /s/ Roderick H. Dillon, Jr.
Roderick H. Dillon, Jr.,
Trustee
Bradley C. Shoup - IRA
By: /s/ Bradley C. Shoup
Bradley C. Shoup
EXHIBIT A
JOINT FILING AGREEMENT
In accordance with Rule 13d-1(f)(1) under the
Securities Exchange Act of 1934, the persons named below hereby
agree to the joint filing on behalf of each of them of a
statement on Schedule 13D (including any amendments thereto) with
respect to the shares of Common Stock of Citadel Holding
Corporation beneficially owned by each of them and further agree
that this Joint Filing Agreement be included as an exhibit to
such joint filings.
IN WITNESS WHEREOF, the undersigned hereby execute this
Joint Filing Agreement as of the 11th day of November, 1994.
DILLON INVESTORS, L.P.
By: /s/ Roderick H. Dillon, Jr.
Roderick H. Dillon, Jr., General
Partner
RODERICK H. DILLON, JR.
By: /s/ Roderick H. Dillon, Jr.
Roderick H. Dillon, Jr.
RODERICK H. DILLON, JR.-IRA
By: /s/ Roderick H. Dillon, Jr.
Roderick H. Dillon, Jr.
RODERICK H. DILLON, JR. FOUNDATION
By: /s/ Roderick H. Dillon, Jr.
Roderick H. Dillon, Jr., Trustee
BRADLEY C. SHOUP - IRA
By: /s/ Bradley C. Shoup
Bradley C. Shoup
Exhibit B
Amended Complaint filed by Dillon Investors, L.P. on
November 14, 1994 in the Court of Chancery of the State of
Delaware in and for New Castle County in action captioned Dillon
Investors, L.P. v. James J. Cotter, Steve Wesson, Peter W.
Geiger, S. Craig Tompkins, Alfred Villasenor, Jr., Craig
Corporation and Citadel Holding Corporation, C.A. No. 13867
IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
DILLON INVESTORS, L.P., )
)
Plaintiff, )
)C.A. No. 13867
v. )
)
JAMES J. COTTER, STEVE WESSON, )
PETER W. GEIGER, S. CRAIG )
TOMPKINS, ALFRED VILLASENOR, JR., )
CRAIG CORPORATION and CITADEL )
HOLDING CORPORATION, )
)
Defendants. )
AMENDED COMPLAINT
For its amended complaint against the defendants,
plaintiff Dillon Investors, L.P. ("Dillon L.P.") alleges as
follows:
1. Dillon L.P. is a limited partnership formed under
the laws of the State of Delaware and is the beneficial owner of
647,000 shares of the common stock of defendant Citadel Holding
Corporation ("Citadel").
2. Citadel is a corporation organized under the laws
of the State of Delaware. Citadel is the owner of more than 10%
of the issued and outstanding shares of stock of Fidelity Federal
Bank FSB ("Fidelity"), is a registered savings and loan holding
company and is subject to the rules and regulations of the Office
of Thrift Supervision ("OTS").
3. Defendant Craig Corporation ("Craig") is also a
corporation organized under the laws of the State of Delaware.
Craig purports to be the owner of approximately 24.9% of the
shares of the outstanding voting stock of Citadel. Craig has
extended a $8.2 million line of credit to a wholly owned
subsidiary of Citadel of which, as of November 9, 1994, $6.2
million had been drawn down and guaranteed by Citadel. The line
of credit does not mature and is not due and payable until August
5, 1995. Craig has admitted that under the regulations of the
OTS, it controls Citadel.
4. Defendants James J. Cotter ("Cotter"), Steve
Wesson ("Wesson"), Peter W. Geiger, S. Craig Tompkins
("Tompkins") and Alfred Villasenor, Jr. (collectively the
"Individual Defendants") are the members of the board of
directors of Citadel. Cotter is (a) the chairman of the board of
directors of Citadel and (b) a principal stockholder of and a
member of and the chairman of the board of directors of Craig.
Tompkins is (a) the vice chairman of the board of directors,
secretary/treasurer and principal accounting officer of Citadel
and (b) a director of and president of Craig. Non-employee
directors of Citadel receive $10,000 per year for their
attendance at regularly scheduled meetings of the board of
directors, except for Cotter and Tompkins who will receive
$45,000 per year and $25,000 per year respectively. Cotter
received $100,000 per year until some date subsequent to August
4, 1994. In addition, "it is contemplated" that Wesson (the
President and CEO of Citadel) will be granted options to purchase
an "estimated" 35,000 shares of common stock of Citadel.
5. By Amendment No. 1 to its Schedule 13D filed
September 8, 1994, Dillon L.P., together with others, announced
for the first time that it and the others had "begun to consider
seeking a greater voice in the affairs of [Citadel]," that they
"may consider seeking representation on the Board of Directors of
[Citadel] in the future" and that they may suggest business
strategies to Citadel.
6. By letter dated October 13, 1994 (the "October 13
letter"), Dillon L.P. requested that the Individual Defendants
schedule an annual meeting for Citadel and recommended that the
Individual Defendants distribute the shares of stock of Fidelity
to the Citadel stockholders and liquidate the remaining Citadel
assets in order to maximize stockholder value.
7. By Amendment No. 2 to its Schedule 13D filed
October 17, 1994, Dillon L.P., together with others, disclosed
the October 13 letter, and reiterated that they had "begun to
consider seeking a greater voice in the affairs of [Citadel]" and
announced that depending on Citadel's response to the October 13
letter, they "may consider seeking representation on the Board of
Directors of [Citadel] in the future."
8. Subsequent to the receipt of the October 13 letter
and the filing of Amendment No. 2 to the Schedule 13D of Dillon
L.P, the Individual Defendants scheduled the 1994 annual meeting
for December 12, 1994 (the "1994 Citadel Annual Meeting"). The
Individual Defendants declared November 4, 1994 as the record
date for the 1994 Citadel Annual Meeting.
9. On October 21, 1994, the Individual Defendants
issued 74,300 shares (the "Facilitating Shares") of Citadel
common stock to Craig. OTS approval for Craig to purchase in
excess of 10% of the outstanding shares of common stock of
Citadel was scheduled to expire on October 23, 1994. The
Facilitating Shares were issued for the lesser of the average
trading prices (a) for 3 trading days preceding October 21 or (b)
the 5 trading days after October 21. On October 24, 1994, Wesson
stated that the issuance of the Facilitating Shares "was
important to our Board to preserve Craig as a potential source of
future equity financing without the need to seek new OTS
approval." (Emphasis supplied). Stated more succinctly, the
Facilitating Shares were issued to Craig so that future issuances
to Craig could be accomplished without any regulatory delay.
Craig has stated that in addition it would have been unwilling to
file an agreement with the OTS to avoid delay since the agreement
"would have substantially limited Craig's ability to exercise an
influence over the business and affairs of" Citadel.
10. On November 4, 1994, Dillon L.P. amended its
Schedule 13D and thereby indicated its intention (with others) to
solicit proxies to elect its nominees as the board of directors
of Citadel at the 1994 Citadel Annual Meeting. Should its
nominees be elected, Dillon L.P. intends to implement (subject to
the fiduciary duties of the directors) the changes it recommended
in its October 13 letter and liquidate Citadel.
11. In apparent anticipation of the amended Schedule
13D, Citadel issued a press release on November 4, 1994,
declaring that the Individual Defendants had "reset" the record
date for the 1994 Citadel Annual Meeting to November 11, 1994.
12. On November 7, 1994, a written consent executed on
behalf of Mr. Dillon was delivered to Citadel in accordance with
8 Del. C. Section 228 to take the following actions: (i) remove the
entire board of Citadel; (ii) elect Mr. Dillon, Bradley C. Shoup,
Ralph V. Whitworth, Jordan M. Spiegel and Timothy M. Kelley as
directors of Citadel; and (iii) amend the by-laws of Citadel to
limit and/or condition indemnification of certain representatives
of Citadel. The delivery of the consent established, pursuant to
8 Del. C. Sections 213 and 228, a stockholder record date of November
7, 1994 as the record date for the consent.
13. On November 8, 1994, Citadel announced by press
release that the earlier report which provided that the record
date for the 1994 Citadel Annual Meeting was reset to November
11, 1994 was "erroneous," and further announced that the third
record date for such meeting was to be November 14, 1994. This
further manipulation of the record date was accomplished to
permit Citadel to issue additional shares to its controlling
stockholder, Craig, and enable Craig to cast additional votes at
the 1994 Citadel Annual Meeting to impede the announced proxy and
consent solicitations of Dillon L.P.
14. On November 10, 1994, prior to the purported
record date for the annual meeting of November 14, 1994, Citadel
sold 1,329,114 shares of newly authorized 3% Cumulative Voting
Convertible Preferred Stock to Craig in exchange for cancellation
of $5.2 million of debt owed by Citadel to Craig (the
"Entrenchment Shares"). The Entrenchment Shares were issued to
Craig for the "Stated Value" of $3.95 per share, a price wholly
inadequate given the terms and intrinsic value of the
Entrenchment Shares. Indeed, the sales price of the Entrenchment
Shares was below the closing price for the common stock on the
American Stock Exchange on November 10, 1994. In addition to the
guaranteed 3% annual return and ranking prior to the common
shares as to dividends, liquidation and dissolution, the
Entrenchment Shares are subject to automatic conversion into
common stock under certain circumstances. Furthermore, subject
to certain limitations, the Entrenchment Shares may be converted
into Citadel common stock at the option of the holder of the
Entrenchment Shares. Moreover, the terms of the Entrenchment
Shares prohibit Citadel from declaring a dividend on its common
stock or redeeming those shares unless the dividends accrued on
the outstanding Entrenchment Shares have been or will be paid
contemporaneously therewith.
15. Citadel may not unilaterally redeem any of the
Entrenchment Shares prior to November 10, 1997. Nevertheless,
Craig has the right to require Citadel to purchase the
Entrenchment Shares upon the occurrence of a change of control.
The certificate of designation defines a "change of control" to
have occurred, inter alia, when the current directors or their
nominees cease to constitute a majority of the board of
directors. If such a change in control occurs (if, for example
the proxy or consent solicitation of Dillon L.P. is successful),
Citadel is required to purchase the Entrenchment Shares at a
premium equal to the Stated Value plus 9% interest per annum (if
the redemption occurs before November 10, 1998).
16. The holders of Entrenchment Shares are entitled to
one vote for each share held and to vote jointly with the common
stock on the election of directors. The Entrenchment Shares also
are entitled to nominate one director for election to the board
of directors. The Entrenchment Shares were thus issued so that
Craig would own the shares on the record date for the 1994
Citadel Annual Meeting and to influence improperly the election
of directors, among other things. As stated in the press release
announcing the issuance: "Craig's ownership of these shares on
the record date was a condition to Craig's agreement to convert
its debt to equity."
17. As the holder of the Entrenchment Shares, Craig
was also granted by the board of directors of Citadel a
preemptive right to purchase any unissued voting stock of any
class of Citadel. As described in the certificate of designation
for the Entrenchment Shares: "Such preemptive rights shall extend
only to the extent necessary to allow [Craig] to maintain its
proportionate shares of the outstanding voting stock of the
Company...." Thus, Craig has not only established its control
over Citadel but has guaranteed its ability to maintain that
control.
18. The Entrenchment Shares represent 16.6% of the
outstanding voting securities of Citadel. As a result of the
issuance of the Entrenchment Shares, Craig now controls
approximately 25% of the outstanding voting securities of
Citadel: 16.6% through the Entrenchment Shares and 8.3% through
its holdings of Citadel common stock.
19. Craig knowingly participated in the breaches of
duty hereinafter alleged since two of its officers and directors,
Cotter and Tompkins, participated actively in the wrongdoing.
FIRST CAUSE OF ACTION
20. Dillon L.P. realleges and restates paragraphs 1
through 19 above.
21. On information and belief, the Facilitating Shares
and Entrenchment Shares were issued to Craig solely to permit it
to have more shares to vote at the 1994 Citadel Annual Meeting
and to obstruct the consent and proxy solicitations of Dillon.
Such shares were issued hastily for inadequate consideration and
not for a proper business or corporate purpose of Citadel.
22. As such, the Facilitating Shares and Entrenchment
Shares were issued to enable the Individual Defendants to
maintain themselves in office and to affect adversely and to
impede the voting rights of Dillon L.P. and the other
stockholders of Citadel at the 1994 Citadel Annual Meeting.
23. Thus, the Facilitating Shares and Entrenchment
Shares were improperly and invalidly issued to Craig.
SECOND CAUSE OF ACTION
24. Dillon L.P. realleges and restates paragraphs 1
through 23 above.
25. The Individual Defendants have twice improperly
attempted to change the record date for the 1994 Citadel Annual
Meeting from November 4, 1994 to November 11, 1994, and then
again to November 14, 1994. No explanation for the attempted
change was given in the press release issued by Citadel on
November 4, 1994, and the November 7, 1994 press release merely
stated that the report of the November 11, 1994 record date was
erroneous. On information and belief, the purported changes in
the record date were attempted by the Individual Defendants not
for a proper corporate or business purpose of Citadel but to
enable the Individual Defendants to perpetuate themselves in
office and to permit Cotter, Tompkins and Craig to maintain their
control of Citadel by improperly manipulating the corporate
machinery of Citadel so as to permit them to issue the
Entrenchment Shares to Craig prior to the new record date of
November 14, 1994.
THIRD CAUSE OF ACTION
26. Dillon L.P. realleges and restates paragraphs 1
through 25 above.
27. The Individual Defendants and Craig conspired to
issue additional shares of voting stock of Citadel to Craig prior
to November 14, 1994. On information and belief, such issuances
were not for a proper business or corporate purpose of Citadel.
Such shares were issued for the primary purpose of enabling the
Individual Defendants to maintain themselves in office and to
maintain the control of Cotter, Tompkins and Craig over Citadel
and in an attempt to dilute, adversely affect and impede the
voting power and rights of Dillon L.P. and the other stockholders
of Citadel.
28. The issuances of the Facilitating Shares and the
Entrenchment Shares were in violation of the fiduciary duties of
the Individual Defendants and Craig which are owed to Dillon L.P.
and the other stockholders of Citadel.
WHEREFORE, Dillon L.P. prays that the Court enter its
judgments and orders:
a. declaring that the Facilitating Shares and
Entrenchment Shares have been improperly issued and cannot be
voted or counted toward a quorum at the 1994 Citadel Annual
Meeting;
b. rescinding the issuances of the Facilitating
Shares and Entrenchment Shares;
c. enjoining, pendente lite and permanently, the
Individual Defendants from issuing any shares of stock of Citadel
prior to the 1994 Citadel Annual Meeting;
d. awarding Dillon L.P. its costs and expenses,
including reasonable attorneys' fees, incurred in maintaining
this action; and
e. awarding and granting such other relief as
the Court may deem equitable.
/s/ Daniel A. Dreisbach
R. Franklin Balotti
Daniel A. Dreisbach
Todd C. Schiltz
Richards, Layton & Finger
One Rodney Square
P.O. Box 551
Wilmington, Delaware 19899
(302) 658-6541
Attorneys for Plaintiff
Dillon Investors, L.P.
Dated: November 14, 1994
CERTIFICATE OF SERVICE
I, Todd C. Schiltz, hereby certify that on this 14th
day of November, 1994, two copies of the foregoing document were
served by hand delivery on the following:
Robert K. Payson, Esquire
Potter Anderson & Corroon
350 Delaware Trust Building
P.O. Box 951
Wilmington, Delaware 19899
William O. LaMotte, III, Esquire
Morris Nichols Arsht & Tunnell
1201 North Market Street
P.O. Box 1347
Wilmington, Delaware 19899-1347
/s/ Todd C. Schiltz
Todd C. Schiltz
Exhibit C
Complaint filed by Citadel Holding Corporation on
November 16, 1994 in the United States District Court for the
Central District of California in action captioned Citadel
Holding Corporation v. Dillon Investors, L.P., Roderick H.
Dillon, Jr., Roderick H. Dillon, Jr. Foundation, Bradley C.
Shoup, Timothy M. Kelley, Ralph V. Whitworth and Jordan M.
Spiegel.
Page 26 of 47 Pages
UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CITADEL HOLDING CORPORATION, :
a Delaware corporation, :
:
Plaintiff, :
:
v. : CASE NO.
:
DILLON INVESTORS, L.P., a : COMPLAINT FOR
Delaware partnership; RODERICK : INJUNCTIVE RELIEF
H. DILLON, JR., an individual; :
RODERICK H. DILLON, JR. :
FOUNDATION, an Ohio trust; :
BRADLEY C. SHOUP, an :
individual; TIMOTHY M. KELLEY, :
an individual; RALPH V. :
WHITWORTH, an individual; and :
JORDAN M. SPIEGEL, an :
individual, :
Defendants.:
Plaintiff Citadel Holding Corporation ("Citadel"), on
knowledge as to plaintiff, and otherwise upon information and
belief, alleges as follows:
THE PARTIES
1. Plaintiff Citadel is a publicly held corporation,
organized and existing under the laws of the State of Delaware,
with its principal place of business at 600 North Brand
Boulevard, Glendale, California 91203.
2. Citadel is the owner of approximately 17 percent
of the issued and outstanding shares of stock of Fidelity Federal
Bank, FSB ("Fidelity"), which is a federal savings bank that is
subject to the rules and regulations of the Office of Thrift
Supervision ("OTS").
3. There are approximately 6,669,924 shares of
Citadel common stock that have been issued and are outstanding
("Citadel Shares"). Citadel's records indicate that Citadel
Shares are held by approximately 274 shareholders of record. The
Citadel Shares are traded as a listed security on the American
Stock Exchange, and they are registered pursuant to Section 12 of
the Securities Exchange Act of 1934 ("Exchange Act").
4. Defendant Roderick H. Dillon, Jr. ("Dillon") has
represented in filings with the Securities and Exchange
Commission ("SEC") that he is the beneficial owner of 5,000
shares of common stock of Citadel and that his holdings equal
approximately 0.075% of Citadel Shares. In addition, Dillon
maintains an individual retirement account ("Dillon IRA"), and
Dillon has represented in filings with the SEC that the Dillon
IRA is the beneficial owner of 5,000 shares of common stock of
Citadel, which equal approximately 0.075% of Citadel Shares.
Dillon is a citizen of the State of Ohio. Dillon is the Chief
Investment Officer of Dillon Capital Management, L.P.
5. Defendant Dillon Investors, L.P. ("Dillon
Investors") is a Delaware partnership with its principal place of
business at 21 East State Street, Suite 1410, Columbus,
Ohio 43215. Dillon Investors has represented in filings with the
SEC that it is the beneficial owner of 647,000 shares of common
stock of Citadel and that its holdings equal approximately 9.70%
of Citadel Shares. Dillon is the sole general partner of Dillon
Investors. Dillon is a controlling person of Dillon Investors
within the meaning of Section 20(a) of the Exchange Act and is
the beneficial owner of Dillon Investors' Citadel Shares.
6. Defendant Roderick H. Dillon, Jr. Foundation
("Dillon Foundation") is a trust organized in and existing
pursuant to the laws of the State of Ohio. The Dillon Foundation
has represented in filings with the SEC that it is the beneficial
owner of 2,000 shares of common stock of Citadel and that such
shares, which are beneficially owned by Dillon, equal
approximately 0.03% of Citadel Shares. Dillon is the sole
trustee of the Dillon Foundation and is the beneficial owner of
the Dillon Foundation's Citadel Shares. Dillon is a controlling
person of the Dillon Foundation within the meaning of
Section 20(a) of the Exchange Act.
7. Defendant Bradley C. Shoup ("Shoup") has
represented in filings with the SEC that he is the beneficial
owner of the assets of an IRA account in Shoup's name. Shoup has
further represented in filings with the SEC that he is the
beneficial owner of 2,000 shares of common stock of Citadel,
which equals approximately 0.03% of Citadel Shares. Shoup is a
citizen of California. Shoup is also a partner at Batchelder &
Partners, Inc., a financial advisory firm in La Jolla, California
that specializes in, among other things, consulting in corporate
takeovers.
8. Defendants Timothy M. Kelley, Ralph V. Whitworth,
and Jordan M. Spiegel are citizens of the States of Ohio,
Virginia, and California respectively. Kelley is Secretary,
Treasurer, and General Counsel of Donald W. Kelley & Associates,
Inc., a real estate consulting and development firm located in
Columbus, Ohio. Whitworth is President of Whitworth &
Associates, a corporate consulting firm in Washington, D.C.
Spiegel is Executive Vice-President of A. B. Laffler, V. A.
Canto & Associates, an economic consulting firm located in La
Jolla, California. Kelley, Whitworth, and Spiegel are part of a
slate of proposed directors, including Dillon and Shoup, who are
seeking to take control of Citadel by ousting its current Board
of Directors and then liquidating and dissolving Citadel, by
means of false and misleading filings with the SEC, public
statements, and proxy solicitations.
JURISDICTION AND VENUE
9. This action arises under Section 13(d) of the
Exchange Act, 15 U.S.C. Section 78m(d), and the rules and regulations
of the SEC promulgated thereunder. Jurisdiction and venue of
this court are founded on 28 U.S.C. Sections 1331, 1337 and 1391, and
on Section 27 of the Exchange Act, 15 U.S.C. Section 78aa. Acts and
transactions constituting and in furtherance of violations of the
Exchange Act have occurred and continue to occur in this District
and have been committed by defendants through use of the means
and instrumentalities of interstate commerce and of the U.S.
mails.
10. The amount in controversy herein, exclusive of
interest and costs, exceeds $50,000.
THE DEFENDANTS' SCHEME
11. Since at least March 1993, Defendants have acted
in concert with each other and with others for the purpose of
acquiring control of Citadel in order to liquidate its assets and
dissolve Citadel irrespective of any attendant fiduciary duties.
Defendants have engaged Garland Associates, Inc. to assist them.
As part of and in furtherance of defendants' scheme, defendants
have stated publicly, and with the intention of supporting their
effort to wrest control of Citadel's Board of Directors, or,
alternatively, as part of a greenmail scheme, that they believe
the liquidation value of Citadel Shares far exceeds their market
value, suggesting a difference of roughly $9 per share rather
than roughly $4 per share, respectively.
12. Dillon has agreed to indemnify Kelley, Whitworth,
Spiegel and Shoup against all liabilities, including liabilities
under the federal securities laws, in connection with efforts to
obtain control of Citadel's Board of Directors and, if
successful, dissolution and liquidation of Citadel. Dillon
intends to force Citadel shareholders to pay for any costs
associated with such liabilities and the costs of defendants'
attempted takeover.
13. If defendants are successful in acquiring control
of Citadel, through control of its Board of Directors, they will
seek, among other things, and irrespective of their fiduciary
duties to all Citadel shareholders, to:
- Take Citadel's block of shares of Fidelity
and dilute their value by distributing them pro rata to Citadel's
shareholders, thereby benefitting defendants to the detriment of
Citadel's other shareholders.
- Liquidate the assets of Citadel and dissolve
Citadel at fire sale prices to the detriment of Citadel's other
shareholders.
14. In carrying out the foregoing scheme, defendants
have violated federal law by, among other things:
- Failing to disclose contracts, arrangements
and understandings among them and with others respecting the
stock of Citadel, as mandated by Section 13(d) of the Exchange
Act.
- Failing to disclose that they and others
constitute a "group," organized for the purpose of seizing
control of Citadel, as mandated by Section 13(d) of the Exchange
Act.
- Failing to disclose their true purposes and
intentions in their Schedule 13Ds, including their intent to
wrest control of Citadel's Board of Directors and dissolve
Citadel and liquidate its assets, irrespective of any fiduciary
duties owed to other Citadel shareholders, as mandated by
Section 13(d) of the Exchange Act.
- Failing to disclose detailed and accurate
information concerning themselves and their related entities,
including Garland Associates, Inc., Dillon Capital Management,
L.P., Batchelder & Partners, Inc., Donald W. Kelley & Associates,
Inc., Whitworth & Associates, A. B. Laffler, V. A. Canto &
Associates, Loomis, Sayles & Co., Inc., and United Shareholders
Association, as mandated by Section 13(d) of the Exchange Act.
For example, defendants' proposed slate of Directors includes at
least two individuals formerly associated with a well-known
corporate raider (T. Boone Pickens) known for his greenmail
tactics.
- Failing to disclose the adverse consequences
to Citadel and its shareholders if defendants wrest control of
Citadel and dissolve Citadel and liquidate its assets, which
defendants are in a position to know, as mandated by
Section 13(d) of the Exchange Act.
- Failing to disclose the adverse consequences
to Citadel and its shareholders if defendants fail to obtain
approval by the OTS and other governmental agencies for their
plan, which defendants are in a position to know, as mandated by
Section 13(d) of the Exchange Act.
- Failing to identify the key assumptions
underlying their liquidation and dissolution plan, as mandated by
Section 13(d) of the Exchange Act.
- Failing to identify their opinion of the
liquidation value of Citadel's assets, as mandated by
Section 13(d) of the Exchange Act.
- Failing to identify whether and why the
market price of Citadel Shares is not a reliable indicator of
their value, as mandated by Section 13(d) of the Exchange Act.
- Failing to disclose defendants' alternative
valuation for Citadel Shares, as mandated by Section 13(d) of the
Exchange Act.
- Failing to identify the material contracts
that might be terminated upon liquidation and the resulting
impact on Citadel's shareholders, which defendants are in a
position to know, as mandated by Section 13(d) of the Exchange
Act.
- Failing to identify the adverse tax conse-
quences to Citadel and its shareholders if defendants' scheme is
successfully implemented, which defendants are in a position to
know, as mandated by Section 13(d) of the Exchange Act.
- Failing to disclose defendants' fee
arrangement with and financial incentives to financial and legal
advisors and counselors, including Dillon Capital Management,
L.P., Batchelder & Partners, Inc., Donald W. Kelley & Associates,
Inc., Whitworth & Associates, A. B. Laffler, V. A. Canto &
Associates, and Garland Associates, Inc., as mandated by
Section 13(d) of the Exchange Act.
- Failing to disclose the existence and nature
of any financing or other arrangements in connection with the
acquisition by anyone of Citadel Shares in support of defendants'
scheme, as mandated by Section 13(d) of the Exchange Act.
THE SCHEDULE 13D STATEMENTS
15. On or about March 18, 1994, Dillon (on behalf of
himself and the Dillon IRA), Dillon Investors, and the Dillon
Foundation filed a 13D statement with the SEC. Defendants
disclosed that they had acquired over 9 percent of Citadel
Shares. Defendants did not, however, disclose that they had been
acting and were continuing to act as a group among themselves and
with others in connection with the acquisition of Citadel Shares,
or that their intention was and is to seek to effectuate a change
in the control of Citadel and dissolve the company and liquidate
its assets, irrespective of any fiduciary duties owed to other
Citadel shareholders. Defendants also did not disclose any of
the information described in paragraph 14 of this Complaint, as
mandated by Section 13(d) of the Exchange Act. This permitted
defendants to accumulate a greater interest in Citadel before
filing their 13D Statement, in violation of Section 13(d) of the
Exchange Act. Despite the fact that defendants have filed four
amendments to this 13D, to this day they have not made such
disclosures.
16. On or about September 9, 1994, Dillon (on behalf
of himself and the Dillon IRA), Dillon Investors, and the Dillon
Foundation filed their first amendment to their earlier 13D
filing. This filing, however, did not disclose that defendants
had been acting and were continuing to act as a group among
themselves and with others in connection with their acquisition
of Citadel Shares or their intention to seek to effectuate a
change in the control of Citadel and dissolve the company and
liquidate its assets, irrespective of any fiduciary duties owed
to other Citadel shareholders. Defendants also did not disclose
any of the information described in paragraph 14 of this
Complaint, as mandated by Section 13(d) of the Exchange Act.
17. On or about October 17, 1994, Dillon (on behalf of
himself and the Dillon IRA), Dillon Investors, and the Dillon
Foundation filed their second amendment to their earlier 13D
filing. Defendants still did not disclose that they had been
acting and were continuing to act as a group with others in
connection with their Citadel Shares, or their intention to seek
to effectuate a change in the control of Citadel and dissolve the
company and liquidate its assets, irrespective of any fiduciary
duties owed to other Citadel shareholders. Defendants also did
not disclose any of the information described in paragraph 14 of
this Complaint, as mandated by Section 13(d) of the Exchange Act.
18. On or about November 4, 1994, Dillon (on behalf of
himself and the Dillon IRA), Dillon Investors, the Dillon
Foundation and Shoup finally disclosed their slate of nominees to
the Board of Directors of Citadel in yet another 13D amendment as
part of their long-held plan with others to dissolve Citadel and
liquidate its assets, irrespective of any fiduciary duties owed
to other Citadel shareholders. Defendants did not disclose in
the 13D amendment, however, that they were acting as a part of a
group with others in acquiring Citadel Shares or seeking to
acquire control of Citadel or their intention to seek to
effectuate a change in the control of Citadel and dissolve the
company and liquidate its assets, irrespective of any fiduciary
duties owed to other Citadel shareholders. Defendants also did
not disclose any of the information described in paragraph 14 of
this Complaint, as mandated by Section 13(d) of the Exchange Act.
19. On or about November 7, 1994, Dillon (on behalf of
himself and the Dillon IRA), Dillon Investors, the Dillon
Foundation and Shoup filed their fourth amendment to their prior
13D statement. Defendants disclosed that they had submitted
preliminary proxy materials to the SEC to solicit proxies to
elect their slate of Directors. Despite filing this fourth
amendment to the 13D, Defendants continued to refuse to
acknowledge that they were and/or acting as a group with others,
but claimed that their only agreement or understanding was that
the members of the Dillon slate have agreed to be nominated and
serve as Directors of Citadel. The 13D fails to state that these
persons are part of a "group," fails to state that they have
certain agreements and understandings with regard to Citadel
Shares, and fails to make the disclosures identified in
paragraph 14 of this Complaint.
IRREPARABLE INJURY TO CITADEL, ITS
SHAREHOLDERS AND THE INVESTING PUBLIC
20. Citadel, its shareholders, and the investing
public have been and will continue to be substantially and
irreparably injured by defendants' ongoing and unlawful scheme
and conduct in that, among other things:
(a) Through their unlawful acts, defendants have
sown the seeds of misinformation which Citadel cannot remedy
after the fact through counter-information;
(b) Citadel shareholders (both present and
prospective) are being compelled to make hasty, ill-informed
investment decisions, including proxies and consents, concerning
Citadel Shares -- which decisions could result in a change in the
management of Citadel and drastic (and severely detrimental)
changes in the operations and plans of the company -- without the
benefit of the full and fair disclosures and truthful information
to which they are entitled under, among other things, Section
13(d) of the Exchange Act.
(c) By reason of defendants' unlawful conduct,
there has been and will continue to be confusion and misunder-
standing on the part of Citadel shareholders and the general
investing public as to the true intentions of defendants with
respect to Citadel and its operations -- including defendants'
unyielding decision to dissolve Citadel and liquidate its assets
- -- and a major disruption in the market for Citadel Shares;
(d) The market for Citadel Shares is being
manipulated; indeed, many of Citadel's shareholders have been and
will be induced to give proxies or consents to defendants or to
sell their shares to market professionals, speculators, or
members of defendants' group by reason of defendants'
manipulation;
(e) The widespread confusion and uncertainty
created by defendants' misconduct as to their intention toward
Citadel is causing, and will continue to cause, serious
dislocations in the operation of and plans for Citadel's business
and the market for its securities; and
(f) Citadel may be wrongfully coerced to act to
dispose of valuable assets at less than the full value that could
be obtained for such assets but for defendants' wrongful conduct.
FIRST CAUSE OF ACTION AGAINST
ALL OF THE DEFENDANTS
21. Citadel repeats and realleges each and every
allegation of Paragraphs 1 through 20 as if set forth fully
herein.
22. Section 13(d)(1) of the Exchange Act, 15 U.S.C.
Section 78m(d)(1), provides that any person acquiring 5 percent or more
of the shares of any company registered under Section 12 of the
Exchange Act must file a Schedule 13D statement. Section
13(d)(3), 15 U.S.C. Section 78m(d)(3), provides that "when two or more
persons act as a . . . group for the purpose of acquiring,
holding, or disposing of securities of an issuer, such . . .
group shall be deemed a 'person' for the purposes of this
subsection." Under SEC Regulation 13D-101, 17 C.F.R.
Section 240.13D-101, Item 4 of that Schedule 13D must disclose, among
other things, "the purpose or purposes of the acquisition."
Under SEC Regulation 13D-101, Item 6 of that Schedule 13D must
describe "any contracts, arrangements, understandings or
relationships (legal or otherwise)" among the persons filing the
Schedule 13D and any other person.
23. The March 17, 1989 Schedule 13D statement filed by
defendants and all of the amendments thereto, including but not
limited to that filed on or after November 7, 1994 (the most
recent amendment), are materially false and misleading in that,
among other things, they:
- Fail to disclose contracts, arrangements and
understandings among them and with others respecting the stock of
Citadel, as mandated by Section 13(d) of the Exchange Act.
- Fail to disclose that they and others
constitute a "group," organized for the purpose of seizing
control of Citadel, as mandated by Section 13(d) of the Exchange
Act.
- Fail to disclose their true purposes and
intentions in their Schedule 13Ds, including their intent to
wrest control of Citadel's Board of Directors and dissolve
Citadel and liquidate its assets, irrespective of any fiduciary
duties owed to other Citadel shareholders, as mandated by
Section 13(d) of the Exchange Act.
- Fail to disclose detailed and accurate
information concerning themselves and their related or affiliated
entities, including Garland Associates, Inc., Dillon Capital
Management, L.P., Batchelder & Partners, Inc., Donald W. Kelley &
Associates, Inc., Whitworth & Associates, A. B. Laffler, V. A.
Canto & Associates, Loomis, Sayles & Co., Inc. and United
Shareholders Association, as mandated by Section 13(d) of the
Exchange Act. For example, defendants' proposed slate of
Directors includes at least two individuals formerly associated
with a well-known corporate raider (T. Boone Pickens) known for
his greenmail tactics.
- Fail to disclose the adverse consequences to
Citadel and its shareholders if defendants wrest control of
Citadel and dissolve Citadel and liquidate its assets, which
defendants are in a position to know, as mandated by
Section 13(d) of the Exchange Act.
- Fail to disclose the adverse consequences to
Citadel and its shareholders if defendants fail to obtain
approval by the OTS and other governmental agencies for their
plan, which defendants are in a position to know, as mandated by
Section 13(d) of the Exchange Act.
- Fail to identify the key assumptions
underlying their liquidation and dissolution plan, as mandated by
Section 13(d) of the Exchange Act.
- Fail to identify their opinion of the
liquidation value of Citadel's assets, as mandated by
Section 13(d) of the Exchange Act.
- Fail to identify whether and why the market
price of Citadel Shares is not a reliable indicator of their
value, as mandated by Section 13(d) of the Exchange Act.
- Fail to disclose defendants' alternative
valuation for Citadel Shares, as mandated by Section 13(d) of the
Exchange Act.
- Fail to identify the material contracts that
might be terminated upon liquidation and the resulting impact on
Citadel's shareholders, which defendants are in a position to
know, as mandated by Section 13(d) of the Exchange Act.
- Fail to identify the adverse tax conse-
quences to Citadel and its shareholders if defendants' scheme is
successfully implemented, as mandated by Section 13(d) of the
Exchange Act.
- Fail to disclose defendants' fee arrangement
with and financial incentives to financial and legal advisors and
counselors, including Dillon Capital Management, L.P.,
Batchelder & Partners, Inc., Donald W. Kelley & Associates, Inc.,
Whitworth & Associates, A. B. Laffler, V. A. Canto & Associates,
and Garland Associates, Inc., as mandated by Section 13(d) of the
Exchange Act.
- Fail to disclose the existence and nature of
any financing or other arrangements in connection with the
acquisition by anyone of Citadel Shares in support of defendants'
scheme.
24. All of the above-described 13D statements and
amendments thereto also are materially false and misleading in
that they fail to disclose that defendants have been and are
actively seeking to expand the group or to further its aims by
soliciting other shareholders prior to any filing and issuance of
formal proxy materials.
25. The above-stated misrepresentations and omissions
of facts and circumstances are material to any evaluation by
Citadel shareholders and members of the investing public with
respect to their investment decisions concerning the retention,
sale or purchase of Citadel Shares, as well as their decision to
grant or withhold proxies and/or consents.
26. By virtue of the foregoing, defendants have
violated and are continuing to violate Section 13(d) of the
Exchange Act and the rules and regulations, including Rule 13d-1,
promulgated thereunder.
27. Defendants Kelley, Whitworth, and Spiegel, by
continuing to participate in the scheme described above, with
knowledge of its true purpose and the material violations of
Section 13(d) of the Exchange Act as set forth herein, have aided
and abetted and conspired with, and continue to aid and abet and
conspire with the other defendants in the commission of the
violations alleged herein. Defendants are direct, necessary and
substantial participants in the conspiracy and know that their
conduct has assisted and will continue to assist the accomplish-
ment of the wrongful conduct and wrongful goals of the others.
28. The defendants have failed to correct the false
and misleading statements contained in their Schedule 13D
Statement and amendments thereto, and, unless enjoined by this
Court, will proceed with an illegal accumulation of stock,
consent solicitation, or a proxy contest. This will have the
impact of materially misleading Citadel's shareholders as set
forth herein. Citadel has no adequate remedy at law. Citadel
cannot avoid the substantial irreparable injuries that are being
caused by the material misstatements and omissions by the
defendants who have violated and are continuing to violate
Section 13(d) of the Exchange Act.
SECOND CAUSE OF ACTION AGAINST
ALL OF THE DEFENDANTS
29. Citadel repeats and realleges each and every
allegation of Paragraphs 1 through 28 as if set forth fully
herein.
30. Rule 13d-2(a) requires that if any material change
occurs in the facts set forth in a 13D Statement, the person or
persons affected must file "promptly" an amendment disclosing
such change.
31. The defendants have failed to file promptly
appropriate amendments to their prior 13D Statement and
subsequent amendments after material changes have occurred in the
facts as previously set forth.
32. The defendants thus have violated and continue to
violate Section 13(d) and the rules promulgated thereunder.
33. Citadel has no adequate remedy at law.
WHEREFORE, plaintiff demands judgment against
defendants as follows:
1. On the First and Second Causes of Action, granting
Citadel temporary, preliminary and permanent injunctive relief
against defendants, and their directors, officers, partners,
employees, agents, subsidiaries, and affiliates, and all other
persons or entities acting in concert with or on behalf of
defendants (collectively, "Defendants"), directly or indirectly,
as follows:
(a) an order forbidding Defendants from
soliciting any proxies or consents related to Citadel Shares
until each of the Defendants has disclosed the material
information which has been omitted from, and corrected the
information misstated in, the 13D Schedule and amendments
thereto;
(b) an order prohibiting the voting of any
Citadel Shares pursuant to any proxy granted or which may be
granted pursuant to Defendants' proxy solicitation prior to the
date 10 days following public dissemination, by press release and
mailing to all Citadel shareholders solely at Defendants'
expense, of the corrective disclosures referred to above;
(c) an order prohibiting the use, in any way
whatsoever, of any consents to Citadel shareholder action without
a meeting granted pursuant to the Defendants' proxy solicitation
prior to the date 10 days following public dissemination, by
press release and mailing to Citadel shareholders solely at
Defendants' expense, of the corrective disclosures referred to
above;
(d) an order enjoining each of the Defendants
from acquiring or attempting to acquire any further Citadel
Shares until ten days after Defendants have disclosed the
material information omitted from, and corrected the information
misstated in, their Schedule 13D and amendments;
(e) an order enjoining each of the Defendants
from exercising all voting rights, whether in person or by proxy,
appertaining to Citadel Shares acquired by them during the period
of time that they had failed to make disclosures required by, or
had made disclosures which were materially inaccurate or
deficient pursuant to, Section 13(d) of the Exchange Act (March
1993 to the present);
(f) an order enjoining each of the Defendants
from exercising or attempting to exercise any influence or
control over the business or management of Citadel until amended
13Ds are filed disclosing all material information omitted from
the prior 13Ds and amendments and correcting all misstatements in
the 13Ds and amendments;
(g) an order enjoining each of the Defendants
from using or attempting to use any Citadel Shares as a means of
controlling or affecting the management of Citadel;
(h) an order prohibiting Defendants from making
any false or misleading public statements regarding Citadel or
Citadel Shares;
(i) an order prohibiting Defendants from taking
or attempting to take any other steps in furtherance of their
unlawful scheme; and
(j) an order prohibiting Defendants from
soliciting or arranging for the solicitation of orders to buy or
sell any Citadel Shares.
2. On the First and Second Causes of Action,
directing defendants in this action to comply with the
requirements of Section 13(d) of the Exchange Act and to file a
complete and truthful Schedule 13D statement;
3. Declaring and decreeing that Citadel is entitled
to refuse to transfer on its books any stock purchased by or for
Defendants pursuant to their unlawful plan, scheme, and course of
conduct or to recognize the vote with respect to any such stock
purchased by Defendants;
4. Granting Citadel its costs and disbursements,
including reasonable attorneys' fees in this action; and
5. Granting Citadel such other and further relief as
the Court deems just and proper.
DATED: November 16, 1994 GIBSON, DUNN & CRUTCHER
RICHARD P. LEVY
KEVIN S. ROSEN
LINCOLN D. BANDLOW
By: /s/ Kevin S. Rosen
Kevin S. Rosen
Attorneys for Plaintiff
Citadel Holding Corporation